<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF
THE SECURITIES EXCHANGE ACT OF 1934
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a)
METRA BIOSYSTEMS, INC.
(Name of Subject Company)
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
QUIDEL CORPORATION
(Bidder)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
591591 10 2
(CUSIP Number of Class of Securities)
------------------------
ANDRE DE BRUIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
QUIDEL CORPORATION
10165 MCKELLAR COURT
SAN DIEGO, CALIFORNIA 92121-4201
619.552.1100
(FACSIMILE) 619.646.8016
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Bidders)
COPIES TO:
MARK W. SHURTLEFF, ESQ.
GIBSON, DUNN & CRUTCHER LLP
4 PARK PLAZA
IRVINE, CALIFORNIA 92614
949.451.3800
(FACSIMILE) 949.451.4220
CALCULATION OF FILING FEE
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TRANSACTION VALUATION(1) AMOUNT OF FILING FEE
<S> <C>
$22,600,544.30 $4,520.11
</TABLE>
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
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Amount Previously Paid: Filing Party:
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Form or Registration No.: Date Filed:
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</TABLE>
NOTE: The remainder of this cover page is only to be completed if this Schedule
14D-1 (or amendment thereto) is being filed, INTER ALIA, to satisfy the
reporting requirements of Section 13(d) of the Securities Exchange Act of 1934.
SEE General Instructions D, E and F to Schedule 14D-1.
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1 For purposes of fee calculation only. The total transaction value is based
on approximately 12,696,935 Shares outstanding as of May 31, 1999 multiplied
by the offer price of $1.78 per Share. The amount of the filing fee,
calculated in accordance with Rule 0-11 of the Securities Exchange Act of
1934, equals 1/50 of 1% of the value of the Shares to be purchased.
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(CONTINUED ON FOLLOWING PAGE(S))
(Page 1 of 7 Pages)
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14D-1
CUSIP NO. 591591 10 2 Page 2 of 7 Pages
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1. Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Persons
MBS Acquisition Corporation
I.R.S. Identification No.: To be applied for.
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2. Check the appropriate box if a member of a group* (a) / /
(b) /X/
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3. SEC Use Only
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4. Source of funds *
BK, WC
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5. Check box if disclosure of legal proceedings is required pursuant to Item
2(e) or 2(f) / /
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6. Citizenship or place of organization
Delaware
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7. Aggregate amount beneficially owned by each reporting person
35,459,260 shares (MBS Acquisition Corporation, a wholly-owned subsidiary of
Quidel Corporation, has the right, under some circumstances, to acquire up to
approximately 35,459,260 shares of the common stock of Metra Biosystems, Inc.
pursuant to that certain Stock Option Agreement, dated as of June 4, 1999,
among Quidel Corporation, Metra Biosystems, Inc. and MBS Acquisition
Corporation)
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8. Check box if the aggregate amount in row (7) excludes certain shares* /X/
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9. Percent of class represented by amount in row (7)
70.9%
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10. Type of Reporting Person*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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14D-1
CUSIP NO. 591591 10 2 Page 3 of 7 Pages
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1. Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Persons
Quidel Corporation
I.R.S. Identification No.: 94-2573850
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2. Check the appropriate box if a member of a group* (a) / /
(b) /X/
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3. SEC Use Only
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4. Source of funds *
BK, WC
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5. Check box if disclosure of legal proceedings is required pursuant to Item
2(e) or 2(f) / /
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6. Citizenship or place of organization
Delaware
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7. Aggregate amount beneficially owned by each reporting person
35,459,260 shares (MBS Acquisition Corporation, a wholly-owned subsidiary of
Quidel Corporation, has the right, under some circumstances, to acquire up to
approximately 35,459,260 shares of the common stock of Metra Biosystems, Inc.
pursuant to that certain Stock Option Agreement, dated as of June 4, 1999,
among Quidel Corporation, Metra Biosystems, Inc. and MBS Acquisition
Corporation)
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8. Check box if the aggregate amount in row (7) excludes certain shares* /X/
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9. Percent of class represented by amount in row (7)
70.9%
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10. Type of Reporting Person*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
INTRODUCTION
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by MBS Acquisition Corporation (the "Purchaser"), a Delaware
corporation and a wholly-owned subsidiary of Quidel Corporation, a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $0.001 per share (the "Shares"), of Metra Biosystems, Inc., a California
corporation (the "Company"), and the associated preferred shares purchase rights
(the "Rights") issued pursuant to the Preferred Shares Rights Agreement, dated
as of January 11, 1994 (the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Co., as Rights Agent, as first amended on
January 17, 1997, as second amended on November 3, 1998 and as third amended on
June 4, 1999, at a purchase price of $1.78 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated June 9, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. The Offer is being
made pursuant to an Agreement and Plan of Merger, dated as of June 4, 1999, by
and among Parent, the Company and the Purchaser, which provides, among other
things, that as promptly as practicable after the satisfaction or, if
permissible, waiver of the conditions set forth therein, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation, and each issued and outstanding Share (other than any
Shares held by Parent, the Purchaser or any wholly-owned subsidiary of Parent or
the Purchaser or in the treasury of the Company or by any wholly-owned
subsidiary of the Company, which Shares will be canceled with no payment being
made with respect thereto, and other than Shares, if any, held by shareholders
who perfect their appraisal rights under California law) will, by virtue of the
Merger and without any action by the holder thereof, be converted into the right
to receive $1.78, in cash, payable to the holder thereof, without interest
thereon, upon the surrender of the certificate formerly representing the Share.
The information contained in this Statement concerning the Company,
including, without limitation, information concerning the background of the
transaction, the deliberations, approvals and recommendations of the Board of
Directors of the Company in connection with the transaction, the opinion of the
Company's financial advisor, and the Company's capital structure and historical
and projected financial information, was supplied by the Company. Neither Parent
nor the Purchaser takes any responsibility for the accuracy of such information.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Metra Biosystems, Inc., a California
corporation, which has its principal executive offices at 265 North Whisman
Road, Mountain View, California 94043-3911.
(b) The information set forth in the Offer to Purchase under the section
"INTRODUCTION," Section 1 ("Terms of the Offer"), and Section 11 ("Purpose of
the Offer; the Merger Agreement; Appraisal Rights; Plans for the Company; the
Rights") is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase under Section 6
("Price Range of the Shares; Dividends") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Statement is filed by Parent and the Purchaser (collectively,
"Quidel"). The information set forth in the Offer to Purchase under the section
"INTRODUCTION," Section 9 ("Certain Information Concerning Parent and the
Purchaser") and Schedule I is incorporated herein by reference.
(e)-(f) During the last five years, neither Quidel, nor, to the knowledge
of Quidel, any of the persons listed in Schedule I of the Offer to Purchase has
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violations of such laws.
(g) The information set forth in the Offer to Purchase under Schedule I is
incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)-(b) The information set forth in the Offer to Purchase under the
section "INTRODUCTION," Section 9 ("Certain Information Concerning Parent and
the Purchaser"), Section 10 ("Background of the Offer;
<PAGE>
Past Contacts with the Company") and Section 11 ("Purpose of the Offer; the
Merger Agreement, Appraisal Rights; Plans for the Company; the Rights") is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the Offer to Purchase under Section 12
("Source and Amount of Funds") is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Offer to Purchase under the
section "INTRODUCTION," Section 7 ("Possible Effects of the Offer on the Market
for the Shares; Nasdaq Quotation; Exchange Act Registration; Margin
Regulations"), Section 10 ("Background of the Offer; Past Contacts with the
Company"), Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") and Section 13 ("Dividends and
Distributions") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) MBS Acquisition Corporation, a wholly-owned subsidiary of Quidel
Corporation, has the right, under some circumstances, to acquire up to
37,303,065 shares of the common stock of Metra Biosystems, Inc. pursuant to that
certain Stock Option Agreement, dated as of June 4, 1999, among Quidel
Corporation, Metra Biosystems, Inc. and MBS Acquisition Corporation. Dr. Mary
Lake Polan, a director of Parent who is also a director of the Company,
beneficially owns 46,664 Shares (which beneficial ownership is disclaimed by
Parent and the Purchaser). The information set forth in the Offer to Purchase
under Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal Rights;
Plans for the Company; the Rights"), Schedule I and the Stock Option Agreement,
a copy of which is attached hereto as Exhibit (c)(2), is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under the section
"INTRODUCTION," Section 9 ("Certain Information Concerning Parent and the
Purchaser"), Section 10 ("Background of the Offer; Past Contacts with the
Company"), Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") and Section 15 ("Certain Legal
Matters; Required Regulatory Approvals") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under Section 16
("Certain Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase under Section 9 ("Certain
Information Concerning Parent and the Purchaser") is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase under the section
"INTRODUCTION," Section 10 ("Background of the Offer; Past Contacts with the
Company") and Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") is incorporated herein by reference.
(b)-(c) The information set forth in the Offer to Purchase under the
section "INTRODUCTION," Section 11 ("Purpose of the Offer; the Merger Agreement;
Appraisal Rights; Plans for the Company; the Rights") and Section 15 ("Certain
Legal Matters; Required Regulatory Approvals") is incorporated herein by
reference.
(d) The information set forth in the Offer to Purchase under Section 7
("Possible Effects of the Offer on the Market for Shares; Nasdaq Quotation;
Exchange Act Registration; Margin Regulations") is incorporated herein by
reference.
(e) The information set forth in the Offer to Purchase under Section 15
("Certain Legal Matters; Required Regulatory Approvals") is incorporated herein
by reference.
<PAGE>
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and Agreement and Plan of Merger, copies of which are attached
hereto as Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated June 9, 1999
(a)(2) Letter of Transmittal
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees
(a)(4) Letter to Clients for Use by Brokers, Dealers, Commercial Bank
Companies and Other Nominees
(a)(5) Notice of Guaranteed Delivery
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Text of joint press release, dated June 7, 1999, issued by the
Company and Parent
(a)(8) Form of summary advertisement, dated June 9, 1999
(b) Commitment letter, dated June 4, 1999, from Bank of America NT&SA
(c)(1) Agreement and Plan of Merger, dated as of June 4, 1999, among Quidel
Corporation, a Delaware corporation, Metra Biosystems, Inc., a
California corporation, and MBS Acquisition Corporation, a Delaware
corporation
(c)(2) Stock Option Agreement, dated as of June 4, 1999, among Quidel
Corporation, a Delaware corporation, Metra Biosystems, Inc., a
California corporation, and MBS Acquisition Corporation, a Delaware
corporation
(c)(3) Indemnification Agreement, dated as of June 4, 1999, among Quidel
Corporation, a Delaware corporation, Metra Biosystems, Inc., a
California corporation, and MBS Acquisition Corporation, a Delaware
corporation
(d) Not applicable
(e) Not applicable
(f) Not applicable
<PAGE>
SIGNATURE
After due inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
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MBS ACQUISITION CORPORATION,
Dated: June 9, 1999 a Delaware corporation
By: /s/ ANDRE DE BRUIN
-------------------------------------------
Andre de Bruin
PRESIDENT
QUIDEL CORPORATION,
a Delaware corporation
By: /s/ ANDRE DE BRUIN
-------------------------------------------
Andre de Bruin
PRESIDENT & CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
BY
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (EXCEPT FOR A DIRECTOR OF
THE COMPANY WHO IS ALSO A DIRECTOR OF PARENT AND, ACCORDINGLY, ABSTAINED FROM
VOTING ON ALL MATTERS RELATING TO THE OFFER AND THE MERGER) HAS DETERMINED THAT
THE OFFER AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN), ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER
AND ADOPTED THE MERGER AGREEMENT AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE
COMPANY'S SHAREHOLDERS.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING AT
LEAST NINETY PERCENT (90%) OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF COMMON
STOCK OF THE COMPANY BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO
THE EXPIRATION DATE FOR THE OFFER (THE "MINIMUM CONDITION") AND CERTAIN OTHER
CONDITIONS. SEE SECTION 14.
IN THE EVENT THAT THE MINIMUM CONDITION IS NOT SATISFIED ON THE INITIAL
EXPIRATION DATE, THE PURCHASER MAY ELECT TO EXTEND THE OFFER AND MAY WAIVE THE
MINIMUM CONDITION AND AMEND THE OFFER TO REDUCE THE NUMBER OF SHARES SUBJECT TO
THE OFFER TO THE NUMBER OF SHARES THAT, WHEN ADDED TO THE SHARES THEN OWNED BY
THE PURCHASER, WILL EQUAL 49.99% OF THE SHARES THEN OUTSTANDING (THE "REVISED
MINIMUM NUMBER"). IF A GREATER NUMBER OF SHARES IS TENDERED INTO THE OFFER AND
NOT WITHDRAWN, THE PURCHASER MAY ELECT TO PURCHASE, ON A PRO RATA BASIS, THE
REVISED MINIMUM NUMBER OF SHARES.
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IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (as defined herein) should either:
- complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) representing tendered Shares
and any other required documents to the Depositary (as defined herein) or
tender such Shares pursuant to the procedures for book-entry transfer set
forth in Section 3; or
- request such shareholder's broker, dealer, commercial bank, trust company
or other nominee to effect such transaction.
A shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent or the Dealer
Manager or from brokers, dealers, commercial banks, trust companies and other
nominees.
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
JUNE 9, 1999
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TABLE OF CONTENTS
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PAGE
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Introduction .................................................................................................... 1
1. Terms of the Offer.................................................................................... 3
2. Acceptance for Payment and Payment.................................................................... 5
3. Procedures for Tendering Shares....................................................................... 6
4. Withdrawal Rights..................................................................................... 9
5. Certain Tax Consequences.............................................................................. 10
6. Price Range of the Shares; Dividends.................................................................. 11
7. Possible Effects of the Offer on the Market for the Shares; Nasdaq Quotation; Exchange Act 11
Registration; Margin Regulations....................................................................
8. Certain Information Concerning the Company............................................................ 13
9. Certain Information Concerning Parent and the Purchaser............................................... 16
10. Background of the Offer; Past Contacts with the Company............................................... 18
11. Purpose of the Offer; the Merger Agreement; Appraisal Rights; Plans for the Company; the Rights....... 21
12. Source and Amount of Funds............................................................................ 32
13. Dividends and Distributions........................................................................... 33
14. Certain Conditions of the Offer....................................................................... 34
15. Certain Legal Matters; Required Regulatory Approvals.................................................. 35
16. Certain Fees and Expenses............................................................................. 37
17. Miscellaneous......................................................................................... 37
SCHEDULE I: Directors and Executive Officers of Parent and the Purchaser......................................... I-1
ANNEX A: Text of Chapter 13 of the California General Corporation Law............................................ A-1
</TABLE>
<PAGE>
TO: ALL HOLDERS OF SHARES OF COMMON STOCK OF METRA BIOSYSTEMS, INC.
INTRODUCTION
MBS Acquisition Corporation (the "Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Quidel Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.001 per share ("Shares"), of Metra Biosystems, Inc., a California
corporation (the "Company"), and the associated preferred shares purchase rights
(the "Rights") issued pursuant to the Preferred Shares Rights Agreement, dated
as of January 11, 1994 (the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Company, as Rights Agent, as first amended on
January 17, 1997, as second amended on November 3, 1998 and as third amended on
June 4, 1999, at a purchase price of $1.78 per Share (and associated Right), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"). Unless otherwise specified,
all references to Shares will include the associated Rights.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of First
Security Van Kasper, as Dealer Manager (the "Dealer Manager"), American Stock
Transfer & Trust Company, as Depositary (the "Depositary"), and Beacon Hill
Partners, Inc., as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") UNANIMOUSLY
(EXCEPT FOR A DIRECTOR OF THE COMPANY WHO IS ALSO A DIRECTOR OF PARENT AND,
ACCORDINGLY, ABSTAINED FROM VOTING ON ALL MATTERS RELATING TO THE OFFER AND THE
MERGER) HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND
ADOPTED THE MERGER AGREEMENT AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE
COMPANY'S SHAREHOLDERS.
EGS Securities Corp. (the "Financial Advisor") has delivered to the Company
Board a written opinion dated May 29, 1999, to the effect that, as of such date
and based upon and subject to certain matters stated in such opinion, the $1.78
per Share cash consideration to be received by the holders of Shares (other than
Shares held by Parent or its affiliates, in the treasury of the Company or by
any wholly-owned subsidiary of the Company), pursuant to the Offer and the
Merger is fair, from a financial point of view, to such holders. A copy of the
Financial Advisor's written opinion, dated May 29, 1999, is included with the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), which is being mailed to shareholders concurrently herewith.
Shareholders are urged to read the opinion carefully in its entirety for a
description of the assumptions made, matters considered, and limitations of the
review undertaken by the Financial Advisor.
THE OFFER IS CONDITIONED UPON AT LEAST NINETY PERCENT (90%) OF THE TOTAL
NUMBER OF OUTSTANDING SHARES BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN
PRIOR TO THE EXPIRATION DATE FOR THE OFFER (THE "MINIMUM CONDITION"). THE OFFER
IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. THE OFFER WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS EXTENDED (THE
"EXPIRATION DATE"). SEE SECTIONS 1, 14, AND 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 4, 1999 (the "Merger Agreement"), among Parent, the Company and the
Purchaser pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"). The Company will continue as the surviving
corporation (the "Surviving Corporation"). In the Merger, each outstanding Share
(other than Shares held by Parent, the Purchaser or any wholly-owned subsidiary
of Parent or the Purchaser or in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares will be canceled with no
payment being made with respect thereto, and other than Shares, if any, held by
shareholders who perfect
1
<PAGE>
their appraisal rights under California law ("Dissenting Shares")) will, by
virtue of the Merger and without any action by the holder thereof, be converted
into the right to receive $1.78 in cash, payable to the holder thereof, without
interest thereon (the "Merger Price"), upon the surrender of the certificate
formerly representing such Share. The Merger Agreement is more fully described
in Section 11. Certain federal income tax consequences of the sale of Shares
pursuant to the Offer and the Merger are described in Section 5.
The Merger Agreement provides that, in the event the Minimum Condition is
not satisfied on any scheduled expiration date of the Offer, and provided that
certain other conditions have been met, the Purchaser may, in its sole
discretion, either (1) withdraw the Offer or allow it to expire, (2) extend the
Offer or (3) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next expiration date of the Offer (without
giving effect to the potential issuance of any Shares issuable upon exercise of
the Stock Option Agreement (as defined below)) and (B) the number of Shares
tendered pursuant to the Offer and not withdrawn as of the next scheduled
expiration date is more than 50% of the then outstanding Shares, the Purchaser
shall waive the Minimum Condition and amend the Offer to reduce the number of
Shares subject to the Offer to a number of Shares that, when added to the Shares
then owned by the Purchaser, will equal 49.99% of the Shares then outstanding
(the "Revised Minimum Number"). If a greater number of Shares is tendered into
the Offer and not withdrawn, the Purchaser may elect to purchase, on a pro rata
basis, the Revised Minimum Number of Shares.
If the Minimum Condition and the other conditions to the Offer are satisfied
and the Offer is consummated, the Purchaser will own a sufficient number of
Shares to ensure that the Merger will be approved. Under the California General
Corporation Law (the "CGCL"), if, after consummation of the Offer, the Purchaser
owns at least 90% of the outstanding Shares, the Purchaser will be able to cause
the Merger to occur without a vote of the Company's shareholders.
If, however, Parent or the Purchaser own, directly or indirectly, more than
50% but less than 90% of the then outstanding Shares as a result of the Offer,
the CGCL provides that the Merger may not be consummated unless either (1) all
the shareholders of the Company consent or (2) the Commissioner of Corporations
of the State of California approves, after a hearing, the terms and conditions
of the Merger and the fairness thereof. In the event that the Purchaser does not
acquire at least 90% of the Shares then outstanding as of any scheduled
expiration date of the Offer as a result of the Offer, the Stock Option
Agreement or otherwise, and the Purchaser instead waives the Minimum Condition
and amends the Offer, the Purchaser would own, upon consummation of the Offer,
49.99% of the Shares then outstanding and would thereafter solicit approval of
the Merger and the Merger Agreement by a vote of the shareholders of the
Company. Under those circumstances, a significantly longer period of time will
be required to effect the Merger.
In connection with the Merger Agreement, the Purchaser, Parent and the
Company entered into a Stock Option Agreement, dated as of June 4, 1999 (the
"Stock Option Agreement"), in which the Company granted the Purchaser an
irrevocable option to purchase (the "Option") a number of Shares, at a price of
$1.78 per Share, which, together with the Shares beneficially owned by the
Purchaser or Parent, would result in the Purchaser and Parent together
beneficially owning one hundred (100) Shares more than ninety percent (90%) of
the outstanding Shares following exercise of the Option. The Option expires
unless it is exercised before the earlier of (1) the Effective Time, (2)
termination of the Merger Agreement or termination or expiration of the Offer
without the purchase of Shares in the Offer for any reason or (3) the date on
which the Purchaser waives the Minimum Condition and accepts for payment the
Revised Minimum Number of Shares.
The Company has informed the Purchaser that, as of May 31, 1999, there were
approximately 12,696,935 Shares issued and outstanding.
2
<PAGE>
Based on the foregoing and assuming no additional Shares (or warrants,
options or rights exercisable for, or securities convertible into, Shares) have
been issued, if the Purchaser were to acquire approximately 11,427,242 Shares
pursuant to the Offer, the Minimum Condition would be satisfied.
No appraisal rights are provided in connection with the Offer. Shareholders,
however, may have appraisal rights under the CGCL regardless of whether the
Merger is consummated with or without a vote of the Company's shareholders. See
Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and thereby purchase all
Shares validly tendered on or prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in Section 4, as soon as practicable
after the Expiration Date; PROVIDED that, if all the conditions to the Offer are
not satisfied or waived, the Purchaser reserves the right, in its sole
discretion, to extend the Expiration Date from time to time until August 4,
1999, notwithstanding the prior satisfaction of the conditions to the Offer.
Additionally, at the request of the Company, the Purchaser is obligated to
extend the Expiration Date in one or more periods of not more than five business
days, but in no event later than August 4, 1999, under certain conditions. The
Offer will remain open until the Expiration Date, as the Expiration Date may,
from time to time, be extended by the Purchaser.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. See Section 14. If, at the Expiration Date, the conditions to
the Offer described in Section 14 have not been satisfied or waived and the
Merger Agreement is still in effect, the Purchaser will extend the Expiration
Date, subject to Parent's and the Purchaser's rights of termination under the
Merger Agreement. During any extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering shareholder to withdraw the shareholder's Shares. See Section 4. Under
no circumstances will interest be paid on the purchase price for tendered
Shares, whether or not the Offer is extended.
The Merger Agreement provides that, in the event the Minimum Condition is
not satisfied on any scheduled expiration date of the Offer, and provided that
certain other conditions have been met, the Purchaser may, in its sole
discretion, either (1) withdraw the Offer or allow it to expire, (2) extend the
Offer or (3) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next expiration date of the Offer (without
giving effect to the potential issuance of any Shares issuable upon exercise of
the Stock Option Agreement and (B) the number of Shares tendered pursuant to the
Offer and not withdrawn as of the next Expiration Date is more than 50% of the
then outstanding Shares, the Purchaser shall waive the Minimum Condition and
amend the Offer to reduce the number of Shares subject to the Offer to the
Revised Minimum Number of Shares. If a greater number of Shares is tendered into
the Offer and not withdrawn, the Purchaser may elect to purchase, on a pro rata
basis, the Revised Minimum Number of Shares.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "SEC"), the Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to:
- in addition to its termination rights relating to fulfillment of the
Minimum Condition, terminate the Offer if, at any time prior to the time
of payment for Shares pursuant to the Offer, any of the other
circumstances referred to in Section 14 exist;
- waive any condition; or
3
<PAGE>
- except as set forth in the Merger Agreement and discussed below, otherwise
amend the Offer in any respect, in each case, by giving oral or written
notice of such termination, waiver or amendment to the Depositary.
In the Merger Agreement, the Purchaser has agreed that, without the prior
written consent of the Company, it will not:
- impose conditions to the Offer in addition to the conditions to the Offer
described in Section 14;
- modify or amend the conditions to the Offer described in Section 14 or any
other term of the Offer in a manner adverse to the holders of Shares;
- reduce the number of Shares subject to the Offer;
- reduce the Merger Price;
- except as otherwise provided in the Merger Agreement, extend the Offer; or
- change the form of consideration payable in the Offer.
Any extension, termination or amendment will be followed as promptly as
practicable by public announcement thereof. In the case of an extension, Rule
14e-1(d) under the Securities Exchange Act of 1934 (the "Exchange Act") requires
that the announcement be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14e-1 under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to shareholders in connection with the
Offer be promptly disseminated to shareholders in a manner reasonably designed
to inform shareholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. The rights reserved by the Purchaser in the preceding paragraph are in
addition to Purchaser's rights under Section 14.
If the Purchaser makes a material change in the terms of the Offer, or if
the Purchaser waives a material condition to the Offer, the Purchaser will
extend the Offer and disseminate additional tender offer materials to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of the offer, other than a change in price or a change in
percentage of securities sought, will depend on the facts and circumstances,
including the materiality of the changes. In the SEC's view, an offer should
remain open for a minimum of five business days from the date the material
change is first published, sent or given to shareholders, and, if material
changes are made with respect to information that approaches the significance of
price and the percentage of securities sought, a minimum of ten business days
may be required to allow for adequate dissemination and investor response. With
respect to a change in price, a minimum ten business day period from the date of
such change is generally required under applicable SEC rules and regulations to
allow for adequate dissemination to shareholders.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
As of the date of this Offer to Purchase, the Rights are evidenced by the
certificates representing Shares and do not trade separately. Accordingly, by
tendering a certificate representing Shares, a shareholder is automatically
tendering a similar number of associated Rights. If, however, pursuant to the
Rights Agreement or for any other reason, the Rights detach and separate
certificates representing rights ("Rights Certificates") are issued,
shareholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of such Share.
4
<PAGE>
If proration is required as a result of any reduction in the number of
Shares subject to the Offer to a number equal to the Revised Minimum Number,
then, because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, the Purchaser would not expect to announce
the final results of proration until approximately seven Nasdaq trading days
after the Expiration Date. A "Nasdaq trading day" is any day on which the Nasdaq
National Market System is open for business. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Shares may obtain the preliminary results from the
Depositary and may also be able to obtain the preliminary results from their
brokers. The Purchaser, however, will not pay for any Shares accepted for
payment pursuant to the Offer until the final proration results are known.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares, and will be furnished by the Purchaser to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the security holder lists or, if applicable, who are listed
as participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), the Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not properly withdrawn (in
accordance with Section 4) prior to the Expiration Date promptly after the
Expiration Date. In addition, subject to applicable rules of the SEC, the
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply with
applicable law. See Sections 1 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of:
- certificates representing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth
in Section 3;
- the appropriate Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined herein) in connection with a book-entry
transfer; and
- any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of the Book-Entry
Confirmation that the participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce the
agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of the Shares for payment in accordance with the Offer.
In all cases, upon the terms and subject to the conditions of the Offer, the
Purchaser will pay for Shares purchased pursuant to the Offer by depositing the
purchase price therefor with the Depositary. The
5
<PAGE>
Depositary will act as agent for tendering shareholders for the purpose of
receiving payment from the Purchaser and transmitting payment to validly
tendering shareholders.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE PURCHASER.
The reservation by the Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires the Purchaser to pay the consideration
offered or to return Shares deposited by or on behalf of shareholders promptly
after the expiration, termination or withdrawal of the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering shareholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained within the Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
IF, BEFORE THE EXPIRATION DATE, THE PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, THE INCREASED CONSIDERATION
WILL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER,
WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
The Purchaser reserves the right, subject to the provisions of the Merger
Agreement, to assign, in whole or in part, to one or more of Parent's
subsidiaries or affiliates the right to purchase all or any portion of the
Shares tendered pursuant to the Offer. No assignment, however, will relieve
Parent of any liability under the Merger Agreement for any breach of the Merger
Agreement by any assignee.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees or an Agent's Message in connection with a book-entry delivery of
Shares and any other documents required by the Letter of Transmittal must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (1)
Share Certificates representing tendered Shares must be received by the
Depositary or tendered pursuant to the procedure for book-entry transfer set
forth below and Book-Entry Confirmation must be received by the Depositary, in
each case, on or prior to the Expiration Date, or (2) the guaranteed delivery
procedures set forth below must be complied with. No alternate, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE
CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
Shares at the Book-Entry Transfer Facility for purposes of the Offer. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer
6
<PAGE>
Facility to transfer Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Shares may be effected
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with all required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other required
documents must, in any case, be transmitted to and received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchaser on
or prior to the Expiration Date, or the guaranteed delivery procedure set forth
below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY SOLELY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT, BY
ITSELF, CONSTITUTE DELIVERY TO THE DEPOSITARY PURSUANT TO THE OFFER.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution"), unless Shares
tendered thereby are tendered (1) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (2) for
the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or the procedures for book-entry transfer
cannot be completed on a timely basis, the Shares or Rights may nevertheless be
tendered if all of the following guaranteed delivery procedures are duly
complied with:
- the tender is made by or through an Eligible Institution;
- a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, is received by
the Depositary, as provided below, on or prior to the Expiration Date; and
- the Share Certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal are received by the Depositary within three Nasdaq
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the shareholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
7
<PAGE>
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of:
- Share Certificates for, or of Book-Entry Confirmation with respect to, the
Shares;
- a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message); and
- any other documents required by the appropriate Letter of Transmittal.
Accordingly, payment might not be made to all tendering shareholders at the same
time, and will depend upon when Share Certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at a Book-Entry Transfer Facility.
BACKUP WITHHOLDING. Under the backup federal income tax withholding laws
applicable to some shareholders (other than some exempt shareholders, that
include, among others, all corporations and certain foreign individuals), the
Depositary may be required to withhold 31% of the amount of any payments made to
those shareholders pursuant to the Offer or the Merger. To prevent backup
federal income tax withholding, each such shareholder must provide the
Depositary with the shareholder's correct taxpayer identification number and
certify that the shareholder is not subject to backup federal income tax
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See Instruction 10 of the Letter of Transmittal.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser as the shareholder's
agents, attorneys-in-fact and proxies, with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of the
shareholder's rights with respect to the Shares tendered by the shareholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares and other securities or rights issued or issuable in respect of such
Shares on or after the date of this Offer to Purchase. All powers of attorney
and proxies will be considered irrevocable and coupled with an interest in the
tendered Shares. All appointments will be effective upon the acceptance for
payment of Shares by the Purchaser in accordance with the terms of the Offer.
Upon acceptance for payment, all other powers of attorney and proxies given by
the shareholder with respect to the Shares and other securities or rights prior
to payment will be revoked, without further action, and no subsequent powers of
attorney and proxies may be given by the shareholder (and, if given, will not be
deemed effective). The designees of the Purchaser will, with respect to the
Shares and other securities and rights for which appointment is effective, be
empowered to exercise all voting and other rights of the shareholder as they, in
their sole discretion, may deem proper at any annual or special meeting of the
Company's shareholders, or any adjournment or postponement thereof, or by
consent in lieu of any meeting or otherwise. In order for Shares to be deemed
validly tendered, immediately upon the acceptance for payment of Shares, the
Purchaser or its designee must be able to exercise full voting rights with
respect to Shares and other securities, including voting at any meeting of
shareholders.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it not to be in proper form or the acceptance of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer to the extent
permitted by applicable law and the Merger Agreement or any defect or
irregularity in any tender of Shares of any particular shareholder whether or
not similar defects or irregularities are waived in the case of other
shareholders.
8
<PAGE>
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering shareholder's acceptance of the terms and conditions of
the Offer, as well as the tendering shareholder's representation and warranty to
the Purchaser that (a) the shareholder has a net long position in Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (b) the
tender of the Shares complies with Rule 14e-4 under the Exchange Act. It is a
violation of Rule 14e-4 under the Exchange Act for a person, directly or
indirectly, to tender Shares for the person's own account unless, at the time of
tender, the person so tendering (1) has a net long position equal to or greater
than the amount of (x) Shares tendered or (y) other securities immediately
convertible into or exchangeable or exercisable for the Shares tendered and the
person will acquire the Shares for tender by conversion, exchange or exercise
and (2) will cause the Shares to be delivered in accordance with the terms of
the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
The Purchaser's interpretation of the terms and conditions of the Offer will
be final and binding. No tender of Shares will be deemed to have been validly
made until all defects and irregularities with respect to the tender have been
cured or waived by the Purchaser. None of Parent, the Purchaser or any of their
respective affiliates or assigns, the Depositary, the Dealer Manager, the
Information Agent or any other person or entity will be under any duty to give
any notification of any defects or irregularities in tenders or incur any
liability for failure to give any notification.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after August 4, 1999 (or such later date as may apply in the case that
the Offer is extended).
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares. The retained
Shares may not be withdrawn except to the extent that the tendering shareholder
is entitled to and duly exercises withdrawal rights as described in this Section
4.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify:
- the name of the person who tendered the Shares to be withdrawn;
- the number of Shares to be withdrawn; and
- if Share Certificates have been tendered by a person other than the
registered holder, the name of the registered holder of the Shares as set
forth in the Share Certificate.
If Share Certificates have been delivered or otherwise identified to the
Depositary, then before the physical release of the Share Certificates, the
tendering shareholder must submit the serial numbers shown on the particular
Share Certificates to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution, except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in Section
3, the notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in
which case a notice of withdrawal will be
9
<PAGE>
effective if delivered to the Depositary by any method of delivery described in
the first sentence of this paragraph. Withdrawals of Shares may not be
rescinded. Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of Parent, the
Purchaser or any of their respective affiliates or assigns, the Depositary, the
Dealer Manager, the Information Agent or any other person or entity will be
under any duty to give any notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any
notification.
5. CERTAIN TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. For
federal income tax purposes, each tendering shareholder would generally
recognize gain or loss equal to the difference between the amount of cash
received and the shareholder's tax basis for the tendered and sold Shares. The
gain or loss will be capital gain or loss (assuming the Shares are held as a
capital asset) and any capital gain or loss will be long term capital gain or
loss if the shareholder held the Shares for more than one year. In the case of a
shareholder who is an individual, any long term capital gain will generally be
subject to tax at a maximum rate of 20%.
The foregoing discussion may not be applicable to certain types of
shareholders, including shareholders who acquired Shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations, or
entities that are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986 (such as insurance companies, tax-exempt entities and
regulated investment companies). This discussion does not address all aspects of
federal income taxation that may be relevant to a particular shareholder in
light of the shareholder's personal investment circumstances nor does it address
any aspect of foreign, state, local or estate and gift taxation that may be
applicable to a shareholder.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND MERGER,
INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
10
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded on the Nasdaq National Market System under the symbol
"MTRA." The following table sets forth, for the calendar periods indicated, the
reported high and low sale prices for the Shares on the Nasdaq National Market
System.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1997 CALENDAR YEAR
First Quarter................................................................ $ 63/4 $ 33/4
Second Quarter............................................................... 5 25/8
Third Quarter................................................................ 5 31/8
Fourth Quarter............................................................... 43/8 3
1998 CALENDAR YEAR
First Quarter................................................................ 41/8 21/8
Second Quarter............................................................... 31/8 111/16
Third Quarter................................................................ 25/16 23/32
Fourth Quarter............................................................... 13/4 11/32
1999 CALENDAR YEAR
First Quarter................................................................ 19/16 5/8
Second Quarter (as of June 8, 1999).......................................... 15/8 43/64
</TABLE>
On June 4, 1999, the last full day of trading prior to the announcement of
the execution of the Merger Agreement, according to publicly available sources,
the reported closing price on the Nasdaq National Market System for the Shares
was $1 1/32 per Share. On June 8, 1999, the last full day of trading prior to
the commencement of the Offer, according to publicly available sources, the
reported closing price on the Nasdaq National Market System for the Shares was
$1 19/32 per Share. The Company has not declared or paid any dividends on the
Shares since its initial public offering on June 30, 1995.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ
QUOTATION; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly, and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer price
therefor.
NASDAQ QUOTATION. The purchase of Shares pursuant to the Offer will reduce
the number of holders of Shares and the number of Shares that might otherwise
trade publicly, and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in the Nasdaq
National Market System. According to published guidelines, the Shares would not
be eligible for continued inclusion if, among other things, the number of
publicly held Shares falls below 750,000, the number of holders of round lots of
Shares falls below 400 or the aggregate market value of such publicly held
Shares falls below $5,000,000. If these standards are not met, the Shares might
nevertheless continue to be included in the Nasdaq Small Cap Market, but if,
among other things, the number of holders of Shares falls below 300, or if the
number of publicly held Shares falls
11
<PAGE>
below 500,000, or if the aggregate market value of such publicly held Shares
falls below $1,000,000 or if there are not at least two market makers (one of
which may be a market maker entering a stability bid), Nasdaq Stock Market rules
provide that the Shares would no longer qualify for inclusion in the Nasdaq
Stock Market, and the Nasdaq Stock Market would cease to provide any quotations.
Shares held, directly or indirectly, by an officer or director of the Company,
or by any beneficial owner of more than 10% of the Shares, ordinarily will not
be considered as being publicly held for this purpose.
In the event the Shares are no longer eligible for Nasdaq Stock Market
quotation, quotations might still be available from other sources. The extent of
the public market for the Shares and the availability of the quotations would,
however, depend upon the number of holders of such Shares remaining at that
time, the interest in maintaining a market in such Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act as described below and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the SEC if
the Shares are not listed on a "national securities exchange" and there are
fewer than 300 record holders of Shares. Termination of registration of the
Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its shareholders and the SEC and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) under the Exchange Act and the
requirements of furnishing a proxy statement in connection with shareholders'
meetings pursuant to Section 14(a) or 14(c) under the Exchange Act and the
related requirement of an annual report, no longer applicable to the Company. If
the Shares are no longer registered under the Exchange Act, the requirements of
Rule 13e-3 under the Exchange Act with respect to "going private" transactions
would no longer be applicable to the Company. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of the securities pursuant to Rule 144 under the Securities
Act of 1933, may be impaired or, with respect to certain persons, eliminated. If
registration of the Shares under the Exchange Act was terminated, the Shares
would no longer be "margin securities" or eligible for stock exchange listing or
Nasdaq Stock Market reporting. The Purchaser intends to cause the Company to
apply for termination of registration of the Shares as soon as possible after
successful completion of the Offer if the Shares are then eligible for
termination. If registration of the Shares is not terminated prior to the
Merger, then the Purchaser intends to terminate the registration of the Shares
under the Exchange Act following the consummation of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which regulations have the effect, among other things,
of allowing brokers to extend credit on the collateral of the Shares for the
purpose of buying, carrying or trading in securities ("Purpose Loans").
Depending on factors such as the number of record holders of the Shares and the
number and market value of publicly held Shares, following the purchase of
Shares pursuant to the Offer, the Shares might no longer constitute "margin
securities" for purposes of the Federal Reserve Board's margin regulations. In
addition, if registration of the Shares under the Exchange Act was terminated,
the Shares would no longer constitute "margin securities." If the Shares no
longer constituted "margin securities", they could no longer be used as
collateral for Purpose Loans made by brokers.
12
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL. The Company is a California corporation with its principal
executive offices located at 265 North Whisman Road, Mountain View, California
94043-3911. The following description of the Company's business has been taken
from, and is qualified in its entirety by reference to, the Form 10-K filed by
the Company for the fiscal year ended June 30, 1998 (the "Company Form 10-K"):
The Company is a leader in developing and commercializing innovative
diagnostic products for the detection and management of metabolic bone and joint
diseases and disorders. The Company's strategy is to offer a portfolio of
diagnostic products that provide consumers and physicians with comprehensive
clinical information regarding the metabolism of bone and other connective
tissues. For bone, this includes products that assess both the "state" of bone
health and the "rate" of bone loss, in order to detect disease and then provide
the ability to monitor effective prevention or treatment. The Company has
developed and is currently marketing for either research or clinical use
immunodiagnostic tests to assess bone resorption, immunodiagnostic tests to
assess bone formation, an immunodiagnostic test to assess bone growth disorders,
and an immunodiagnostic test to assess arthritis. The Company is also currently
developing products to serve the doctor's office testing market that include a
portable ultrasound device designed to assess bone fragility and a
bone-resorption test for use in the physicians offices, as well as serum
versions of its Pyrilinks-Registered Trademark- bone resorption tests (currently
urine based). The Company's general business strategy is comprised of certain
key elements: first, the expansion of consumer, physician and managed care
awareness and support regarding proactive bone disease prevention, detection and
treatment management benefits and the adoption of the Company's product
alternatives; second, distribution capabilities in key markets on both a direct
basis and with established diagnostic companies; and third, continual
development, in-licensing and acquisition of new diagnostic products to
complement the Company's existing products.
SELECTED FINANCIAL INFORMATION. The selected financial information of the
Company set forth below has been excerpted and derived from the Company Form
10-K and the Form 10-Q filed by the Company for the fiscal quarter ended March
31, 1999. More comprehensive financial and other information is included in such
reports (including management's discussion and analysis of financial condition
and results of operations) and in other reports and documents filed by the
Company with the SEC. The financial information set forth below is qualified in
its entirety by reference to such reports and documents filed with the SEC and
the financial statements and related notes contained therein. These reports and
other documents may be examined and copies thereof may be obtained in the manner
set forth below.
13
<PAGE>
THE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JUNE 30, MARCH 31,
---------------------------------- ----------------------
1998 1997 1996 1999 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations Data:
Product sales....................................... $ 6,544 $ 6,405 $ 4,413 $ 4,171 $ 4,920
Partner revenue..................................... 1,162 320 2,057 364 1,030
---------- ---------- ---------- ---------- ----------
Total revenues...................................... 7,706 6,725 6,470 4,535 5,950
Total operating expenses(1)......................... 21,597 22,035 29,670 11,526 16,211
---------- ---------- ---------- ---------- ----------
Net loss(1)......................................... $ (11,922) $ (13,127) $ (21,399) $ (6,112) $ (8,637)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic and diluted net loss per share................ $ (0.94) $ (1.04) $ (2.05) $ (0.48) $ (0.68)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Shares used to compute basic and
diluted net loss per share........................ 12,643 12,586 10,449 12,697 12,635
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
-------------------- MARCH 31,
1998 1997 1999
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Working capital.............................................................. $ 17,871 $ 30,729 $ 14,636
Total assets................................................................. 34,563 47,768 27,655
Long-term portion of capital lease obligations............................... 944 1,574 286
Total shareholders' equity................................................... 30,097 42,077 23,717
</TABLE>
- ------------------------
(1) The fiscal 1996 total operating expenses and net loss include $11,291 of
acquired in-process research and development associated with the acquisition
of Osteo Sciences Corporation in January 1996.
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act, and, in accordance therewith, is
required to file periodic reports, proxy statements and other information with
the SEC relating to its business, financial condition and other matters. Certain
information, as of particular dates, concerning the Company's business,
principal physical properties, capital structure, material pending legal
proceedings, operating results, financial condition, directors and officers
(including their remuneration and the stock options granted to them), the
principal holders of the Company's securities, any material interests of such
persons in transactions with the Company and certain other matters, is required
to be disclosed in proxy statements and annual reports distributed to the
Company's shareholders and filed with the SEC. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the SEC:
Northeast Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048, and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
also be obtained at prescribed rates from the Public Reference Section of the
SEC at its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may be obtained electronically by visiting
the SEC's worldwide web site on the Internet at http://www.sec.gov. The Shares
are traded on the Nasdaq National Market System. Reports, proxy statements and
other information concerning the Company should also be available for inspection
at the National Association of Securities Dealers, Inc., at 1735 K Street, N.W.,
Washington D.C. 20006.
14
<PAGE>
Although neither Parent nor the Purchaser has any knowledge that any such
information is untrue, neither Parent nor the Purchaser takes any responsibility
for the accuracy or completeness of information contained in this Offer to
Purchase with respect to the Company or any of its subsidiaries or affiliates or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information.
CERTAIN COMPANY PROJECTIONS. To the knowledge of Parent and the Purchaser,
the Company does not as a matter of course, make public forecasts as to its
future financial performance. However, in connection with the discussions
concerning the Offer and the Merger, the Company in March 1999 furnished Parent
with financial projections contained in the Company's 1999 and 2000 operating
budgets prepared by management for management's 1999 and 2000 operating plan.
The financial projections contained therein are based on numerous assumptions
concerning revenue growth in all product and customer areas, and increases in
sales and marketing and general administrative expenses.
The Company's projections which were furnished to Parent anticipated net
sales of approximately $7.6 million and $12.5 million for fiscal years ended
June 30, 1999 and June 30, 2000, respectively. Fiscal net losses were projected
at approximately $7.1 million and $1.2 million for fiscal years ended June 30,
1999 and June 30, 2000, respectively.
The Company's 1999 and 2000 operating budgets and the financial projections
contained therein were prepared for the limited purpose of managing the
operating plan of the Company for fiscal years 1999 and 2000. They do not
reflect recent developments that have occurred since they were prepared in March
1999, such as the Offer and the Merger and developments in the Company's
business. This reference to the projections is provided solely because such
projections have been provided to the Purchaser. None of Parent, the Purchaser,
the Company or any of their respective affiliates or representatives believes
that such projections should be relied upon.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED BY
THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR
FORECASTS. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
PROJECTIONS. THE COMPANY HAS ADVISED PARENT AND THE PURCHASER THAT ITS INTERNAL
FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO PARENT WERE BASED IN
PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING
AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS
SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT NUMEROUS ASSUMPTIONS
(NOT ALL OF WHICH WERE PROVIDED TO PARENT), ALL MADE BY MANAGEMENT OF THE
COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC,
MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, INCLUDING EFFECTIVE TAX RATES
CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO
PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE
SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE
ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE
CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT ANY OF PARENT, THE PURCHASER, THE COMPANY OR
THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE
PROJECTIONS TO BE A RELIABLE PREDICTION OF
15
<PAGE>
FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF
PARENT, THE PURCHASER, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES HAS MADE, OR MAKES ANY REPRESENTATION TO ANY PERSON REGARDING
THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE
OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN
ERROR. IT IS EXPECTED THAT THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND
PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN
THOSE PROJECTED.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
PARENT AND THE PURCHASER. The Purchaser is a Delaware corporation with its
principal executive offices located at 10165 McKellar Court, San Diego,
California 92121. The Purchaser, incorporated in 1999, is a wholly-owned
subsidiary of Parent, was organized for the purpose of acquiring the Company,
and has not conducted any unrelated activities since its organization. Parent is
a Delaware corporation with its principal executive offices located at 10165
McKellar Court, San Diego, California 92121.
Parent discovers, develops, manufactures and markets rapid immunodiagnostic
products for point-of-care detection of human medical conditions and illnesses.
These products provide simple, accurate and cost-effective diagnoses of acute
and chronic conditions in the areas of reproductive and women's health,
infectious diseases, gastrointestinal and autoimmune disorders. Parent commenced
its operations in 1979 and launched its first products, dipstick-based pregnancy
tests, in 1984. Parent has expanded its product base through internal
development and acquisition in the areas of pregnancy and ovulation, infectious
disease, gastrointestinal and autoimmune products for professional and home use.
Parent's products are sold to professionals for use in the physician's office
and clinical laboratory, and to consumers through retail drug stores. Parent
markets its products in the United States and in over sixty other countries
through a broad network of national and regional distributors, supported by
Parent's direct sales force.
Parent recently developed a new strategic business plan, which focuses on
two priorities: (1) to substantially improve performance and increase
predictability and consistency in Parent's base of operations; and (2) to
rationalize existing product lines while expanding Parent's overall new product
and technology portfolio. The mission for fiscal 1999 and beyond is to establish
Parent as a leader in rapid in-vitro diagnostics for the decentralized
point-of-care ("POC") market. POC testing is the alternative to central lab and
self-testing. The POC market is comprised of two general segments: hospital
testing and decentralized testing. Hospital POC testing is a growing practice
and is generally an extension of the hospital's central lab. For example,
stat-labs provide rapid turnaround of critical measures like blood gasses in
real time to physicians and nurses treating critically ill patients. The
decentralized POC market consists of physician's office labs, nursing homes,
pharmacies and other non-institutional settings in which healthcare providers
perform diagnostic tests. The decentralized POC market encompasses a large
variety of in-vitro diagnostic products ranging from sophisticated instrumented
diagnostic systems serving larger group practices to very simple, single-use,
disposable tests for the physician's office. POC testing in both the hospital
and decentralized segments is increasing in popularity.
SELECTED FINANCIAL INFORMATION. The selected financial information of
Parent set forth below has been excerpted and derived from the Form 10-K filed
by Parent for the fiscal year ended March 31, 1998 and the Form 10-Q filed by
Parent for the fiscal quarter ended December 31, 1998. More comprehensive
financial and other information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and in other reports and documents filed by Parent with the SEC. The
financial information set forth below is qualified in its entirety by reference
to such reports and documents filed with the SEC and the financial statements
and related notes contained therein. These reports and other documents may be
examined and copies thereof may be obtained in the manner set forth below.
16
<PAGE>
PARENT AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
------------------------------- --------------------
1998 1997 1996 1998 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Selected Operations Data:
Net sales................................................ $ 45,721 $ 41,919 $ 34,481 $ 33,893 $ 32,448
Total revenues........................................... 49,479 44,722 35,053 37,218 34,798
Income (loss) before benefit (provision) for income
taxes.................................................. (1,521) 3,672 579 556 1,268
Benefit (provision) for income taxes..................... 2,631 (123) -- (308) (51)
--------- --------- --------- --------- ---------
Net income............................................... $ 1,110 $ 3,549 $ 579 $ 248 $ 1,217
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Basic and diluted earnings per share..................... $ 0.05 $ 0.16 $ 0.03 $ 0.01 $ 0.05
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Shares used in basic per share calculation............... 23,649 21,976 21,238 23,774 23,622
Shares used in diluted per share calculation............. 23,857 22,791 22,684 23,811 23,873
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1998 1997
--------- --------- DECEMBER 31,
1998
------------------
(UNAUDITED)
<S> <C> <C> <C>
Selected Balance Sheet Data:
Working capital....................................................... $ 16,790 $ 19,444 $ 15,495
Total assets.......................................................... 47,782 42,261 46,031
Long-term debt........................................................ 3,002 3,203 2,873
Stockholders' equity.................................................. 36,889 35,158 37,221
</TABLE>
Parent issued a press release on May 17, 1999 in which it announced certain
financial results for the fiscal year ended March 31, 1999, based on preliminary
unaudited figures. In the press release, Parent reported net sales of $47.2
million, total revenues of $51.4 million and net income of $7.7 million, or
$0.32 per share. Included in net income was a deferred tax benefit of $6.4
million. At March 31, 1999, Parent reported working capital of $16.5 million,
total assets of $52.6 million and stockholders' equity of $44.7 million.
AVAILABLE INFORMATION. Parent is subject to the information and reporting
requirements of the Exchange Act, and, in accordance therewith is required to
file periodic reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. Certain
information, as of particular dates, concerning Parent's business, principal
physical properties, capital structure, material pending legal proceedings,
operating results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
Parent's securities, any material interests of such persons in transactions with
Parent and certain other matters, is required to be disclosed in proxy
statements and annual reports distributed to Parent's shareholders and filed
with the SEC. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the SEC: Northeast Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048, and Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the SEC at its principal office at
Judiciary Plaza, 450
17
<PAGE>
Fifth Street, N.W., Washington, D.C. 20549. Such material may be obtained
electronically by visiting the SEC's worldwide web site on the Internet at
http://www.sec.gov. The Shares are traded on the Nasdaq National Market System.
Reports, proxy statements and other information concerning Parent should also be
available for inspection at the National Association of Securities Dealers,
Inc., at 1735 K Street, N.W., Washington D.C. 20006.
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (1) none of the Purchaser or Parent, and, to the knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I hereto or any
associate or majority owned subsidiary of any of the foregoing, beneficially
owns or has a right to acquire any Shares or any other equity securities of the
Company; (2) neither the Purchaser, Parent nor, to the knowledge of the
Purchaser and Parent, any of the persons or entities referred to in clause (1)
above has effected any transaction in the Shares or any other equity securities
of the Company during the past 60 days; (3) neither the Purchaser, Parent nor,
to the knowledge of the Purchaser and Parent, none of the persons listed in
clause (1) above has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company (including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies, consents or
authorizations); (4) there have not been any transactions which would require
reporting under the rules and regulations of the SEC between the Purchaser or
Parent or any of their respective subsidiaries or, to the knowledge of the
Purchaser and Parent, any of the persons listed in clause (1) above, on the one
hand, and the Company or any of its executive officers, directors or affiliates,
on the other hand; and (5) except for the Merger, there have been no contacts,
negotiations or transactions between the Purchaser or Parent or any of their
respective subsidiaries or, to the knowledge of the Purchaser and Parent, any of
the persons listed in clause (1) above, on the one hand, and the Company or any
of its subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Neither the Purchaser nor Parent had any relationship with the Company
before the commencement of the discussion that led to the execution of the
Merger Agreement. See Section 10. The Purchaser and Parent each disclaims that
it is an "affiliate" of the Company within the meaning of Rule 13e-3 under the
Exchange Act.
10. BACKGROUND OF THE OFFER; PAST CONTACTS WITH THE COMPANY.
In September 1997, senior management of the Company recommended to the
Company Board that the Company evaluate its strategic alternatives by
considering mergers and acquisitions as a means to enhance shareholder value. In
October 1997, the Company engaged EGS Securities Corp., an investment banking
firm focused on the healthcare and medical technology sectors, as its financial
advisor to identify and approach potential candidates for mergers and
acquisitions and to assist in structuring and negotiating any transactions.
In November 1997, Mr. George Dunbar, President and Chief Executive Officer
of the Company, initiated discussions about combining the two companies with Mr.
Steven Frankel, then-President and Chief Executive Officer of Parent, which were
inconclusive. Mr. Frankel resigned as President and Chief Executive Officer of
Parent on March 2, 1998.
On March 11, 1998, Mr. Dunbar contacted Mr. Thomas Glaze, a board member of
Parent, to discuss a transaction between Parent and the Company and asked Mr.
Glaze to help facilitate a meeting with Mr. Andre de Bruin, then-Vice Chairman
of Parent. A meeting was scheduled for April 1998.
On April 17, 1998, Mr. Dunbar, Mr. James McLaren and Ms. Jennifer Lloyd of
EGS Securities, Mr. de Bruin, Mr. Steven Burke, then-Chief Financial Officer of
Parent and representatives of J.P. Morgan, Parent's former financial advisor,
met in Denver to discuss a potential transaction. The companies
18
<PAGE>
agreed to pursue discussions. Following this meeting, EGS Securities and J.P.
Morgan worked on an integrated merger model and discussed certain terms for a
transaction. Given that Parent was in a period of transition (without a Chief
Executive Officer) and the Company was simultaneously negotiating another
transaction, no agreement was reached, and discussions ceased with a mutual
understanding that talks could resume if circumstances changed.
On January 29, 1999, Ms. Lloyd, who had recently joined the Company as Vice
President of Corporate Development, contacted Mr. Charles Cashion, who had
recently joined Parent as Senior Vice President, Corporate Operations, and Chief
Financial Officer, to solicit Parent's interest in resuming discussions with the
Company. Mr. Cashion discussed the opportunity with Mr. deBruin and called Ms.
Lloyd to confirm that Parent would be interested in discussing a transaction
with the Company. Mr. Dunbar called Mr. de Bruin to discuss the opportunity, and
Mr. de Bruin sent Mr. Dunbar a letter indicating Parent's interest in pursuing
discussions. Ms. Lloyd sent Parent an information memorandum on the Company and
arranged a meeting between the two companies for February 12, 1999.
During the week of February 12, Parent engaged Bay City Capital LLC as its
financial advisor. John D. Diekman, Ph.D. is a member of Parent's Board of
Directors and a managing director of Bay City Capital LLC (accordingly, Dr.
Diekman abstained from voting on all matters relating to the Offer and the
Merger). On February 12, 1999, Mr. de Bruin, Mr. Cashion, Ms. Donna McGill, Vice
President of Strategic Business Management and Women's Health for Parent, Dr.
Diekman and Mr. Kirby Bartlett of Bay City Capital LLC, Mr. McLaren of EGS
Securities and the Company's senior management met to discuss a potential
acquisition of the Company by Parent. At the conclusion of the meeting, Parent
informed the Company that they were interested in pursuing discussions and would
consider various transaction structures in preparing a proposal over the next
week. The parties continued their discussions by telephone over the next several
days regarding strategic fit, synergies, valuation and structure for a
transaction.
On February 25, 1999, Parent sent the Company a letter outlining a proposed
merger transaction and a valuation methodology, but not an absolute valuation,
with the majority of the consideration to be paid in cash and part of the
consideration to be paid in Parent stock. The Company, Parent and their
respective advisors negotiated the terms of the proposal over the next eight
days.
On March 4, 1999, the Company Board met to consider the revised proposal and
elected to pursue a transaction with Parent on an exclusive basis. The Company
Board directed EGS Securities and the Company's management to negotiate the
terms of an agreement.
On March 5, 1999, Mr. Dunbar signed the revised proposal and delivered it to
Mr. de Bruin. On March 8, 1999, the Company announced publicly that it had
signed an agreement with an unnamed party to enter into an initial 30-day period
of exclusivity to negotiate a definitive agreement to sell the Company.
During the initial 30-day period of exclusivity, representatives from Parent
and its legal and financial advisors conducted due diligence at the Company's
headquarters in Mountain View, California and by telephone. During that period,
Parent, the Company and their respective legal and financial advisors conducted
further negotiations of the terms of the transaction. Specifically, on March 10,
1999, Bay City Capital LLC and EGS Securities met in Palo Alto, California to
discuss the financial terms of the transaction. On March 18, 1999, members of
both working groups met in Mountain View, California to further the due
diligence process.
On March 22, 1999, the Company's management, EGS Securities, and Company
Board members Ms. Mariann Byerwalter and Dr. Greg Lawless met with Parent's
management and Bay City Capital LLC to conduct due diligence of Parent at
Parent's headquarters in San Diego, California.
From March 22, 1999 through April 7, 1999, the parties continued their
negotiations, and on April 7, 1999, Parent delivered to the Company a second
revised proposal for an all-cash transaction with two potential structures,
either (i) $1.65 per share at closing or (ii) $1.50 per share at closing plus an
additional payment in two years contingent upon several milestones and certain
events.
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On April 8, 1999, the initial 30-day period of exclusivity had expired, and
the Company Board met to consider the second revised proposal, concluding that a
subcommittee of the Company Board, including Mr. Dunbar, Mr. Craig Taylor and
Mr. John Castello, would request a meeting with Mr. de Bruin and Dr. Diekman to
negotiate certain terms of the transaction. This meeting was held in Palo Alto,
California, on April 13, 1999. On April 14, 1999, representatives from EGS
Securities and Bay City Capital LLC held a conference call to discuss further
issues related to the financial terms of the transaction. On April 15, 1999,
Parent delivered a third revised proposal to the Company. The third revised
proposal consisted of an all-cash transaction with two potential structures,
either (a) $1.75 per share at closing or (b) $1.72 per share plus up to $0.16
per share in escrow to be paid after two years contingent upon certain events.
On April 18, 1999, the Company Board met to consider the Company's various
alternatives, and after lengthy discussion, agreed to accept Parent's third
revised proposal, indicating a strong preference that the transaction be
structured as a tender offer. The Company granted Parent an additional
exclusivity period until April 29, 1999, to allow Parent's Board of Directors to
consider the transaction for approval at its scheduled meeting on April 27,
1999.
On April 27, 1999, Parent's Board of Directors met to approve in principle
the proposed terms for an acquisition of the Company. At this meeting, Parent's
Board of Directors also established a special committee comprised of Messrs. de
Bruin, Glaze and Mr. Richard C.E. Morgan. The special committee was authorized
to review and approve the Merger Agreement. Dr. Mary Lake Polan, who is also a
director of the Company, abstained from voting in any of the matters relating to
the Offer and the Merger. On May 1, 1999, Parent's legal counsel delivered to
the Company a draft of the Merger Agreement. From May 1, 1999 through June 4,
1999, Parent, the Company and their respective advisors negotiated further the
terms of the Merger Agreement.
On May 16, 1999, Parent increased its offer to $1.78 per share, structured
as an all-cash tender offer with no escrow provision.
On May 24, 1999, the Company Board held a special meeting in person and via
teleconference in which all of the members were present. EGS Securities made a
presentation regarding certain financial analyses it had performed in connection
with its review of the Offer and Merger and indicated that it was prepared to
render an opinion that, subject to certain assumptions and qualifications, the
consideration to be received by the holders of the Company's Common Stock in the
Offer and Merger pursuant to the Merger Agreement was fair to such holders from
a financial point of view. Representatives of Venture Law Group and Orrick,
Herrington & Sutcliffe LLP also gave a presentation regarding the various legal
aspects of the transaction as well as a summary of the principal terms of the
Merger Agreement.
On May 25, 1999, the special committee of Parent's Board of Directors,
together with Dr. Diekman and Parent's legal advisors, met telephonically to
discuss the transaction. Following discussion among the members of the special
committee, the special committee unanimously approved the transaction.
On May 29, 1999, the Company Board held a special meeting via teleconference
in which all of the members were present. EGS Securities updated its
presentation regarding certain financial analyses it had performed in connection
with its review of the Offer and Merger and rendered its oral opinion,
subsequently confirmed in writing, that subject to certain assumptions and
qualifications, the consideration to be received by the holders of the Company's
Common Stock in the Offer and Merger pursuant to the Merger Agreement was fair
to such holders from a financial point of view. Representatives of Venture Law
Group and Orrick, Herrington & Sutcliffe LLP also gave an update on the various
legal aspects of the transaction. At the conclusion of this meeting, the Company
Board unanimously (except for Dr. Polan who is also a director of Parent and,
accordingly, abstained from voting on all matters relating to the Offer and the
Merger) approved the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement and the Indemnification Agreement, determined that the Offer, the
Merger, the Merger Agreement, the Stock Option Agreement and the Indemnification
Agreement are fair to and in the best interests of the
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shareholders of the Company, and recommended that the shareholders accept the
Offer and tender their Shares pursuant thereto.
Between May 29, 1999 and June 4, 1999, there were various telephone
conversations among representatives of Parent and the Company and their
respective legal advisors, during which discussions of several remaining issues
relating to the terms of the Merger Agreement were negotiated and resolved.
On June 4, 1999, the Merger Agreement, the Stock Option Agreement and the
Indemnification Agreement were executed and a joint press release was issued by
the two parties before the opening of the U.S. stock markets on June 7, 1999
announcing such transaction.
On June 9, 1999, the Purchaser commenced the Offer.
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; APPRAISAL RIGHTS; PLANS FOR THE
COMPANY; THE RIGHTS.
(A) PURPOSE
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The purpose of the Merger is to acquire all capital stock of the Company
not purchased pursuant to the Offer or otherwise. As a result of the Offer and
the Merger, the Company will become a wholly-owned subsidiary of Parent.
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which is included as Exhibit (c)(1) to the Schedule 14D-1 relating to the Offer.
The Merger Agreement may be examined and copies may be obtained at the places
set forth in Sections 8 and 9. Defined terms used herein and not defined herein
shall have the respective meanings assigned to those terms in the Merger
Agreement.
(B) THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer, and that, upon the terms and subject to prior satisfaction or waiver
of the conditions of the Offer, as set forth in Section 14, the Purchaser will
purchase all Shares validly tendered pursuant to the Offer. The Merger Agreement
provides that, without the prior written consent of the Company, the Purchaser
will not (1) impose additional conditions to the Offer, (2) modify or amend the
conditions to the Offer or any other term of the Offer in a manner adverse to
the holders of Shares pursuant to the Offer, (3) reduce the number of Shares
subject to the Offer, (4) reduce the amount offered per Share, (5) except as
provided in the following sentence, extend the Offer, if all of the conditions
to the Offer are satisfied or waived, or (6) change the form of consideration
payable in the Offer. Notwithstanding the foregoing, the Purchaser may, without
the consent of the Company, (1) extend the Offer until August 4, 1999 if, at the
then scheduled Expiration Date of the Offer, any of the conditions to the Offer
described in Section 14 have not been satisfied or waived, or (2) increase the
Merger Price and extend the Offer for up to ten business days to the extent
required by law. Additionally, at the Company's request, the Purchaser is
obligated to extend the Expiration Date (1) in one or more periods of not more
than five business days, but not later than August 4, 1999, if (A) any of the
conditions to the offer set forth in Section 14 have not been satisfied for
waived on the Expiration Date, (B) such condition is reasonably capable of being
satisfied by the Company and the Company exercises reasonable efforts to cause
such condition to be satisfied, and (C) the Company is in compliance with its
covenants in the Merger Agreement; or (2) for five business days if the Minimum
Condition has not been satisfied at the first scheduled Expiration Date.
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REVISED MINIMUM NUMBER. In the event the Minimum Condition is not satisfied
on any scheduled expiration date of the Offer and the Purchaser has not extended
the Offer at the Company's request as set forth above, the Purchaser may, in its
sole discretion, either (1) withdraw the Offer or allow it to expire, (2) extend
the Offer as set forth above or (3) amend the Offer to provide that, in the
event (A) the Minimum Condition is not satisfied at the next scheduled
expiration date of the Offer (without giving effect to the potential issuance of
any Shares issuable upon exercise of the Stock Option Agreement), and (B) the
number of Shares tendered pursuant to the Offer and not withdrawn as of such
next scheduled Expiration Date is more than 50% of the then outstanding Shares,
the Purchaser shall waive the Minimum Condition and amend the Offer to reduce
the number of Shares subject to the Offer to the Revised Minimum Number of
Shares. If a greater number of Shares is tendered into the Offer and not
withdrawn, the Purchaser may elect to purchase, on a pro rata basis, the Revised
Minimum Number of Shares. Notwithstanding any other provisions in this Offer to
Purchase, in the event that the Purchaser purchases a number of Shares equal to
the Revised Minimum Number, then without the prior written consent of the
Purchaser prior to the termination of this Agreement, the Company shall take no
action whatsoever to increase the percentage of Shares owned by the Purchaser in
excess of the Revised Minimum Number.
RECOMMENDATION. The Company has represented to Parent in the Merger
Agreement that the Company Board, at a meeting duly called and held, has
unanimously (except for Dr. Polan who is a director of both the Company and
Parent and, accordingly, abstained from voting on all matters relating to the
Offer and the Merger) (1) determined that the Offer and the Merger are fair to
and in the best interests of the Company and its shareholders, (2) approved the
Offer and adopted the Merger Agreement in accordance with the CGCL and for
purposes of Section 1101 of the CGCL and similar provisions of any other similar
state statutes that might be deemed applicable to the transactions contemplated
by the Merger Agreement and (3) resolved to recommend acceptance of the Offer
and approval of the Merger Agreement by the Company's shareholders, PROVIDED,
HOWEVER, that such recommendation and approval may be withdrawn, modified or
amended to the extent that the Company Board determines in good faith and on a
reasonable basis, after consultation with its outside counsel, that such action
is required in the exercise of the Company Board's fiduciary duties under
applicable law. The Company has further represented that, prior to the execution
of the Merger Agreement, the Financial Advisor delivered to the Company Board
its written opinion, to the effect that, as of the date of such written opinion,
the consideration to be received by the holders of the Shares (other than Shares
held by Parent or its affiliates, in the treasury of the Company or by any
wholly-owned subsidiary of the Company) pursuant to the Offer and the Merger is
fair to such holders from a financial point of view.
DIRECTORS. The Merger Agreement provides that, subject to compliance with
applicable law, promptly upon the payment by the Purchaser for Shares pursuant
to the Offer, and from time to time thereafter, Parent is entitled to designate
such number of directors, rounded up to the next whole number, on the Company
Board as is equal to the product of the total number of directors on the Company
Board (determined after giving effect to the directors so elected pursuant to
this sentence) multiplied by the ratio of the aggregate number of Shares
beneficially owned by Parent, the Purchaser or their affiliates to the total
number of Shares then outstanding; PROVIDED, HOWEVER, that if the Purchaser has
acquired the Revised Minimum Number of Shares in the Offer, such number of
directors shall be rounded up to the greatest whole number plus one to give the
Purchaser at least a majority of the members of the Company Board. The Company
will, upon request of Parent, promptly take all actions necessary to cause
Parent's designees to be so elected, including, if necessary, seeking the
resignations of one or more existing directors; PROVIDED, HOWEVER, that prior to
the time the Merger becomes effective (the "Effective Time"), the Company Board
will always have at least one member who is a director on the Company Board at
the time of execution of the Merger Agreement and who is not an executive
officer of the Company (the "Independent Director").
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Following the election or appointment of Parent's designees pursuant to the
preceding paragraph and prior to the Effective Time, any amendment or
termination of the Merger Agreement by the Company, any extension by the Company
of the time for performance of any of the obligations or other acts of Parent or
the Purchaser or exercise or waiver of any of the Company's rights thereunder
will require the affirmative vote of the Independent Director.
THE MERGER. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Company has agreed pursuant to the Merger Agreement that, if required by
applicable law in order to consummate the Merger, it will (1) convene a special
meeting of its shareholders as soon as practicable following the acceptance for
payment of and payment for Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the Merger Agreement; (2) prepare
and file with the SEC a preliminary proxy statement relating to the Merger
Agreement, and use its reasonable best efforts (A) to obtain and furnish the
information required to be included by the SEC in the Proxy Statement and, after
consultation with Parent, to respond as soon as practicable to any comments made
by the SEC with respect to the preliminary proxy statement and to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to its
shareholders and (B) to obtain the necessary approvals of the Merger and
adoption of the Merger Agreement by its shareholders; and (3) include in the
Proxy Statement the recommendation of the Company Board that shareholders of the
Company vote in favor of the approval and adoption of the Merger and the Merger
Agreement. Parent has agreed in the Merger Agreement that it will vote, or cause
to be voted, all of the Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval of the Merger and the Merger
Agreement.
The Merger Agreement further provides that, notwithstanding the foregoing,
if the Purchaser acquires at least 90% of the outstanding Shares of the Company
pursuant to the Offer, the parties to the Merger Agreement will take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acceptance for payment of and payment for the Shares by
the Purchaser pursuant to the Offer without a meeting of the shareholders of the
Company, in accordance with Section 1110 of the CGCL.
CHARTER, BY-LAWS, DIRECTORS AND OFFICERS. The Articles of Incorporation of
the Purchaser, as in effect immediately prior to the Effective Time, will be the
Articles of Incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and of the Merger Agreement and
applicable law. The By-Laws of the Purchaser in effect at the time of the
Effective Time will be the By-Laws of the Surviving Corporation until amended in
accordance with the terms thereof and applicable law. Subject to applicable law,
the directors of the Purchaser immediately prior to the Effective Time will be
the initial directors of the Surviving Corporation and will hold office until
their respective successors are duly elected and qualified, or their earlier
death, resignation or removal. At the Effective Time, Parent shall create a
vacancy on its Board of Directors by increasing its membership by one member and
shall fill the vacancy from among the existing members of the Company Board upon
mutual agreement of Parent and the Company. The officers of the Purchaser
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation.
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CONVERSION OF SECURITIES. By virtue of the Merger and without any action on
the part of the holders thereof, at the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than (1) any Shares
held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or the
Purchaser, in the treasury of the Company or by any wholly-owned subsidiary of
the Company, which Shares, by virtue of the Merger and without any action on the
part of the holder thereof, will be canceled and retired and will cease to exist
with no payment being made with respect thereto and (2) Dissenting Shares) will
be canceled and retired and will be converted into the right to receive the
Merger Price, upon surrender of the certificate formerly representing such
Share. At the Effective Time, each share of common stock of the Purchaser, par
value $0.001 per share, issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and non-assessable share of common stock, par value $0.001 per share, of
the Surviving Corporation.
STOCK OPTIONS. Upon the consummation of the Offer, the Purchaser will make
a cash payment (less applicable withholding taxes) to each holder of an option
("Company Stock Options") to acquire Shares outstanding immediately prior to the
Effective Time under the Company's 1990 Incentive Stock Option Plan, 1995 Stock
Option Plan, 1995 Employee Stock Option Plan and 1995 Directors' Option Plan
(collectively, the "Company Plans"), if then vested, in an amount equal to the
difference between the Merger Price less the per Share exercise price of such
option for all Shares subject to such option as expressly stated in the
applicable stock option agreement or other agreement (the "Option
Consideration"). At or before the Effective Time, the Company shall cause to be
effected any necessary amendments to the Company Plans to give effect to the
foregoing provisions.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to the Parent and the
Purchaser with respect to, among other matters, its organization and
qualification, capitalization, authority, required filings, public filings,
consents and approvals, no defaults or undisclosed liabilities, absence of
changes, litigation, compliance with applicable law, employee benefit plans and
labor matters, environmental laws and regulations, taxes, intellectual property,
assets, contracts, insurance, product warranties, suppliers, distributors and
customers, the Rights Agreement, certain business practices, vote required,
brokers, information supplied and opinion of the Financial Advisor. In addition,
the Company has represented that it had at April 30, 1999 cash and cash
equivalents, including short-term investments and long-term investments (other
than investments in equity securities) (collectively, "Cash Balances") of $20
million and, as of the date that Purchaser accepts for payment and pays for
Shares in the Offer, the Company will have a cash balance of at least $19
million, less $500,000 for every month after June 1999 and less the amount of
Company's reasonable out-of-pocket costs incurred in connection with the Merger
(the "Minimum Cash Balance"). Parent and the Purchaser have made customary
representations and warranties to the Company with respect to, among other
matters, its organization, authority, financing, consents and approvals,
information supplied and brokers.
COVENANTS. The Merger Agreement obligates the Company and its subsidiaries,
from the date of the Merger Agreement to the earlier to occur of the termination
of the Merger Agreement or the Effective Time, to conduct their operations only
in the ordinary course of business consistent with past practice and in such a
manner to cause the Company to have the Minimum Cash Balance. The Merger
Agreement also contains specific restrictive covenants as to certain
impermissible activities of the Company prior to such time when a majority of
the Company's Board is designated or elected by the Purchaser or its respective
affiliates, which provide that the Company will not (and will not permit any of
its subsidiaries to) take certain actions without the prior written consent of
Parent, including, among other things, amend its Charter or By-Laws, amend the
Rights Agreement, issue or sell its securities, change its capital structure,
set aside or pay dividends and other distributions, repurchase or redeem
securities, enter into or assume certain additional indebtedness, increase its
compensation or adopt new benefit plans, make material acquisitions or
dispositions, change the Company's accounting principles or practices, settle or
compromise
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any tax liability, discharge or satisfy certain claims, liabilities and
obligations, and permit to occur certain other material events or transactions.
NO SOLICITATION. The Merger Agreement requires the Company, its affiliates
and their respective officers, directors, employees, representatives and agents
to immediately cease any discussions or negotiations with any parties with
respect to any Third Party Acquisition (defined below). Neither the Company nor
any of its affiliates shall, nor shall the Company authorize or permit any of
its or their respective officers, directors, employees, representatives or
agents to, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with or provide any non-public information
to any person or group (other than Parent and the Purchaser or any of their
designees) concerning any Third Party Acquisition; PROVIDED, HOWEVER, that
nothing herein will prevent the Company Board from taking and disclosing to the
Company's shareholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender or exchange offer.
The Company has agreed to promptly notify Parent in the event it receives any
proposal or inquiry concerning a Third Party Acquisition, including the terms
and conditions thereof and the identity of the party submitting such proposal;
and shall advise Parent from time to time of the status and any material
developments concerning the same.
Except as set forth herein, the Company Board shall not withdraw its
recommendation of the transactions contemplated by the Merger Agreement or
approve or recommend, or cause the Company to enter into any agreement with
respect to, any Third Party Acquisition. Notwithstanding the foregoing, if the
Company Board by a majority vote determines in its good faith judgment, after
consultation with and based upon the advice of its outside legal counsel, that
it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend a Superior Proposal (defined below), but in each
case only (1) after providing reasonable written notice to Parent (a "Notice of
Superior Proposal"), advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal; and (2) if
Parent does not, within three business days of Parent's receipt of the Notice of
Superior Proposal, make an offer that the Company Board by a majority vote
determines in its good faith judgment (based on the written advice of a
financial adviser of nationally recognized reputation) to be at least as
favorable to the Company's shareholders as such Superior Proposal; PROVIDED,
HOWEVER, that the Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until the Merger Agreement is
terminated by its terms. Any disclosure that the Company Board may be compelled
to make with respect to the receipt of a proposal for a Third Party Acquisition
or otherwise in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2
will not constitute a violation of the Merger Agreement PROVIDED that such
disclosure states that no action will be taken by the Company Board in violation
of the foregoing provisions.
A "Third Party Acquisition" means the occurrence of any of the following
events: (1) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) other than Parent, the Purchaser or any of their affiliates (a
"Third Party"); (2) the acquisition by a Third Party of any material portion of
the assets of the Company and its subsidiaries taken as a whole, other than the
sale of its products in the ordinary course of business consistent with past
practices; (3) the acquisition by a Third Party of fifteen percent (15%) or more
of the outstanding Shares; (4) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; (5) the
repurchase by the Company or any of its subsidiaries of more than ten percent
(10%) of the outstanding Shares; or (6) the acquisition by the Company or any of
its subsidiaries by merger, purchase of stock or assets, joint venture or
otherwise of a direct or indirect ownership interest or investment in any
business whose annual revenues, net income or assets is equal or greater than
ten percent (10%) of the annual revenues, net income or assets of the Company. A
"Superior Proposal" means any bona fide proposal to acquire directly or
indirectly for consideration consisting of cash and/or securities more than a
majority of the Shares then outstanding or all or a significant portion of
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the assets of the Company and otherwise on terms that the Company Board by a
majority vote determines in its good faith judgment (based on the written advice
of a financial advisor of nationally recognized reputation) to be more favorable
to the Company's shareholders than the Merger.
ACCESS TO INFORMATION. The Merger Agreement provides that, until the
Effective Time, the Company will give Parent, its representatives and persons
providing or committed to providing Parent with financing for the contemplated
transaction reasonable access to all employees, plants, offices, warehouses and
other facilities and properties and to all books and records of the Company and
its subsidiaries, will permit Parent to make such inspections as Parent
reasonably requests, and will cause the Company's officers and those of its
subsidiaries to furnish Parent with such financial and operating data and other
information with respect to business and properties as Parent reasonably
requests.
REASONABLE EFFORTS. Subject to the terms and conditions provided in the
Merger Agreement, the Company and the Purchaser will use their respective
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under any
applicable laws to consummate and make effective the transaction contemplated
hereby as promptly as practicable.
EMPLOYEE BENEFIT ARRANGEMENTS. Parent has agreed to provide the employees
of the Company and its subsidiaries with employee benefits reasonably
commensurate with the benefits currently provided to the Company's employees.
The Company's employees who remain with the Surviving Corporation or Parent will
receive credit for past service with the Company. Parent will compensate
employees of the Company and its subsidiaries at a rate not less than the rate
of compensation currently paid to such employees by the Company and its
subsidiaries. In addition, in connection with the Company's annual salary
reviews, the Company or Parent will increase the rate of compensation paid to
such employees in accordance with ordinary business practices, provided that the
aggregate amount of the increases shall not exceed five percent (5%) of total
base salaries or $196,200. Parent has agreed and will cause the Surviving
Corporation to agree that all obligations of the Company or any subsidiary under
any "change of control" or similar provisions relating to employees contained in
any existing contracts and all termination or severance agreements with certain
executives of the Company will be honored in accordance with their terms as of
the date of the Merger Agreement.
PUBLIC ANNOUNCEMENTS. The Merger Agreement provides that the Company, the
Purchaser and Parent will consult with each other before issuing any press
release or otherwise making any public statement with respect to transactions
contemplated by the Merger Agreement, and will not issue any such press release
or make any such public statement prior to such consultation, unless required by
applicable law or any listing agreement with a securities exchange or the Nasdaq
National Market System.
RESIGNATION OF OFFICERS AND DIRECTORS. Except as otherwise agreed in
writing by Parent, the Merger Agreement contemplates that each of the directors
and officers of the Company and its subsidiaries shall tender their resignations
effective on or before the Effective Time. Any resignations tendered by such
directors and officers will be deemed an "involuntary termination" for purposes
of any change of control or severance agreements.
NOTIFICATION OF CERTAIN EVENTS. Company has agreed to promptly notify
Parent of (1) the occurrence or non-occurrence of any fact or event which would
be reasonably likely to cause any representation or warranty contained in the
Merger Agreement to be untrue or inaccurate in any material respect at any time
prior to the Effective Time, (2) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by the Merger Agreement, (3)
any notice or other communication form any governmental or regulatory agency in
connection with the transactions contemplated by this Agreement, and (4) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its knowledge, threatened against, relating to or involving or otherwise
affecting such party which would have been required to have been
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disclosed pursuant the Merger Agreement or which relate to the consummation of
the transactions contemplated by the Merger Agreement.
RIGHTS AGREEMENT. The Company has agreed to take all action necessary to
ensure that neither the Merger Agreement nor the Merger will cause the Rights to
become exercisable, cause Parent or the Purchaser to become an "Acquiring
Person" (as defined in the Rights Agreement), or permit a "Triggering Event" or
"Distribution Date" (as each is defined in the Rights Agreement) to occur.
INDEMNIFICATION. The Merger Agreement provides that the Articles of
Incorporation of the Surviving Corporation shall contain the provisions with
respect to indemnification set forth in the Articles of Incorporation and
By-Laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who
between the date of the Merger Agreement and the Effective Time were directors
or officers of the Company, unless such modification is required by law.
After the time the persons designated by Parent have been elected to, and
shall constitute a majority of, the Company Board pursuant to the terms of the
Merger Agreement (the "Appointment Date"), the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Articles of
Incorporation or By-Laws, but subject to the limitations thereof, including the
limitations contained in Section 317 of the CGCL, to indemnify and hold
harmless, each director and officer of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties"), against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of their holding the office of director or officer
occurring at or before the Effective Time (including, without limitation, the
transactions contemplated by the Merger Agreement) for a period of six years
after the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (1) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to the Surviving Corporation
and Parent and (2) neither the Surviving Corporation nor Parent shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld).
For a period four years after the Effective Time, Parent has agreed to cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from or related to facts or
events that occurred at or before the Effective Time; PROVIDED, HOWEVER, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the annual premiums paid as of the
date of the Merger Agreement by the Company for such insurance (such 150%
amount, the "Maximum Premium"). If such insurance coverage cannot be obtained at
all, or can only be obtained at an annual premium in excess of the Maximum
Premium, Parent shall maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium, PROVIDED FURTHER, if such insurance coverage cannot be obtained at all,
Parent shall purchase all available extended reporting periods with respect to
pre-existing insurance in an amount that, together with all other insurance
purchased, does not exceed the Maximum Premium. Parent has agreed, and will
cause the Company not to take any action that would have the effect of limiting
the aggregate amount of insurance coverage required to be maintained for the
individuals referred herein.
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SECURITY AGREEMENT. Simultaneous with the closing of the Offer, the Company
has agreed to execute a security agreement in form and substance satisfactory to
Parent to provide that the Minimum Cash Balance will be available to Parent
immediately following the acceptance of Shares by Parent or the Purchaser for
payment at the conclusion of the Offer.
EMPLOYMENT AGREEMENTS. The Company has agreed to use its reasonable best
efforts to cause a number of Company employees to execute employment agreements
reasonably satisfactory to Parent.
CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the Merger Agreement,
the respective obligations of Parent, the Purchaser and the Company to
consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions: (1) the shareholders of the
Company will have duly approved the transactions contemplated by the Merger
Agreement by the requisite vote, if required; (2) Parent, the Purchaser or their
affiliates will have accepted for payment and paid for Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement; and (3) no statute,
rule, regulation, executive order, decree, ruling or injunction will have been
enacted, entered, promulgated or enforced by any United States court or United
States governmental authority which prohibits, restrains, enjoins or restricts
the consummation of the Merger.
TERMINATION. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval and adoption of the Merger Agreement by the
shareholders of the Company (with any termination by Parent also being an
effective termination by the Purchaser):
(1) by the mutual written consent of the Company, Parent and the
Purchaser;
(2) by Parent and the Purchaser or the Company if (A) any court of
competent jurisdiction in the United States or other Governmental Entity
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become nonappealable,
(B) the Merger has not been consummated by November 15, 1999; or (C) the
Offer terminates or expires in accordance with its terms as a result of a
failure of any of the conditions set forth in Section 14 without the
Purchaser having purchased any Shares pursuant to the Offer; PROVIDED that
no party may terminate this Agreement pursuant to clauses (B) or (C) if such
party's failure to fulfill any of its obligations under the Merger Agreement
shall have been the reason that the Effective Time shall not have occurred
on or before said date;
(3) by the Company if (A) there shall have been a breach of any
representation or warranty on the part of Parent or the Purchaser set forth
in the Merger Agreement or if any representation or warranty of Parent or
the Purchaser shall have become untrue, and such breach shall not have been
cured or such representation or warranty shall not have been made true
within thirty (30) business days after notice by the Company thereof except
for any inaccuracies that, individually or in the aggregate, have not had,
and would not have a material adverse effect on Parent, PROVIDED that the
Company has not breached any of its obligations hereunder; (B) there shall
have been a breach by Parent or the Purchaser of any of their respective
covenants or agreements hereunder having a material adverse effect on Parent
or materially adversely affecting (or materially delaying) the consummation
of the Merger, and Parent or the Purchaser, as the case may be, has not
cured such breach within thirty business days after notice by the Company
thereof, PROVIDED that the Company has not breached any of its obligations
hereunder; (C) the Purchaser has not timely commenced this Offer; or (D) the
Company Board has received a Superior Proposal and has complied with the
Merger Agreement; or
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(4) by Parent and the Purchaser if (A) there shall have been a breach of
any representation or warranty on the part of the Company set forth in the
Merger Agreement or if any representation or warranty of the Company shall
have become untrue, and such breach shall not have been cured or such
representation or warranty shall not have been made true within thirty
business days after notice by Parent or the Purchaser thereof except for any
inaccuracies that individually or in the aggregate have not had, and would
not have, a material adverse effect on the Company, provided that Parent has
not materially breached any of its obligations hereunder; (B) there shall
have been a breach by the Company of its covenants or agreements hereunder
having a material adverse effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Merger, and the
Company has not cured such breach within thirty business days after notice
by Parent or the Purchaser thereof provided that Parent has not materially
breached any of its obligations; (C) the Company Board shall have
recommended to the Company's shareholders a Superior Proposal; (D) the
Company Board shall have withdrawn or materially weakened its recommendation
of the Merger Agreement or the Merger; (E) if the Offer has expired or has
been terminated in accordance with the terms set forth in Section 14 without
any Shares having been purchased pursuant to the Offer; (F) a tender offer
or exchange offer for 15% or more of the Shares is commenced, and the
Company Board, within 10 business days after such tender offer or exchange
offer is commenced, either fails to recommend against acceptance of such
tender offer or exchange offer by its shareholders or takes no position with
respect to the acceptance of such tender offer or exchange offer by its
shareholders.
FEES AND EXPENSES. In the event that the Merger Agreement is terminated
pursuant to the following paragraphs of "Termination" as described above:
- (3)(D), (4)(C) or (4)(D);
- (4)(A) or (4)(B) (unless the breach or inaccuracy causing termination
pursuant to either such paragraph was in all respects outside the
direction or control of the Company) and within twelve months thereafter
the Company enters into an agreement with respect to a Third Party
Acquisition or a Third Party Acquisition occurs involving any party (or
any affiliate thereof) (x) with whom the Company (or its agents) had
negotiations with a view to a Third Party Acquisition, (y) to whom the
Company (or its agents) furnished information with a view to a Third Party
Acquisition or (z) who had submitted a proposal or expressed an interest
in a Third Party Acquisition, in the case of each of clauses (x), (y) and
(z), after the date hereof and prior to such termination;
- (4)(D) and the Company Board has withdrawn or materially weakened its
recommendation following the receipt of an offer by a Third Party to
consummate a Third Party Acquisition involving the payment of
consideration to shareholders of the Company with a value in excess of
$1.78 per Share; then
the Company shall pay to Parent the amount of One Million Two Hundred Thousand
Dollars ($1,200,000) immediately upon the occurrence of the event described
herein. Except as specifically provided herein and except for a termination by
Parent or the Purchaser pursuant to paragraph (4)(B) above in an amount which,
taken together with any other amounts payable under Section 4 of the Merger
Agreement, will not exceed $1,200,000, the Company, Parent and the Purchaser
have agreed to bear their own expenses in connection with the Merger Agreement
and the transactions contemplated thereby.
AMENDMENT. Subject to applicable law, the Merger Agreement may be amended
by action taken by the Company, Parent and the Purchaser at any time before or
after approval of the Merger by the shareholders of the Company (if required by
applicable law) but, after any such approval, no amendment will be made which
requires the approval of such shareholders under applicable law without such
approval. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of the parties thereto.
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EXTENSION; WAIVER. At any time prior to the Effective Time, any party to
the Merger Agreement may (1) extend the time for the performance of any of the
obligations or other acts of the other party, (2) waive any inaccuracies in the
representations and warranties of the other party contained therein or in any
document, certificate or writing delivered pursuant thereto, or (3) waive
compliance by the other party with any of the agreements or conditions contained
in the Merger Agreement. Any agreement on the part of any party thereto to any
such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of either party thereto to
assert any of its rights hereunder will not constitute a waiver of such rights.
(C) APPRAISAL RIGHTS.
No appraisal rights are available in connection with the Offer. If the
Merger is consummated, however, shareholders of the Company who have not
tendered their Shares will have certain rights under the CGCL to dissent and
demand appraisal of, and to receive payment in cash of the fair market value of,
their Shares. Shareholders who perfect such rights by complying with the
procedures set forth in Chapter 13 of the CGCL ("Chapter 13") will have the fair
market value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) determined by a California court of
competent jurisdiction and will be entitled to receive a cash payment equal to
such fair market value from the Surviving Corporation. In addition, such
dissenting shareholders would be entitled to receive payment of a fair rate of
interest from the date of consummation of the Merger on the amount determined to
be the fair market value of their Shares.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any shareholder and the demand
for appraisal of, and payment in cash for the fair market value of, the Shares.
Parent intends, however, to cause the Surviving Corporation to argue in an
appraisal proceeding that, for purposes of such proceeding, the fair market
value of each Share is less than the price paid in the Merger. In this regard,
shareholders should be aware that opinions of investment banking firms as to the
fairness from a financial point of view (including the Financial Advisor's
opinion described herein) are not necessarily opinions as to "fair market value"
under Chapter 13.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE
TO THE APPLICABLE PROVISIONS OF CHAPTER 13 OF THE CGCL. A COPY OF THE TEXT OF
CHAPTER 13 OF THE CGCL IS INCLUDED IN THIS OFFER TO PURCHASE AS ANNEX A.
(D) STOCK OPTION AGREEMENT.
In connection with the Merger Agreement, the Purchaser, Parent and the
Company entered into the Stock Option Agreement in which the Company granted the
Purchaser the Option. Under the Option, the Purchaser may purchase a number of
Shares, at a price of $1.78 per Share, which, together with the Shares
beneficially owned by the Purchaser or Parent, would result in the Purchaser and
Parent together beneficially owning one hundred (100) Shares more than ninety
percent (90%) of the outstanding Shares following exercise of the Option. The
Option expires unless it is exercised before the earlier of (1) the Effective
Time, (2) termination of the Merger Agreement or termination or expiration of
the Offer without the purchase of Shares in the Offer for any reason or (3) the
date on which the Purchaser waives the Minimum Condition and accepts for payment
the Revised Minimum Number of Shares. The foregoing summary is qualified in its
entirety by reference to the Stock Option Agreement, which is included as
Exhibit (c)(2) to the Schedule 14D-1 relating to the Offer.
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(E) INDEMNIFICATION AGREEMENT.
The Purchaser, Parent and the Company have entered into an Indemnification
Agreement, dated as of June 4, 1999 (the "Indemnification Agreement"), which
provides for the reimbursement of certain costs incurred by the Company in
converting and transferring the Cash Balances. In the event that the Purchaser
and Parent terminate the Merger Agreement and abandon the Offer for reasons
other than because of (1) the Company's breach of any representation or warranty
in the Merger Agreement, (2) the Company's breach of the Merger Agreement having
a material adverse effect on the Company, (3) the Company Board recommended to
its shareholders a Superior Proposal, (4) a tender offer or exchange offer for
15% or more of the Shares is commenced or (5) withdrawal or weakening of its
recommendation of the Offer, the Purchaser and Parent have agreed to indemnify
and reimburse the Company for bank charges, prepayment penalties and opportunity
costs incurred in transferring the Cash Balances. The foregoing summary is
qualified in its entirety by reference to the Indemnification Agreement, which
is included as Exhibit (c)(3) to the Schedule 14D-1 relating to the Offer.
(F) PLANS FOR THE COMPANY.
Except as otherwise set forth in this Offer to Purchase, it is expected
that, initially following the Merger, the Surviving Corporation will continue
the business and operations of the Company substantially as they are currently
being conducted. Except as indicated in this Offer to Purchase, Parent does not
have any present plans or proposals that relate to or would result in any
material change in the Company's capitalization or dividend policy or the
composition of the Company Board or the Company's management.
(G) THE RIGHTS.
According to the Company's filing on Form 8-A dated August 22, 1996
(together with subsequent filings relating to the Rights Agreement, the "Company
8-A"), on August 21, 1996, the Company declared a dividend distribution of one
Right for each outstanding Share, which entitles the registered holder to
purchase from the Company one one-thousandth of a share of a Series A
Participating Preferred Stock, par value $0.001, of the Company (the "Preferred
Stock") at an exercise price of $50.00 per share of Preferred Stock (the
"Exercise Price"), subject to adjustment.
The Rights Agreement provides that if a person or group of affiliated or
associated persons (1) has acquired, or obtained the right to acquire,
beneficial ownership of 20% (or in the case of Citigroup Inc. and its affiliates
only, 28%) or more of the outstanding Shares, subject to certain exceptions set
forth in the Rights Agreement, or (2) commences a tender offer or exchange
offer, the consummation of which would result in the beneficial ownership by a
person or group of 30% or more of the outstanding Shares, then each holder of a
Right can receive Shares having a value equal to two times the Exercise Price.
As a condition of the Offer and pursuant to the Merger Agreement, the Company
has taken all actions necessary to make the Rights inapplicable to the Offer and
the Merger.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Company 8-A and
the Rights Agreement as set forth as an exhibit to the Company 8-A that was
filed with the SEC. Copies may be obtained in the manner set forth in Section 8.
SHAREHOLDERS ARE REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR EACH SHARE
TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. IF THE DISTRIBUTION
DATE (AS DEFINED IN THE RIGHTS AGREEMENT) DOES NOT OCCUR PRIOR TO THE EXPIRATION
DATE, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
SEE SECTIONS 1 AND 3.
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12. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Parent and the Purchaser to purchase
all Shares pursuant to the Offer and Merger and to pay related fees and
expenses, including the Option Consideration, is expected to be in an aggregate
maximum amount of approximately $25 million.
FACILITIES AND THE USE OF PROCEEDS. The Purchaser, through Parent, expects
to obtain debt financing in an aggregate maximum amount of up to approximately
$29 million. The debt financing will be used partially to fund the Offer, the
Merger and the related fees and expenses and partially to fund Parent's ongoing
working capital requirements. The funds necessary to purchase the Company's
Shares will be provided to Parent and the Purchaser by Bank of America NT&SA
("BofA") in the forms of (1) a revolving credit facility (the "Revolving
Facility") available in an amount up to the lesser of $10 million or the
Borrowing Base (as described below), provided however, that the Revolving
Facility will step down to $7.5 million within ninety days of the completion of
Parent's contemplated sale/leaseback of the property located at 10165 McKellar
Court, San Diego, California and (2) a fully cash-secured term loan (the "Term
Loan") in the amount of $19 million available in connection with the closing of
the Offer and the Merger. BofA has committed to provide the Revolving Facility
and the Term Loan pursuant to a commitment letter, dated June 4, 1999 (the
"Commitment Letter").
In the event of a merger requiring a meeting of shareholders, Parent may
decide to fund the Offer, the Merger and the related fees and expenses solely
through the Revolving Facility and existing working capital of Parent and the
Company. In such event, Parent might not utilize the Term Loan.
BORROWING BASE AVAILABILITY, RATES AND RATE INDEX. The "Borrowing Base," as
defined in the Commitment Letter, will be the product of the value of certain
eligible assets of Parent multiplied by an appropriate advance rate.
For the Revolving Facility, the Commitment Letter provides that the rate
will be either (1) the rate of interest publicly announced from time to time by
BofA in San Francisco, California, as its reference rate (the "Reference Rate")
or (2) the London Interbank Offered Rate for one, two, three, or six month
eurodollar deposits as quoted by BofA two business days prior to such request
(the "LIBOR"), plus 1.50%. The rate for the Term Loan will be the Reference
Rate.
MATURITIES. The Revolving Facility has a final maturity date of one year
from the date of the closing. The Term Loan has a final maturity date of either
(1) five days from the date of the closing, in the event of a merger in which
the Minimum Condition is satisfied or (2) August 31, 1999, in the event of a
merger requiring a meeting of shareholders.
SECURITY. Both the Revolving Facility and the Term Loan will be secured by
(1) a perfected first priority security interest in accounts receivable,
inventory, fixed assets and intangibles of Parent and its subsidiaries and (2) a
perfected first priority security interest in a cash deposit owned by the
Company and held at BofA in an amount at least equal to the outstanding advance
under the Term Loan.
REPAYMENT, MANDATORY PREPAYMENTS AND DEFAULT RATE. With respect to the
Revolving Facility, interest must be paid monthly or, in the case of LIBOR
advances, at the earlier of the maturity of the applicable interest period or
monthly, with the principal due at maturity of the Revolving Facility. Parent is
required to make mandatory prepayments in amounts necessary to maintain
Borrowing Base compliance. Reference Rate borrowings may be paid at any time
without penalty. LIBOR borrowings may be prepaid at any time upon three business
day's notice, provided that Parent is required to reimburse BofA for any funding
losses and loss of anticipated profits. With respect to the Term Loan, either
(1) interest and the principal are payable at maturity, in the event of a merger
in which the Minimum Condition is satisfied or (2) interest is payable monthly
and principal is payable at maturity, in the event of a merger requiring a
meeting of shareholders. The Company intends to repay all amounts due under the
Term Loan with available working capital of the Company.
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Mandatory prepayments will be required from (1) proceeds of Parent's
contemplated sale/leaseback of the property located at 10165 McKellar Court, San
Diego, California and (2) proceeds of the issuance of any equity securities net
of associated expenses.
The default rate is 2% over the rate of interest.
OTHER TERMS, CONDITIONS, AND COVENANTS. Among other conditions to be
negotiated, the commitment from BofA will be subject to the following
conditions: (1) BofA's due diligence, including, but not limited to,
satisfactory review of Parent's 1999 fiscal year end draft audited financial
statements; (2) delivery to BofA of an opinion by Parent's counsel; (3) no
material adverse change in the business, operations, performance, properties,
prospects or financial condition of Parent, any guarantors, or the Merger; (4)
the termination of all existing bank loan agreements and the release of related
liens; and (5) the execution and delivery to BofA of any credit documents in
form and substance acceptable to BofA.
The Commitment Letter provides that Parent will provide periodic financial
statements and projections, compliance certificates and other documents that
BofA may request. Parent also is required to comply with certain financial
covenants, such as a minimum tangible net worth and no more than one quarterly
loss in any fiscal year, which will be calculated and tested quarterly on a
consolidated basis using generally accepted accounting principles, and which
will have compliance levels as set forth in the final documentation.
Additionally, Parent will be subject to other covenants that are customary for
facilities of the type extended by BofA. The Revolving Facility and the Term
Loan will be cross-collateralized and cross-defaulted.
REPRESENTATIONS AND WARRANTIES AND INDEMNITY. Parent will provide to BofA
all customary and appropriate representations and warranties. Parent also will
indemnify BofA and its respective directors, officers, agents, and employees
from and against all losses, claims, damages, expenses, or liabilities incurred
in connection with the financing contemplated thereby or the proposed use of
proceeds of such financing other than with respect to claims or damages arising
from BofA's own gross negligence or willful misconduct or any claims that may be
asserted by Parent against BofA.
FEES AND EXPENSES. The fees for the Revolving Facility include (1) a
commitment fee of 0.125% per annum calculated on the unused portion of the
Revolving Facility and payable quarterly in arrears and (2) a credit facility
fee of 0.125% per annum calculated on the Revolving Facility payable at the
closing. The fees for the Term Loan will include a facility fee of $15,000 to be
paid at the closing.
Parent also will bear all costs and expenses, including attorneys' fees,
appraisal, and audit costs, incurred by BofA with respect to the completion of
due diligence, negotiation, documentation, and the closing of the Revolving
Facility and the Term Loan.
The foregoing summary of the Revolving Facility and the Term Loan is
qualified in its entirety by reference to the Commitment Letter, which is
included as Exhibit (b) to the Schedule 14D-1 relating to the Offer.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that, without the prior written consent of the
Purchaser and except as otherwise expressly provided in the Merger Agreement,
the Company will not, and will not permit any of its subsidiaries to, prior to
the time persons designated or elected by the Purchaser or any of the respective
affiliates will constitute a majority of the Company Board, (1) issue, reissue
or sell, or authorize the issuance, reissuance or sale of (A) additional shares
of capital stock of any class, or securities convertible into capital stock of
any class, or any rights, warrants or options to acquire any convertible
securities or capital stock, other than the issuance of Shares (and the related
Rights), in accordance with the terms of the instruments governing such issuance
on the date of the Merger Agreement, pursuant to the exercise or conversion of
Options outstanding on the date of the Agreement, or (B) any other
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securities in respect of, in lieu of, or in substitution for, the Shares or any
other capital stock of any class outstanding on the date of the Agreement; (2)
make any other changes in its capital structure; or (3) split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or otherwise
acquire any of its securities or any securities of its subsidiaries.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer
(subject to the provisions of the Merger Agreement), the Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to the Purchaser's obligation to pay for or return tendered Shares promptly
after termination or withdrawal of the Offer), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any tendered Shares, and may terminate or amend the Offer, subject
to the terms of the Merger Agreement, as to any Shares not then paid for, if, at
any time on or after June 4, 1999 and before the time for payment for any such
Shares, any of the following events exist or shall occur and remain in effect:
(1) there has not been validly tendered and not withdrawn, prior to the
expiration of the Offer, such number of Shares which, together with Shares
already beneficially owned by Parent or any of its wholly-owned
subsidiaries, would constitute at least the Minimum Condition; PROVIDED,
HOWEVER, that the Minimum Condition must be waived by the Purchaser and the
Revised Minimum Number substituted therefor as contemplated, and to the
extent required, by the Merger Agreement.
(2) Parent, the Purchaser or the Company will be subject to any final
order, decree, or injunction of a court of competent jurisdiction within the
United States that (A) prevents or materially delays the consummation of the
Offer or the Merger, or (B) would impose any material limitation on the
ability of Parent effectively to exercise full rights of ownership of the
Company or the assets or business of the Company; or
(3) there shall have occurred (A) any general suspension of trading in,
or limitation on prices for, securities on the Nasdaq National Market System
or New York Stock Exchange, Inc. for a period in excess of twenty-four (24)
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market
conditions), (B) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (C) a commencement of a war, armed hostilities or other
international or national calamity, directly or indirectly involving the
United States, except for the current level of hostilities in Kosovo,
Bosnia, Serbia or Iraq, or (D) in the case of any of the foregoing existing
at the time of the commencement of the Offer, including the current
hostilities in Kosovo, Bosnia, Serbia or Iraq, a material acceleration or
worsening thereof; or
(4) any representation and warranty of the Company contained in the
Merger Agreement, without regard to any qualification or reference to
immateriality or Material Adverse Effect on the Company (as defined in the
Merger Agreement) is not true and correct as of June 4, 1999 or will not be
true and correct as of the expiration of the Offer, except for any
inaccuracies that, individually or in the aggregate, have not had, and would
not have, a Material Adverse Effect on the Company; or
(5) there has been a material breach by the Company of any of its
agreements, covenants or obligations under this Agreement, and the breach is
not curable or, if curable, is not cured by the Company within twenty (20)
calendar days after receipt by the Company of written notice from Parent of
such breach; or
(6) the Merger Agreement has been terminated in accordance with its
terms; or
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(7) (A) a tender offer or exchange offer for fifteen percent (15%) or
more of the outstanding Shares is commenced, and the Company Board, within
ten (10) business days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender offer
or exchange offer by its shareholders or takes no position with respect to
the acceptance of such tender offer or exchange offer by its shareholders;
or (B) any person or group shall have entered into a definitive agreement or
agreement in principle with the Company with respect to a Third Party
Acquisition; or
(8) (A) the Company Board has withdrawn, changed or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger Agreement
or the Merger or has recommended a proposal with respect to a Third Party
Acquisition, or has adopted any resolution to effect any of the foregoing,
or (B) the Company Board has recommended any proposal other than this
Agreement; or
(9) the Company has not obtained all permits, authorizations, consents,
and approvals required on its part to perform its obligations under, and
consummate the transactions contemplated by, the Merger Agreement, in form
and substance reasonably satisfactory to Parent, or Parent and the Purchaser
have not received evidence reasonably satisfactory to them of the receipt of
such permits, authorizations, consents, and approvals, except for such
permits, authorizations, consents or approvals that, individually or in the
aggregate, have not had, and would not have, a Material Adverse Effect on
the Company;
(10) certain employees of the Company shall not have entered into
employment agreements reasonably satisfactory to Parent on substantially the
terms previously agreed upon by Parent and the Company.
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be waived by Parent or the Purchaser, in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
GENERAL. Except as set forth in this Offer to Purchase, based on its review
of publicly available filings by the Company with the SEC, neither Parent nor
the Purchaser is aware of any licenses or regulatory permits that appear to be
material to the business of the Company and its subsidiaries, taken as a whole,
and that might be adversely affected by the Purchaser's acquisition of Shares
(and the indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein, or any filings, approvals or other actions by or with any
domestic, foreign or supranational governmental authority or administrative or
regulatory agency that would be required for the acquisition or ownership of the
Shares (or the indirect acquisition of the stock of the Company's subsidiaries)
by the Purchaser pursuant to the Offer as contemplated herein. Should any such
approval or other action be required, it is presently contemplated that such
approval or action would be sought except as described below under "State
Takeover Laws." Should any such approval or other action be required, there can
be no assurance that any such approval or action would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's or its subsidiaries' businesses, or that certain parts of the
Company's, Parent's, the Purchaser's or any of their respective subsidiaries'
businesses might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action
or in the event that such approvals were not obtained or such actions were not
taken. The Purchaser's obligation to
35
<PAGE>
purchase and pay for Shares is subject to certain conditions, including
conditions with respect to litigation and governmental actions. See Introduction
and Section 14.
SECTION 1203 OF CGCL. The Company is incorporated under the laws of the
State of California. Section 1203 of the CGCL provides that if a tender offer is
made to some or all of a corporation's shareholders by an "interested party," an
affirmative opinion in writing as to the fairness of the consideration to the
shareholders of the corporation must be delivered to the shareholders at the
time that the tender offer is first made in writing to the shareholders. If,
however, the tender offer is commenced by publication and tender offer materials
are subsequently mailed or otherwise distributed to the shareholders, the
opinion may be omitted in the publication if the opinion is included in the
materials distributed to the shareholders. For purposes of Section 1203, the
term "interested party" includes, among others, a person who is a party to the
transaction and (1) directly or indirectly controls the corporation that is the
subject of the tender offer, (2) is, or is directly or indirectly controlled by,
an officer or director of the subject corporation, or (3) is an entity in which
a material financial interest is held by any director or executive officer of
the subject corporation. While none of the Company, Parent or the Purchaser
believes that the Offer constitutes a transaction which falls within the
provisions of Section 1203, the Financial Advisor has provided a written
fairness opinion with respect to the Offer. A copy of the Financial Advisor's
written opinion, dated May 29, 1999, is included with the Schedule 14D-9, which
is being mailed to shareholders concurrently herewith.
STATE TAKEOVER LAWS. Under the CGCL, the Merger may not be consummated for
cash paid to the shareholders of the Company if Parent or the Purchaser owns,
directly or indirectly, more than 50% but less than 90% of the then outstanding
Shares unless either (1) all the shareholders of the Company consent or (2) the
Commissioner of Corporations of the State of California approves, after a
hearing, the terms and conditions of the Merger and the fairness thereof.
In the event that less than 90% of the then outstanding Shares are tendered
on any scheduled expiration date of the Offer, and provided that certain other
conditions have been met, the Purchaser may, among other options, waive the
Minimum Condition and amend the Offer to reduce the number of Shares subject to
the Offer to the Revised Minimum Number. If a greater number of Shares is
tendered into the Offer and not withdrawn, the Purchaser may elect to purchase,
on a pro rata basis, the Revised Minimum Number of Shares.
A number of states have adopted takeover laws and regulations which purport,
to varying degrees, to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have substantial
assets, shareholders, principal executive offices or principal places of
business therein. To the extent that certain provisions of certain of these
state takeover statutes purport to apply to the Offer or the Merger, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in EDGAR v. MITE CORP., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS CORP. v. DYNAMICS CORP. OF AMERICA,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions. Subsequently, in TLX ACQUISITION CORP. v. TELEX
CORP., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in TYSON FOODS, INC. v. MCREYNOLDS, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in GRAND
METROPOLITAN PLC v. BUTTERWORTH, that
36
<PAGE>
the provisions of the Florida Affiliated Transactions Act and Florida Control
Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
"GOING PRIVATE" RULE. The SEC has adopted Rule 13e-3 under the Exchange
Act, which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger. Rule 13e-3 under the
Exchange Act requires, among other things, that certain financial information
concerning the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the SEC and
disclosed to shareholders prior to the consummation of the transaction. Parent,
however, believes that Rule 13e-3 under the Exchange Act will not be applicable
to the Merger because of the following exemptions. Rule 13e-3 would not apply if
(i) the Shares are deregistered under the Exchange Act prior to the Merger or
other business combination or (ii) the Merger or other business combination is
consummated within one year after the purchase of the Shares pursuant to the
Offer and the amount paid per Share in the Merger or other business combination
is at least equal to the amount paid per Share in the Offer.
16. CERTAIN FEES AND EXPENSES.
Bay City Capital LLC has been retained as the financial advisor to Parent.
Parent will pay the financial advisor approximately $425,000 for its services in
connection with the Offer and the Merger. Parent also will reimburse the
financial advisor for its reasonable out-of-pocket expenses in connection
therewith and will indemnify the financial advisor against certain liabilities
and expenses in connection therewith, including certain liabilities under the
federal securities laws.
First Security Van Kasper has been retained as the Dealer Manager. The
Purchaser will pay the Dealer Manager reasonable and customary compensation for
its services in connection with the Offer. The Purchaser also will reimburse the
Dealer Manager for its reasonable out-of-pocket expenses in connection therewith
and will indemnify the Dealer Manager against certain liabilities and expenses
in connection therewith, including certain liabilities under the federal
securities laws.
Beacon Hill Partners, Inc. has been retained by the Purchaser to act as
Information Agent and American Stock Transfer & Trust Company as the Depositary
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent and the Depositary reasonable and customary compensation for
all such services, reimburse the Information Agent and Depositary for reasonable
out-of-pocket expenses in connection therewith, and indemnify the Information
Agent and the Depositary against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or the
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
37
<PAGE>
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
Parent and the Purchaser have filed with the SEC a Schedule 14D-1, together
with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
office of the SEC in the same manner as described in Section 8 with respect to
information concerning the Company, except that copies will not be available at
the regional offices of the SEC.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer shall under any circumstances create any implication that there has
been no change in the affairs of Parent, the Purchaser, the Company or any of
their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
MBS ACQUISITION CORPORATION
June 9, 1999
38
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
The following table sets forth the name, principal occupation or employment
at the present time and during the last five years, and the name of any
corporation or other organization in which such employment is or was conducted
of each director and executive officer of Parent. Except as otherwise indicated,
all of the persons listed below are citizens of the United States of America.
Except as otherwise indicated, the principal business address of all of the
persons listed below is 10165 McKellar Court, San Diego, California 92121.
Directors of Parent are indicated with an asterisk. None of the persons listed
below have bought or sold any Shares within the past 60 days.
<TABLE>
<CAPTION>
MATERIAL POSITIONS HELD
NAME PRESENT PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- --------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
*John D. Diekman, Ph.D. ............... Managing Director of Bay City Chairman of Affymetrix Inc. (1993 to
Bay City Capital LLC Capital LLC present); and Managing Director of
750 Battery Street, Suite 600 Bay City Capital LLC (1998 to
San Francisco, California 94111 present).
*Thomas A. Glaze ...................... Chief Executive Officer of Chief Executive Officer of
Metabolex, Inc. Metabolex, Inc. Metabolex, Inc. (1991 to present).
3876 Bay Center Place
Hayward, California 94545
*Margaret G. McGlynn .................. Senior Vice President, Worldwide Senior Vice President, Worldwide
Merck & Co. Human Health Marketing of Merck & Human Health Marketing of Merck &
1 Merck Drive, Mailcode 3A-60 Co., Inc. Co., Inc. (1998 to present); and
P.O. Box 100 Senior Vice President, Health and
Whitehouse Station, New Jersey Utilization Management of
08889-0100 Merck-Medco Managed Care, L.L.C.
(from 1994 to 1998).
*Richard C. E. Morgan(1) .............. Managing Partner of Amphion Capital Managing Partner of Amphion Capital
Amphion Capital Management LLC Management LLC Management LLC, the successor to
590 Madison Avenue, 32nd Floor Wolfensohn Partners, L.P. (1986 to
New York, New York 10022 present).
*Mary Lake Polan, M.D., Ph.D.(2) Professor and Chair of the Professor and Chair of the
Stanford University School of Medicine Department of Gynecology and Department of Gynecology and
300 Pasteur Drive, Room HH333 Obstetrics at Stanford University Obstetrics at Stanford University
Stanford, California 94305-5317 School of Medicine School of Medicine (1990 to
present).
*Faye Wattleton ....................... President of Center for Gender President of Center for Gender
25 West 43rd Street, Equality Equality; and President of The
Suite 1014 Planned Parenthood Foundation of
New York, New York 10036 America.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
MATERIAL POSITIONS HELD
NAME PRESENT PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- --------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
*Andre de Bruin(1)..................... Vice Chairman of the Board, President and Chief Executive
President and Chief Executive Officer of Parent (1998 to
Officer of Parent present); and President and Chief
Executive Officer of Somatogen,
Inc. (1994 to 1998).
Charles J. Cashion.................... Senior Vice President, Corporate Senior Vice President, Corporate
Operations, and Chief Financial Operations, and Chief Financial
Officer of Parent Officer of Parent (1998 to
present); and Senior Vice
President and Chief Financial
Officer of The Immune Response
Corp. (1989 to 1998).
Charles H. Bowden, M.D................ Vice President, Technology, Business Vice President, Technology, Business
Development and Infectious Development and Infectious
Diseases, and Chief Medical Diseases, and Chief Medical
Officer of Parent Officer of Parent (1998 to
present); Medical Industry
Consultant (1995 to 1998); and
Vice President, Business
Development of Nellcor, Inc. (1990
to 1995).
Robert C. Buchs....................... Vice President, Sales & Distribution Vice President, Sales & Distribution
Management of Parent Management of Parent (1998 to
present); President of Buchs &
Associates (1996 to 1998); and
Vice President, Primary of
McKesson General Medical (1995 to
1996).
Donna M. McGill....................... Vice President, Strategic Business Vice President, Strategic Business
Management and Women's Health of Management and Women's Health of
Parent Parent (1999 to present); Medical
Device Industry Consultant (1995
to 1999); and Director of
Marketing, Manager of Business
Development and Product Manager of
Becton Dickinson and Co. (1984 to
1995).
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
MATERIAL POSITIONS HELD
NAME PRESENT PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- --------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Mark E. Paiz.......................... Vice President, Operations of Parent Vice President, Operations of Parent
(1998 to present); Director of
Manufacturing for Parent (1997 to
1998); Director of Research &
Development of Medtronic
Interventional Vascular
(1996-1997); Manager, Quality
Engineer of Hybritech (1992-1996).
John D. Tamerius, Ph.D................ Vice President, Research & Vice President, Research &
Development of Parent Development of Parent (1998 to
present); Interim Vice President,
Research & Development of Parent
(1998); Vice President, Clinical
Laboratory Business (1994 to
1998).
Robin G. Weiner....................... Vice President, Regulatory & Vice President, Regulatory &
Clinical of Parent Clinical of Parent (1995 to
present); Senior Director,
Regulatory, Quality & Clinical
Affairs of Parent (1992 to 1995).
</TABLE>
- ------------------------
(1) Citizen of the United Kingdom.
(2) Dr. Polan is also a director of the Company and beneficially owns 46,664
Shares.
I-3
<PAGE>
The following table sets forth the name, principal occupation or employment
at the present time and during the last five years, and the name of any
corporation or other organization in which such employment is or was conducted
of each director and executive officer of the Purchaser. Except as otherwise
indicated, all of the persons listed below are citizens of the United States of
America. Except as otherwise indicated, the principal business address of all of
the persons listed below is 10165 McKellar Court, San Diego, California 92121.
Directors of the Purchaser are indicated with an asterisk. None of the persons
listed below have bought or sold any Shares within the past 60 days.
<TABLE>
<CAPTION>
MATERIAL POSITIONS HELD
NAME PRESENT PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
*Andre de Bruin(1).................. Vice Chairman of the Board, President and Chief Executive
President and Chief Executive Officer of Parent (1998 to
Officer of Parent present); and President and Chief
Executive Officer of Somatogen,
Inc. (1994 to 1998).
*Charles J. Cashion................. Senior Vice President, Corporate Senior Vice President, Corporate
Operations, and Chief Financial Operations, and Chief Financial
Officer of Parent Officer of Parent (1998 to
present); and Senior Vice
President and Chief Financial
Officer of The Immune Response
Corp. (1989 to 1998).
</TABLE>
- ------------------------
(1) Citizen of the United Kingdom.
I-4
<PAGE>
ANNEX A
TEXT OF CHAPTER 13 OF THE CALIFORNIA GENERAL CORPORATION LAW
<TABLE>
<CAPTION>
SECTION
- -----------
<S> <C>
1300. Reorganization or short-form merger;
dissenting shares; corporate purchase at fair
market value; definitions.
1301. Notice to holders of dissenting shares in
reorganizations; demand for purchase; time;
contents.
1302. Submission of share certificates for
endorsement; uncertificated securities.
1303. Payment of agreed price with interest;
agreement fixing fair market value; filing;
time of payment.
1304. Action to determine whether shares are
dissenting shares or fair market value;
limitation; joinder; consolidation;
determination of issues; appointment of
appraisers.
1305. Report of appraisers; confirmation;
determination by court; judgment; payment;
appeal; costs.
<CAPTION>
SECTION
- -----------
<S> <C>
1306. Prevention of immediate payment; status as
creditors; interest.
1307. Dividends on dissenting shares.
1308. Rights of dissenting shareholders pending
valuation; withdrawal of demand for payment.
1309. Termination of dissenting share and
shareholder status.
1310. Suspension of right to compensation or
valuation proceedings; litigation of
shareholders' approval.
1311. Exempt shares.
1312. Right of dissenting shareholder to attack,
set aside or rescind merger or
reorganization; restraining order or
injunction; conditions.
</TABLE>
SECTION 1300. REORGANIZATION OR SHORT-FORM MERGER; DISSENTING SHARES; CORPORATE
PURCHASE AT FAIR MARKET VALUE; DEFINITIONS
(a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to vote
on the transaction and each shareholder of a subsidiary corporation in a
short-form merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their fair market
value the shares owned by the shareholder which are dissenting shares as defined
in subdivision (b). The fair market value shall be determined as of the day
before the first announcement of the terms of the proposed reorganization or
short-form merger, excluding any appreciation or depreciation in consequence of
the proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by
the Commissioner of Corporations under subdivision (o) of Section 25100 or
(B) listed on the list of OTC margin stocks issued by the Board of Governors
of the Federal Reserve System, and the notice of meeting of shareholders to
act upon the reorganization summarizes this section and Sections 1301, 1302,
1303 and 1304; provided, however, that this provision does not apply to any
shares with respect to which there exists any restriction on transfer
imposed by the corporation or by any law or regulation; and provided,
further, that this provision does not apply to any class of shares described
in subparagraph (A) or (B) if demands for payment are filed with respect to
5 percent or more of the outstanding shares of that class.
A-1
<PAGE>
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case where
the approval required by Section 1201 is sought by written consent rather
than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the recordholder
of dissenting shares and includes a transferee of record. (ADDED BY STATS.1975,
C. 682, SECTION 7, EFF. JAN. 1, 1977. AMENDED BY STATS.1976, C. 641, SECTION
21.3, EFF. JAN. 1, 1977; STATS.1982, C. 36, P. 69, SECTION 3, EFF. FEB. 17,
1982; STATS.1990, C. 1018 (A.B.2259), SECTION 2; STATS.1993, C. 543 (A.B.2063),
SECTION 13.)
SECTION 1301. NOTICE TO HOLDERS OF DISSENTING SHARES IN REORGANIZATIONS; DEMAND
FOR PURCHASE; TIME; CONTENTS
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such sections.
The statement of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price. (ADDED
BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977. AMENDED BY STATS.1976, C.
641, SECTION 21.6, EFF. JAN. 1, 1997; STATS.1980, C. 501, P. 1052, SECTION 5;
STATS.1980, C. 1155, P. 3831, SECTION 1.)
A-2
<PAGE>
SECTION 1302. SUBMISSION OF SHARE CERTIFICATES FOR ENDORSEMENT; UNCERTIFICATED
SECURITIES
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares. (ADDED BY STATS.1975, C. 682,
SECTION 7, EFF. JAN. 1, 1977. AMENDED BY STATS.1986, C. 766, SECTION 23.)
SECTION 1303. PAYMENT OF AGREED PRICE WITH INTEREST; AGREEMENT FIXING FAIR
MARKET VALUE; FILING, TIME OF PAYMENT
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement. (ADDED BY STATS.1975, C. 682, SECTION 7,
EFF. JAN. 1, 1977. AMENDED BY STATS.1980, C. 501, P. 1053, SECTION 6;
STATS.1986, C. 766, SECTION 24.)
SECTION 1304. ACTION TO DETERMINE WHETHER SHARES ARE DISSENTING SHARES OR FAIR
MARKET VALUE; LIMITATION; JOINDER; CONSOLIDATION; DETERMINATION OF
ISSUES; APPOINTMENT OF APPRAISERS
(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of the
shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (Section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares. (ADDED BY
STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977.)
SECTION 1305. REPORT OF APPRAISERS; CONFIRMATION; DETERMINATION OF COURT;
JUDGMENT; PAYMENT; APPEAL; COSTS
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall
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<PAGE>
make and file a report in the office of the clerk of the court. Thereupon, on
the motion of any party, the report shall be submitted to the court and
considered on such evidence as the court considers relevant. If the court finds
the report reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time as
may be allowed by the court or the report is not confirmed by the court, the
court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301). (ADDED BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977. AMENDED BY
STATS.1976, C. 641, SECTION 22, EFF. JAN. 1, 1977; STATS.1977, C. 235, P. 1068,
SECTION 16; STATS.1986, C. 766, SECTION 25.)
SECTION 1306. PREVENTION OF IMMEDIATE PAYMENT; STATUS AS CREDITORS; INTEREST
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5. (ADDED BY STATS.1975, C. 682,
SECTION 7, EFF. JAN. 1, 1977.)
SECTION 1307. DIVIDENDS ON DISSENTING SHARES
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor. (ADDED BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977.)
SECTION 1308. RIGHTS OF DISSENTING SHAREHOLDERS PENDING VALUATION; WITHDRAWAL OF
DEMAND FOR PAYMENT
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto. (ADDED BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977.)
A-4
<PAGE>
SECTION 1309. TERMINATION OF DISSENTING SHARE AND SHAREHOLDER STATUS
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares. (ADDED
BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977.)
SECTION 1310. SUSPENSION OF RIGHT TO COMPENSATION OR VALUATION PROCEEDINGS;
LITIGATION OF SHAREHOLDERS' APPROVAL
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation. (ADDED BY STATS.1975, C. 682, SECTION 7, EFF. JAN. 1, 1977.)
SECTION 1311. EXEMPT SHARES
This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect to
such shares in the event of a reorganization or merger. (ADDED BY STATS.1975, C.
682, SECTION 7, EFF. JAN. 1, 1977. AMENDED BY STATS.1988, C. 919, SECTION 8.)
SECTION 1312. RIGHT OF DISSENTING SHAREHOLDER TO ATTACK, SET ASIDE OR RESCIND
MERGER OR REORGANIZATION; RESTRAINING ORDER OR INJUNCTION;
CONDITIONS
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set aside
or rescinded, except in an action to test whether the number of shares required
to authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the
A-5
<PAGE>
reorganization or short-form merger or to have the reorganization or short-form
merger set aside or rescinded shall not restrain or enjoin the consummation of
the transaction except upon 10 days' prior notice to the corporation and upon a
determination by the court that clearly no other remedy will adequately protect
the complaining shareholder or the class of shareholders of which such
shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled. (ADDED BY STATS.1975, C. 682,
SECTION 7, EFF. JAN. 1, 1977. AMENDED BY STATS.1976, C. 641, SECTION 22.5, EFF.
JAN. 1, 1977; STATS.1988, C. 919, SECTION 9.)
A-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL OR OVERNIGHT DELIVERY BY FACSIMILE TRANSMISSION
40 Wall Street, 46th Floor (FOR ELIGIBLE INSTITUTIONS ONLY)
New York, New York 10005 (718) 234-5001
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE
(718) 921-8200
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at the Purchaser's expense. Shareholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF BEACON HILL PARTNERS, INC.]
90 Broad Street
New York, New York 10004
Banks and Brokers Call Collect (212) 843-8500
All Others Call Toll Free (800) 350-6580
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO OF FIRST SECURITY VAN KASPER]
10877 Wilshire Boulevard, Suite 1700
Los Angeles, California 90024
(800) 225-8552
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 9, 1999
BY
MBS ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL OR OVERNIGHT DELIVERY BY FACSIMILE TRANSMISSION
40 Wall Street, 46th Floor (FOR ELIGIBLE INSTITUTIONS ONLY)
New York, New York 10005 (718) 234-5001
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE
(718) 921-8200
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ----------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
SHARE CERTIFICATE(S) AND SHARES TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
(ATTACH ADDITIONAL LIST, IF NECESSARY) APPEAR(S) ON SHARE CERTIFICATE(S))
<C> <C> <C> <S>
- ----------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
TOTAL SHARES:
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by Book-Entry
Transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures
set forth in Section 3 of the Offer to Purchase (as defined below). Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary. Shareholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Shareholders" and other shareholders are
referred to herein as "Certificate Shareholders."
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary or complete the procedures for
book-entry transfer before the Expiration Date (as defined in the section
"INTRODUCTION" of the Offer to Purchase) must tender their Shares according to
the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket No. (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
Account Number (if delivered by Book-Entry Transfer): ______________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to MBS Acquisition Corporation (the
"Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Quidel
Corporation, a Delaware corporation ("Parent"), the shares of common stock of
Metra Biosystems, Inc. (the "Company"), par value $0.001 per share (the "Common
Stock"), including the associated preferred shares purchase rights (the
"Rights") issued pursuant to the Preferred Shares Rights Agreement between the
Company and American Stock Transfer & Trust Company, as Rights Agent, dated as
of January 11, 1994, as first amended on January 17, 1997, as second amended on
November 3, 1998 and as third amended on June 4, 1999, (the "Rights" and,
together with the Common Stock, the "Shares"), pursuant to the Purchaser's offer
to purchase all outstanding Shares at a price of $1.78 per share (the "Merger
Price"), net to the seller in cash, upon the terms and subject to the conditions
set forth in Purchaser's offer to purchase, dated June 9, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements hereto or thereto, constitute the "Offer"). The undersigned
understands that the Purchaser reserves the right to transfer or assign, in
whole or in part from time to time, to any subsidiaries or affiliates of the
Purchaser the right to purchase Shares tendered pursuant to the Offer. As used
herein, the term "Purchaser" shall, if applicable, include any such subsidiary
and affiliate.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), effective upon acceptance for payment of and payment for the Shares
tendered herewith, the undersigned hereby sells, assigns and transfers to, or
upon the order of the Purchaser, all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities issued or issuable in respect thereof (collectively,
"Distributions")) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver certificates for such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by the Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the
Merger Price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares and all Distributions for cancellation and transfer on
the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares and
all Distributions and that, when the same are accepted for payment by the
Purchaser, the
<PAGE>
Purchaser will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, claims, charges and encumbrances, and the same
will not be subject to any adverse claims. The undersigned shall, upon request,
execute any signature guarantees or additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares and all Distributions. In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser any such Distributions issued to the
undersigned, in respect of the tendered Shares, accompanied by documentation of
transfer, and pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of any such
Distributions and may withhold the entire Merger Price or deduct from the Merger
Price the amount or value thereof, as determined by the Purchaser, in its sole
discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints designees of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of substitution,
to vote at any annual, special or adjourned meeting of the Company's
shareholders or otherwise act (including pursuant to written consent) in such
manner as each such attorney and proxy or his or her substitute will in his or
her sole discretion deem proper, to execute any written consent concerning any
matter as each such attorney and proxy or his or her substitute will in his or
her sole discretion deem proper with respect to, and to otherwise act with
respect to, all the Shares tendered hereby that have been accepted for payment
by the Purchaser before the time any such vote or action is taken (and any and
all Distributions issued or issuable in respect thereof) and with respect to
which the undersigned is entitled to vote. This appointment is effective when,
and only to the extent that, the Purchaser accepts for payment such Shares as
provided in the Offer to Purchase. This power of attorney and proxy is coupled
with an interest in the tendered Shares, is irrevocable and is granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall revoke all prior
powers of attorney and proxies given by the undersigned at any time with respect
to such Shares, and no subsequent powers of attorney or proxies may be given by
the undersigned (and, if given, shall not be deemed effective). The Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including voting at any shareholders meeting then
scheduled.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions will constitute the undersigned's acceptance of the terms and
conditions of the Offer, including the undersigned's representation and warranty
to the Purchaser that (i) the undersigned has a net long position in the Shares
or equivalent securities being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended, and (ii) the
tender of such Shares compiles with Rule 14e-4. The Purchaser's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer.
The undersigned understands that upon the terms and conditions of the Offer,
the Company will pay $1.78 net per Share, without interest, for Shares validly
tendered and not properly withdrawn pursuant to the Offer, taking into account
the number of Shares so tendered. The undersigned understands that all Shares
validly tendered and not properly withdrawn will be purchased at the Merger
Price upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
The undersigned understands that a tender of Shares pursuant to the Offer
will include a tender of the Rights and that no separate consideration will be
paid for such Rights.
The undersigned understands that acceptance of Shares by the Purchaser for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Merger Price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the Merger Price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the Merger Price of any
Shares purchased, and/or return any certificates for Shares not tendered or
accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility with any Shares not accepted for payment. The undersigned
recognizes that the Purchaser has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder(s)
thereof if the Company does not accept for payment any of the Shares so
tendered.
<PAGE>
- -----------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the Merger Price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned.
Issue check and/or certificate(s) to:
Name _______________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
PLEASE PRINT
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
INCLUDE ZIP CODE
____________________________________________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.
(SEE SUBSTITUTE FORM W-9)
- -----------------------------------------------------
- -----------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail check and/or certificate(s) to:
Name _______________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
PLEASE PRINT
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
INCLUDE ZIP CODE
- -----------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT:
SHAREHOLDER(S) SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: ____________________________________________________________________,
1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
PLEASE PRINT
Capacity: __________________________________________________________________
____________________________________________________________________________
PLEASE PROVIDE FULL TITLE
Address: ___________________________________________________________________
INCLUDE ZIP CODE
Telephone No.: _____________________________________________________________
INCLUDE AREA CODE
Taxpayer Identification or
Social Security Number: ____________________________________________________
SEE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS:
PLACE MEDALLION GUARANTEE IN SPACE PROVIDED BELOW.
----------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
inside front cover hereof or (ii) if such Shares are tendered for the account of
a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in
Section 3 of the Offer to Purchase. Share Certificates, or timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Shareholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary on or
prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof), with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery.
A "trading day" is any day on which Nasdaq National Market is open for business.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or facsimile hereof) must
accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal or facsimile hereof, waive any right to receive any
notice of the acceptance of this Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the box marked "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), without alteration, enlargement or
any other change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in the name
of a person other than the registered owner(s). Signatures on such
certificate(s) or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay, or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the Merger Price is to be made to, or if certificates for
Shares not tendered or purchased are to be registered in the name of, any person
other than the registered holder(s), or if tendered certificates are registered
in the name of a person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder(s) or
<PAGE>
such person) payable on account of the transfer to such person will be deducted
from the Merger Price received by such persons(s) pursuant to this Offer (i.e.,
the Merger Price will be reduced) unless satisfactory evidence of the payment of
such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of and/or certificates for unpurchased Shares are to be returned to,
a person other than the person(s) signing this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to someone other
than the person(s) signing this Letter of Transmittal or to an address other
than that shown on the front cover hereof, the appropriate boxes on this Letter
of Transmittal should be completed. Book-Entry Shareholders may request that
Shares not purchased be credited to such account maintained at such Book-Entry
Transfer Facility as such Book-Entry Shareholder may designate hereon. If no
such instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above. See
Instruction 1.
8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase and subject to the consent of Purchaser, the Purchaser reserves the
absolute right, in its sole discretion, to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its addresses set forth below.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a shareholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
shareholder or other payee to a $50 penalty, and payments that are made to such
shareholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
In order for a foreign individual to qualify as an exempt recipient, it must
submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the shareholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing a Substitute Form W-9 certifying (i) that the TIN provided on
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN), and
(ii) that (a) such shareholder is exempt from backup withholding, (b) such
shareholder has not been notified by the Internal Revenue Service that such
shareholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (c) the Internal Revenue Service has notified such
shareholder that such shareholder is no longer subject to backup withholding.
The words "Applied For" may be written in Part 3 of the Substitute From W-9
if the tendering shareholder has not been issued a TIN but has applied for a TIN
or intends to apply for a TIN in the near future. If the words "Applied For" are
written in Part 3, the shareholder or other payee must also complete the
Certificate of Awaiting Taxpayer Identification Number below. Notwithstanding
that the words "Applied For" are written in Part 3 and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The shareholder is required to give the Depositary the TIN of the holder of
the Shares. If the Shares are held in more than one name or not held in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute From W-9" for additional guidance
on which number to report.
11. LOST OR DESTROYED CERTIFICATES. If any certificate(s) representing
Shares has been lost, destroyed, mutilated, or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, mutilated, or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR
TO THE EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 10)
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--Taxpayer Identification Number--For PART 3
FORM W-9 all accounts, enter your TIN in the box at
Department of the Treasury right. (For most individuals, this is your SOCIAL SECURITY NUMBER
Internal Revenue Service social security number. If you do not have a OR
PAYER'S REQUEST FOR TAXPAYER TIN, see Obtaining a Number in the enclosed
IDENTIFICATION NUMBER (TIN) GUIDELINES.) Certify by signing and dating EMPLOYER IDENTIFICATION NUMBER
below. Note: If the account is in more than (IF AWAITING TIN WRITE "APPLIED
one name, see the chart in the enclosed FOR")
GUIDELINES to determine which number to give
the payer.
NAME (Please Print)
ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------
PART 2--For payees exempt from backup withholding, see the enclosed GUIDELINES and complete as instructed
therein.
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to
be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have
not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a
result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed GUIDELINES.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
SIGNATURE DATE , 1999
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under the penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
Signature:________________________________ Date:_______________, 1999
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent at the location and telephone numbers set forth below:
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF BEACON HILL PARTNERS, INC.]
90 Broad Street
New York, New York 10004
Banks and Brokers Call Collect (212) 843-8500
All Others Call Toll Free (800) 350-6580
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO OF FIRST SECURITY VAN KASPER]
10877 Wilshire Boulevard, Suite 1700
Los Angeles, California 90024
(800) 225-8552
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
BY
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
June 9, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by MBS Acquisition Corporation (the "Purchaser"), a
Delaware corporation and a wholly-owned subsidiary of Quidel Corporation, a
Delaware corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of common stock, par value
$0.001 per share (the "Common Stock"), of Metra Biosystems, Inc., a California
corporation (the "Company"), including the associated preferred shares purchase
rights (the "Rights" and, together with the Common Stock, the "Shares"), of the
Company at a price of $1.78 per Share net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated June 9, 1999 (the "Offer to Purchase"), and the related Letter
of Transmittal (which together constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is contingent upon, among other things, Shares representing at
least ninety percent (90%) of the total number of outstanding Shares of the
Company being validly tendered and not properly withdrawn before the Expiration
Date for the Offer (as such terms are defined in the Offer to Purchase) and
certain other conditions. See Section 14 of the Offer to Purchase.
In the event that less than 90% of the then outstanding Shares are tendered
on any scheduled expiration date of the Offer, and provided that certain other
conditions have been met, the Purchaser may, among other options, waive the
Minimum Condition and amend the Offer to reduce the number of Shares subject to
the Offer to a number of Shares that, when added to the Shares then owned by the
Purchaser, will equal 49.99% of the Shares then outstanding (the "Revised
Minimum Number"). If a greater number of Shares is tendered into the Offer and
not withdrawn, the Purchaser may elect to purchase, on a pro rata basis, the
Revised Minimum Number of Shares.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
copies of the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients.
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach American Stock Transfer & Trust
Company (the "Depositary") by the Expiration Date (as defined in the
Offer to Purchase) or if the procedure for book-entry transfer cannot be
completed on a timely basis.
4. A letter to the shareholders from the President and Chief Executive
Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the
Offer.
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), together with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry delivery of Shares and any other documents required
by the Letter of Transmittal must be received by the Depositary. Additionally,
certificates representing the tendered Shares must be received by the Depositary
or tendered pursuant to the procedure for book-entry transfer as set forth in
the Offer to Purchase and Book-Entry Confirmation (as defined in the Offer to
Purchase) must be received by the Depositary.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates for Shares or other required documents on or before
the Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and Beacon Hill
Partners, Inc., the Information Agent, as described in Section 16 of the Offer
to Purchase) for soliciting tenders of Shares pursuant to the Offer. The
Purchaser will, however, upon request, reimburse you for customary clerical and
mailing expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any stock transfer
taxes payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from the
undersigned.
<TABLE>
<S> <C>
Very truly yours,
[LOGO OF FIRST SECURITY VAN KASPER]
as Dealer Manager
</TABLE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR ANY
OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF THE PURCHASER, PARENT, THE
COMPANY, THE INFORMATION AGENT, THE DEALER MANAGER OR THE DEPOSITARY, OR OF ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
BY
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
June 9, 1999
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated June 9, 1999
(the "Offer to Purchase"), and a related Letter of Transmittal (which together
constitute the "Offer") relating to the offer by MBS Acquisition Corporation
(the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of
Quidel Corporation, a Delaware corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $0.001 per share (the "Common
Stock"), of Metra Biosystems, Inc., a California corporation (the "Company"),
including the associated preferred shares purchase rights (the "Rights" and,
together with the Common Stock, the "Shares"), of the Company at a price of
$1.78 per Share net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us (or our nominee) for
your account, upon the terms and subject to the conditions set forth in the
Offer.
Your attention is invited to the following:
1. The purchase price is $1.78 per Share net to you in cash, without
interest, upon the terms and subject to the conditions set forth in the
Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously (except for a
director of the Company who is also a director of Parent and, accordingly,
abstained from voting on all matters relating to the Offer and the Merger)
has determined that the Offer and the Merger (as defined in the Offer to
<PAGE>
Purchase), are fair to and in the best interests of the Company and its
shareholders, has approved the Offer and adopted the Merger Agreement and
recommends acceptance of the Offer by the Company's shareholders.
4. The Offer is contingent upon, among other things, Shares
representing at least ninety percent (90%) of the total number of
outstanding Shares of Common Stock of the Company being validly tendered and
not properly withdrawn before the Expiration Date for the Offer (the
"Minimum Condition") and certain other conditions. See Section 14 of the
Offer to Purchase.
5. In the event that less than 90% of the then outstanding Shares are
tendered on any scheduled expiration date of the Offer, and provided that
certain other conditions have been met, the Purchaser may, among other
options, waive the Minimum Condition and amend the Offer to reduce the
number of Shares subject to the Offer to a number of Shares that, when added
to the Shares then owned by the Purchaser, will equal 49.99% of the Shares
then outstanding (the "Revised Minimum Number"). If a greater number of
Shares is tendered into the Offer and not withdrawn, the Purchaser may elect
to purchase, on a pro rata basis, the Revised Minimum Number of Shares.
6. The Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on Thursday, July 8, 1999, unless the Offer is extended.
7. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by the Purchaser pursuant to the Offer.
8. Payment for Shares pursuant to the Offer will be made only after
timely receipt by the Depositary of (a) the certificates evidencing such
Shares or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry delivery, and (c) any other documents required
by the Letter of Transmittal. Accordingly, payment may not be made to all
tendering shareholders at the same time and will depend upon when
certificates for Shares are received by the Depositary or Book-Entry
Transfer Facility confirmations of such shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF BEFORE THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer will
be deemed to be made on behalf of the Purchaser by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
BY
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated June 9, 1999, and the related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by MBS Acquisition
Corporation (the "Purchaser"), a Delaware corporation and a wholly-owned
subsidiary of Quidel Corporation, a Delaware corporation ("Parent"), to purchase
all outstanding shares of common stock, par value $0.001 per share (the "Common
Stock"), of Metra Biosystems, Inc., a California corporation (the "Company"),
including the associated preferred shares purchase rights (the "Rights" and,
together with the Common Stock, the "Shares"), of the Company, at a price of
$1.78 per Share net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to Be Tendered:
- -------- Shares*
<TABLE>
<S> <C> <C>
SIGN BELOW
Account Number: Signature(s):
Dated: , 1999
Please type or print name(s)
Please type or print address(es) here
Area Code and Telephone Number
Taxpayer Identification or Social Security Number(s)
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
TO
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if certificates evidencing
shares of common stock, par value $0.001 per share (the "Common Stock"), of
Metra Biosystems, Inc., a California corporation (the "Company"), including the
associated preferred shares purchase rights (the "Rights" and, together with the
Common Stock, the "Shares"), of the Company are not immediately available or
time will not permit all required documents to reach American Stock Transfer &
Trust Company, as Depositary (the "Depositary"), before the Expiration Date (as
defined in the "Offer to Purchase" (as defined below)) or the procedure for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary. See Section 3 of the
Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL OR OVERNIGHT DELIVERY BY FACSIMILE TRANSMISSION
40 Wall Street, 46th Floor (FOR ELIGIBLE INSTITUTIONS ONLY)
New York, New York 10005 (718) 234-5001
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE
(718) 921-8200
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to MBS Acquisition Corporation (the
"Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Quidel
Corporation, a Delaware corporation ("Parent"), upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated June 9, 1999 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
COMMON STOCK, PAR VALUE $0.001 PER SHARE
- --------------------------------------- ---------------------------------------
Certificate Nos. (if ---------------------------------------
available) ---------------------------------------
- --------------------------------------- Name(s) of Record Holder(s)
Number of Shares Tendered (Please Type or Print)
Address(es):
---------------------------------------
---------------------------------------
---------------------------------------
Zip Code
Tel. No.: ( )
--------------------------
(Area Code)
---------------------------------------
Signature(s)
---------------------------------------
Date
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Check box if Shares will be delivered by
book-entry transfer: / /
- ---------------------------------------
Name of Tendering Institution
- ---------------------------------------
Account No.
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GUARANTEE
(NOT TO BE USED FOR THE SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union, savings
associate or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program ("Eligible Institution"), hereby guarantees
delivery to the Depositary, at its address set forth above, certificates ("Share
Certificates") evidencing the Shares tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Shares into the Depositary's account
at The Depository Trust Company, in each case with delivery of a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed, or an
Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery, and any other required documents, all within three trading days after the
date of execution of this Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq National Market is open for business.
The Eligible Institution that completes this form must communicate the guarantee
to the Depositary and must deliver the Letter of Transmittal and Share Certificates
to the Depositary within the time period shown herein. Failure to do so could result
in a financial loss to such Eligible Institution.
- ---------------------------------------- ----------------------------------------
Name of Firm Authorized Signature
- ---------------------------------------- Title: ---------------------------------
Address Name: ---------------------------------
- ---------------------------------------- Please Type or Print
Zip Code Dated: ----------------------------, 1999
- ----------------------------------------
Telephone No. (including Area Code)
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.-- Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<C> <S> <C>
- ------------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first individual
on the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF--
<C> <S> <C>
- ------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local
government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security number
or your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME IS LISTED, THE
NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
- ------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM WITHHOLDING INCLUDE:
- - An organization exempt from tax under Section 501(a), an individual retirement
account (IRA), or a custodial account under Section 403(b)(7), if the account
satisfies the requirements of Section 401(f)(2).
- - The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or instrumentality
thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- - A corporation
- - A dealer in securities or commodities required to register in the United
States, the District of California, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- - A future commission merchant registered with the Commodity Futures Trading
Commission
- - A foreign central bank of issue.
PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenants bonds under Section 1451.
- - Payments made by certain foreign organizations.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLD. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045, 6049,
6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT"
IN PART 2 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.-- Section 6109 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.-- If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.-- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE>
QUIDEL CORPORATION SIGNS AGREEMENT TO ACQUIRE METRA BIOSYSTEMS, INC. IN ALL CASH
TRANSACTION
SAN DIEGO, June 7 -- QUIDEL Corporation today announced that it has
signed a definitive agreement to acquire Metra Biosystems, Inc. for $22.9
million, or $1.78 per share based upon 12,852,248 fully diluted shares
outstanding, in an all-cash tender offer. The tender offer will commence on
June 9, 1999 and will have an initial duration of twenty business days. After
charges related to the transaction and the consolidation of Metra's business
into QUIDEL, Metra's results of operations are expected to add to QUIDEL's
current fiscal year earnings.
The cash consideration of $1.78 per share, to be paid to Metra shareholders
represents a premium of approximately 68% to Metra's closing common stock price
one week prior to announcement and a premium of approximately 78% to the
six-month trailing average of $1.00. For the twelve months ended March 31, 1999,
Metra had total revenues of $6.3 million for fourteen products marketed under
Metra's label in the areas of bone and joint related diseases and over sixty
products distributed on behalf of its partners. Completion of the acquisition is
subject to 90% of the shares being tendered, execution of retention agreements
by key employees, minimum cash balance at closing and other customary closing
conditions.
It is anticipated that the total consolidation and transaction costs to
QUIDEL will be approximately $8 million, net of Metra's estimated cash of
approximately $19 million at the close of the tender offer. The tender offer
will be financed from QUIDEL's cash reserves and proceeds from a short-term bank
loan.
"We are pleased to be acquiring Metra Biosystems, a world leader in the
diagnosis, detection and management of osteoporosis and other bone diseases,"
said Andre de Bruin, vice chairman, president and chief executive officer of
QUIDEL Corporation. "We are particularly pleased that we could acquire an
attractive product and technology portfolio with revenues of more than $6
million without dilution to QUIDEL's stockholders. We believe Metra's
shareholders will favorably view our all cash offer."
Mr. de Bruin and George Dunbar, Metra's president and chief executive
officer, issued a joint statement to the employees of both companies saying:
"The acquisition of Metra by QUIDEL will assure the ongoing success of Metra
products as the market for osteoporosis continues to develop."
Mr. de Bruin added, "We believe we can strengthen the financial performance
of Metra and realize attractive returns on this investment relatively quickly
for several reasons. First, by reducing overhead costs and consolidating
operations, we can create a profit from the excellent products Metra has
created. Second, product demand is increasing in the osteoporosis market as the
population ages. As major pharmaceutical companies introduce new drugs for these
diseases, the ability to accurately diagnose the disease at earlier stages will
be recognized as important for proper treatment. Third, Medicare reimbursement
has recently been established for certain osteoporosis diagnostics, including
Metra's new ultrasonometer for evaluating bone quality. Reimbursement for a new
class of biochemical markers is also expected. In addition, reimbursement for
Metra's Pyrilinks(R)-D has already increased from 5 states in 1997 to 43 states
in 1998. Fourth, QUIDEL will be able to capitalize on Metra's international
infrastructure and begin to strengthen the marketing of existing QUIDEL products
abroad. In turn, sales of Metra's products will benefit from utilizing QUIDEL's
established marketing and distribution channels in the U.S."
Osteoporosis is a bone disease characterized by a decrease in bone mass
that leads to increased susceptibility to fractures. According to the National
Osteoporosis Foundation, osteoporosis afflicts over 28 million people in the
U.S. and over 200 million people worldwide. In the U.S., the annual cost to the
Medicare system to treat fractures among older adults is approximately $14
billion. Detecting the state of bone condition and rate of bone loss helps to
determine if a person is at higher risk of developing osteoporosis, as well as
to assess the risk of bone fracture and to monitor osteoporosis drug therapy.
Metra Biosystems has distribution agreements and strategic collaborations
with major diagnostic and pharmaceutical companies including Abbott
Laboratories, Beckman-Coulter, Inc.,
<PAGE>
Bayer Corporation, Diagnostic Products Corporation, Sumitomo Pharmaceuticals and
others which complement QUIDEL's corporate partnering strategy.
Metra Biosystems, Inc. develops and commercializes diagnostic products for
research and clinical use that provide physicians with comprehensive clinical
information regarding the metabolism of bone and other connective tissues. With
fourteen immunodiagnostic products, including Pyrilinks(R)-D -- the Dpd bone
resorption test, and its new QUS-2(TM) calcaneal (heel) ultrasonometer, Metra
believes it is the only U.S. company to offer both immunodiagnostic and scanning
technologies for the assessment and management of bone health.
QUIDEL Corporation discovers, develops, manufactures and markets rapid
immunodiagnostic products for point-of-care detection of human medical
conditions and illnesses. These products provide simple, accurate and
cost-effective diagnoses for acute and chronic conditions in the areas of
women's health and infectious diseases. QUIDEL's products are sold to
professionals in the physician's office and clinical laboratories, and to
consumers through organizations that provide private label, store brand
products.
This press release contains forward-looking statements regarding QUIDEL and
Metra Biosystems, Inc. and their future activities within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. QUIDEL and Metra believe that their expectations are based on
reasonable assumptions, but can give no assurance that their goals will be
achieved. Actual results could differ materially from those described or implied
in this press release as a result of a number of factors, including, but not
limited to, the uncertainties associated with completing the proposed
acquisition, any adverse actions by the companies' distribution partners,
competitive products, new product introductions by competitors, changes in
regulations, other economic factors affecting the companies' markets, the degree
of acceptance that new products achieve, and seasonality. Please see the
discussion of these and other factors in the companies' annual reports, Forms
10-K and subsequent quarterly reports on Forms 10-Q. Pyrilinks(R)-D and
QUS-2(TM) are registered trademarks of Metra Biosystems, Inc.
CONTACT: Charles J. Cashion, 619-552-7962, or Christa Cerciello,
619-646-8031, both of QUIDEL; or George Dunbar or Jennifer Lloyd, both of
Metra Biosystems, 650-903-9100/
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES (AS DEFINED BELOW). THE OFFER (AS DEFINED BELOW) IS MADE
SOLELY BY THE OFFER TO PURCHASE DATED JUNE 9, 1999 (THE "OFFER TO PURCHASE") AND
THE RELATED LETTER OF TRANSMITTAL (WHICH TOGETHER CONSTITUTE THE "OFFER") AND IS
BEING MADE TO ALL HOLDERS OF SHARES. THE PURCHASER (AS DEFINED BELOW) IS NOT
AWARE OF ANY STATE WHERE THE MAKING OF THE OFFER IS PROHIBITED BY ADMINISTRATIVE
OR JUDICIAL ACTION PURSUANT TO ANY VALID STATE STATUTE. IF THE PURCHASER
BECOMES AWARE OF ANY VALID STATE STATUTE PROHIBITING THE MAKING OF THE OFFER OR
THE ACCEPTANCE OF SHARES PURSUANT THERETO, THE PURCHASER WILL MAKE A GOOD FAITH
EFFORT TO COMPLY WITH SUCH STATE STATUTE. IF, AFTER SUCH GOOD FAITH EFFORT, THE
PURCHASER CANNOT COMPLY WITH SUCH STATE STATUTE, THE OFFER WILL NOT BE MADE TO
(NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) THE HOLDERS OF SHARES IN
SUCH STATE. IN ANY JURISDICTION WHERE SECURITIES, BLUE SKY OR OTHER LAWS
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER WILL BE
DEEMED TO BE MADE ON BEHALF OF THE PURCHASER BY ONE OR MORE REGISTERED BROKERS
OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARES PURCHASE RIGHTS)
OF
METRA BIOSYSTEMS, INC.
BY
MBS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
QUIDEL CORPORATION
AT
$1.78 NET PER SHARE
MBS Acquisition Corporation (the "Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Quidel Corporation, a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of common stock, par
value $0.001 per share (the "Common Stock"), of Metra Biosystems, Inc., a
California corporation (the "Company"), including the associated preferred
shares purchase rights (the "Rights" and, together with the Common Stock, the
"Shares") of the Company, at a price of $1.78 per Share net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated June 9, 1999 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, JULY 8, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 4, 1999, by and among Parent, the Purchaser and the Company (the
"Merger Agreement") pursuant to which, following the consummation of the Offer
and the satisfaction of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation. On the effective date of the Merger, each outstanding
Share (other than any Shares held by Parent, the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which shares will be canceled with no
payment being made with respect thereto and other than Shares, if any, held by
shareholders who perfect their appraisal rights under California law) will by
virtue of the Merger and without any action by the holder thereof be converted
into the right to receive an amount equal to $1.78 in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (EXCEPT FOR A DIRECTOR OF
THE COMPANY WHO IS ALSO A DIRECTOR OF PARENT AND, ACCORDINGLY, DID NOT VOTE) HAS
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE
MERGER AGREEMENT AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S
SHAREHOLDERS.
The Offer is conditioned upon, among other things, Shares representing at
least ninety percent (90%) of the total number of outstanding Shares being
validly tendered and not properly withdrawn prior to the expiration date for the
Offer (the "Minimum Condition") and certain other conditions. See Section 14 of
the Offer to Purchase.
In the event that the Minimum Condition is not satisfied on the initial
expiration date, the Purchaser may elect to extend the Offer and may waive the
Minimum Condition and amend the Offer to reduce the number of Shares subject to
the Offer to the number of Shares that, when added to the Shares then owned by
the Purchaser, will equal 49.99% of the Shares then outstanding (the "Revised
Minimum Number"). If a greater number of Shares is tendered into the Offer and
not withdrawn, the Purchaser may elect to purchase, on a pro rata basis, the
Revised Minimum Number of Shares.
2
<PAGE>
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to American Stock
Transfer & Trust Company, as depositary (the "Depositary"), of the Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering shareholders
for the purpose of receiving payment from the Purchaser and transmitting payment
to validly tendering shareholders. Under no circumstances will interest on the
purchase price for Shares be paid by the Purchaser. In all cases, payment for
shares purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (1) certificates representing Shares (the "Share
Certificates") for such Shares or timely confirmation of the book-entry transfer
of such Shares into the Depositary's account at The Depository Trust Company,
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (2) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to Purchase)
in connection with a book-entry transfer and (3) any other documents required by
the Letter of Transmittal.
The Purchaser expressly reserves the right, in its sole discretion (subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend the period during which the Offer is open for any reason,
including the existence of any of the conditions specified in Section 14 of the
Offer to Purchase, by giving oral or written notice of such extension to the
Depositary. Any extension will be followed as promptly as practicable by public
announcement thereof, and such announcement will be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date (as defined below).
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment as provided
in the Offer to Purchase, may also be withdrawn at any time after August 4, 1999
(or such later date as may apply in the case that the Offer is extended). The
term "Expiration Date" means 5:00 p.m., New York City time, on Thursday, July 8,
1999, unless and until the Purchaser, subject to the terms of the Merger
Agreement, has further extended the period of time for which the Offer is open,
in which event the term "Expiration Date" will mean the time and date at which
the Offer, as so extended by the Purchaser, will expire. In order for a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn, and if Share Certificates have been tendered
by a person other than the registered holder, the name of the registered holder
of the Shares as set forth in the Share Certificate. If Share Certificates have
been delivered or otherwise identified to the Depositary, then before the
physical release of such certificate, the tendering shareholder must submit the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by a
firm that is a bank, broker,
3
<PAGE>
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program (an "Eligible
Institution"), except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in this paragraph. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding. Any Shares properly withdrawn will be
deemed not validly tendered for purposes of the Offer, but may be tendered at
any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed pursuant to Rule 14d-6(e)(1)(vii)
of the General Rules and Regulations under the Securities Exchange Act of 1934
is contained in the Offer to Purchase, and is incorporated herein by reference.
The Company is providing the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and, if required, other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Beacon Hill
Partners, Inc., as Information Agent (the "Information Agent"), at the address
and telephone number listed below. Additional copies of the Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained at the Purchaser's expense from the Information Agent
or from brokers, dealers, commercial banks and trust companies. Neither Parent
nor the Purchaser will pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF BEACON HILL PARTNERS, INC.]
90 Broad Street
New York, New York 10004
Banks and Brokers Call Collect (212) 843-8500
All Others Call Toll Free (800) 350-6580
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO OF FIRST SECURITY VAN KASPER]
10877 Wilshire Boulevard, Suite 1700
Los Angeles, California 90024
(800) 225-8552
June 9, 1999
4
<PAGE>
[LOGO OF BANK OF AMERICA NT&SA] San Diego Regional
Commercial Banking Office
June 4, 1999
Charles J. Cashion
Senior Vice President, CFO
Quidel Corporation
10165 McKellar Court
San Diego, CA 92121
Dear Charles:
On behalf of Bank of America NT&SA ("Bank"), we are pleased to commit the terms
and conditions of credit, as outlined in the attached Summary of Committed Terms
and Conditions ("Term Sheet"). We look forward to working with you in completing
this transaction.
The terms and conditions are based on our analysis of your credit request and
the financial and business information you have delivered to us as of this date.
This commitment is subject to the satisfaction of the conditions precedent
contained in the attached summary of terms and conditions. Those terms and
conditions are not all-inclusive but generally describe the commitment offered
to you. Please keep this letter and attached Term Sheet confidential and do not
disclose its contents to any party other than employees, officers, shareholders
and financial and legal advisors of Company.
You will be required to execute documentation that is in a form and in substance
satisfactory to the Bank. The documents may contain terms or conditions
different from or in addition to those that are stated in this letter, provided
that the key terms are not materially inconsistent with those outlined herein.
For example, these terms may include various warranties, representation and
covenants regarding financial condition. All pre-closing conditions stated in
the loan documents must be met at or prior to funding.
If the terms of this commitment are agreed and accepted by you, the
non-refundable deposit of $10,000 will be subject to the following
understandings:
- - if the committed credit is consummated, the Bank will credit the full
$10,000 deposit, less Bank's expenses, to the initial fees that are payable
under the commitment;
- - if the committed credit is accepted, but does not close by August 31, 1999,
then Bank will keep the full $10,000 deposit, and you will be responsible
for reimbursing Bank for its expenses incurred in connection with this
transaction, including without limitation Bank's audit and environmental
costs (including the allocated costs of in-house auditors, appraisers and
environmental services), legal, appraisal, and due diligence fees and the
allocated costs of in-house legal counsel, unless such failure to close is
solely the result of a breach by the Bank of its commitment hereunder.
<PAGE>
Quidel Corporation
June 4, 1999
Page 2
Any disputes between you and us arising prior to closing concerning the
commitment summarized in this letter and commitment or the interpretation of
this letter and commitment, will be resolved by binding arbitration, according
to the Commercial Rules of the American Arbitration Association. The loan
documents will contain provisions for reference and arbitration of any disputes
that may arise after the closing of this credit.
If you wish to accept this commitment, please sign and return a copy of this
letter to us no later than June 9, 1999 along with a check for the remaining
$5,000 of the $10,000 non-refundable deposit. If you do not respond by that
time, or if you do respond and the credit does not close by August 31, 1999 for
any reason, this commitment will expire. Further, if between the time you accept
this commitment and the date of closing, there is a material adverse change in
the financial condition of Company, the Bank has the right to rescind this
commitment.
Thank you for the opportunity to offer this credit commitment. If you have any
questions with respect to this commitment, please give us a call.
Sincerely,
Bank Of America National Trust and Savings Association
/s/ Karin S. Barnes
- ---------------------------------------
Karin S. Barnes
Vice President
619-515-7507
AGREED AND ACCEPTED:
By: /s/ Charles J. Cashion
------------------------------------
Date: 6/4/99
----------------------------------
<PAGE>
QUIDEL CORPORATION
SUMMARY OF COMMITTED TERMS AND CONDITIONS
June 4, 1999
DO NOT DISCLOSE THE CONTENTS OF THE TERM SHEET TO ANY PARTY OTHER THAN THE
EMPLOYEES, FINANCIAL ADVISORS, AND LEGAL COUNSEL OF QUIDEL CORPORATION
("BORROWER") WITHOUT THE ACCEPTANCE OF THE ATTACHED COMMITMENT LETTER.
Borrower: Quidel Corporation
Final borrowing and legal structure must be acceptable to
Bank and its legal counsel.
Guarantor(s): Facility A to be guaranteed by the Borrower's wholly-owned
subsidiaries, existing at the date of closing or thereafter
formed or acquired, and by any US holding company that would
be formed to hold the Borrower's stock.
Purpose: To partially finance (i) the acquisition of "Project Red
Wine" (the "Acquisition"); (ii) to fund ongoing working
capital requirements.
Facilities: FACILITY A: A revolving credit facility available in
an amount up to the lesser of
(i) $10,000,000 or (ii) the Borrowing Base
(as described below). Revolver Commitment
shall step down to $7,500,000 within 90 days
of the completion of Borrower's contemplated
sale/leaseback of the property located at
10165 McKellar Court, San Diego, CA.
FACILITY B: A fully cash secured term loan in the
amount of $19,000,000, available on a single
advance at closing if Borrower's acquisition
entity acquires 90% or more of the capital
stock of the target in Project Red Wine ("a
90% acquisition"), or in two advances if
Borrower's acquisition entity acquires 49.9%
of such capital stock ("a 49.9%
acquisition").
Maturities: FACILITY A: One year from the date of closing.
FACILITY B: Five days from the date of closing in the
case of a 90% acquisition or August 31, 1999
in the case of a 49.9% acquisition.
Borrowing
Base
Availability: The Borrowing Base will likely be defined as the net result
of (i) the total ELIGIBLE trade accounts receivable
multiplied by an 75% advance rate; PLUS (ii) the total
ELIGIBLE inventory multiplied by a 30% advance rate; PLUS
(iii) the total equipment, net of depreciation and
associated liabilities, multiplied by a 30% advance rate;
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PLUS for a period of 5 days from date closing in the case of
a 90% acquisition or August 31, 1999 in the case of a 49.9%
acquisition; (iv) domestic cash and cash equivalents
multiplied by an 80% advance rate up to $2,000,000.
Eligible receivables will likely be defined as accounts of
the Borrower resulting from sales in the ordinary course of
business. These receivables are to be aged 90 days or less
from the original invoice date and EXCLUDE: contra accounts;
employee or affiliate accounts; federal, state, or local
government accounts; foreign accounts.
Eligible inventory will likely include raw materials and
EXCLUDE the following: finished goods, work in process
inventory; inventory-in-transit; consigned inventory;
freight and duty; damaged or defective inventory; slow
moving inventory, defined as inventory older than 12 months;
packaging material; and marketing materials.
Repayment: FACILITY A: Interest would be payable monthly or, in the
case of LIBOR advances, at the earlier of
the maturity of the applicable Interest
period or monthly, with principal due at
maturity. Borrower would be required to make
mandatory prepayments in amounts necessary
to maintain Borrowing Base compliance.
Reference Rate borrowings could be prepaid
at any time without penalty. LIBOR
borrowings could be prepaid at any time upon
three business day's notice provided the
Borrower would be required to reimburse Bank
for any funding losses and/or loss of
anticipated profits.
FACILITY B: Interest would be payable at maturity in
the case of a 90% acquisition, and monthly
and at maturity in the case of a 49.9%
acquisition. Principal would be payable at
maturity.
Security: FACILITY A A perfected first priority security interest
AND in accounts receivable, inventory, fixed
FACILITY B: assets and intangibles of the Borrower and
its subsidiaries, and a perfected first
priority security interest in a cash
deposit held at the Bank owned by Metra
Biosystems in an amount at least equal to
the outstanding advance(s) under Facility B.
Upon repayment of Facility B, the Bank's
security interest in the cash deposit will
be released.
Rates and
Commitment Fees:
FACILITY A: i) Bank of America's Reference Rate or
ii) LIBOR plus 1.50%
2
<PAGE>
iii) A commitment fee of 0.125% per annum
calculated on the unused portion of
the Facility A Commitment and
payable quarterly in arrears.
iv) A credit facility fee of 0.125% per
annum calculated on the Facility A
Commitment payable to Bank at
closing.
FACILITY B: i) Bank of America's Reference Rate
ii) A facility fee of $15,000 payable
to Bank at closing.
Rate Index: "Reference Rate"' would be defined as the rate of
interest publicly announced from time to time by the Bank in
San Francisco, California as its reference rate.
"LIBOR" is defined as the average London Interbank offered
rate for 1, 2, 3 or 6 month eurodollar deposits as quoted by
Bank two business days prior to such request, rounded
upwards to the nearest 1/16% and adjusted for maximum cost
of reserves.
Interest and Fee Interest and fees will be calculated based upon a 360 day
Calculations: year and actual days elapsed. The interest rates as well
as other applicable items (including, but not limited to,
minimum borrowing amounts, borrowing notification
requirements, breakage costs) would be further defined in
a credit agreement.
Mandatory Mandatory prepayments will be required from (i) proceeds
Prepayments: of Borrower's contemplated sale/leaseback of the property
located at 10165 McKellar Court, San Diego, CA. and from
(ii) proceeds of the issuance of any equity securities
net of associated expenses.
Default Rate: Two percent over the rate of interest.
Other Terms, The following is a partial list of certain key proposed
and Conditions, conditions and covenants which will be included in loan
Covenants: agreements, security agreements, UCC filings, financing
statements, guarantees and other related documents,
instruments and agreements (collectively, the "Credit
Documents"). Such Credit Documents shall contain covenants
and conditions that the Bank deems appropriate for this
transaction, and the conditions stated herein are subject to
final documentation negotiation.
Conditions This commitment from the Bank would be subject to (among
Precedent: other conditions precedent), the satisfactory completion of
the following:
- The Bank's due diligence, including, but not limited
to;
Satisfactory review of Borrower's FYE 3/31/99 draft
audited financial statements with no material variance
between the draft
3
<PAGE>
financial statements and the actual audited financial
statements; and
- Delivery to the Bank an opinion of Borrower's counsel
by a firm acceptable to Bank on such matters as Bank
may require.
- There shall have occurred no material adverse change in
the business, operations, performance, properties, or
prospects or financial condition of the Borrower, any
Guarantors or Project Red Wine.
- Termination of existing bank loan agreements and
release of related liens.
- The execution and delivery to Bank of the Credit
Documents. The Bank understands some of these
conditions will be met at a closing at which certain
transactions will be deemed to take place
simultaneously.
- Other such conditions as the Bank may require.
Representations All information conveyed to the Bank has been true and
and Warranties: correct. Such other representations and warranties as the
Bank deems appropriate for transactions of this nature.
Covenants:
Reporting Borrower to provide to Bank, all in form and substance,
Requirements satisfactory to Bank:
1. The Borrower's annual fiscal year end CPA audited (by a
nationally-recognized firm acceptable to Bank),
consolidated financial statements, with an unqualified
opinion and company prepared consolidating schedules
for material subsidiaries (if any), and CPA management
letter, within 90 days of fiscal year end.
2. Quarterly company prepared consolidated and
consolidating financial statements with a comparison to
prior year-end plan within 45 days of each quarter end;
fiscal year end comparison to prior year-end plan
within 90 days of fiscal year end.
3. Quarterly borrowing base certificate within 30 days of
each quarter end. A new borrowing certificate required
concurrently with each borrowing request.
4
<PAGE>
4. Quarterly compliance certificates with covenant
calculation within 45 days of each quarter end.
5. Quarterly financial projections for the subsequent
fiscal year due within 30 days of fiscal year end.
6. Such other information as the Bank may reasonably
request.
Financial: Borrower will be required to maintain the following
financial covenants which will be calculated and tested
quarterly (on a consolidated basis), utilizing generally
accepted accounting principles. The final definitions and
levels will be set forth in the Credit Documents.
i) Maximum ratio of Senior Debt to EBITDA of 2.50
ii) Minimum Tangible Net Worth of $32,250,000
iii) No more than one quarterly loss in any fiscal year.
Borrower to be profitable on a pre-tax basis for FY
2000.
Affirmative Usual for facilities and transactions of this type, those
Covenants: specified below and others to be reasonably specified by
the Bank, including, but not limited to maintenance of
corporate existence and rights; performance of obligations;
and notices of default, litigation and material adverse
change; maintenance of properties in good working order;
maintenance of satisfactory insurance; compliance with laws;
inspection of books and properties; further assurances; and
payment of taxes.
Negative Usual for facilities and transactions of this type, those
Covenants: specified below and others to be reasonably specified by
the Bank, including, but not limited to:
1. Limitation on mergers, consolidations and asset sales,
and change of control;
2. Limitation on investments, capital expenditures, loans
and affiliate transactions;
3. Limitations on liens and indebtedness;
4. No dividend payments shall be permitted;
5. Limitations on amendment of debt agreements and other
material agreements.
Other
Conditions: Including, but not limited to:
1. All facilities will be cross collateralized and
defaulted.
5
<PAGE>
2. Borrower to provide Bank a closing balance sheet and
income statement within 30 days of closing the
Acquisition.
3. All payments under all facilities made by the Borrower
will be made free and clear of any present or future
taxes, withholdings or other deductions whatsoever
(other than income taxes) in the jurisdiction of Bank's
applicable lending office. Customary increased costs
and capital adequacy provisions shall be included in
the Credit Documents.
4. Events of default as customarily found in credit
agreements for similar financings including, but not
limited to those relating to payment defaults, covenant
defaults, cross defaults, collateral defaults, guaranty
defaults, breaches of warranty, voluntary and
involuntary insolvency proceedings, judgment and
attachments, dissolution, ERISA violations, and change
of control.
Expenses: Costs and expenses, including attorneys' fees, appraisal,
and audit costs (including allocated cost of in-house legal,
audit and environmental services), incurred at any time by
Bank with respect to the completion of due diligence,
negotiation, documentation and closing of the Facilities,
would be for the account of the Borrower regardless of
whether the Facilities close. Borrower would also be
required to reimburse Bank for all reasonable costs and
expenses incurred by Bank in enforcing any loan document as
well as in connection with any actual or proposed waivers or
amendments under the Facilities.
Indemnity: Borrower shall indemnify and hold harmless Bank and its
respective directors, officers, agents, and employees from
and against all losses, claims, damages, expenses, or
liabilities including, but not limited to, reasonable
(giving due regard to the prevailing circumstances) legal
or other expenses incurred in connection with investigating,
preparing to defend, or defending any such loss, claim,
damage, expense, or liability, incurred in respect of the
financing contemplated hereby or the proposed use of the
proceeds of such financing other than with respect to
claims or damages resulting from Bank's own gross negligence
or willful misconduct or any claims which may be asserted
by Borrower against Bank.
Governing Law: State of California.
6
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 4, 1999
AMONG
QUIDEL CORPORATION,
METRA BIOSYSTEMS, INC.
AND
MBS ACQUISITION CORPORATION
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
ARTICLE I. THE OFFER.............................................................................................2
SECTION 1.1. THE OFFER..................................................................................2
SECTION 1.2. ACTIONS BY COMPANY.........................................................................3
SECTION 1.3. DIRECTORS..................................................................................5
ARTICLE II. THE MERGER...........................................................................................6
SECTION 2.1. THE MERGER.................................................................................6
SECTION 2.2. MERGER WITHOUT MEETING OF SHAREHOLDERS......................................................6
SECTION 2.3. SHAREHOLDERS' MEETING.......................................................................6
SECTION 2.4. EFFECTIVE TIME.............................................................................7
SECTION 2.5. EFFECTS OF THE MERGER......................................................................7
SECTION 2.6. ARTICLES OF INCORPORATION AND BYLAWS.......................................................7
SECTION 2.7. CLOSING................................................................................... 7
SECTION 2.8. DIRECTORS..................................................................................8
SECTION 2.9. OFFICERS...................................................................................8
SECTION 2.10. CONVERSION OF SHARES......................................................................8
SECTION 2.11. APPRAISAL RIGHTS..........................................................................8
SECTION 2.12. PAYMENT FOR SHARES........................................................................9
SECTION 2.13. EXCHANGE OF PURCHASER COMMON STOCK.......................................................10
SECTION 2.14. STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN..............................................10
SECTION 2.15. TAKING OF NECESSARY ACTION; FURTHER ACTION...............................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY..........................................................11
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..............................................11
SECTION 3.2. CAPITALIZATION OF COMPANY AND ITS SUBSIDIARIES............................................12
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION......................................13
SECTION 3.4. SEC REPORTS; FINANCIAL STATEMENTS.........................................................14
SECTION 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS.....................................................14
SECTION 3.6. NO DEFAULT................................................................................15
SECTION 3.7. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES............................................15
SECTION 3.8. LITIGATION................................................................................17
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAW............................................................17
SECTION 3.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS....................................................17
SECTION 3.11. ENVIRONMENTAL LAWS AND REGULATIONS.......................................................18
SECTION 3.12. TAXES....................................................................................19
SECTION 3.13. INTELLECTUAL PROPERTY....................................................................20
SECTION 3.14. ASSETS...................................................................................20
SECTION 3.15. CONTRACTS.................................................................................21
SECTION 3.16. INSURANCE................................................................................22
SECTION 3.17. PRODUCT WARRANTIES.......................................................................22
SECTION 3.18. SUPPLIERS, DISTRIBUTORS AND CUSTOMERS....................................................22
SECTION 3.19. COMPANY RIGHTS AGREEMENT.................................................................22
SECTION 3.20. CERTAIN BUSINESS PRACTICES...............................................................22
SECTION 3.21. VOTE REQUIRED............................................................................23
SECTION 3.22. BROKERS..................................................................................23
SECTION 3.23. INFORMATION SUPPLIED.....................................................................23
SECTION 3.24. FAIRNESS OPINION.........................................................................23
i
<PAGE>
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................................23
SECTION 4.1. ORGANIZATION..............................................................................23
SECTION 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT......................................................24
SECTION 4.3. FINANCING.................................................................................24
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS.....................................................24
SECTION 4.5. INFORMATION SUPPLIED......................................................................25
SECTION 4.6. BROKERS...................................................................................25
ARTICLE V. COVENANTS............................................................................................25
SECTION 5.1. CONDUCT OF BUSINESS OF COMPANY............................................................25
SECTION 5.2. OTHER POTENTIAL ACQUIRERS.................................................................28
SECTION 5.3. ACCESS TO INFORMATION.....................................................................29
SECTION 5.4. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS.................................................30
SECTION 5.5. EMPLOYEE BENEFITS.........................................................................30
SECTION 5.6. PUBLIC ANNOUNCEMENTS......................................................................31
SECTION 5.7. RESIGNATION OF OFFICERS AND DIRECTORS.....................................................31
SECTION 5.8. NOTICE OF CERTAIN EVENTS..................................................................31
SECTION 5.9. REDEMPTION OF RIGHTS......................................................................31
SECTION 5.10. INDEMNIFICATION..........................................................................31
SECTION 5.11. SECURITY AGREEMENTS......................................................................32
SECTION 5.12. EMPLOYMENT AGREEMENTS....................................................................33
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER............................................................33
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER...............................33
ARTICLE VII. TERMINATION; AMENDMENT; WAIVER.....................................................................33
SECTION 7.1. TERMINATION...............................................................................33
SECTION 7.2. EFFECT OF TERMINATION.....................................................................34
SECTION 7.3. FEES AND EXPENSES.........................................................................35
SECTION 7.4. AMENDMENT.................................................................................35
SECTION 7.5. EXTENSION; WAIVER.........................................................................36
ARTICLE VIII. MISCELLANEOUS.....................................................................................36
SECTION 8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................36
SECTION 8.2. ENTIRE AGREEMENT; ASSIGNMENT..............................................................36
SECTION 8.3. VALIDITY..................................................................................36
SECTION 8.4. NOTICES...................................................................................36
SECTION 8.5. GOVERNING LAW.............................................................................37
SECTION 8.6. DESCRIPTIVE HEADINGS......................................................................37
SECTION 8.7. PARTIES IN INTEREST.......................................................................37
SECTION 8.8. CERTAIN DEFINITIONS.......................................................................37
SECTION 8.9. PERSONAL LIABILITY........................................................................38
SECTION 8.10. SPECIFIC PERFORMANCE.....................................................................38
SECTION 8.11. COUNTERPARTS.............................................................................39
</TABLE>
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of June
4, 1999 is by and among QUIDEL CORPORATION, a Delaware corporation ("PARENT"),
METRA BIOSYSTEMS, INC., a California corporation ("COMPANY"), and MBS
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of
Parent ("PURCHASER").
WHEREAS, the Boards of Directors of Company, Parent and Purchaser have
each (i) determined that the Merger (defined below) is fair and in the best
interests of their respective stockholders and (ii) approved the Merger in
accordance with this Agreement;
WHEREAS, in furtherance of the Merger, Parent proposes to cause
Purchaser to make a tender offer (as it may be amended or supplemented, from
time to time, as permitted under this Agreement, the "OFFER") to purchase for
cash any and all the issued and outstanding shares of common stock, par value
$0.001 per share, of Company (including the Company Rights attached thereto, the
"SHARES"), upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, prior to the approval of the business combination, the Board
of Directors of Company approved the amendment to the Preferred Shares Rights
Agreement to permit the transactions contemplated by this Agreement to proceed
without triggering a distribution of rights under the Agreement;
WHEREAS, Company's Board of Directors (the "COMPANY BOARD") has adopted
resolutions approving, among other things, the Merger and the Offer and
recommending that the shareholders of Company accept the Offer, tender their
Shares to Purchaser and approve this Agreement; and
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
Company, concurrently herewith, is entering into a Stock Option Agreement, dated
as of the date hereof, with Parent and Purchaser, pursuant to which Company is
granting Purchaser an option to purchase Shares, all upon the terms and subject
to the conditions set forth in the Stock Option Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound hereby Company, Parent and Purchaser hereby agree
as follows:
1
<PAGE>
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Subject to the terms and conditions of this Agreement, as promptly
as practicable (but in no event later than five (5) business days (as defined
below) after the public announcement of the execution hereof), Parent shall
cause Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), and Purchaser
shall commence the Offer to purchase, for cash, all the Shares at a price equal
to $1.78 per Share, net to the seller in cash (the "OFFER PRICE"). Subject to
the terms and conditions set forth in this Agreement, including, without
limitation, SECTION 1.1(c) and the conditions set forth in ANNEX I hereto,
Purchaser shall use all commercially reasonable efforts to accept for payment
and pay for Shares tendered as soon as Purchaser is legally permitted to do so
under applicable law. The Offer will initially expire twenty (20) business days
after its commencement. The Offer will be made by means of an offer to purchase
(the "OFFER TO PURCHASE") containing the terms set forth in this Agreement and
the conditions set forth in ANNEX I hereto. Subject to SECTION 1.1(c), neither
Parent nor Purchaser may decrease the Offer Price, change the form of
consideration payable in the Offer, decrease the number of Shares sought, impose
additional conditions to the Offer, change the expiration date of the Offer or
amend any other term or condition of the Offer in any manner adverse to the
holders of the Shares (other than with respect to insignificant changes or
amendments) without the prior written consent of Company; PROVIDED, HOWEVER,
that if on the initial scheduled expiration date of the Offer (as it may be
extended) all conditions to the Offer have not been satisfied or waived, the
Offer may be extended from time to time until August 4, 1999 without the consent
of Company. In addition, the Offer Price may be increased and the Offer may be
extended for up to ten (10) business days to the extent required by law in
connection with such increase, in each case without the consent of Company.
Without limiting the right of Purchaser to extend the Offer pursuant to the
immediately preceding sentence, at the request of Company, Purchaser shall, and
Parent shall cause Purchaser to, extend the expiration date of the Offer (i) in
one or more periods of not more than five business days (but in no event later
than August 4, 1999), if (A) any of the conditions set forth in ANNEX I shall
not have been satisfied or waived at the scheduled or extended expiration date
of the Offer, (B) such condition is reasonably capable of being satisfied by
Company, (C) Company exercises its reasonable best efforts to cause such
condition to be satisfied and (D) Company is in compliance with all of its
covenants in this Agreement or (ii) for five business days in the event that the
Minimum Condition shall not have been satisfied at the first scheduled
expiration date of the Offer.
(b) As soon as practicable after the Offer is commenced, Parent and
Purchaser shall file with the United States Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
(together with all amendments and supplements thereto and including the exhibits
thereto, the "SCHEDULE 14D-1"). The Schedule 14D-1 will include, as exhibits,
the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "OFFER DOCUMENTS") with respect to the Offer. Parent and Purchaser
shall mail the
2
<PAGE>
Schedule 14D-1 to the shareholders of Company as soon as practicable after
filing with the SEC. The Schedule 14D-1 and the Offer Documents will comply in
all material respects with the provisions of applicable Federal securities laws.
Each of Parent and Purchaser, on the one hand, and Company, on the other hand,
shall promptly correct any information provided by it for use in the Schedule
14D-1 and the Offer Documents if and to the extent that it has become false or
misleading in any material respect. Company shall provide any information
reasonably requested by Purchaser for inclusion in the Offer Documents. Company
and its counsel will be given the opportunity to review the Schedule 14D-1 and
the Offer Documents before they are filed with the SEC. In addition, Parent and
Purchaser shall promptly provide, in writing, to Company and its counsel, any
comments Parent, Purchaser or their counsel may receive from time to time from
the SEC or its staff with respect to the Schedule 14D-1 and the Offer Documents.
(c) In the event the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer and Company shall not have given to
Purchaser a notice to extend the expiration date of the Offer pursuant to
subsection (ii) of the last sentence of Section 1.1(a) above, Purchaser may, in
its sole discretion, either (i) withdraw the Offer or allow it to expire, (ii)
extend the Offer pursuant to SECTION 1.1(a) or (iii) amend the Offer to provide
that, in the event (A) the Minimum Condition is not satisfied at the next
scheduled expiration date of the Offer (without giving effect to the potential
issuance of any Shares issuable upon exercise of the Stock Option Agreement),
and (B) the number of Shares tendered pursuant to the Offer and not withdrawn as
of such next scheduled expiration date is more than 50% of the then outstanding
Shares, Purchaser shall waive the Minimum Condition and amend the Offer to
reduce the number of Shares subject to the Offer to a number of Shares that,
when added to the Shares then owned by Purchaser, will equal 49.99% of the
Shares then outstanding (the "REVISED MINIMUM NUMBER"), and, if a greater number
of Shares is tendered into the Offer and not withdrawn, purchase, on a pro rata
basis, the Revised Minimum Number of Shares. Notwithstanding any other
provisions of this Agreement, in the event that Purchaser purchases a number of
Shares equal to the Revised Minimum Number, then without the prior written
consent of Purchaser prior to the termination of this Agreement, Company shall
take no action whatsoever to increase the percentage of Shares owned by the
Purchaser in excess of the Revised Minimum Number.
(d) Parent has, and shall provide or cause to be provided to Purchaser
on a timely basis, the funds necessary to purchase the Shares that Purchaser
becomes obligated to purchase pursuant to the Offer.
SECTION 1.2 ACTIONS BY COMPANY.
(a) Company hereby approves of and consents to the Offer. Company
represents that all of the disinterested directors (as defined in Section 310 of
the California Corporations Code, as amended (the "CCC")) of the Company Board,
and the Company Board in its entirety, at a meeting duly called and held prior
to or on the date on which the parties entered into this Agreement, each has
unanimously (except for Dr. Polen who did not vote):
3
<PAGE>
(i) determined that each of the Offer and the Merger is fair
to and in the best interests of Company's shareholders (other than
Parent and Purchaser);
(ii) approved this Agreement and the transactions contemplated
hereby (including, without limitation, the acquisition of Company by
Parent or Purchaser, and any purchase of Shares in connection
therewith, by means of this Agreement, the Offer, the Merger and/or any
other transactions conducted to effectuate the acquisition of Company
by Parent or Purchaser ("OTHER TRANSACTIONS")); and
(iii) resolved to recommend that Company's shareholders accept
the Offer, tender their Shares to Purchaser and approve and adopt this
Agreement and the Merger (PROVIDED, HOWEVER, that subject to and in
accordance with the provisions of SECTION 5.2(b), such recommendation
may be withdrawn, modified or amended in connection with a Superior
Proposal (as defined in SECTION 5.2(c)). Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Company
Board described in the immediately preceding sentence, subject to
SECTION 5.2(b).
(b) Concurrently with the commencement of the Offer, Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, and including the exhibits thereto,
the "SCHEDULE 14D-9") which will, subject to the fiduciary duties of the Company
Board under applicable law, as advised by outside legal counsel reasonably
acceptable to Parent, and the provisions of this Agreement, contain the
resolutions referred to in clauses (i), (ii) and (iii) of SECTION 1.2(a). The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable Federal securities laws. Company shall take all steps necessary to
cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of Shares to the extent required by applicable Federal securities laws.
Each of Company, on the one hand, and Parent and Purchaser, on the other hand,
shall promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it has become false or misleading in any
material respect. Company shall further take all steps necessary to cause the
Schedule 14D-9, as it may be corrected, to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable Federal securities laws. Parent and its counsel will be
given the opportunity to review the Schedule 14D-9 before it is filed with the
SEC. In addition, Company shall promptly provide, in writing, to Parent,
Purchaser and their counsel any comments Company or its counsel may receive from
time to time from the SEC or its staff with respect to the Schedule 14D-9.
(c) In connection with the Offer, Company shall promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
the record holders of the Shares as of a recent date and those of persons
becoming record holders after such date, together with copies of all other
information in Company's control regarding the beneficial owners of Shares that
Parent may reasonably request, and shall furnish Purchaser with such other
information and assistance as Purchaser or its agents may reasonably request in
communicating the Offer to Company's shareholders. Subject to the requirements
of applicable law, and except for such steps as are
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necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall (i) hold in
confidence the information contained in such labels, listings and files, (ii)
use such information only in connection with the Offer and the Merger and (iii)
if this Agreement is terminated in accordance with Article VII, upon request of
Company, deliver or cause to be delivered to Company all copies of such
information then in their possession or the possession of its agents or
representatives.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for any Shares by
Purchaser or any other subsidiary of Parent pursuant to the Offer, and from time
to time thereafter, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as is equal
to the product of the total number of directors then serving on the Company
Board (giving effect to any increase in the number of directors pursuant to this
SECTION 1.3) multiplied by the ratio of the aggregate number of Shares
beneficially owned by Parent, Purchaser and any of their affiliates to the total
number of Shares then outstanding PROVIDED, HOWEVER, that if Purchaser has
acquired the Revised Minimum Number of Shares in the Offer, such number of
directors shall be rounded up to the greatest whole number plus one to give
Purchaser at least a majority of the members of the Company Board. Company
shall, upon request of Purchaser, take all action necessary to cause Parent's
designees to be elected or appointed to the Company Board, including without
limitation increasing the size of the Company Board, or, at Company's election,
securing the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected or appointed to the
Company Board, and shall cause Parent's designees to be so elected or appointed.
At such time, Company shall also cause persons designated by Parent to
constitute the same percentage (rounded up to the next whole number) as is on
the Company Board of (i) each committee of the Company Board, (ii) if requested
by Parent, each board of directors (or similar body) of each subsidiary (as
defined herein) and (iii) if requested by Parent, each committee (or similar
body) of each such board.
(b) Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 under the Exchange Act in order
to fulfill its obligations under SECTION 1.3(a), including, without limitation,
mailing to Company's shareholders as part of the Schedule 14D-9 the information
required by such Section 14(f) and Rule 14f-1, as is necessary to enable
Parent's designees to be appointed or elected to the Company Board. Parent or
Purchaser shall supply to Company in writing and shall be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of SECTION 1.3(a) are in addition to and will not limit any rights
which Parent, Purchaser or any of their affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise.
(c) In the event that Parent's designees are elected to the Company
Board pursuant to this SECTION 1.3, until the Effective Time (as defined below)
the Company Board will have at
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least one director who is a director on the date hereof and who is not an
executive officer of Company (the "INDEPENDENT DIRECTOR"). Notwithstanding
anything in this Agreement to the contrary, from and after the time, if any,
that Parent's designees constitute a majority of the Company Board, the
affirmative vote of the Independent Director will be required for (i) any
amendment or termination of this Agreement by Company; (ii) any extension of
time for performance of any of the obligations of Parent or Purchaser hereunder;
or (iii) any exercise or waiver of any of Company's rights, benefits or remedies
hereunder.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. At the Effective Time (defined in SECTION 2.4)
and upon the terms and subject to the conditions of this Agreement and in
accordance with the CCC, Purchaser will be merged with and into Company (the
"MERGER"). Following the Merger, Company will continue as the surviving
corporation (the "SURVIVING CORPORATION") and the separate corporate existence
of Purchaser will cease.
SECTION 2.2 MERGER WITHOUT MEETING OF SHAREHOLDERS. In the event that
Parent, Purchaser or any permitted assignee of Purchaser acquires at least
ninety percent (90%) of the Shares pursuant to the Offer, or otherwise, the
parties hereto shall, at the request of Parent and subject to ARTICLE VII, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of the
shareholders of Company, in accordance with Section 1110 of the CCC.
SECTION 2.3 SHAREHOLDERS' MEETING.
(a) If Purchaser is unable to utilize the provisions of Section 1110 of
the CCC, then as soon as practicable following the consummation of the Offer and
if required by applicable law in order to consummate the Merger, Company, acting
through the Company Board, shall, in accordance with applicable law and its
Articles of Incorporation and By-laws,:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "SPECIAL MEETING") as promptly as practicable
following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer for the purpose of considering and taking action upon the
Merger and this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Special Meeting (together with any
amendments thereto or supplements thereof, the "PROXY STATEMENT") and use its
best efforts (A) to obtain and furnish the information required to be included
by the SEC in the Proxy Statement and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to any preliminary
Proxy Statement and cause a definitive Proxy Statement to be mailed to its
shareholders and (B) to obtain the necessary approval of this Agreement by its
shareholders; and
(iii) subject to the fiduciary obligations of the Company
Board under applicable law as advised by outside legal counsel, include in the
Proxy Statement the
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recommendation of the Company Board that shareholders of the Company vote in
favor of the approval and adoption of the Merger and of this Agreement.
(b) Parent will provide Company with the information concerning Parent
and Purchaser required to be included in the Proxy Statement. Parent shall vote,
or cause to be voted, all of the Shares then owned by it, Purchaser or any of
their subsidiaries and affiliates in favor of the approval of this Agreement.
SECTION 2.4 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, as soon as practicable following the consummation of
the Offer (and, if required by applicable law, after the vote of the
shareholders of Company in favor of the adoption of this Agreement has been
obtained), Company (and/or Purchaser, if appropriate) shall file a copy of
this Agreement with the Secretaries of State of the States of California and
Delaware, along with the required officers' certificate of each of Company
and Purchaser and, if applicable, a certificate of satisfaction of the
Franchise Tax Board with respect to Purchaser, all in accordance with Section
1103 of the CCC and Section 252 of the Delaware General Corporation Law (the
"DGCL"). In addition, the parties hereto shall take all such other and
further actions as may be required by law to make the Merger effective. The
Merger will thereupon become effective for purposes of this Agreement, upon
the later to occur of the effectiveness of the Merger in California and
Delaware, and the time of such effectiveness is hereinafter referred to as
the "EFFECTIVE TIME".
SECTION 2.5 EFFECTS OF THE MERGER. The Merger will have the effects
set forth in the CCC, with respect to the Company, and the DGCL, with respect
to purchaser. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all of the properties, rights, privileges,
powers and franchises of Company and Purchaser will vest in the Surviving
Corporation and all debts, liabilities and duties of Company and Purchaser
will become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.6 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation of Purchaser in effect at the Effective Time will be the Articles
of Incorporation of the Surviving Corporation until amended in accordance with
the terms thereof and applicable law, except that Article First of the Articles
of Incorporation of the Surviving Corporation shall read in its entirety as
follows:
"FIRST: The name of the Corporation is Metra Biosystems, Inc.
The bylaws of Purchaser in effect at the Effective Time will be the
bylaws of the Surviving Corporation until amended in accordance with the terms
thereof and applicable law.
SECTION 2.7 CLOSING. Unless this Agreement has been terminated and the
transactions herein contemplated have been abandoned pursuant to Article VII and
subject to the satisfaction or waiver of the conditions set forth in Article VI,
the closing of the merger (the "CLOSING") will take place at 10:00 AM (PDT) as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI, at the offices
of Gibson, Dunn & Crutcher LLP, unless another date, time or place is agreed to
in writing by the parties hereto.
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SECTION 2.8 DIRECTORS. The directors of Purchaser at the Effective Time
will be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified. At the Effective Time, the Board of Directors of Parent shall be
increased from seven (7) members to eight (8) members, and Parent shall take all
actions reasonably necessary to cause the resulting vacancy to be filled by a
member designated by mutual agreement of Parent and Company from among the
existing members of the board of directors of Company.
SECTION 2.9 OFFICERS. The officers of Purchaser at the Effective Time
will be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.10 CONVERSION OF SHARES.
(a) At the Effective Time each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in Company's treasury or by
any of Company's subsidiaries; Shares held by Parent, Purchaser or any other
subsidiary of Parent; and Shares held by shareholders of Company duly exercising
appraisal rights pursuant to Chapter 13 of the CCC ("DISSENTING SHAREHOLDERS"))
will, by virtue of the Merger and without any action on the part of Purchaser,
Company or the holder thereof, be converted into and become the right to receive
an amount in cash equal to $1.78 per Share, net to the Seller in cash (the
"MERGER CONSIDERATION"), upon surrender of the certificate formerly representing
such Share in the manner provided in SECTION 2.12.
(b) At the Effective Time, each Share held in the treasury of Company
and each Share held by Parent, Purchaser or any subsidiary of Parent, Purchaser
or Company immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Purchaser, Company or the holder
thereof, be canceled, retired and cease to exist without payment of any
consideration therefor and without any conversion thereof.
(c) At the Effective Time, each share of any other capital stock of
Company (other than the Shares) will, by virtue of the Merger and without any
action on the part of Purchaser, Company or the holder thereof, be canceled,
retired and cease to exist without payment of any consideration therefor and
without any conversion thereof.
(d) At the Effective Time, each outstanding share of Purchaser's common
stock, par value $0.001 per share, will be converted into one share of the
Surviving Corporation's common stock, par value $0.001 per share.
SECTION 2.11 APPRAISAL RIGHTS. Notwithstanding any provision of this
Agreement to the contrary, if and to the extent required by the CCC, Dissenting
Shares shall not be exchangeable for the right to receive the Merger
Consideration, and holders of such Dissenting Shares ("DISSENTING SHAREHOLDERS")
shall be entitled to receive only such rights as are granted by the CCC. If any
Dissenting Shareholder fails to perfect or has effectively withdrawn or lost
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the right to dissent, the Shares held by such Dissenting Shareholder will
thereupon be entitled to be surrendered in exchange for the Merger
Consideration. If any Dissenting Shareholders are entitled to require Company to
purchase such Dissenting Shareholder's Shares for their "fair market value," as
provided in Chapter 13 of the CCC, Company will give Parent notice thereof and
Parent will have the right to participate in all negotiations and proceedings
with respect to any demands for appraisal. Neither Company nor the Surviving
Corporation will, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment. Notwithstanding anything to the contrary contained in this SECTION
2.11, if (i) the merger is rescinded or abandoned or (ii) the shareholders of
Company revoke the authority to effect the Merger, then the right of any
shareholder to be paid the fair value of such shareholder's Dissenting Shares
pursuant to Section 1300 of the CCC shall cease.
SECTION 2.12 PAYMENT FOR SHARES.
(a) Parent shall appoint Parent's stock transfer agent, or such other
person as Parent may reasonably choose to appoint, to act as paying agent (the
"PAYING AGENT"), pursuant to an agreement reasonably satisfactory to Parent and
Company entered into prior to the Effective Time, for the purpose of exchanging
certificates that immediately prior to the Effective Time represented
outstanding Shares ("COMPANY CERTIFICATES") for the Merger Consideration. At the
Effective Time, Parent shall remit or cause to be remitted to the Paying Agent
an amount sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments pursuant to SECTION 2.12(a) hereof.
(b) As soon as practicable after the Effective Time and in no event
later than five (5) business days thereafter, Parent shall cause the Paying
Agent to mail to each holder of record (other than Parent, Purchaser or any
other subsidiary of Parent or Company) of Company Certificates a form letter of
transmittal for use in effecting the surrender of Company Certificates in
exchange for payment therefor.
(c) Upon the surrender of each Company Certificate formerly
representing Shares, together with a duly completed and executed letter of
transmittal, the Paying Agent shall pay to the holders of Company Certificates
the amount to which such persons are entitled for each Share formerly
represented by such Company Certificate, less any amounts required to be held
pursuant to applicable tax laws, and Company Certificate(s) so surrendered will
be canceled, retired and cease to exist. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of Company, it will be
a condition to the payment of the amount to which such persons are entitled that
Company Certificate(s) so surrendered will be properly endorsed or be otherwise
in proper form for transfer and that such transferee shall (i) pay to the Paying
Agent any transfer or other taxes required, or (ii) establish to the
satisfaction of the Paying Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there will be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Company Certificates
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representing such Shares are presented to the Surviving Corporation, they shall
be canceled and exchanged as provided in this ARTICLE II. As of the Effective
Time, the holders of Company Certificates representing Shares will cease to have
any rights as shareholders of Company, except such rights, if any, as they may
have pursuant to this Agreement and the CCC. Except as provided above, until
such Company Certificates are surrendered for exchange, each such Company
Certificate will, after the Effective Time, represent for all purposes only the
right to receive the Merger Consideration subject to the Escrow Agreement.
(e) In the event any Company Certificates are lost, stolen, or
destroyed, the Paying Agent shall issue in exchange for such lost, stolen, or
destroyed Company Certificates, upon the making of an affidavit of that fact by
the holder thereof, such Merger Consideration as may be required pursuant to
this ARTICLE II; PROVIDED, HOWEVER, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen, or destroyed Company Certificate to deliver a bond in such sum as Parent
may direct as indemnity against any claim that may be made against Parent or the
Paying Agent with respect to such Company Certificate alleged to have been lost,
stolen, or destroyed.
(f) At any time following six months after the Effective Time, the
Surviving Corporation will be entitled to require the Paying Agent to deliver to
it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed to
holders of Company Certificates, and thereafter such holders will be entitled to
look to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Company Certificates, without
any interest thereon. None of the Surviving Corporation, Parent or the Paying
Agent will be liable to any holder of a Company Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar laws.
SECTION 2.13 EXCHANGE OF PURCHASER COMMON STOCK. From and after the
Effective Time, each outstanding certificate previously representing shares of
Purchaser common stock will be deemed for all purposes to evidence ownership of
and to represent the number of shares of Surviving Corporation common stock into
which such shares of Purchaser common stock will be converted. Promptly after
the Effective Time, the Surviving Corporation shall issue to Parent a stock
certificate or certificates representing such shares of Surviving Corporation
common stock in exchange for the certificate or certificates that formerly
represented shares of Purchaser common stock, which will be canceled.
SECTION 2.14 STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN.
(a) Upon the consummation of the Offer, Purchaser will make a cash
payment (less applicable withholding taxes) to each holder of an option to
acquire shares of common stock of Company (the "COMMON STOCK") outstanding
immediately prior to the Effective Time under Company's 1990 Incentive Stock
Option Plan, 1995 Stock Option Plan, 1995 Employee Stock Option Plan and 1995
Directors' Option Plan (the "COMPANY STOCK OPTIONS"), if then vested, in an
amount equal to the difference between the Offer Price less the exercise price
per share of
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Common Stock applicable to such option for all shares of Common Stock subject to
such option as expressly stated in the applicable stock option agreement or
other agreement (the "OPTION CONSIDERATION").
(b) From and after the Effective Time, other than as expressly set
forth in SECTION 2.13, no holder of a Company Stock Option shall have any rights
in respect thereof other than to receive payment for his or her Company Stock
Options as set forth in SECTION 2.14(a).
(c) Offering periods under Company's 1995 Employee Stock Purchase Plan
(the "1995 PLAN") are currently in process through June 30, 1999. The maximum
amount of payroll deductions currently authorized under such 1995 Plan for such
period is approximately $20,000. No further offering periods shall be commenced
after the date hereof, and the 1995 Plan and all purchase rights thereunder
shall be suspended during the duration of this Agreement effective as of June
30, 1999.
(d) At or before the Effective Time, Company shall cause to be effected
any necessary amendments to the Company Plans to give effect to the foregoing
provisions of this Section.
SECTION 2.15 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of
Parent, Purchaser and Company in good faith shall take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Company and Purchaser,
the officers and directors of Company and Parent are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the Company Disclosure Schedule, Company hereby
represents and warrants to each of Parent and Purchaser, as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) SECTION 3.1(a) of the Disclosure Schedule delivered by Company to
Parent concurrently with the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") sets forth, as of the date of this Agreement, a true and
complete list of all Company's directly or indirectly owned subsidiaries,
together with the jurisdiction of incorporation of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interests owned by Company or another subsidiary of Company. Each of Company and
its subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Company heretofore has
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delivered to Parent accurate and complete copies of the charter and bylaws (or
similar governing documents), as currently in full force and effect, of Company
and its subsidiaries.
(b) Each of Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on Company
(defined below). The term "MATERIAL ADVERSE EFFECT ON COMPANY" means any change
or effect that (i) is or is reasonably likely to be materially adverse to the
business, assets, results of operations, condition (financial or otherwise) or
prospects of Company and its subsidiaries, taken as whole, or (ii) would or
would be reasonably likely to impair the ability of Company to consummate the
transactions contemplated hereby PROVIDED, HOWEVER, that in determining whether
there has been a Material Adverse Effect on Company, any adverse effect
attributable to the following shall be disregarded: (i) the taking of any action
permitted or required by this Agreement; or (ii) the breach by Parent or
Purchaser of this Agreement; and in each case, to the extent that such adverse
effect is attributable to such event.
(c) SECTION 3.1(c) of the Company Disclosure Schedule sets forth a true
and complete list of each equity investment held, as of the date of this
Agreement, by Company or any of its subsidiaries in any other person other than
Company's subsidiaries (collectively, "OTHER INTERESTS"). The Other Interests
are free and clear of all Liens (defined in SECTION 3.2(b)).
SECTION 3.2 CAPITALIZATION OF COMPANY AND ITS SUBSIDIARIES.
(a) The authorized capital stock of Company consists of Fifty Million
(50,000,000) Shares, of which, as of May 31, 1999, 12,696,935 Shares were issued
and outstanding (each together with a Share purchase right (the "COMPANY
RIGHTS") issued pursuant to the Rights Agreement dated as of January 11, 1994,
as amended by Amendment No. 1 to Preferred Shares Rights Agreement dated as of
January 17, 1997, and Amendment No. 2 to Preferred Shares Rights Agreement dated
as of November 3, 1998, between Company and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent (the "COMPANY RIGHTS AGREEMENT")) and Five Million
(5,000,000) shares of preferred stock, par value $.001 per share, no shares of
which are outstanding. All of the outstanding Shares have been validly issued
and are fully paid and nonassessable and free of preemptive rights, and Company
has no liability under the provisions of applicable Federal and state securities
laws by reason of the issuance or sale thereof. Set forth in SECTION 3.2(a) of
the Company Disclosure Schedule is a true and complete list of all outstanding
or authorized Company Stock Options, warrants, calls, rights, commitments or any
other agreements of any character that may obligate Company or its subsidiaries
to issue any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Company. Except as set
forth above and in SECTION 3.2(a) of the Company Disclosure Schedule, and except
for the Company Rights, as of the date hereof, there are outstanding (i) no
shares of capital stock or other voting securities of Company, (ii) no
securities of Company or its subsidiaries convertible into or exchangeable for
shares of capital stock or voting securities of Company, (iii) no options or
other rights to acquire
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from Company or its subsidiaries, and no obligations of Company or its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Company, and (iv) no equity equivalent interests in the ownership or earnings of
Company or its subsidiaries or other similar rights (collectively "COMPANY
SECURITIES"). As of the date hereof, there are no outstanding obligations of
Company or its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. There are no shareholder agreements, voting trusts or other
agreements or understandings to which Company is a party or by which it is bound
relating to the voting or registration of any shares of capital stock of
Company.
(b) All of the outstanding capital stock of Company's subsidiaries is
owned by Company, directly or indirectly, free and clear of any Lien (defined
below) or any other limitation or restriction (including any restriction on the
right to vote or sell the same, except as may be provided as a matter of law).
There are no securities of Company or its subsidiaries convertible into or
exchangeable for, options or other rights to acquire securities from Company or
its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for, the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in or
any other securities of any subsidiary of Company. There are no outstanding
contractual obligations of Company or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of Company. The term "LIEN" means, with respect to
any asset (including, without limitation, any security), any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
(c) The Common Stock of Company constitutes the only class of equity
securities of Company or its subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION.
(a) Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Company Board and no other corporate proceedings on the part of Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, except the approval and adoption of this Agreement by the
holders of a majority of the outstanding Shares. This Agreement has been duly
and validly executed and delivered by Company and, assuming the due
authorization, execution and delivery of this Agreement by Parent and Purchaser,
constitutes a valid, legal and binding agreement of Company, enforceable against
Company in accordance with its terms except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought.
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(b) The Company Board has unanimously resolved to recommend that the
shareholders of Company approve and adopt this Agreement.
SECTION 3.4 SEC REPORTS; FINANCIAL STATEMENTS. Except as set forth in
the Company Disclosure Schedule, Company has filed all required forms, reports
and documents (collectively, "COMPANY SEC REPORTS") with the SEC, each of which
has complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT") and the Exchange Act,
and the regulations promulgated thereunder, each as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including without limitation any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of Company included in
Company SEC Reports fairly present in all material respects, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended. Company had at April 30, 1999 cash and cash equivalents,
including short-term investments and long-term investments (other than
investments in equity securities) (collectively, "CASH BALANCES"), in the
aggregate amount of at least $20 million, and as of the date that Purchaser
accepts for payment and pays for Shares in the Offer Company will have a cash
balance of at least $19 million in an account at Bank of America, provided
however that such cash balance may be reduced by $500,000 for every month after
June, 1999 that such Shares are not accepted for payment by Purchaser, and
provided further that such cash balance may be reduced by the amount of
Company's reasonable out-of-pocket costs incurred in the preparation, execution
and performance of this Agreement, not to exceed $1,060,000, but if a long-form
merger is required, then total fees may be up to $1,250,000.
SECTION 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Securities
Act, the Exchange Act, state securities or blue sky laws, and the filing of a
copy of this Agreement and required officers' certificates as required by the
CCC, no filing with or notice to, and no permit, authorization, consent or
approval of, any United States or foreign court or tribunal, or administrative,
governmental or regulatory body, agency or authority (each a "GOVERNMENTAL
ENTITY") is necessary for the execution and delivery by Company of this
Agreement or the consummation by Company of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not have
a Material Adverse Effect on Company.
(b) Neither the execution, delivery and performance of this Agreement
by Company, nor the consummation by Company of the transactions contemplated
hereby, will (i) conflict with or result in any breach of any provision of the
respective charter or bylaws (or similar
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governing documents) of Company or any of its subsidiaries; (ii) result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound; or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Company or any of its
subsidiaries or any of their respective properties or assets except in the case
of clauses (ii) and (iii), where such violations, breaches or defaults would not
have a Material Adverse Effect on Company.
SECTION 3.6 NO DEFAULT. None of Company or its subsidiaries is in
breach, default or violation (and no event has occurred that, with notice or the
lapse of time or both, would constitute a breach, default or violation) of any
term, condition or provision of (a) its charter or bylaws (or similar governing
documents), (b) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Company or any of its
subsidiaries is now a party or by which any of them or any of their respective
properties or assets may be bound, or (c) any order, writ, injunction, decree,
law, statute, rule or regulation applicable to Company or any of its
subsidiaries or any of their respective properties or assets, except, in the
case of (b) or (c), for violations, breaches or defaults that would not have a
Material Adverse Effect on Company.
SECTION 3.7 NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
(a) Except as and to the extent publicly disclosed by Company in
Company SEC Reports, none of Company or its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of Company (including the notes thereto), other
than liabilities incurred in the ordinary course of business since March 31,
1999, none of which, individually or in the aggregate, would have a Material
Adverse Effect on Company. Without limiting the generality of the foregoing,
except as and to the extent publicly disclosed by Company in Company SEC Reports
or in the Company Disclosure Schedule, since March 31, 1999, Company and its
subsidiaries have conducted their respective businesses in all material respects
only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses consistent with past
practices, and none of the following has occurred:
(i) change in the financial condition, properties, business or
results of operations of Company and its subsidiaries, except for those changes
that, individually or in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect on Company;
(ii) damage, destruction or other casualty loss with respect
to any material asset or property owned, leased or otherwise used by Company or
any of its subsidiaries, not covered by insurance;
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(iii) declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of Company or any of its
subsidiaries (other than wholly owned subsidiaries) or any repurchase,
redemption or other acquisition by Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, Company or any of its subsidiaries;
(iv) amendment of any term of any outstanding security of
Company or any of its subsidiaries;
(v) incurrence, assumption or guarantee by Company or any
of its subsidiaries of any indebtedness for borrowed money;
(vi) creation or assumption by Company or any of its
subsidiaries of any Lien on any material asset, other than in the ordinary
course of business consistent with past practices;
(vii) loan, advance or capital contributions made by Company
or any of its subsidiaries to, or investment in, any person;
(viii) transaction or commitment made, or any contract or
agreement entered into, by Company or any of its subsidiaries relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by Company or any of its subsidiaries of any contract,
agreement or other right, in either case, material to Company and its
subsidiaries, taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(ix) labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of Company or any of its subsidiaries, or any lockouts,
strikes, slowdowns, work stoppages or, to Company's knowledge, threats thereof
by or with respect to such employees;
(x) change by Company or any of its subsidiaries in its
accounting principles, practices or methods; or
(xi) there have occurred statistically significant negative
results in Company's ultrasound clinical trials.
(b) Since March 31, 1999, except as disclosed in the Company Disclosure
Schedule, the Company SEC Reports filed prior to the date hereof or increases in
the ordinary course of business consistent with past practices, there has not
been any (i) increase in the compensation payable or that could become payable
by Company or any of its subsidiaries to (x) officers of Company or any of its
subsidiaries or (y) any employee of Company or any of its subsidiaries whose
annual cash compensation is Fifty Thousand Dollars ($50,000) or more, or (ii)
liabilities being imposed upon or incurred by Company that will equal or exceed
Twenty-Five Thousand Dollars ($25,000) for any single violation or One Hundred
Thousand Dollars ($100,000) in the aggregate.
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(c) Except as publicly disclosed by Company in Company SEC Reports,
since March 31, 1999, there have been no events, changes or effects with respect
to Company or its subsidiaries having, or that reasonably could be expected to
have, a Material Adverse Effect on Company.
SECTION 3.8 LITIGATION. Except as publicly disclosed by Company in
Company SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Company, threatened against
Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Company or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as publicly disclosed by
Company in Company SEC Reports, none of Company or its subsidiaries is subject
to any outstanding order, writ, injunction or decree that, insofar as can be
reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on Company or could reasonably be expected to prevent or
delay the consummation of the transactions contemplated hereby.
SECTION 3.9 COMPLIANCE WITH APPLICABLE LAW. Except as publicly
disclosed by Company in Company SEC Reports, Company and its subsidiaries hold
all material permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of their respective
businesses (collectively, the "COMPANY PERMITS"). Except as publicly disclosed
by Company in Company SEC Reports, Company and its subsidiaries are in material
compliance with the terms of the Company Permits, and the businesses of Company
and its subsidiaries are not being conducted in violation of any material law,
ordinance or regulation of the United States or any foreign country or any
political subdivision thereof or of any Governmental Entity. Except as publicly
disclosed by Company in Company SEC Reports, no investigation or review by any
Governmental Entity with respect to Company or its subsidiaries is pending or,
to the knowledge of Company, threatened nor, to the knowledge of Company, has
any Governmental Entity indicated an intention to conduct the same.
SECTION 3.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) SECTION 3.10(a) of the Company Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all material bonus,
stock, option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any current or former employment or executive
compensation or severance agreements written or otherwise maintained or
contributed to by Company or any trade or business (whether or not incorporated)
that is a member of a controlled group including Company or that is under common
control with Company within the meaning of Section 414 of the Code (an "ERISA
AFFILIATE"), for the benefit of or relating to any employee of Company or any
employee of an ERISA Affiliate, as well as each plan with respect to which
Company or an ERISA Affiliate could incur liability under Section 4069 (if such
plan has been or were terminated) or Section 4212(c) of ERISA (collectively, the
"EMPLOYEE PLANS"), excluding former agreements under which Company has no
remaining obligations. Company
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has made available to Parent a copy of (i) the most recent annual report on Form
5500 filed with the Internal Revenue Service (the "IRS") for each disclosed
Employee Plan where such report is required and (ii) the documents and
instruments governing each such Employee Plan (other than those referred to in
Section 4(b)(4) of ERISA). No event has occurred and, to the knowledge of
Company, there currently exists no condition or set of circumstances in
connection with which Company or any of its subsidiaries could be subject to,
any liability under the terms of any Employee Plans other than the payment of
benefits under the terms of such Employee Plans, ERISA, the Code or any other
applicable law, including, without limitation, any liability under Title IV of
ERISA that would have a Material Adverse Effect on Company.
(b) SECTION 3.10(b) of the Company Disclosure Schedule sets forth
a list of (i) all material employment agreements with officers of Company; (ii)
all agreements with consultants who are individuals obligating Company to make
annual cash payments in an amount exceeding Twenty-Five Thousand Dollars
($25,000); (iii) all severance agreements, programs and policies of Company with
or relating to its employees, except programs and policies required to be
maintained by law; and (iv) all plans, programs, agreements and other
arrangements of Company with or relating to its employees that contain change in
control provisions. Company has made available to Parent copies (or descriptions
in detail reasonably satisfactory to Parent) of all such agreements, plans,
programs and other arrangements.
(c) Except as disclosed in SECTION 3.10(c) of the Company
Disclosure Schedule, there will be no payment, accrual of additional benefits,
acceleration of payments or vesting in any benefit under any Employee Plan or
any agreement or arrangement disclosed under this Section solely by reason of
entering into or in connection with the transactions contemplated by this
Agreement.
(d) Except as disclosed in SECTION 3.10(d) of the Company
Disclosure Schedule, no Employee Plan that is a welfare benefit plan, within the
meaning of Section 3(1) of ERISA, provides benefits to former employees of
Company or its ERISA Affiliates, other than pursuant to Section 4980B of the
Code.
(e) There are no controversies pending or, to the knowledge of
Company, threatened between Company or any of its subsidiaries and any of their
respective employees that have, or may reasonably be expected to have, a
Material Adverse Effect on Company. Except as disclosed in SECTION 3.10(e) of
the Company Disclosure Schedule, neither Company nor any of its subsidiaries is
a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by Company or its subsidiaries, nor does Company
know of any activities or proceedings of any labor union to organize any such
employees. Company has no knowledge of any strikes, slowdowns, work stoppages,
lockouts or threats thereof by or with respect to any employees of Company or
any of its subsidiaries.
SECTION 3.11 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as publicly disclosed by Company in Company SEC
Reports, (i) each of Company and its subsidiaries is in material compliance with
all applicable Federal, state, local and foreign laws and regulations relating
to pollution or protection of human health or the
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environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "ENVIRONMENTAL LAWS"),
which compliance includes, but is not limited to, the possession by Company and
its subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws and compliance with the terms and
conditions thereof; (ii) none of Company or its subsidiaries has received
written notice of or is the subject of any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability under
or non-compliance with any Environmental Law (an "ENVIRONMENTAL CLAIM"); and
(iii) to the knowledge of Company, there are no circumstances that are
reasonably likely to prevent or interfere with such material compliance in the
future.
(b) Except as disclosed in Company SEC Reports, there are no
Environmental Claims pending or, to the knowledge of Company, threatened against
Company or its subsidiaries or, to the knowledge of Company, against any person
or entity whose liability for any Environmental Claim Company or any of its
subsidiaries has or may have retained or assumed, either contractually or by
operation of law.
SECTION 3.12 TAXES.
(a) For purposes of this Agreement:
(i) the term "TAX" (including "TAXES") means (A) all Federal,
state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto, (B)
any liability for payment of amounts described in clause (A), whether as a
result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (C) any liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(ii) the term "TAX RETURN" means any return, declaration,
report, statement, information statement and other document required to be filed
with respect to Taxes.
(b) Company and its subsidiaries have accurately prepared and
timely filed all Tax Returns they are required to have filed. Such Tax Returns
are accurate and correct in all material respects and do not contain a
disclosure statement under Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law).
(c) Company and its subsidiaries have paid or adequately
provided for all Taxes (whether or not shown on any Tax Return) they are
required to have paid or to pay.
(d) No claim for assessment or collection of Taxes is presently
being asserted against Company or its subsidiaries, and neither Company nor any
of its subsidiaries is a party to any
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pending action, proceeding, or investigation by any governmental taxing
authority, nor does Company have knowledge of any such threatened action,
proceeding or investigation.
(e) Neither Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any change
of control of Company or any of its subsidiaries, in the payment of any "excess
parachute payments" within the meaning of Section 28OG of the Code.
SECTION 3.13 INTELLECTUAL PROPERTY. Except as set forth on the Company
Disclosure Schedule, each of Company and its subsidiaries currently owns or
possesses adequate licenses or other valid rights to use all existing United
States and foreign patents, trademarks, trade names, service marks, copyrights,
trade secrets and applications therefor (collectively, "COMPANY INTELLECTUAL
PROPERTY RIGHTS"), except where the failure to own or possess valid rights to
use Company Intellectual Property Rights would not have a Material Adverse
Effect on Company. Schedule 3.13 of the Company Disclosure Schedule lists all of
the Company's patents and trademarks. The validity of Company Intellectual
Property Rights and the title thereto of Company or any subsidiary, as the case
may be, is not being questioned in any litigation to which Company or any
subsidiary is a party. The conduct of the business of Company and its
subsidiaries as now conducted does not infringe any valid patents, trademarks,
trade names, service marks, copyrights or other intellectual property rights of
others. The consummation of the transactions completed hereby will not result in
the loss or impairment of any Company Intellectual Property Rights.
SECTION 3.14 ASSETS.
(a) The assets and properties of Company and its subsidiaries,
considered as a whole, constitute all of the assets and properties that are
reasonably required for the business and operations of Company and its
subsidiaries as presently conducted. Company and its subsidiaries have good and
marketable title to or a valid leasehold estate in all personal properties and
assets reflected on Company's balance sheet at March 31, 1999 (except for
properties or assets subsequently sold in the ordinary course of business
consistent with past practice), except as would not, individually or in the
aggregate, have a Material Adverse Effect on Company, in each case, free and
clear of all Liens.
(b) SECTION 3.14 of the Company Disclosure Schedule sets forth (i)
a complete and accurate list of each improved and unimproved real property (each
a "PROPERTY") and facility ("FACILITY") owned or leased by Company or any of its
subsidiaries, and the current use of such Property or Facility and indicating
whether the Property or Facility is owned or leased, (ii) a complete and
accurate list of all leases pursuant to which Company or any of its subsidiaries
lease personal property and which require an annual expenditure by Company or
any of its subsidiaries individually in excess of Twenty-Five Thousand Dollars
($25,000) or which are not cancelable (without material penalty, cost or other
liability) within one year and (iii) with respect to each lease for real
property, the term (including renewal options) and current fixed rent.
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(c) There are no pending or, to the knowledge of Company,
threatened condemnation or similar proceedings relating to any of the Properties
or Facilities of Company and its subsidiaries.
SECTION 3.15. CONTRACTS. SECTION 3.15 of the Company Disclosure
Schedule contains a complete and accurate list of all contracts (written or
oral), undertakings, commitments or agreements (other than contracts,
undertakings, commitments or agreements for employee benefit matters set forth
in SECTION 3.10 of the Company Disclosure Schedule and real property leases set
forth in SECTION 3.14 of the Company Disclosure Schedule) of the following
categories to which Company or any of its subsidiaries is a party or by which
any of them is bound (collectively, and together with the contracts,
undertakings, commitments or agreements for employee benefit matters set forth
in SECTION 3.10 of the Company Disclosure Schedule and the real property leases
set forth in SECTION 3.14 of the Company Disclosure Schedule, the "CONTRACTS"):
(a) Contracts made in the ordinary course of business, requiring
annual expenditures by or liabilities of Company and its subsidiaries in excess
of Fifty Thousand Dollars ($50,000) that have a remaining term in excess of one
hundred eighty (180) days or are not cancelable (without material penalty, cost
or other liability) within one hundred eighty (180) days;
(b) promissory notes, loans, agreements, indentures, evidences of
indebtedness or other instruments relating to the lending of money, whether as
borrower, lender or guarantor, in excess of Twenty-Five Thousand Dollars
($25,000);
(c) Contracts containing covenants limiting the freedom of
Company or any of its subsidiaries to engage in any line of business or compete
with any person or operate at any location;
(d) joint venture or partnership agreements or joint development
or similar agreements pursuant to which any third party is entitled to develop
any Property and/or Facility on behalf of Company or its subsidiaries;
(e) Contracts with any Federal, state or local government that
have a remaining term in excess of one (1) year or are not cancelable (without
material penalty, cost or other liability) within one (1) year; and
(f) any other Contract that is material to Company and its
subsidiaries, taken as a whole.
Except as set forth in Section 3.15 of the Company Disclosure Schedule,
true and complete copies of the written Contracts and descriptions of verbal
Contracts, if any, have been delivered or made available to Parent. Each of the
Contracts is a valid and binding obligation of Company and, to Company's
knowledge without any investigation, the other parties thereto, enforceable
against Company in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium, reorganization, arrangement or
similar laws affecting creditors' rights generally and by general principles of
equity. No event has occurred which
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would, on notice or lapse of time or both, entitle the holder of any
indebtedness issued pursuant to a Contract identified in SECTION 3.15 of the
Company Disclosure Schedule in response to paragraph (b) above to accelerate, or
which does accelerate, the maturity of any such indebtedness.
SECTION 3.16 INSURANCE. Each of Company and its subsidiaries maintains
insurance policies (the "INSURANCE POLICIES") against all risks of a character
and in such amounts as are usually insured against by similarly situated
companies in the same or similar businesses. Each Insurance Policy is listed in
SECTION 3.16 of the Company Disclosure Schedule. Each Insurance Policy is in
full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full. None of the Insurance Policies will
terminate or lapse (or be affected in any other materially adverse manner) by
reason of the transactions contemplated by this Agreement. Each of Company and
its subsidiaries has complied in all material respects with the provisions of
each Insurance Policy under which it is the insured party. No insurer under any
Insurance Policy has canceled or generally disclaimed liability under any such
policy or, to Company's knowledge, indicated any intent to do so or not to renew
any such policy. All material claims under the Insurance Policies have been
filed in a timely fashion.
SECTION 3.17 PRODUCT WARRANTIES. SECTION 3.17 of the Company Disclosure
Schedule sets forth complete and accurate copies of the written warranties and
guaranties by Company or any of its subsidiaries currently in effect with
respect to its material products, or as to which material obligations have been
assumed by Company or its subsidiaries. There have not been any material
deviations from such warranties and guaranties, and neither Company, any of its
subsidiaries nor any of their respective salesmen, employees, distributors and
agents is authorized to undertake obligations to any customer or to other third
parties in excess of such warranties or guaranties. Neither Company nor any of
its subsidiaries has made any oral warranty or guaranty with respect to its
products.
SECTION 3.18 SUPPLIERS, DISTRIBUTORS AND CUSTOMERS. The documents and
information supplied by Company to Parent or any of its representatives in
connection with this Agreement with respect to relationships and volumes of
business done with its significant suppliers, distributors and customers are
accurate in all material respects. Except as set forth in the Company Disclosure
Schedule, during the last twelve (12) months, Company has received no notices of
termination or written threats of termination from any of the five (5) largest
suppliers, five (5) largest distributors or ten (10) largest customers for
Company and its subsidiaries.
SECTION 3.19 COMPANY RIGHTS AGREEMENT. Company has taken all necessary
action to ensure that neither its entering into this Agreement nor the
consummation of the Merger will cause Company Rights to become exercisable,
cause Parent or Purchaser to become an "Acquiring Person" (each as defined in
Company Rights Agreement), or cause there to occur a "Triggering Event" or a
"Distribution Date" (each as defined in the Company Rights Agreement).
SECTION 3.20 CERTAIN BUSINESS PRACTICES. None of Company, any of its
subsidiaries or any directors, officers, agents or employees of Company or any
of its subsidiaries has (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to
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political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (c) made any other unlawful payment.
SECTION 3.21 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of Company's capital stock necessary to approve and adopt this
Agreement.
SECTION 3.22 BROKERS. No broker, finder or investment banker (other
than Company's financial adviser, EGS Securities Corp., a true and correct copy
of whose engagement agreement has been provided to Parent) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon arrangements made by or
on behalf of Company.
SECTION 3.23 INFORMATION SUPPLIED. None of the information supplied by
Company specifically for inclusion in the Offer Documents will, at the date such
Offer Documents are filed with the SEC, the date they are disseminated to the
shareholders of Company, and at the Effective Time contain any untrue statement
of a material fact regarding Company or will omit to state any material fact
regarding Company required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
SECTION 3.24 FAIRNESS OPINION. Company has received a written opinion
from EGS SECURITIES CORP. to the effect that, as of the date thereof, the
consideration to be received by the holders of Shares in the Offer and the
Merger is fair to such holders from a financial point of view, and Company will
promptly deliver a copy of such opinion to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to Company, as
follows:
SECTION 4.1 ORGANIZATION.
(a) Parent is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted. Purchaser is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Parent has heretofore delivered
to Company accurate and complete copies of the charters and bylaws as currently
in effect of Parent and Purchaser.
(b) Each of Parent and Purchaser is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in
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such jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not have a Material Adverse Effect on Parent (defined
below). The term "MATERIAL ADVERSE EFFECT ON PARENT" means any change or effect
that (i) is or is reasonably likely to be materially adverse to the business,
assets, results of operations, condition (financial or otherwise) or prospects
of Parent and its subsidiaries, taken as a whole, or (ii) would, or would be
reasonably likely to, impair the ability of Parent and/or Purchaser to
consummate the transactions contemplated hereby, provided, however, that in
determining whether there has been a Material Adverse Effect on Parent, any
adverse effect attributable to the following shall be disregarded: (i) the
taking of any action permitted or required by this Agreement; or (ii) the breach
by Company of this Agreement; and in each case to the extent such adverse effect
is attributable to such event.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Purchaser and by Parent as the sole
shareholder of Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and constitutes a valid,
legal and binding agreement of each of Parent and Purchaser enforceable against
each of Parent and Purchaser in accordance with its terms.
SECTION 4.3 FINANCING. At each of (a) the time of acceptance for
purchase by Purchaser of Shares pursuant to the Offer and (b) the Effective
Time, Parent will have, and will make available to Purchaser, the funds
necessary to consummate the Offer and the Merger and the transactions
contemplated thereby, and to pay related fees and expenses. Parent and Purchaser
have received a commitment letter dated June 4, 1999, among Parent, Purchaser,
and Bank of America in a form reasonably acceptable to Company (the "COMMITMENT
LETTER") with respect to the financing of the acquisition of the Shares in the
Offer and the Merger (the "FINANCING"). The aggregate proceeds of the Financing,
together with internal corporate funds of Parent or Purchaser are sufficient to
acquire all of the Shares in the Offer and the Merger and to pay anticipated
expenses in connection therewith. The Commitment Letter is valid, binding and
enforceable in accordance with its terms and has not been revoked as of the date
hereof. Nothing has come to the attention of Parent or Purchaser which would
cause either Parent or Purchaser to believe that the proceeds of the Financing
will not be available to them by the Initial Expiration Date. Parent will not
enter into any definitive financing document that would materially reduce the
likelihood of obtaining the Financing or any other commitments and agreements
from third parties to provide financing to Parent or Purchaser without the prior
written consent of Company, which will not be unreasonably withheld.
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act, state
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securities or blue sky laws, and the filing of a copy of this Agreement and
required officers' certificates as required by the CCC and the DGCL, no
filing with or notice to, and no permit authorization, consent or approval of
any Government Entity is necessary for the execution and delivery by Parent
or Purchaser of this Agreement or the consummation by Parent or Purchaser of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or
give such notice would not have a Material Adverse Effect on Company.
(b) Neither the execution, delivery and performance of this
Agreement by Parent or Purchaser, nor the consummation by Parent or Purchaser of
the transactions contemplated hereby, will (i) conflict with or result in any
breach of any provision of the respective charter or bylaws (or similar
governing documents) of Parent or Purchaser or any of their subsidiaries; (ii)
result in a violation or breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or Lien) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or
Purchaser or any of their subsidiaries is a party or by which any of them or any
of their respective properties or assets may be bound; or (iii) violate any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent or Purchaser or any of their subsidiaries or any of their respective
properties or assets.
SECTION 4.5 INFORMATION SUPPLIED. None of the information supplied by
Parent or Purchaser specifically for inclusion in the Offer Documents will, at
the date such Offer Documents are filed with the SEC, the date they are
disseminated to the shareholders of Company, and at the Effective Time contain
any untrue statement of a material fact regarding Parent or Purchaser or will
omit to state any material fact regarding Parent or Purchaser required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they are made, not misleading.
SECTION 4.6 BROKERS. No broker, finder or investment banker (other than
Parent's financial advisor BAY CITY CAPITAL, a true and correct copy of whose
engagement agreement has been provided to Company) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement, based upon arrangements made by or on behalf of
Company.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF COMPANY. Except as contemplated by
this Agreement or as described in SECTION 5.1 of the Company Disclosure
Schedule, during the period from the date hereof to the earlier to occur of the
termination of this Agreement or the Effective Time, Company will, and will
cause each of its subsidiaries to, conduct its operations in the ordinary course
of business consistent with past practice and in such a manner as to cause its
representations and warranties contained in the last sentence of SECTION 3.4 to
be true and correct at and as of the date that Purchaser accepts for payment and
pays for Shares in the Offer, and, to
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the extent consistent therewith and with no less diligence and effort than would
be applied in the absence of this Agreement, Company will use reasonable
commercial efforts to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in SECTION 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither Company nor
any of its subsidiaries will, without the prior written consent of Parent and
Purchaser:
(a) amend its charter or bylaws (or other similar governing
instrument);
(b) amend the Company Rights Agreement in any manner that would
permit any person to acquire more than 20% (or in the case of Citigroup Inc.
and its affiliates only, 28%) of the Shares, or redeem the Company
Rights;
(c) authorize for issuance, issue, sell, deliver or agree or
commit to issue sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights), except for the issuance and sale of Shares pursuant to
Company Stock Options previously granted under the Company Plans and pursuant to
the employee stock purchase plan;
(d) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of its
capital stock, or otherwise make any payments to shareholders in their capacity
as such, or redeem or otherwise acquire any of its securities or any securities
of any of subsidiaries;
(e) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Company or any of its subsidiaries (other than the Merger);
(f) alter, through merger, liquidation, reorganization,
restructuring or any other fashion, the corporate structure of ownership of any
subsidiary;
(g) (i) incur or assume any long-term or short-term debt or issue
any debt securities, except for borrowings under existing lines of credit in the
ordinary course of business; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practice and except for obligations of subsidiaries of
Company incurred in the ordinary course of business; (iii) make any loans,
advances or capital contributions to or investments in any other person; (iv)
pledge or otherwise encumber shares of capital stock of Company or its
subsidiaries; or (v) mortgage or pledge any of its material assets,
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tangible or intangible, or create or suffer to exist any material Lien thereupon
(other than Tax Liens for Taxes not yet due);
(h) except as may be required by law, enter into, adopt, amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, or increase in any manner the compensation or
fringe benefits of any director, officer or employee (including, without
limitation, through the voluntary acceleration of vesting of Company Stock
Options), or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock appreciation rights or performance units); PROVIDED, HOWEVER, that this
paragraph shall not prevent Company or its subsidiaries from entering into
employment agreements or severance agreements with new employees in the ordinary
course of business and consistent with past practice or complying with existing
agreements;
(i) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions having a fair market value in
excess of Fifty Thousand Dollars ($50,000) in the aggregate;
(j) except as may be required as a result of a change in law or
in generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(k) revalue in any material respect any of its assets, including
without limitation writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(l) (i) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into, amend or
terminate any contract or agreement, other than in the ordinary course of
business consistent with past practice, that would be material to Company and
its subsidiaries, taken as a whole; (iii) authorize any new capital expenditure
or expenditures that individually is in excess of Twenty Five Thousand Dollars
($25,000) or in the aggregate are in excess of One Hundred Thousand Dollars
($100,000); PROVIDED that none of the foregoing shall limit any capital
expenditure required pursuant to existing customer contracts or the payment of
fees to service providers in connection with this Agreement and the transactions
contemplated thereby;
(m) make any tax election or settle or compromise any income tax
liability material to Company and its subsidiaries taken as a whole;
(n) settle or compromise any pending or threatened suit, action or
claim that (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Company;
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(o) pay, or (subject to SECTION 5.5) award any increases in, any
salary, wages, vacation pay, sick pay, bonuses or other compensation except in
the ordinary course of business consistent with past practice;
(p) made any material change in the conduct of its business or
operations, or take or omit to take any actions not in the ordinary course of
business consistent with past practices; or
(q) take or agree in writing or otherwise to take any of the
actions described in SECTIONS 5.1(a) THROUGH 5.1(p) or any action that would
make any of the representations or warranties of Company contained in this
Agreement untrue or incorrect.
SECTION 5.2 OTHER POTENTIAL ACQUIRERS.
(a) Company, its affiliates and their respective officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties with respect to any Third Party
Acquisition (defined below). Neither Company nor any of its affiliates shall,
nor shall Company authorize or permit any of its or their respective officers,
directors, employees, representatives or agents to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any non-public information to any person or group (other than Parent
and Purchaser or any designees of Parent and Purchaser) concerning any Third
Party Acquisition; PROVIDED, HOWEVER, that nothing herein will prevent the
Company Board from taking and disclosing to Company's shareholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender or exchange offer. Company shall promptly notify Parent in
the event it receives any proposal or inquiry concerning a Third Party
Acquisition, including the terms and conditions thereof and the identity of the
party submitting such proposal; and shall advise Parent from time to time of the
status and any material developments concerning the same.
(b) Except as set forth in this SECTION 5.2(b), the Company Board
shall not withdraw its recommendation of the transactions contemplated hereby or
approve or recommend, or cause Company to enter into any agreement with respect
to, any Third Party Acquisition. Notwithstanding the foregoing, if the Company
Board by a majority vote determines in its good faith judgment, after
consultation with and based upon the advice of counsel reasonably acceptable to
Parent, that it is required to do so in order to comply with its fiduciary
duties, the Company Board may withdraw its recommendation of the transactions
contemplated hereby or approve or recommend a Superior Proposal (defined below),
but in each case only (i) after providing reasonable written notice to Parent (a
"NOTICE OF SUPERIOR PROPOSAL"), advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal;
and (ii) if Parent does not, within three (3) business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Company Board by a
majority vote determines in its good faith judgment (based on the advice of a
financial adviser reasonably acceptable to Parent) to be at least as favorable
to Company's shareholders as such Superior Proposal; PROVIDED, HOWEVER, that
Company shall not be entitled to enter into any agreement with respect to a
Superior Proposal unless and until this Agreement is terminated by its terms
pursuant to
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SECTION 7.1. Any disclosure that the Company Board may be compelled to make with
respect to the receipt of a proposal for a Third Party Acquisition or otherwise
in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not
constitute a violation of this Agreement PROVIDED that such disclosure states
that no action will be taken by the Company Board in violation of this SECTION
5.2(b).
(c) For the purposes of this Agreement, "THIRD PARTY ACQUISITION"
means the occurrence of any of the following events: (i) the acquisition of
Company by merger or otherwise by any person (which includes a "person" as such
term is defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Purchaser or any affiliate thereof (a "THIRD PARTY"); (ii) the acquisition by a
Third Party of any material portion of the assets of Company and its
subsidiaries taken as a whole, other than the sale of its products in the
ordinary course of business consistent with past practices; (iii) the
acquisition by a Third Party of fifteen percent (15%) or more of the outstanding
Shares; (iv) the adoption by Company of a plan of liquidation or the declaration
or payment of an extraordinary dividend; (v) the repurchase by Company or any of
its subsidiaries of more than ten percent (10%) of the outstanding Shares; or
(vi) the acquisition by Company or any of its subsidiaries by merger, purchase
of stock or assets, joint venture or otherwise of a direct or indirect ownership
interest or investment in any business whose annual revenues, net income or
assets is equal or greater than ten percent (10%) of the annual revenues, net
income or assets of Company. For purposes of this Agreement, a "SUPERIOR
PROPOSAL") means any bona fide proposal to acquire directly or indirectly for
consideration consisting of cash and/or securities more than fifty percent (50%)
of the Shares then outstanding or all or a significant portion of the assets of
Company and otherwise on terms that the Company Board by a majority vote
determines in its good faith judgment (based on the advice of a financial
advisor reasonably acceptable to Parent) to be more favorable to Company's
shareholders than the Merger.
SECTION 5.3 ACCESS TO INFORMATION.
(a) Between the date hereof and the Effective Time, Company will
give Parent and its authorized representatives, and Parent will give Company and
its authorized representatives, reasonable access to all employees, plants,
offices, warehouses, and other facilities and to all books and records of itself
and its subsidiaries; will permit the other party to make such inspections as
such party may reasonably require; and will cause its officers and those of its
subsidiaries to furnish the other party with such financial and operating data
and other information with respect to the business and properties of itself and
its subsidiaries as the other party may from time to time reasonably request.
(b) Between the date hereof and the Effective Time, Company shall
furnish to Parent, as soon as available within thirty days after the end of each
calendar month (commencing with June 4, 1999), an unaudited balance sheet of
Company as of the end of the such month, and the related statements of earnings,
shareholders' equity (deficit); and, as soon as available within thirty days
after the end of each calendar quarter, cash flows for the quarter then ended
each, prepared in accordance with generally accepted accounting principles in
conformity with the practices consistently applied by Company with respect to
its monthly financial statements. All the foregoing shall be in accordance with
the books and records of Company and shall fairly
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present its financial position (taking into account the differences between the
monthly and quarterly statements prepared by such party in conformity with its
past practices) as of the last day of the period then ended.
(c) Parent and Purchaser will hold, and will cause its consultants
and advisers to hold, in confidence all documents and information furnished to
it by or on behalf of Company in connection with the transactions contemplated
by this Agreement, pursuant to the terms of that certain Confidentiality
Agreement entered into between Company and Parent dated April 27, 1998. Company
will hold, and will cause its consultants and advisers to hold, in confidence
all documents and information furnished to it by or on behalf of Parent or
Purchaser in connection with the transactions contemplated by this Agreement
pursuant to the terms of that certain Confidentiality Agreement entered into
between Parent and Company dated April 27, 1998.
SECTION 5.4 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all commercially reasonable efforts to take or cause to be taken all action and
to do or cause to be done all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (a)
cooperating in the preparation and filing of the Schedule 14D-1, Offer
Documents, Schedule 14D-9 or any other filings required to be filed with the SEC
pursuant to the transactions contemplated by this Agreement and any amendments
to any thereof; (b) obtaining consents of all third parties and Governmental
Entities necessary proper or advisable for the consummation of the transactions
contemplated by this Agreement; (c) contesting any legal proceeding relating to
the Merger; and (d) executing any additional instruments necessary to consummate
the transactions contemplated hereby. Subject to the terms and conditions of
this Agreement, Parent and Purchaser agree to use all commercially reasonable
efforts to cause the Effective Time to occur as soon as practicable after
Company's shareholders vote with respect to the Merger. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall take all
such necessary action.
SECTION 5.5 EMPLOYEE BENEFITS. Parent will provide the employees of
Company and its subsidiaries with employee benefits reasonably commensurate with
the benefits currently provided to Company employees. Company employees who
remain with the Surviving Corporation or Parent shall receive credit for past
service with Company. Parent will compensate employees of Company and its
subsidiaries at a rate not less than the rate of compensation currently paid to
such employees by Company and its subsidiaries. In addition, in connection with
Company's annual salary reviews, Company or Parent will increase the rate of
compensation paid to such employees in accordance with ordinary business
practices, provided that the aggregate amount of the increases shall not exceed
5% of total base salaries or $196,200. Parent agrees and will cause the
Surviving Corporation to agree that all obligations of Company or any subsidiary
under any "change of control" or similar provisions relating to employees
contained in any existing contracts and all termination or severance agreements
with executive officers identified in SECTION 3.10(c) of the Company Disclosure
Schedule will be honored in accordance with their terms (subject to SECTION
2.14) as of the date hereof. Notwithstanding the
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foregoing, except as provided in the preceding sentence, nothing contained
herein shall be construed as requiring Parent or the Surviving Corporation to
continue any specific employee benefit plans or to continue the employment of
any specific person.
SECTION 5.6 PUBLIC ANNOUNCEMENTS. Parent, Purchaser and Company, as the
case may be, will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, 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 or by
obligations pursuant to any listing agreement with the Nasdaq-NMS as determined
by Parent, Purchaser or Company, as the case may be.
SECTION 5.7 RESIGNATION OF OFFICERS AND DIRECTORS. Except as otherwise
agreed in writing by Parent, each of the directors and officers of Company and
its subsidiaries shall tender their resignations effective on or before the
Effective Time. Any resignations tendered pursuant to this Section 5.7 shall be
deemed an "involuntary termination" for purposes of any change of control or
severance agreements.
SECTION 5.8 NOTICE OF CERTAIN EVENTS. Company shall promptly notify
Parent and Parent shall promptly notify Company of:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency in connection with the transactions contemplated by this
Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against, relating to or
involving or otherwise affecting such party which, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
SECTION 3.8, or which relate to the consummation of the transactions
contemplated by this Agreement; or
(d) the occurrence or nonoccurrence of any event that would
reasonably be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect; provided that the
delivery of any notice pursuant to this SECTION 5.8 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 5.9 REDEMPTION OF RIGHTS. Prior to the initial expiration date
of the Offer, Company shall have redeemed the Company Rights.
SECTION 5.10 INDEMNIFICATION. (a) The Certificate of Incorporation of
the Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Articles of Incorporation and By-Laws of
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
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adversely affect the rights thereunder of individuals who between the date
hereof and the Effective Time were directors or officers of Company, unless such
modification is required by law.
(b) After the time the persons designated by Parent have been
elected to, and shall constitute a majority of, the Company Board pursuant to
SECTION 1.3 (the "APPOINTMENT DATE"), the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Articles of
Incorporation or By-Laws, but subject to the limitations thereof, including the
limitations contained in SECTION 317 of the CCC, to indemnify and hold harmless,
each director and officer of Company or any of its subsidiaries (collectively,
the "INDEMNIFIED PARTIES"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action or omission by such director or officer by
virtue of their holding the office of director or officer occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) for a period of six years after the Effective
Time. In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) any counsel retained
by the Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to the Surviving Corporation and Parent and (ii) neither
the Surviving Corporation nor Parent shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
(c) For a period four years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from or related to facts or
events that occurred at or before the Effective Time; PROVIDED, HOWEVER, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the annual premiums paid as of the
date hereof by Company for such insurance (such 150% amount, the "MAXIMUM
PREMIUM"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium, PROVIDED FURTHER,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available extended reporting periods with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
SECTION 5.10(c), does not exceed the Maximum Premium. Company represents to
Parent that the Maximum Premium is $210,000. Parent agrees, add will cause
Company not to take any action that would have the effect of limiting the
aggregate amount of insurance coverage required to be maintained for the
individuals referred to in this SECTION 5.10.
SECTION 5.11 SECURITY AGREEMENT. Simultaneously with the closing of the
Offer, Company shall execute a security agreement in form and substance
reasonably satisfactory to Parent to provide that the cash balance referred to
in Section 3.4 shall be available to Parent
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immediately following the acceptance of Shares by Parent for payment at the
conclusion of the Offer.
SECTION 5.12 EMPLOYMENT AGREEMENTS. Company shall use its reasonable
best efforts to cause the individuals named by Parent to Company in paragraph
(b) of a supplemental communication made on the date hereof to enter into
employment agreements reasonably satisfactory to Parent on substantially the
terms set forth in such supplemental communication.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement must be approved and adopted by the requisite
vote of the shareholders of Company, if required;
(b) no statute, rule, regulation, executive order, decree, ruling
or injunction had been enacted, entered, promulgated or enforced by any United
States court or United States governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger; and
(c) Parent, Purchaser or their affiliates have purchased Shares
pursuant to the Offer.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval and adoption of this Agreement by the shareholders of Company:
(a) by mutual written consent of Parent, Purchaser and Company;
(b) by Parent and Purchaser or Company if (i) any court of
competent jurisdiction in the United States or other United States Governmental
Entity shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become nonappealable,
(ii) the Merger has not been consummated by November 15, 1999; or (iii) the
Offer terminates or expires in accordance with its terms as a result of a
failure of any of the conditions set forth in Annex I hereto without Purchaser
having purchased any Shares pursuant to the Offer; PROVIDED that no party may
terminate this Agreement pursuant to clauses (ii) or (iii) if such party's
failure to fulfill any of its obligations under this Agreement shall have been
the reason that the Effective Time shall not have occurred on or before said
date;
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(c) by Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Purchaser set forth in this
Agreement or if any representation or warranty of Parent or Purchaser shall have
become untrue, and such breach shall not have been cured or such representation
or warranty shall not have been made true within thirty (30) business days after
notice by Company thereof except for any breach or inaccuracies that,
individually or in the aggregate, have not had, and would not have a Material
Adverse Effect on Parent, PROVIDED that Company has not materially breached any
of its obligations hereunder; (ii) there shall have been a breach by Parent or
Purchaser of any of their respective covenants or agreements hereunder having a
Material Adverse Effect on Parent or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Parent or Purchaser, as
the case may be, has not cured such breach within thirty (30) business days
after notice by Company thereof, PROVIDED that Company has not materially
breached any of its obligations hereunder; (iii) Purchaser has not timely
commenced the Offer pursuant to SECTION 1.1; or (iv) the Company Board has
received a Superior Proposal and has complied with the provisions of SECTION
5.2(b); or
(d) by Parent and Purchaser if (i) there shall have been a breach
of any representation or warranty on the part of Company set forth in this
Agreement or if any representation or warranty of Company shall have become
untrue, and such breach shall not have been cured or such representation or
warranty shall not have been made true within thirty (30) business days after
notice by Parent or Purchaser thereof except for any breach or inaccuracies that
individually or in the aggregate have not had, and would not have, a Material
Adverse Effect on Company, provided that Parent has not materially breached any
of its obligations hereunder; (ii) there shall have been a breach by Company of
its covenants or agreements hereunder having a Material Adverse Effect on
Company or materially adversely affecting (or materially delaying) the
consummation of the Merger, and Company has not cured such breach within thirty
(30) business days after notice by Parent or Purchaser thereof provided that
Parent has not materially breached any of its obligations; (iii) the Company
Board shall have recommended to Company's shareholders a Superior Proposal; (iv)
the Company Board shall have withdrawn or materially weakened its recommendation
of this Agreement or the Merger; (v) if the Offer has expired or has been
terminated in accordance with the terms set forth in this Agreement (including
Annex I) without any Shares having been purchased pursuant to the Offer; (vi) a
tender offer or exchange offer for 15% or more of the Shares is commenced, and
the Board of Directors of Company, within 10 business days after such tender
offer or exchange offer is commenced, either fails to recommend against
acceptance of such tender offer or exchange offer by its shareholders or takes
no position with respect to the acceptance of such tender offer or exchange
offer by its shareholders.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 7.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this SECTION 7.2 and SECTIONS 5.4 and 7.3 hereof. Nothing
contained in this SECTION 7.2 shall relieve any party from liability for any
breach of this Agreement.
34
<PAGE>
SECTION 7.3 FEES AND EXPENSES.
(a) In the event that this Agreement is terminated pursuant to:
(i) SECTION 7.1(c)(iv) or SECTION 7.1(d)(iii) OR (vi);
(ii) SECTIONS 7.1(d)(i) OR (ii) (unless the breach or
inaccuracy causing termination pursuant to either such Section was in all
respects outside the direction or control of Company) and within twelve (12)
months thereafter Company enters into an agreement with respect to a Third Party
Acquisition or a Third Party Acquisition occurs involving any party (or any
affiliate thereof) (x) with whom Company (or its agents) had negotiations with a
view to a Third Party Acquisition, (y) to whom Company (or its agents) furnished
information with a view to a Third Party Acquisition or (z) who had submitted a
proposal or expressed an interest in a Third Party Acquisition, in the case of
each of clauses (x), (y) and (z), after the date hereof and prior to such
termination;
(iii) SECTION 7.1(d)(iv) and the Company Board has withdrawn
or materially weakened its recommendation following the receipt of an offer by a
Third Party to consummate a Third Party Acquisition involving the payment of
consideration to shareholders of Company with a value in excess of the Merger
Consideration; then
Parent and Purchaser will suffer direct and substantial damages, which damages
cannot be determined with reasonable certainty. To compensate Parent and
Purchaser for such damages, and in recognition of the time, efforts and expenses
incurred by Parent with respect to Company and the opportunity that the Merger
represents to Parent, Company shall pay to Parent the amount of One Million Two
Hundred Thousand Dollars ($1,200,000) as liquidated damages immediately upon the
occurrence of the event described in this SECTION 7.3(a) giving rise to such
damages. It is specifically acknowledged that the amount to be paid pursuant to
this SECTION 7.3(a) represents liquidated damages, as described in Section 1671
of the California Civil Code, and not a penalty, and that the agreements
contained in this SECTION 7.3(a) are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, Parent would
not enter into this Agreement.
(b) The Fee payable pursuant to (A) SECTION 7.3(a)(i) or (a)(iii)
shall be paid within one business day after the first to occur of the events
described therein and (B) SECTION 7.3(a)(iii) shall be paid on the date on which
the transactions referred to in such subsections are subsequently consummated.
(c) Except as specifically provided in this SECTION 7.3, and
except for a termination by Parent or Purchaser pursuant to Section 7.1(d)(ii)
in an amount which taken together with any amounts under this SECTION 7.3 will
not exceed $1,200,000, each party shall bear its own expenses in connection with
this Agreement and the transactions contemplated hereby.
SECTION 7.4 AMENDMENT. This Agreement may be amended by action taken by
Company, Parent and Purchaser at any time before or after approval of the Merger
by the shareholders of Company but after any such approval no amendment shall be
made which
35
<PAGE>
requires the approval of such shareholders under applicable law without such
approval. This Agreement may be amended only by an instrument in writing signed
on behalf of the parties hereto.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
each party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto 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 hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein will not survive beyond the Effective
Time or a termination of this Agreement. This SECTION 8.1 will not limit any
covenant or agreement of the parties hereto which by its terms requires
performance after the Effective Time.
SECTION 8.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Company Disclosure Schedule) (a) constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings both written and oral between the
parties with respect to the subject matter hereof and (b) will not be assigned
by operation of law or otherwise; PROVIDED, HOWEVER, that Purchaser may assign
any or all of its rights and obligations under this Agreement to any subsidiary
of Parent, but no such assignment will relieve Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 8.3 VALIDITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 8.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder must be in writing and shall be given (and will be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
to each other party as follows:
if to Parent or Purchaser: QUIDEL CORPORATION
10165 McKellar Court
San Diego, California 92121-4201
Telecopier: (619) 546-8955
Attention: President and Chief
Executive Officer
36
<PAGE>
with a copy to: Gibson, Dunn & Crutcher LLP
4 Park Plaza
Irvine, California 92614
Telecopier: (949) 451-4220
Attention: Leonard J. McGill, Esq.
if to Company to: METRA BIOSYSTEMS, INC.
265 North Whisman Road
Mountain View, California 94043-3911
Telecopier: (650) 903-0500
Attention: President and Chief
Executive Officer
with a copy to: Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
Telecopier: (650) 854-1121
Attention: Mark B. Weeks, Esq.
and
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Telecopier (415) 773-5759
Attention: Alan Talkington, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 8.5 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of California without regard
to the principles of conflicts of law thereof.
SECTION 8.6 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 8.7 PARTIES IN INTEREST. This Agreement will be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as provided in Section 8.2, nothing in this
Agreement express or implied is intended to or will confer upon any other person
any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
SECTION 8.8 CERTAIN DEFINITIONS. For the purposes of this Agreement the
term:
37
<PAGE>
(a) "AFFILIATE" means a person that, directly or indirectly,
through one or more intermediaries controls, is controlled by or is under common
control with the first-mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which the
NYSE is closed;
(c) "CAPITAL STOCK" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(d) "DISSENTING SHARES" shall mean any Shares outstanding
immediately prior to the Effective Time and held by a holder who had not voted
in favor of the Merger or consented thereto in writing, and who has demanded
appraisal for such Shares in accordance with Section 1300 of the CCC, if such
Section 1300 provides for appraisal rights for such Shares in the Merger.
(e) "KNOWLEDGE" or "KNOWN" means, with respect to any matter in
question, the actual knowledge of such matter of any executive officer of
Company or Parent, as the case may be;
(f) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other legal entity; and
(g) "SUBSIDIARY" or "SUBSIDIARIES" of Company, Parent, the
Surviving Corporation or any other person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which Company, Parent, the Surviving Corporation or any
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the capital
stock 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.
SECTION 8.9 PERSONAL LIABILITY. This Agreement will not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of Company or Parent or any officer,
director, employee, agent, representative or investor of any party hereto.
SECTION 8.10 SPECIFIC PERFORMANCE. The parties hereby acknowledge that
the failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to the
consummation of the Merger, will cause irreparable injury to the other parties,
for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; PROVIDED, HOWEVER, that if a party
hereto is entitled to receive any payment or reimbursement of expenses pursuant
to SECTIONS 7.3(a) or (b) it shall not be entitled to specific performance to
compel the consummation of the Merger.
38
<PAGE>
SECTION 8.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original but all of
which will constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
QUIDEL CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
METRA BIOSYSTEMS, INC.
By: /s/ George W. Dunbar, Jr.
-----------------------------------------
Name: George W. Dunbar, Jr.
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
MBS ACQUISITION CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President
--------------------------------------
39
<PAGE>
ANNEX I
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer
(subject to the provisions of this Agreement), Purchaser will not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer, subject to the terms of this
Agreement, as to any Shares not then paid for, if at any time on or after June
4, 1999 and before the time for payment for any such Shares, any of the
following events exist or shall occur and remain in effect:
(a) there has not been validly tendered and not withdrawn, prior to the
expiration of the Offer, such number of Shares which, together with
Shares already beneficially owned by Parent or any of its wholly owned
subsidiaries, would constitute at least ninety percent (90%) of the
outstanding Shares (the "MINIMUM CONDITION"); PROVIDED, HOWEVER, that
the Minimum Condition must be waived by Purchaser and the Revised
Minimum Number substituted therefor as contemplated, and to the extent
required, by SECTION 1.1(c) of the Agreement.
(b) Parent, Purchaser or Company will be subject to any final order,
decree, or injunction of a court of competent jurisdiction within the
United States that (i) prevents or materially delays the consummation
of the Offer or the Merger, or (ii) would impose any material
limitation on the ability of Parent effectively to exercise full rights
of ownership of Company or the assets or business of Company; or
(c) there shall have occurred (1) any general suspension of trading in, or
limitation on prices for, securities on the Nasdaq-NMS or New York
Stock Exchange, Inc. for a period in excess of twenty-four (24) hours
(excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market
conditions), (2) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States
(whether or not mandatory), (3) a commencement of a war, armed
hostilities or other international or national calamity, directly or
indirectly involving the United States, except for the current level of
hostilities in Kosovo, Bosnia, Serbia or Iraq, or (4) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, including the current hostilities in Kosovo, Bosnia, Serbia or
Iraq, a material acceleration or worsening thereof; or
(d) any representation and warranty of Company contained in this Agreement,
without regard to any qualification or reference to immateriality or
Material Adverse Effect on Company is not true and correct as of June
4, 1999 or will not be true and correct as of the
ANNEX I
1
<PAGE>
expiration of the Offer, except for any inaccuracies that, individually
or in the aggregate, have not had, and would not have, a Material
Adverse Effect on Company; or
(e) there has been a material breach by Company of any of its agreements,
covenants or obligations under this Agreement, and the breach is not
curable or, if curable, is not cured by Company within twenty (20)
calendar days after receipt by Company of written notice from Parent of
such breach; or
(f) this Agreement has been terminated in accordance with its terms; or
(g) (1) a tender offer or exchange offer for fifteen percent (15%) or more
of the outstanding Shares is commenced, and the Company Board, within
ten (10) business days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender
offer or exchange offer by its shareholders or takes no position with
respect to the acceptance of such tender offer or exchange offer by its
shareholders; or (2) any person or group shall have entered into a
definitive agreement or agreement in principle with Company with
respect to a Third Party Acquisition; or
(h) (1) the Company Board has withdrawn, changed or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger or has recommended a proposal with respect to a Third
Party Acquisition, or has adopted any resolution to effect any of the
foregoing, or (2) the Company Board has recommended any proposal other
than this Agreement; or
(i) Company has not obtained all permits, authorizations, consents, and
approvals required on its part to perform its obligations under, and
consummate the transactions contemplated by, this Agreement, in form
and substance reasonably satisfactory to Parent, or Parent and
Purchaser have not received evidence reasonably satisfactory to them of
the receipt of such permits, authorizations, consents, and approvals,
except for such permits, authorizations, consents or approvals that,
individually or in the aggregate, have not had, and would not have, a
Material Adverse Effect on Company; or
(j) That number of individuals specified and named by Parent to Company in
paragraph (a) of a supplemental communication dated June 4, 1999 shall
not have entered into employment agreements reasonably satisfactory to
Parent on substantially the terms set forth in such supplemental
communication,
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances makes it inadvisable to proceed with the Offer
or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Purchaser and
may be waived by Parent or Purchaser, in whole or in part at any time and from
time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the
ANNEX I
2
<PAGE>
foregoing rights will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right which may be asserted at any time
and from time to time.
ANNEX I
3
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of June 4, 1999 (this "AGREEMENT") is
by and among QUIDEL CORPORATION, a Delaware corporation ("PARENT"), METRA
BIOSYSTEMS, INC., a California corporation, ("COMPANY"), and MBS ACQUISITION
CORPORATION, a Delaware corporation and wholly-owned subsidiary of Parent
("PURCHASER").
RECITALS
WHEREAS, simultaneously herewith Parent, Company and Purchaser are entering
into an Agreement and Plan of Merger (the "MERGER AGREEMENT") pursuant to which
(i) Parent shall cause Purchaser to make and Purchaser shall make a tender offer
(the "OFFER") to purchase for cash any and all of the issued and outstanding
shares of Company common stock (including the Company Rights (as defined in the
Merger Agreement) attached thereto, the "SHARES") and (ii) Purchaser will
thereafter be merged with and into Company (the "MERGER"), with Company
remaining as the surviving corporation (all capitalized terms not otherwise
defined herein having the meaning ascribed to them in the Merger Agreement);
Whereas, Parent and Purchaser have required as a condition to entering into
the Merger Agreement that Company grant Parent an option to purchase shares of
common stock, $0.001 par value per share, of Company (the "COMMON STOCK") on the
terms set forth herein to facilitate consummation of the Merger, and, in order
to induce Parent and Purchaser to enter into the Merger Agreement, Company has
agreed to this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and in the Merger Agreement, and intending to be
legally bound hereby, Parent, Company and Purchaser hereby agree as follows:
1. GRANT OF OPTION. Company hereby grants to Purchaser an irrevocable
option (the "OPTION") to purchase, at a price of $1.78 per share (the "PURCHASE
PRICE"), such number of shares (but in no event more than the number of
authorized shares of Common Stock available for issuance), which, together with
the shares of Common Stock beneficially owned together by Parent or Purchaser or
their respective assignees immediately following consummation of the Offer,
would result in Parent or Purchaser or their respective assignees together
beneficially owning 100 shares more than 90% of the shares of Common Stock to be
outstanding following the exercise of this Option (the "OPTION SHARES").
2. EXERCISE OF THE OPTION; TERM. Subject to paragraph 3 and provided that
neither Purchaser nor Parent has breached any of their respective material
obligations under the Merger Agreement, Purchaser may exercise the Option, in
whole but not in part, (but only if as the result of such exercise in full
Parent or Purchaser or their respective assignees together would own at least
90% of the outstanding shares of Common Stock), at any time prior to the
expiration of the Option (as set forth below), by written notice to Company
specifying the number of Option Shares to be purchased, the method used to
calculate such number, the manner of payment for
<PAGE>
such Option Shares, and a date for the closing not later than five business
days nor earlier than two business days from the date of such notice (the
"CLOSING"), provided however that the Closing shall occur concurrently with the
consummation of the Offer. The Option shall expire unless exercised prior to the
earlier of (a) the Effective Time, (b) the termination of the Merger Agreement
or the termination or expiration of the Offer without the purchase of Shares
pursuant thereto for any reason, or (c) the date on which Purchaser waives the
Minimum Condition and accepts for payment the Revised Minimum Number of Shares.
The Closing shall take place at the offices of Gibson, Dunn & Crutcher LLP,
Irvine, California, unless another place is agreed to in writing by the parties
hereto.
3. CONDITION TO EXERCISE OF OPTION. Purchaser (or its designee) may
exercise the Option only if the number of shares of Common Stock tendered and
not withdrawn pursuant to the Offer together with the shares of Common Stock
owned by Parent or Purchaser or their respective assignee shall together own not
more than 90% of the shares of Common Stock outstanding.
4. PAYMENT OF PURCHASE PRICE AND DELIVERY OF CERTIFICATES. At the Closing,
(a) against delivery of the Option Shares, Purchaser shall pay to Company the
aggregate purchase price for the Option Shares at such Closing by delivery to
Company of a certified, cashier's or bank check payable to the order of Company,
or by wire transfer of federal funds to an account designated by Company, in an
amount equal to the number of Option Shares issued multiplied by $0.001 to an
account designated in writing by Company, and a promissory note (adequately
secured by collateral other than the Shares acquired) for the balance of the
Purchase Price bearing interest at the prime rate charged by Bank of America on
the date of exercise of the Option, which promissory note shall be due and
payable upon demand but not less than ten days following the issuance thereof
and (b) Company shall deliver to Purchaser a certificate or certificates
representing the Option Shares, free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, in the denominations and in the
name designated by Purchaser in its notice of exercise. At the Closing,
Purchaser (or its assignee) shall deliver a letter representing that the Option
Shares are being purchased for its own account and are being acquired by it
pursuant to this Agreement for investment and not with a view to any
distribution thereof, and agreeing that such person will not offer to sell or
otherwise dispose of any such shares so acquired in violation of the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and a legend to such effect
shall be noted on such Option Shares.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company hereby represents
and warrants to Parent and Purchaser as follows:
5.1 DUE AUTHORIZATION. This Agreement has been duly authorized
by all necessary corporate action on the part of Company and has been duly
executed by a duly authorized officer of Company and is a valid and binding
obligation of Company. All Option Shares when issued will be duly and validly
issued, fully paid and non-assessable.
2
<PAGE>
5.2 DUE ORGANIZATION. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has the requisite corporate power to enter into and perform this Agreement.
5.3 AUTHORIZED SHARES. Except for any filings required to be made with
any governmental authority, which Company agrees to promptly make, Company has
taken all necessary corporate action to authorize and reserve for issuance all
of the Option Shares and will take all necessary corporate action to authorize
and reserve for issuance all additional Shares which may be issued upon exercise
of the Option.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant to Company as follows:
6.1 DUE AUTHORIZATION. This Agreement has been duly authorized by all
necessary corporate action on the part of Parent and Purchaser and has been duly
executed by a duly authorized officer of both Parent and Purchaser.
6.2 DUE ORGANIZATION. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the requisite corporate power to enter into and perform this Agreement.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite corporate power
to enter into and perform this Agreement.
6.3 PURCHASE NOT FOR DISTRIBUTION. Purchaser is acquiring the Option,
and Purchaser or its assignee will acquire the Option Shares, for its own
account and not with a view to or for sale in connection with any distribution
thereof, and Purchaser will not sell or otherwise dispose of any Option Shares
except in compliance with the Securities Act and the rules and regulations
thereunder.
7. ANTI-DILUTION. In the event of any change in Company Common Stock by
reason of any stock dividends, split-ups, recapitalizations, combinations,
exchanges or shares or the like, the number of shares of Company Common Stock
subject to the Option and the purchase price per Option Share shall be adjusted
appropriately.
8. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and will be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
addressed to the respective party at the addresses contained in SECTION 9.4 of
the Merger Agreement.
9. FEES AND EXPENSES. Except as otherwise provided herein or in SECTION
7.3 of the Merger Agreement, all costs, fees and expenses incurred in connection
with this Agreement shall be paid by the party incurring such expenses;
provided, that if any legal action is instituted to enforce or interpret the
terms of this Agreement, the prevailing party in such action shall be entitled,
in addition to any other relief to which the party is entitled; to reimbursement
of its actual attorneys fees.
3
<PAGE>
10. MISCELLANEOUS. This Agreement: (a) shall be governed by and
construed in accordance with the law of the State of California; (b) may not
be assigned without the prior written consent of Company, other than to a
corporation which is the assignee of the Purchaser's rights and obligations
pursuant to SECTION 9.2 of the Merger Agreement; and (c) may be executed in
two or more counterparts which together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
QUIDEL CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
METRA BIOSYSTEMS, INC.
By: /s/ George W. Dunbar, Jr.
-----------------------------------------
Name: George W. Dunbar, Jr.
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
MBS ACQUISITION CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President
--------------------------------------
4
<PAGE>
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT") dated as of June 4,
1999 is by and among QUIDEL CORPORATION, a Delaware corporation ("PARENT"),
METRA BIOSYSTEMS, INC., a California corporation, ("COMPANY"), and MBS
ACQUISITION CORPORATION, a Delaware corporation and wholly-owned subsidiary of
Parent ("PURCHASER").
WHEREAS, Parent, Company and Purchaser have entered into that certain
Agreement and Plan of Merger dated as of June 4, 1999 (the "MERGER AGREEMENT"),
pursuant to which (i) Parent shall cause Purchaser to make and Purchaser shall
make a tender offer (the "OFFER") to purchase for cash any and all of the issued
and outstanding shares of Company common stock (including the Company Rights (as
defined in the Merger Agreement) attached thereto, the "SHARES") and (ii)
Purchaser will thereafter be merged with and into Company (the "MERGER"), with
Company remaining as the surviving corporation;
WHEREAS, SECTION 3.4 of the Merger Agreement provides that as of the
date Purchaser accepts for payment and pays for Shares in the Offer, Company
will have a cash balance in an account at Bank of America;
WHEREAS, the funds which are to compose the BofA Cash are currently in
the form of Cash Balances (as defined in the Merger Agreement) and by
liquidating such Cash Balances and transferring the proceeds thereof to Bank of
America, Company shall incur certain bank charges, prepayment penalties and
Opportunity Costs (defined below) (collectively, the "Conversion Costs"); and
WHEREAS, Parent and Purchaser desire to indemnify Company for all
Conversion Costs in the event that Parent and Purchaser terminate the Offer for
any reason other than those reasons set forth in SECTIONS 7.1(d)(i), (ii),
(iii), (iv) and (vi) of the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants herein contained and intending to be legally bound hereby, Company,
Parent, and Purchaser hereby agree as follows:
1. LIQUIDATION AND TRANSFER. Company shall liquidate such Cash
Balances on or before such date (the "Transfer Date") and in such amounts as
are necessary to enable it to satisfy its obligations pursuant to the Merger
Agreement.
2. INDEMNIFICATION.
(a) In the event Parent and Purchaser terminate the Merger Agreement
after the Transfer Date and abandon the Offer for any reason other than those
reasons set forth in SECTIONS 7.1(d)(i), (ii), (iii), (iv) and (vi) of the
Merger Agreement, Parent and Purchaser shall indemnify and hold Company harmless
from and against all Conversion Costs required to be incurred by Company in
order to comply with its covenant contained in SECTION 1 hereof. Such Conversion
<PAGE>
Costs will be paid by wire transfer within five (5) business days after notice
of termination is given pursuant to SECTION 9.4 of the Merger Agreement.
(b) Within two business days after the Transfer Date, Company shall
provide Parent and Purchaser a good faith written estimate of all Conversion
Costs. Company shall use its commercially reasonable efforts to mitigate the
amount of the Conversion Costs.
(c) For purposes of this Agreement, the "Opportunity Costs" resulting
from the liquidation of Cash Balances and transfer to cash on account at Bank of
America shall be, for the period from the Transfer Date to the date of
termination described in SECTION 2(a) hereof, the difference between the
interest rate that would have been earned on the Cash Balances had they not been
liquidated and the interest rate, if lower, that is paid by Bank of America on
the proceeds thereof.
3. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflicts of law thereof.
4. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
will constitute one and the same agreement.
2
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
QUIDEL CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
METRA BIOSYSTEMS, INC.
By: /s/ George W. Dunbar, Jr.
-----------------------------------------
Name: George W. Dunbar, Jr.
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
MBS ACQUISITION CORPORATION
By: /s/ Andre de Bruin
-----------------------------------------
Name: Andre de Bruin
---------------------------------------
Title: President
--------------------------------------
3
