<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
SCHEDULE 13E-4
-----------------------------------
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
(Amendment No. 2)
UroMed Corporation
(Name of the Issuer)
6% CONVERTIBLE SUBORDINATED NOTES DUE OCTOBER 15, 2003
(Title of Class of Securities)
917274AC6
917274AA0
U9153EAA0
(CUSIP Numbers of Class of Securities)
------------------------------------
Paul J. Murphy
Chief Financial Officer
UroMed Corporation
64 A Street
Needham, MA 02194
(781) 433-0033
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person Filing Statement)
Copy to:
John R. Utzschneider, Esq.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
(617) 951-8852
------------------------------------
September 23, 1998
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE: PREVIOUSLY PAID.
<PAGE>
UroMed Corporation, a Massachusetts corporation (the "Company"),
hereby amends and supplements its Issuer Tender Offer Statement on Schedule
13E-4, originally filed with the Securities and Exchange Commission (the
"Commission") on September 23, 1998, as amended by Amendment No. 1 thereto,
filed with the Commission on September 25, 1998 (the "Statement") in
connection with an offer to purchase (the "Tender Offer") by the Company of
up to $40.0 million aggregate principal amount of its 6% Convertible
Subordinated Notes due October 15, 2003 (the "Notes"). This amendment
constitutes Amendment No. 2 to the Statement. Pursuant to General Instruction
E to Schedule 13E-4, information previously disclosed in the Statement is
omitted from this Amendment No. 2.
2
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
99.1. Offer to Purchase dated October 1, 1998.
99.2. Form of Letter of Transmittal.*
99.3. Form of Notice of Guaranteed Delivery.*
99.4. Form of Letter to Holders of 6% Convertible Subordinated Notes due
October 15, 2003.*
99.5. Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.*
99.6. Form of Letter to Clients.*
99.7. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.*
99.8. Press Release issued on September 23, 1998.*
99.9. Supplement, dated September 23, 1998, to Offer to Purchase
dated September 23, 1998.**
- -----------
* Previously filed as an exhibit to Schedule 13E-4 filed by the Company with
the Securities and Exchange Commission on September 23, 1998.
** Previously filed as an exhibit to Amendment No. 1 to Schedule 13E-4 filed
by the Company on September 25, 1998.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: October 1, 1998 UroMed Corporation
By /s/ Paul J. Murphy
-------------------------------------------
Name: Paul J. Murphy
Title: Chief Financial Officer
4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
99.1. Offer to Purchase dated October 1, 1998.
99.2. Form of Letter of Transmittal.*
99.3. Notice of Guaranteed Delivery.*
99.4. Form of Letter to Holders of 6% Convertible Subordinated Notes due October 15, 2003.*
99.5. Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.*
99.6. Form of Letter to Clients.*
99.7. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.*
99.8. Press Release issued on September 23, 1998.*
99.9. Supplement, dated September 23, 1998, to Offer to Purchase dated
September 23, 1998.**
- -----------
* Previously filed as an exhibit to Schedule 13E-4 filed by the Company with
the Securities and Exchange Commission on September 23, 1998.
** Previously filed as an exhibit to Amendment No. 1 to Schedule 13E-4 filed
with the Securities and Exchange Commission on September 25, 1998.
</TABLE>
5
<PAGE>
EXHIBIT 99.1
[LOGO]
OFFER TO PURCHASE FOR CASH
UP TO $40.0 MILLION AGGREGATE PRINCIPAL AMOUNT OF
6% CONVERTIBLE SUBORDINATED NOTES DUE OCTOBER 15, 2003
AT $450 PER $1,000 PRINCIPAL AMOUNT PLUS ACCRUED AND UNPAID INTEREST
- ----------------------------------------------------------------------
THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY,
OCTOBER 21, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). HOLDERS OF NOTES
MUST TENDER THEIR NOTES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE TENDER OFFER CONSIDERATION (AS DEFINED). TENDERED NOTES MAY BE
WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
UroMed Corporation, a Massachusetts corporation (the "Company" or "UroMed"),
upon the terms and subject to the conditions set forth in this Offer to Purchase
(the "Offer to Purchase") and in the accompanying Letter of Transmittal (the
"Letter of Transmittal"), hereby offers to purchase (the "Tender Offer") up to
$40.0 million aggregate principal amount of its 6% Convertible Subordinated
Notes due October 15, 2003 (each, a "Note" and collectively, the "Notes") for a
cash purchase price of $450 per $1,000 principal amount of Notes, plus accrued
and unpaid interest from October 15, 1998 up to, but not including, the date of
payment (the "Tender Offer Consideration"). Each $1,000 principal amount of
Notes is presently convertible into 15.05882 shares of the Company's common
stock, no par value (the "Common Stock"), equivalent to a conversion price of
approximately $66.41 per share. The Common Stock is traded on the Nasdaq
National Market System ("NASDAQ"). On September 21, 1998, the last reported sale
price of the Common Stock on NASDAQ was $1.31.
-------------------
SEE "CERTAIN CONSIDERATIONS RELATING TO THE TENDER OFFER" AND "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES" FOR DISCUSSIONS OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY INVESTORS IN EVALUATING THE TENDER OFFER.
-------------------
The Company's obligation to accept for purchase and to pay for Notes validly
tendered pursuant to the Tender Offer is conditioned upon satisfaction of the
General Conditions (as defined). If the conditions of the Tender Offer are
satisfied, holders of Notes who validly tender their Notes prior to 5:00 p.m.,
New York City time, on Wednesday, October 21, 1998, unless extended, will
receive the Tender Offer Consideration.
The Company will accept for purchase up to $40.0 million aggregate principal
amount of the Notes; if Notes having an aggregate principal amount in excess of
$40.0 million are tendered, the Company will purchase $40.0 million aggregate
principal amount, pro rata in an amount per Holder (as defined) equal to (i) a
fraction the numerator of which is such Holder's total principal amount of Notes
tendered and the denominator of which is the total principal amount of Notes
tendered, multiplied by (ii) $40.0 million ("Pro Rata Acceptance").
Any questions or requests for assistance may be directed to PaineWebber
Incorporated, which is acting as dealer manager for the Tender Offer (the
"Dealer Manager") at the address and telephone number set forth on the back
cover of this Offer to Purchase. Requests for copies of the Tender Offer
materials should be directed to Kissel-Blake Inc., which is acting as
information agent for the Tender Offer (the "Information Agent"), at the address
and telephone number set forth on the back cover of this Offer to Purchase, or
to a Holder's broker, dealer, commercial bank or trust company. None of the
Company, the Dealer Manager, the Information Agent, the Trustee (as defined) or
the Depositary (as defined) makes any recommendation as to whether or not
Holders should tender any or all of their Notes. Holders must make their own
decision as to whether to tender Notes pursuant to the Tender Offer and, if so,
the principal amount of Notes to tender.
-------------------
The Dealer Manager for the Tender Offer is:
PaineWebber Incorporated
------------
October 1, 1998
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER THE HOLDER SHOULD TENDER NOTES PURSUANT TO THE TENDER
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION THEREWITH, OTHER THAN THOSE CONTAINED HEREIN OR IN
THE ACCOMPANYING LETTER OF TRANSMITTAL. IF MADE OR GIVEN, ANY SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION OR ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
IMPORTANT INFORMATION...................................................................................... 4
AVAILABLE INFORMATION...................................................................................... 5
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... 6
FORWARD-LOOKING STATEMENTS................................................................................. 6
THE COMPANY................................................................................................ 6
BACKGROUND AND PURPOSE OF THE TENDER OFFER................................................................. 7
SUMMARY OF THE TENDER OFFER................................................................................ 9
CERTAIN CONSIDERATIONS RELATING TO THE TENDER OFFER........................................................ 11
THE NOTES.................................................................................................. 13
MARKET AND TRADING INFORMATION............................................................................. 14
UNAUDITED SUMMARY HISTORICAL AND PRO FORMA
STATEMENT OF OPERATIONS AND BALANCE SHEET INFORMATION.................................................... 16
CAPITALIZATION............................................................................................. 20
THE TENDER OFFER........................................................................................... 21
Principal Terms of the Tender Offer.................................................................... 21
Expiration Date; Extension; Termination; Amendments.................................................... 21
Acceptance of Notes for Purchase; Payment for Notes; Maximum Tender Amount and Pro Rata Acceptance..... 21
Procedures for Tendering Notes......................................................................... 23
Conditions of the Tender Offer......................................................................... 26
Backup Federal Income Tax Withholding.................................................................. 27
Withdrawal of Tenders; Absence of Appraisal Rights..................................................... 27
Dealer Manager......................................................................................... 28
Depositary............................................................................................. 28
Information Agent...................................................................................... 28
Miscellaneous.......................................................................................... 28
FEES AND EXPENSES.......................................................................................... 28
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 29
</TABLE>
Subject to applicable securities laws and the terms set forth in the Offer
to Purchase, the Company reserves the right (i) to terminate the Tender Offer,
(ii) to waive any and all unsatisfied conditions to the Tender Offer, (iii) to
extend the expiration date of the Tender Offer, or (iv) to otherwise amend the
Tender Offer in any respect. Any such waiver, extension or amendment may be made
by press release or such other means of announcement as the Company deems
appropriate subject to compliance with applicable laws.
3
<PAGE>
INTROL-Registered Trademark- Bladder Neck Support Prosthesis and
Reliance-Registered Trademark- Urinary Control Insert are registered trademarks
of UroMed Corporation. Impress-TM- Softpatch, PelvicFlex-TM- Personal Trainer
Video, BEACON Technology System-TM-, BreastCheck-TM-, BreastExam-TM-,
BreastView-TM-, CaverMap-TM- Surgical Aid, Access-TM- Instrument and
AlloSling-TM- are trademarks of UroMed Corporation.
IMPORTANT INFORMATION
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
TENDER OFFER.
In order to validly tender Notes in the Tender Offer, a holder of Notes
(each, a "Holder" and collectively, the "Holders") should, on or prior to the
Expiration Date, deliver to State Street Bank and Trust Company (the
"Depositary") at the address set forth on the back cover of this Offer to
Purchase a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message (as defined), and any
other documents required by the instructions to such Letter of Transmittal,
together with the Notes (or such Notes must be transferred pursuant to the
procedures for book-entry transfer described therein and a confirmation of such
book-entry transfer, including an Agent's Message, must be received by the
Depositary, in either case prior to the Expiration Date). IF A HOLDER DOES NOT
DELIVER SUCH DOCUMENTS ON OR PRIOR TO THE EXPIRATION DATE, THE HOLDER WILL NOT
BE ELIGIBLE TO RECEIVE THE TENDER OFFER CONSIDERATION.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
Notes should contact promptly such registered Holder. See "The Tender
Offer--Procedures for Tendering Notes--Proper Tender of Notes" and the Letter of
Transmittal.
The Depositary and the Depository Trust Company ("DTC") have confirmed that
the Tender Offer is eligible for the DTC Automated Tender Offer Program
("ATOP"). Accordingly, DTC participants may electronically transmit their
acceptance of the Tender Offer by causing DTC to transfer Notes to the
Depositary in accordance with DTC's ATOP procedures for transfer. DTC will then
send an Agent's Message to the Depositary for its acceptance. The Depositary
will establish an account with respect to the Notes at DTC for purposes of the
Tender Offer, and any financial institution that is a participant in DTC's
system may make book-entry delivery of the Notes by causing DTC to transfer such
Notes into the Depositary's account at DTC in accordance with DTC's procedure
for such transfer. Although tenders of Notes may be effected through book-entry
transfer at DTC, a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) with any required signature guarantees
or an Agent's Message in connection with a book-entry transfer, must, in any
case, be transmitted to and received by the Depositary at the address set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
or the Holder must comply with the guaranteed delivery procedures described
herein. See "The Tender Offer--Procedures for Tendering Notes."
4
<PAGE>
THE METHOD OF DELIVERY OF NOTES AND LETTERS OF TRANSMITTAL, ANY REQUIRED
SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED THROUGH ATOP,
ARE AT THE ELECTION AND RISK OF THE PERSON TENDERING NOTES AND DELIVERING THE
LETTER OF TRANSMITTAL AND, EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF
TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY
INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE
MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
DEPOSITARY ON OR PRIOR TO SUCH DATE.
Tendering Holders will not be obligated to pay any fees to the Dealer
Manager, the Information Agent or the Depositary.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER WOULD BE UNLAWFUL, AND THE TENDER OFFER IS NOT
MADE TO, AND TENDERS WILL NOT BE ACCEPTED FROM, HOLDERS OF NOTES IN STATES IN
WHICH THE TENDER OFFER OR ACCEPTANCE THEREOF WOULD CONSTITUTE A VIOLATION OF THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. IN ACCORDANCE WITH VARIOUS
STATE SECURITIES LAWS APPLICABLE TO THE TENDER OFFER WHICH REQUIRE THE TENDER
OFFER TO BE MADE TO THE PUBLIC BY A LICENSED BROKER OR DEALER, THE TENDER OFFER
IS HEREBY MADE TO THE HOLDERS OF NOTES RESIDING IN EACH SUCH STATE BY THE DEALER
MANAGER ON BEHALF OF THE COMPANY.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other documents and information
with the Securities and Exchange Commission (the "Commission"). The Company has
also filed with the Commission an Issuer Tender Offer Statement on Schedule
13E-4 (the "Tender Offer Statement") under the Exchange Act, which includes
certain of the information contained in this Offer to Purchase and certain other
information relating to the Tender Offer. Such reports, proxy statements and
other documents and information, including the Tender Offer Statement, may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates and from the Commission's Web Site located at
http://www.sec.gov. The public may obtain information on the operation of the
public reference facilities of the Commission by calling the Commission at
1-800-SEC-0330. The Common Stock is listed on NASDAQ. Such reports, proxy
statements and other documents and information concerning the Company are also
available for inspection at the offices of the Nasdaq Stock Market Report
Section at 1735 K Street, N.W., Washington, D.C. 20006. Copies of the Indenture
(as defined) pursuant to which the Notes were issued are also available from the
Company upon request. Requests for such copies should be directed to the
Company, 64 A Street, Needham, Massachusetts 02194, attention: Domenic Micale,
Director of Finance, telephone number (781) 433-0033, ext. 247.
5
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company have been filed with the Commission
and are incorporated herein by reference: (i) the Company's Annual Report on
Form 10-K for the year ended December 31, 1997; (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998;
and (iii) the Company's Current Report on Form 8-K filed with the Commission on
May 19, 1998. All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
Expiration Date shall be deemed to be incorporated by reference into this Offer
to Purchase and to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Offer to Purchase to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Offer to Purchase.
The Company will provide without charge to each person, including any
beneficial owner to whom this Offer to Purchase has been delivered, upon written
or oral request of such person, a copy of any and all of the documents referred
to above that have been or may be incorporated by reference herein other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference herein). Requests for such copies should be directed to the
Company, 64 A Street, Needham, Massachusetts 02194, attention: Domenic Micale,
Director of Finance, telephone number (781) 433-0033, ext. 247.
FORWARD-LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference into, this
Offer to Purchase may be considered forward looking statements. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, many of which are beyond the
Company's control. Actual results could differ materially from these
forward-looking statements as a result of certain factors, including but not
limited to those described in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 under the headings "Forward-Looking Statements and
Associated Risks" and "Risk Factors", and those described in the Company's Form
10-Q for the quarterly period ended June 30, 1998 under the heading
"Forward-Looking Statements and Associated Risks" which are incorporated herein
by reference.
THE COMPANY
UroMed Corporation, founded in October 1990, is dedicated to establishing
itself as a leader in the development of male and female healthcare products.
The Company has developed or acquired technology in three core areas: prostate
cancer, urinary incontinence, and breast cancer. The Company's direct
hospital-based business lines include its CaverMap-TM- Surgical Aid, intended to
aid physicians in preserving vital nerves during prostate cancer surgery,
Iodine125 prostate cancer brachytherapy seeds, which are not yet FDA-cleared,
and its brachytherapy seed delivery needles, and its BEACON Technology
System-TM- and Access-TM- Instrument/AlloSling-TM- product lines, minimally
invasive incontinence surgical lines. The Company's office-based continuum of
continence care product lines include the Reliance-Registered Trademark- Insert,
the INTROL-Registered Trademark- BladderNeck Support Prosthesis, and the
Impress-TM- Softpatch. In breast cancer screening, the Company is developing its
investigational BreastExam-TM-, BreastCheck-TM- and BreastView-TM- electronic
palpation technology in order to aid physicians and patients in the important
mission of finding suspicious breast lumps earlier. The Company also continues
to dedicate resources to the development and/or acquisition of product lines
that fit into UroMed Corporation's strategic platform.
6
<PAGE>
BACKGROUND AND PURPOSE OF THE TENDER OFFER
BACKGROUND
On October 15, 1996, the Company issued $69.0 million aggregate principal
amount of the Notes in a private placement pursuant to Rule 144A, Regulation D
and Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"). The Company realized net proceeds of approximately $66.2 million from the
original issue and sale of the Notes. As described in the offering materials
circulated by the Company in connection with such offering, the Company intended
to use the majority of such proceeds for the market launch of the Company's
Reliance Insert product and for scale-up marketing and manufacturing activities
for the Company's Impress Softpatch product. Sales of the Reliance Insert during
the period since market launch have been minimal and the Company does not expect
a more significant financial contribution from this product for the foreseeable
future.
In the first quarter of 1998, the Company commenced a restructuring of its
operations in an effort to reduce operating costs while allowing the Company to
create a business model with a significantly lower break-even level. An
important part of this restructuring was an effort to increase the Company's
emphasis on developing its hospital-based products business, and to decrease the
Company's investment in the consumer-oriented continence care business. As a
result, the Company has elected to defer the incurrence of product launch costs
for the Impress Softpatch, and is actively seeking a partnership, other
collaborative relationship or other arrangement with a larger, more established
company with respect to the Impress Softpatch.
The Company believes that its current capital structure is inappropriate in
light of the Company's results of operations, the Company's restructuring, the
Company's decision not to apply the proceeds from the original sale of Notes as
expected, the amount of cash and cash equivalents currently held by the Company
and the continuing operational risk profile of the Company arising from the
developmental stage of many of its current products. In the last several months
the Company has taken several steps to begin to restructure its capitalization.
On August 19, 1998 and on August 28, 1998, the Company repurchased $5.3
million and $3.0 million, respectively, in principal amounts of Notes. These
repurchases occurred in unsolicited open market transactions with persons who
were not affiliates of the Company for purchase prices of $2.2 million and $1.2
million, respectively. The August 19, 1998 repurchase of $5.3 million principal
amount of Notes was made at a purchase price of $390 per $1,000 principal amount
of Notes, plus accrued and unpaid interest from April 15, 1998, and the August
28, 1998 repurchase of $3.0 million principal amount of Notes was made at a
purchase price of $380 per $1,000 principal amount of Notes, plus accrued and
unpaid interest from April 15, 1998. As a result of such purchases, $60.7
million of the original $69.0 million aggregate principal amount of Notes
remains outstanding as of the date hereof.
Between July 2, 1998 and September 15, 1998, the Company also repurchased
approximately 187,000 shares of Common Stock on the open market pursuant to a
program adopted by the Board of Directors of the Company in June, 1998 (the
"Repurchase Plan"). Pursuant to the Repurchase Plan, the Company is authorized
to repurchase up to 1.0 million shares of Common Stock. The aggregate
consideration paid by the Company for the shares repurchased to date is
approximately $511,000. The Company expects that as buying opportunities arise
from time to time, the Company will purchase additional shares pursuant to the
Repurchase Plan.
PURPOSE
The purpose of the Tender Offer is to enable the Company to reduce the
amount of debt that becomes due on October 15, 2003 from the $60.7 million
currently outstanding to approximately $20.7 million and to provide the Company
greater flexibility in managing its operations and financing its business. The
Company believes that the consummation of the Tender Offer on these terms will
provide
7
<PAGE>
significant benefits to the Company. Completion of the Tender Offer will result
in a significant alteration of the capital structure of the Company that better
reflects the Company's current business model and stage of development. In
addition, the Tender Offer will assist the Company by reducing interest expense
and the Company believes that the reduction of its outstanding indebtedness by
$40.0 million may increase its strategic and financial options.
The Tender Offer also gives Holders who are considering the sale of all or
some of their Notes the opportunity to sell their Notes for a higher price than
may have been available in the open market immediately prior to the announcement
of the Tender Offer and without the usual transaction costs associated with
market sales. There may be adverse consequences to holder of Notes who do not
tender them in the Tender Offer. See "Certain Considerations Relating to the
Tender Offer."
Under the terms of the Tender Offer, Notes acquired by the Company will be
purchased by the Company at a substantial discount to their stated principal
amount. Accordingly, if the Company acquires all of the Notes for which the
Tender Offer is being made, the Company will recognize an extraordinary gain
after giving effect to unamortized debt issuance costs and transaction costs of
approximately $19.9 million. Such extraordinary gain represents the excess of
the stated principal amount of the Notes over their respective purchase prices.
As of June 30, 1998, the Company had, for income tax purposes, an accumulated
net operating loss carryforward of approximately $74.7 million. Accordingly, the
Company does not expect to incur any current tax liability with respect to such
gain. Transaction costs with respect to the Tender Offer are expected to be
approximately $1.0 million, and the Company expects to use cash on hand or cash
generated by the sale of short-term investments or other cash-equivalents to
purchase the Notes in the Tender Offer and to pay such expenses. Any Notes
purchased pursuant to the Tender Offer will be retired by the Company.
8
<PAGE>
SUMMARY OF THE TENDER OFFER
<TABLE>
<S> <C>
SECURITIES SOUGHT................. 6% Convertible Subordinated Notes due October 15, 2003.
CUSIP NUMBERS..................... 917274AC6 (denotes Notes that have been sold pursuant to
a registration statement under the Securities Act),
917274AA0 (denotes Notes originally issued pursuant to
Rule 144A), and U9153EAA0 (denotes Notes originally
issued pursuant to Regulation S).
AGGREGATE PRINCIPAL AMOUNT
OUTSTANDING..................... $60.7 million outstanding at September 23, 1998.
EXPIRATION DATE................... The Tender Offer will expire at 5:00 p.m., New York City
time, on Wednesday, October 21, 1998 (unless extended by
the Company in its sole discretion or earlier
terminated).
TENDER OFFER CONSIDERATION........ The Company is offering, upon the terms and subject to
the conditions set forth in this Offer to Purchase and
the accompanying Letter of Transmittal, to purchase up
to $40.0 million aggregate principal amount of
outstanding Notes (the "Maximum Tender Amount") for a
cash purchase price of $450 per $1,000 principal amount,
plus accrued and unpaid interest from October 15, 1998
up to, but not including, the date of payment. The Notes
were issued pursuant to the terms of an Indenture dated
October 15, 1996, between State Street Bank and Trust
Company, as trustee (the "Trustee"), and the Company
(the "Indenture"), in an original aggregate principal
amount of $69.0 million.
ACCEPTANCE OF NOTES FOR PURCHASE;
PAYMENT FOR NOTES; PRO RATA
ACCEPTANCE......................
Promptly after the Expiration Date, the Company will,
subject to the satisfaction or waiver of all relevant
conditions, accept for purchase, and pay for, Notes
validly tendered and not withdrawn under the Tender
Offer on or prior to the Expiration Date; provided,
however, that if more than the Maximum Tender Amount of
Notes has been tendered, the Company will purchase the
Maximum Tender Amount on a Pro Rata Acceptance basis.
WITHDRAWAL OF TENDERS; ABSENCE OF
APPRAISAL RIGHTS................ Tenders of Notes may be withdrawn on or prior to the
Expiration Date. In order to be effective, withdrawals
of Notes must comply with the respective procedures
therefor described under "The Tender Offer--Withdrawal
of Tenders; Absence of Appraisal Rights." Tenders of any
Notes may also be withdrawn if the Tender Offer is
terminated without any such Notes being purchased
thereunder or as otherwise provided herein. In the event
of any termination of the Tender Offer, the Notes
tendered pursuant to the Tender Offer will be returned
promptly to the tendering Holder. There are no appraisal
or other similar
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
statutory rights available to Holders in connection with
the Tender Offer.
CONDITIONS........................ The Tender Offer is being made in connection with, and
the Company's obligation to accept for purchase, and to
pay for, Notes validly tendered pursuant to the Tender
Offer is conditioned upon satisfaction of the General
Conditions.
AMENDMENT; WAIVER................. If the Company makes a material change in the terms of
the Tender Offer or in the information concerning the
Tender Offer or if the Company waives a material
condition of the Tender Offer, the Company may
disseminate additional Tender Offer materials and will
extend the Tender Offer, in each case to the extent
required by law. Any amendment to the Tender Offer or
extension of the Expiration Date may be disseminated by
press release in addition to any other means the Company
deems appropriate. Any amendment applicable to the
Tender Offer will apply to all Notes tendered pursuant
to the Tender Offer.
HOW TO TENDER..................... In order to validly tender Notes in the Tender Offer, a
Holder should, on or prior to the Expiration Date,
deliver to the Depositary at the address set forth on
the back cover of this Offer to Purchase a properly
completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's
Message, and any other documents required by the
instructions in the Letter of Transmittal, together with
such Notes or such Notes must be transferred pursuant to
the procedures for book-entry transfer described therein
and a confirmation of such book-entry transfer,
including an Agent's Message, must be received by the
Depositary, in either case on or prior to the Expiration
Date.
GUARANTEED DELIVERY............... A Holder who desires to tender Notes and who cannot
comply with the procedures set forth herein on a timely
basis or whose Notes are not immediately available may
tender such Notes by following the procedures for
guaranteed delivery set forth herein. See "The Tender
Offer--Procedures for Tendering Notes--Guaranteed
Delivery" and the Letter of Transmittal.
SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS.......................... Any beneficial owner whose Notes are registered in the
name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender Notes should
contact promptly such registered Holder. See "The Tender
Offer-- Procedures for Tendering Notes--Proper Tender of
Notes" and the Letter of Transmittal.
CERTAIN CONSEQUENCES OF NOT
TENDERING....................... The trading market for Notes not tendered in response to
the Tender Offer is likely to be more limited, due to
the reduction in the amount of Notes outstanding. In
addition, the Company may not have sufficient cash
available upon the maturity of the Notes to repay the
principal and accrued interest of the Notes outstanding
on such date. See "Certain Considerations Relating
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
to the Tender Offer--Diminished Market and Trading of
the Notes" and "Market and Trading Information."
BROKERAGE COMMISSION.............. No brokerage commissions are payable by Holders to the
Dealer Manager, the Trustee, the Information Agent, the
Company or the Depositary.
DEALER MANAGER.................... The Company has retained PaineWebber Incorporated to act
as the Dealer Manager in connection with the Tender
Offer. In its capacity as the Dealer Manager,
PaineWebber Incorporated may contact Holders regarding
the Tender Offer and may request brokers, dealers and
other nominees to forward this Offer to Purchase and
related materials to beneficial owners of Notes.
DEPOSITARY........................ The Depositary for the Tender Offer is State Street Bank
and Trust Company.
INFORMATION AGENT................. The Information Agent for the Tender Offer is
Kissel-Blake Inc.
</TABLE>
CERTAIN CONSIDERATIONS RELATING TO THE TENDER OFFER
In deciding whether to participate in the Tender Offer, each Holder should
consider carefully, in addition to the other information contained or
incorporated by reference herein, the information appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 under the
headings "Forward-Looking Statements and Associated Risks" and "Risk Factors,"
which is incorporated herein by reference. Each such Holder should also consider
the following factors when making a decision about whether or not to tender
Notes in the Tender Offer:
DIMINISHED MARKET AND TRADING OF THE NOTES. The Notes are currently traded
on an over-the-counter basis between dealers. Although the Company expects Notes
that are not tendered may continue to be available for trading in this manner,
to the extent that Notes are tendered and accepted for payment in the Tender
Offer, the trading market for Notes that remain outstanding will be more
limited, which may adversely affect the liquidity of the Notes. If Notes in an
aggregate principal amount equal to the Maximum Tender Amount are purchased in
the Tender Offer, $20.7 million aggregate principal amount of Notes will remain
outstanding. An issue of securities with a smaller float may trade at lower
prices than would a comparable issue of securities with a greater float.
Accordingly, the market price for Notes that are not tendered or not purchased
in the Tender Offer may be adversely affected to the extent that the amount of
the Notes purchased pursuant to the Tender Offer reduces the float. The reduced
float may also have the effect of causing the trading prices of the Notes that
are not tendered or purchased to be more volatile. As a result, there can be no
assurance that there will be any active trading market for the Notes after
consummation of the Tender Offer.
The Company is also in the process of appealing a delisting notice delivered
by NASDAQ with respect to the Common Stock. If the Company is unsuccessful in
its appeal of this notice, trading of the Common Stock may move to the Nasdaq
SmallCap Market or to Nasdaq's Over the Counter Bulletin Board. See "Market and
Trading Information."
HISTORY OF LOSSES; REPAYMENT OF NOTES UNCERTAIN. The Tender Offer is
limited to $40.0 million aggregate principal amount of Notes, after which there
will be no less than $20.7 million of Notes remaining outstanding. The Company
has experienced significant operating losses in each period since inception and,
as of June 30, 1998, had an accumulated deficit of $117.6 million. Accordingly,
there can be no assurance that the Company will achieve profitability at any
level sufficient to assure repayment of Notes that remain outstanding following
the Tender Offer. In addition, the Indenture imposes no significant restrictions
on the Company's ability to spend its available cash or other resources,
including long-term investments in product lines or other businesses that may
not produce returns on the Company's
11
<PAGE>
investment over the near term. The Indenture also imposes no restrictions on the
Company's ability to incur Senior Debt to which the Notes will be subordinate.
The incurrence by the Company of any such Senior Debt may have the result of
making repayment of the Notes upon maturity less probable. Accordingly, there
can be no assurance that the Company will have sufficient cash on hand or
available from the liquidation of other assets, or that other sources of funding
will be available, to pay interest on the Notes prior to maturity, or principal
and accrued interest on the Notes at maturity.
CHANGE OF CONTROL. The Company could in the future enter into a transaction
which would constitute a "Change of Control" under the Indenture, although the
Company has no present intention to enter into any such transaction. In the
event of a Change of Control, holders of Notes would be entitled to require the
Company to repurchase Notes at a repurchase price of 100% of the principal
amount thereof, plus accrued interest to the repurchase date.
CERTAIN BANKRUPTCY CONSIDERATIONS. Any payments made to Holders in
consideration for their Notes may be subject to challenge as a preference if
such payments: (a) are made within 90 days of a bankruptcy filing by the Company
(or within one year in the case of Holders who are determined to be insiders of
the Company); (b) are made when the Company is insolvent; and (c) permit the
Holders to receive more than they otherwise might receive in a liquidation under
applicable bankruptcy laws. If such payments were deemed to be a preference, the
full amount of such payments could be recovered by the Company as a debtor in
possession or by the Company's trustee in bankruptcy, and the Holder would be
entitled to assert claims in respect of the Notes against the Company in its
reorganization or bankruptcy case. The Company does not believe that it is
currently insolvent, will be insolvent after giving effect to the consummation
of the Tender Offer or will be insolvent or will file for bankruptcy protection,
whether voluntarily or involuntarily, within one year, although for purposes of
the preference laws described above, the Company would be presumed insolvent for
the 90 days preceding a bankruptcy or reorganization case.
PRO RATA ACCEPTANCE. The Company will purchase Notes in the Tender Offer up
to an aggregate principal amount equal to the Maximum Tender Amount. To the
extent that the aggregate principal amount of the Notes tendered exceeds the
Maximum Tender Amount, the Company will purchase the tendered Notes on a Pro
Rata Acceptance basis. There can be no assurance that all Notes tendered by a
Holder will be purchased by the Company pursuant to the Tender Offer.
12
<PAGE>
THE NOTES
The following summary of certain terms of the Notes does not purport to be
complete and is qualified in its entirety by reference to the Indenture.
<TABLE>
<S> <C>
THE NOTES......................... $60.7 million outstanding aggregate principal amount of
6% Convertible Subordinated Notes due October 15, 2003.
INTEREST PAYMENT DATES............ April 15 and October 15.
CONVERTIBILITY.................... The Notes are convertible into shares of Common Stock at
any time prior to the close of business on the maturity
date, unless previously redeemed or repurchased, at the
conversion rate set forth below.
CONVERSION RATE................... A conversion rate of 15.05882 shares of Common Stock per
$1,000 principal amount of Notes (equivalent to a
conversion price of approximately $66.41 per share),
subject to adjustment in certain events affecting the
Common Stock. In the event the Company distributes
certain securities to holders of its Common Stock, the
Company may elect, in lieu of adjusting the conversion
rate, to arrange for holders of Notes to receive a
portion of such securities, in addition to Common Stock,
on conversion of their Notes.
OPTIONAL REDEMPTION............... The Notes may be redeemed at the option of the Company
at any time on or after October 15, 1999, in whole or in
part, at the redemption prices set forth in the
Indenture.
REPURCHASE AT OPTION OF HOLDERS
UPON CHANGE IN CONTROL.......... In the event of a Change in Control (as defined in the
Indenture), each Holder of Notes may require the Company
to repurchase its Notes, in whole or in part, at a
repurchase price of 100% of the principal amount
thereof, plus accrued interest to the repurchase date.
The repurchase price is payable in cash or, at the
option of the Company but subject to the satisfaction of
certain conditions on its part, in Common Stock (valued
at 95% of the average closing bid prices of the Common
Stock for the five trading days immediately preceding
and including the third trading day prior to the
repurchase date).
SUBORDINATION..................... The Notes are subordinated in right of payment to all
existing and future Senior Debt (as defined in the
Indenture) of the Company. There is no Senior Debt
outstanding as of the date hereof. In addition, the
Notes are effectively subordinated to all indebtedness
and other liabilities that may be incurred by any
subsidiary of the Company. The Company has no
subsidiaries as of the date hereof. The Indenture does
not restrict the incurrence of any indebtedness,
including Senior Debt, by the Company or any subsidiary
thereof.
GOVERNING LAW..................... New York.
INDENTURE......................... Dated as of October 15, 1996, between the Company and
State Street Bank and Trust Company, as Trustee.
</TABLE>
13
<PAGE>
MARKET AND TRADING INFORMATION
The Notes are currently traded on an over-the-counter basis between dealers.
Although there is no reporting system for the Notes, the Company believes that
trading in the Notes has been limited and sporadic. Because there is no
reporting system for trading involving the Notes, the Company is unable to
determine the trading history of the Notes. Although the Company expects the
Notes may continue to be traded in the same manner after the consummation of the
Tender Offer, to the extent that the Notes are traded the prices of Notes may
fluctuate greatly depending on the trading volume and the balance between buy
and sell orders. The Company believes that the trading market for the Notes that
remain outstanding after the Tender Offer will be more limited. See "Certain
Considerations Relating to the Tender Offer-- Diminished Market and Trading of
the Notes."
On August 19, 1998 and on August 28, 1998, the Company repurchased $5.3
million and $3.0 million, respectively, in principal amounts of Notes. These
repurchases occurred in unsolicited open market transactions with persons who
were not affiliates of the Company for purchase prices of $2.2 million and $1.2
million, respectively. The August 19, 1998 repurchase of $5.3 million principal
amount of Notes was made at a purchase price of $390 per $1,000 principal amount
of Notes, plus accrued and unpaid interest from April 15, 1998, and the August
28, 1998 repurchase of $3.0 million principal amount of Notes was made at a
purchase price of $380 per $1,000 principal amount of Notes, plus accrued and
unpaid interest from April 15, 1998.
The Common Stock is currently traded on NASDAQ. On September 21, 1998, the
last reported sale price of the Common Stock on NASDAQ was $1.31 per share.
In June 1998, NASDAQ notified the Company that given its current net worth,
the Company was not in compliance with the requirements for the continued
listing of its Common Stock on NASDAQ and requested that the Company provide
additional information to enable NASDAQ to evaluate the Company's financial
condition. The Company filed a formal response with NASDAQ and remains involved
in an appeal of a delisting notice. As of the date of this Offer to Purchase, it
is unclear whether the Common Stock will remain on NASDAQ, move to the Nasdaq
SmallCap Market, or move to Nasdaq's Over the Counter Bulletin Board.
The following table sets forth certain information relating to the trading
history of the Common Stock on NASDAQ during the period from October 15, 1996
(the original issue date of the Notes) through September 21, 1998.
<TABLE>
<CAPTION>
CLOSING SALE PRICE(1)
------------------------
<S> <C> <C>
LOW HIGH
----- -----------
YEAR ENDED DECEMBER 31, 1996:
Fourth Quarter (Beginning October 16)....................................... $ 45 $ 571/2
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................................... 317/8 483/4
Second Quarter.............................................................. 117/8 393/8
Third Quarter............................................................... 143/8 343/8
Fourth Quarter.............................................................. 171/2 421/2
YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................................... 81/8 205/8
Second Quarter.............................................................. 41 /16 121/32
Third Quarter (through September 21)........................................ 11/8 55/16
</TABLE>
- ------------------------
(1) Reflects a one-for-five reverse stock split of the outstanding Common Stock
effected on May 19, 1998.
14
<PAGE>
Between July 2, 1998 and September 15, 1998, the Company repurchased
approximately 187,000 shares of Common Stock on the open market pursuant to a
program adopted by the Board of Directors of the Company in June, 1998. Pursuant
to the Repurchase Plan, the Company is authorized to repurchase up to 1.0
million shares of Common Stock. The aggregate consideration paid by the Company
for the shares repurchased to date is approximately $511,000. The Company
expects that as buying opportunities arise from time to time, the Company will
purchase additional shares pursuant to the Repurchase Plan.
The Company and its affiliates, including its executive officers and
directors, will be prohibited under applicable Federal securities laws from
repurchasing additional Notes outside of the Tender Offer until at least the
tenth business day after the Expiration Date. Following such time, the Company
may purchase additional Notes in the open market, in private transactions,
through a subsequent tender offer, or otherwise, any of which may be consummated
at purchase prices higher or lower than that offered in the Tender Offer. The
decision to repurchase additional Notes, if any, will depend upon many factors,
including the market price of the Notes, the results of the Tender Offer, the
Company's business and financial position and general economic and market
conditions. Any such repurchase may be on the same terms or on terms more or
less favorable to Holders than the terms of the Tender Offer.
15
<PAGE>
UNAUDITED SUMMARY HISTORICAL AND PRO FORMA
STATEMENT OF OPERATIONS AND BALANCE SHEET INFORMATION
The historical statement of operations and balance sheet information for the
fiscal years ended December 31, 1996 and December 31, 1997 and at such dates is
derived from the audited financial statements of the Company for such periods or
at such dates. Such data at or for the six months ended June 30, 1997 and June
30, 1998 are derived from unaudited financial statements. In management's
opinion, the Company's unaudited financial statements at or for the six months
ended June 30, 1997 and June 30, 1998 include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
results of operations and financial position for the respective periods. The
results of operations for the six months ended June 30, 1997 and June 30, 1998
are not necessarily indicative of the results that may be expected for the
entire year ended December 31, 1998 or any other interim period.
The unaudited pro forma balance sheet information at December 31, 1997 and
June 30, 1998 is presented on (i) an actual basis, and (ii) as if the Company
had completed each of the following transactions (collectively the
"Transactions") on December 31, 1997 and June 30, 1998 respectively: the Tender
Offer, assuming the Maximum Tender Amount of Notes were repurchased; repurchases
in August, 1998 of $8.3 million aggregate principal amount of Notes; and the
repurchases of 187,000 shares of Common Stock during the period between July 2,
1998 and September 15, 1998, for an aggregate consideration of approximately
$0.5 million.
The unaudited pro forma statement of operations information for the fiscal
year ended December 31, 1997 and six months ended June 30, 1998 are presented
(i) on an actual basis, and (ii) as if the Company had completed the
Transactions on January 1, 1997.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable. In the opinion of
management, all adjustments necessary to fairly present the pro forma
information have been made. The unaudited pro forma financial statement
information is provided for informational purposes only and does not purport to
be indicative of the results that would have been reported had such events
actually occurred on the dates specified. The Company cannot predict whether the
consummation of the Tender Offer will conform to the assumptions used in
preparation of the unaudited pro forma statement of operations and balance sheet
information.
16
<PAGE>
UROMED CORPORATION
UNAUDITED SUMMARY HISTORICAL AND PRO FORMA
STATEMENT OF OPERATIONS AND BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1997 1997 1998 1998
<CAPTION>
STATEMENT OF OPERATIONS DATA PRO FORMA PRO FORMA
- ----------------------------------- ----------- --------- ------------- --------- ----------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 2,622 $ 503 $ 503 $ 415 $ 181 $ 181
----------- --------- ------------- --------- ----------- -------------
Cost of revenues................... 5,110 4,722 4,722 1,936 2,002 2,002
Research and development........... 37,597 11,692 11,692 5,728 3,376 3,376
Marketing and sales................ 7,276 13,233 13,233 8,003 2,916 2,916
General and administrative......... 2,816 5,514 5,514 2,557 1,909 1,909
Restructuring...................... -- -- -- -- 1,024 1,024
----------- --------- ------------- --------- ----------- -------------
Total costs and expenses......... 52,799 35,161 35,161 18,224 11,227 11,227
----------- --------- ------------- --------- ----------- -------------
Loss from operations............... (50,177) (34,658) (34,658) (17,809) (11,046) (11,046)
Interest income.................... 3,462 4,558 3,476(a) 2,471 1,664 1,125(a)
Interest expense................... (945) (4,533) (1,353)(b) (2,268) (2,268) (678)(b)
----------- --------- ------------- --------- ----------- -------------
Loss before extraordinary gain..... (47,660) (34,633) (32,535) (17,606) (11,650) (10,599)
Extraordinary gain on early
retirement of debt (c)........... -- -- 24,234 -- -- --
----------- --------- ------------- --------- ----------- -------------
Net loss........................... $(47,660) $ (34,633) $(8,301 ) $(17,606) $(11,650 ) $(10,599 )
----------- --------- ------------- --------- ----------- -------------
----------- --------- ------------- --------- ----------- -------------
Basic and diluted net loss per
share (d)........................ $ (9.33 ) $ (6.52) $ (1.62 ) $ (3.32) $ (2.17 ) $ (2.05 )
----------- --------- ------------- --------- ----------- -------------
Weighted average common shares
outstanding (d).................. 5,109 5,316 5,129 5,303 5,360 5,173
----------- --------- ------------- --------- ----------- -------------
Ratio of earnings to fixed charges
(e).............................. -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1997 1997 1998 1998
<CAPTION>
BALANCE SHEET DATA PRO FORMA PRO FORMA
- ----------------------------------- --------- --------- ------------- --------- --------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Cash, cash equivalents and
short-term investments........... $ 101,638 $ 65,025 $ 41,691(f) $ 81,779 $ 53,259 $ 29,925(f)
Total assets....................... 110,488 76,593 51,656(f (g) 93,354 64,443 39,645(f)(g)
Total current liabilities.......... 5,536 5,808 5,204(h) 5,833 5,317 4,713(h)
Convertible subordinated notes..... 69,000 69,000 20,669(i) 69,000 69,000 20,669(i)
Accumulated deficit................ (71,294) (105,927) (81,418)(j) (88,900) (117,581) (92,932)(j)
Total stockholders' equity /
(deficit)........................ 35,952 1,785 25,783(j (k) 18,521 (9,874) 14,263(j)(k)
Book value per common share (d).... 6.80 0.33 5.00 3.48 (1.85) 2.77
</TABLE>
See Notes to Unaudited Summary Pro Forma Statement of Operations
and Pro Forma Balance Sheet Information.
17
<PAGE>
NOTES TO UNAUDITED SUMMARY PRO FORMA STATEMENT OF OPERATIONS
AND PRO FORMA BALANCE SHEET INFORMATION
(a) Interest income reflects the impact of the net decrease in investable cash,
cash equivalents and short-term investments on interest income earned as a
result of the Transactions, as if such Transactions had occurred on January
1, 1997. For the twelve months ended December 31, 1997, cash, cash
equivalents and short-term investments decreased by a total of $20.4 million
at an average annual return of 5.30%. This net decrease resulted from the
use of $22.8 million to purchase $48.3 million in aggregate principal amount
of Notes, which includes accrued interest and transaction costs, and $0.5
million for purchases of Common Stock, all partially offset by less interest
expense paid on the Notes of $2.9 million as a result of the repurchase of
Notes.
Interest income for the six months ended June 30, 1998 reflects, in addition
to a net decrease in cash, cash equivalents and short-term investments of
$20.4 million through December 31, 1997, an increase in cash and cash
equivalents of $1.4 million due to less interest on the Notes. The total
impact of net cash on investment income earned, at a rate of 5.50% per
annum, is a reduction of $0.5 million for such period.
(b) Interest expense reflects the impact of the decrease in interest expense on
the Notes due to the repurchase of $48.3 million aggregate principal amount
of Notes, in the amounts of $2.9 million and $1.4 million for the twelve
months ended December 31, 1997 and June 30, 1998, respectively. Also
reflects a reduction in amortization expense for the write-off of
unamortized financing fees relating to the repurchased Notes of $0.3 million
and $0.1 million for the twelve months ended December 31, 1997 and the six
months ended June 30, 1998, respectively.
(c) Statement of operations data for the twelve months ended December 31, 1997
reflects an extraordinary gain of $24.2 million from the repurchase of $48.3
million aggregate principal amount of Notes for $21.2 million cash, the
incurrence of $1.0 million in transaction costs and a charge for the write
off of unamortized financing fees of $1.9 million relating to the
repurchased Notes.
(d) All share amounts reflect retroactively a one-for-five reverse stock split
of the outstanding Common Stock effected on May 19, 1998. The pro forma
share amounts reflect the impact of purchases of Common Stock pursuant to
the Repurchase Plan.
(e) As a result of the losses incurred by the Company since inception, earnings
have been insufficient to cover fixed charges. The following table sets
forth the dollar amount by which earnings did not cover fixed charges for
the periods indicated in the Unaudited Pro Forma Statement of Operations
Data (amounts in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------- ---------------------------------
1996 1997 1997 1997 1998 1998
<S> <C> <C> <C> <C> <C> <C>
PRO FORMA PRO FORMA
--------- --------- ----------- --------- --------- -----------
$ 47,660 $ 34,633 $ 32,535 $ 17,606 $ 11,650 $ 10,582
</TABLE>
(f) Cash, cash equivalents and short-term investments reflects cash repurchases
of Notes for an aggregate of $22.8 million, which includes accrued interest
paid of $0.6 million and transaction costs of $1.0 million. Also reflects a
reduction in cash of $0.5 million for purchases of Common Stock pursuant to
the Repurchase Plan.
(g) Total assets reflect the cash reductions described in (f), in addition to
$1.6 million of written off unamortized deferred financing fees relating to
the repurchase of $48.3 million aggregate principal amount of Notes.
18
<PAGE>
NOTES TO UNAUDITED SUMMARY PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
AND PRO FORMA BALANCE SHEET INFORMATION
(h) Reflects an adjustment for $0.6 million in accrued interest paid as part of
the purchase price for the repurchase of $48.3 million aggregate principal
amount of Notes.
(i) Reflects the repurchase of an aggregate of $48.3 million aggregate principal
amount of Notes.
(j) Reflects an extraordinary gain of $24.5 million resulting from the
repurchase of $48.3 million aggregate principal amount of Notes for $21.2
million in cash, the incurrence of $1.0 million in transaction costs and a
charge for the write-off of unamortized financing fees of $1.6 million
relating to the repurchased Notes.
(k) Reflects purchases of Common Stock of $0.5 million pursuant to the
Repurchase Plan and extraordinary gain on retirement of debt of $24.5
million.
19
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998, and as adjusted to give effect to the Transactions as if each of the
Transactions had occurred on June 30, 1998.
<TABLE>
<CAPTION>
JUNE 30, 1998
------------------------
AS
ACTUAL ADJUSTED
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Cash, cash equivalents and short-term investments....................................... $ 53,259 $ 29,925
Convertible Subordinated Notes.......................................................... 69,000 20,669
Stockholders' equity:
Preferred Stock, $.01 par value; 500,000 shares authorized; no shares issued.......... -- --
Common Stock, no par value; 10,000,000 shares authorized; 5,178,000 shares issued and
outstanding......................................................................... 107,024 107,024
Treasury stock........................................................................ -- (511)
Additional paid-in capital............................................................ 685 685
Net unrealized loss on investments available-for-sale................................. (3) (3)
Accumulated deficit................................................................... (117,580) (92,932)
----------- -----------
Total stockholders' equity / (deficit).............................................. (9,874) 14,263(a)
----------- -----------
Total capitalization.................................................................... $ 59,126 $ 34,932
----------- -----------
----------- -----------
</TABLE>
- ------------------------
(a) Reflects an extraordinary gain of $24.5 million resulting from the
repurchase of $48.3 million aggregate principal amount of Notes for $21.2
million in cash, the incurrence of $1.0 million in transaction costs and a
charge for the write-off of unamortized financing fees of $1.6 million
relating to the repurchased Notes.
20
<PAGE>
THE TENDER OFFER
PRINCIPAL TERMS OF THE TENDER OFFER
Upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the accompanying Letter of Transmittal, the Company is offering
to purchase up to $40.0 million aggregate principal amount of the Notes for a
cash purchase price of $450 per $1,000 principal amount plus accrued and unpaid
interest from October 15, 1998 up to, but not including, the date of payment.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENTS
The Tender Offer will expire on the Expiration Date. The Company expressly
reserves the right to extend the Tender Offer on a daily basis or for such
period or periods as it may determine in its sole discretion from time to time
by giving written or oral notice to the Depositary and by making a public
disclosure prior to 9:00 a.m., New York City time, on the next business day
following the previously scheduled Expiration Date. During any extension of the
Tender Offer, all Notes previously tendered and not accepted for purchase will
remain subject to the Tender Offer and may, subject to the terms and conditions
of the Tender Offer, be accepted for purchase by the Company.
The Company expressly reserves the absolute right, in its sole discretion,
to (i) waive any condition to the Tender Offer, (ii) amend any terms of the
Tender Offer or (iii) modify the Tender Offer. Any waiver or amendment
applicable to the Tender Offer will apply to all Notes tendered regardless of
when or in what order such Notes were tendered. If the Company makes a material
change in the terms of the Tender Offer or in the information concerning the
Tender Offer or if it waives a material condition of the Tender Offer, the
Company will disseminate additional Tender Offer materials and will extend the
Tender Offer, in each case, to the extent required by law. See "--Withdrawal of
Tenders; Absence of Appraisal Rights." If the Company amends the terms of the
Tender Offer, such amendment will apply to all Notes tendered pursuant thereto
regardless of when or in what order such Notes were tendered.
The Company expressly reserves the right, in its sole discretion, to
terminate the Tender Offer if any of the conditions applicable thereto set forth
under "--Conditions of the Tender Offer" exist and has not been waived by the
Company. Any such termination will be followed promptly by public announcement
thereof. In the event the Company terminates the Tender Offer, it will give
immediate notice thereof to the Depositary, and all Notes theretofore tendered
pursuant to the Tender Offer will be returned promptly to the tendering Holders
thereof. See "--Withdrawal of Tenders; Absence of Appraisal Rights" and "--
Conditions of the Tender Offer."
Any extension, waiver of a condition, delay, termination or amendment of the
Tender Offer will be disseminated by such means that the Company deems
appropriate, which may include dissemination by press release. Any such
dissemination, if not in the form of a press release, will be followed as
promptly as practicable by a press release or other public announcement thereof,
such announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner by which the Company may
choose to make such announcement, the Company will not, unless otherwise
required by law, have any obligation to publish, advertise or otherwise
communicate any such announcement.
ACCEPTANCE OF NOTES FOR PURCHASE; PAYMENT FOR NOTES; MAXIMUM TENDER AMOUNT AND
PRO RATA ACCEPTANCE
Upon the terms and subject to the conditions of the Tender Offer, promptly
after the Expiration Date, the Company will, subject to the satisfaction or
waiver of all relevant conditions, accept for purchase, and pay for, Notes
validly tendered and not withdrawn under the Tender Offer on or prior to the
Expiration Date; provided, however, that if more than the Maximum Tender Amount
of Notes has been tendered, the Company will purchase the Maximum Tender Amount
on a Pro Rata Acceptance basis.
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The Company expressly reserves the right, in its sole discretion, to delay
acceptance for purchase of Notes tendered under the Tender Offer or the payment
for Notes accepted for purchase (subject to Rule 14e-1(c) under the Exchange
Act, which requires that the Company pay the consideration offered or return the
Notes deposited by or on behalf of the Holders promptly after the termination or
withdrawal of the Tender Offer), or to terminate the Tender Offer and not accept
for purchase any Notes not theretofore accepted for purchase, if any of the
conditions set forth under "--Conditions of the Tender Offer" shall not have
been satisfied or waived by the Company or in order to comply in whole or in
part with any applicable law. In all cases, payment for Notes purchased pursuant
to the Tender Offer will be made only after timely receipt by the Depositary of
(i) such Notes, or timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Notes into the Depositary's account at DTC pursuant to
the procedures set forth below in "Procedures for Tendering Notes," (ii) a
properly completed and duly executed Letter of Transmittal (or an Agent's
Message in lieu thereof) and (iii) all necessary signature guarantees and any
other documents required by the Letter of Transmittal. See "--Procedures for
Tendering Notes" for a description of the procedures for tendering Notes
pursuant to the Tender Offer.
For purposes of the Tender Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Notes when and if it gives oral,
to be followed by written, notice to the Depositary of its acceptance of such
Notes for payment pursuant to the Tender Offer. Payment for Notes purchased
pursuant to the Tender Offer will be made by the Company on the Payment Date by
depositing the Tender Offer Consideration therefor with the Depositary, which
will act as agent for tendering Holders for the purpose of receiving Tender
Offer Consideration from the Company and transmitting Tender Offer Consideration
to the tendering Holders.
Tenders with respect to the Notes pursuant to the Tender Offer will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
If, for any reason whatsoever, acceptance for purchase of or payment for
validly tendered Notes pursuant to the Tender Offer is delayed or the Company is
unable to accept for purchase or to pay for validly tendered Notes pursuant to
the Tender Offer, then the Depositary may, nevertheless, on behalf of the
Company, retain tendered Notes, without prejudice to the rights of the Company
described under "-- Expiration Date; Extension; Termination; Amendments,"
"--Conditions of the Tender Offer" and "-- Withdrawal of Tenders; Absence of
Appraisal Rights," but subject further to Rule 14e-1(c) under the Exchange Act,
which requires that the Company pay the consideration offered or return the
Notes deposited by or on behalf of the Holders promptly after the termination or
withdrawal of the Tender Offer.
The Company does not expect to increase or decrease the consideration
offered in the Tender Offer, but if the consideration offered in the Tender
Offer is increased, all tendering Holders whose Notes are accepted for payment
pursuant to the Tender Offer will be given the increased consideration
regardless of when or in what order such Notes were tendered.
Under no circumstances will any interest be payable because of any delay in
the transmission of funds to the Holders of purchased Notes. If any tendered
Notes are not accepted for payment for any reason pursuant to the terms and
conditions of the Tender Offer or if certificates are submitted evidencing more
Notes than are tendered, certificates evidencing unpurchased Notes will be
returned, without expense, to the tendering Holder (or, in the case of Notes
tendered by book-entry transfer into the Depositary's account at DTC, the
account maintained at DTC designated by the participant therein who so delivered
such Notes), unless otherwise requested by such Holder under "Special Delivery
Instructions" in the Letter of Transmittal, promptly following the Expiration
Date or the termination of the Tender Offer.
Tendering Holders whose Notes are purchased in the Tender Offer will not be
obligated to pay brokerage commissions or fees or to pay transfer taxes with
respect to the purchase of their Notes unless the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" in the
respective Letter of Transmittal has been completed, as described in the
instructions thereto. The
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Company will pay all other charges and expenses in connection with the Tender
Offer. See "--Depositary" and "--Miscellaneous."
PROCEDURES FOR TENDERING NOTES
PROPER TENDER OF NOTES. For Notes to be properly tendered pursuant to the
Tender Offer, (i) such Notes, together with a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof), and any
other documents required by the Letter of Transmittal, must be received on or
prior to the Expiration Date by the Depositary at one of the addresses set forth
on the back cover of this Offer to Purchase, or (ii) such Notes must be tendered
pursuant to the procedure for book-entry transfer described below under the
caption "Book-Entry Delivery" and a Book-Entry Confirmation, including an
Agent's Message, must be received by the Depositary, in each case on or prior to
the Expiration Date, or (iii) the tendering Holder must comply with the
guaranteed delivery procedures described below under the caption "Guaranteed
Delivery." Holders whose Notes are registered in the name of a nominee are urged
to contact such nominee promptly if they wish to accept the Tender Offer.
LETTERS OF TRANSMITTAL SHOULD BE SENT ONLY TO THE DEPOSITARY, NOT THE COMPANY,
THE TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER.
Except as provided below under the captions "Book-Entry Delivery" and
"Guaranteed Delivery," unless the Notes being tendered are deposited with the
Depositary on or prior to the Expiration Date (accompanied by a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal), the Company may, at its option, reject
such tender. If less than the entire principal amount of any Notes evidenced by
a submitted certificate(s) is to be tendered, the tendering Holder should fill
in the principal amount tendered in the appropriate box on the Letter of
Transmittal. The entire principal amount represented by all Notes deposited with
the Depositary will be deemed to have been tendered unless otherwise indicated.
In all cases, notwithstanding any provision hereof, the payment for Notes
tendered and accepted for payment pursuant to the Tender Offer will be made only
after the timely receipt by the Depositary of (i) certificates for such Notes or
a timely Book-Entry Confirmation, (ii) the Letter of Transmittal (or a manually
signed facsimile thereof) properly completed and duly executed, or an Agent's
Message, and (iii) any required signature guarantees or other documents required
by such Letter of Transmittal.
METHOD OF DELIVERY. ALL LETTERS OF TRANSMITTAL, NOTICES OF GUARANTEED
DELIVERY AND NOTES SHOULD BE DELIVERED ONLY BY COURIER, HAND DELIVERY OR
TRANSMITTED BY MAIL. DELIVERIES SHOULD BE MADE ONLY TO THE DEPOSITARY, NOT TO
THE COMPANY, THE TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER. THE
METHOD OF DELIVERY OF CERTIFICATES FOR NOTES AND ALL OTHER REQUIRED DOCUMENTS IS
AT THE OPTION AND RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED TO
BE MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES OF NOTES
ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
SIGNATURE GUARANTEES. No signature guarantees are required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Notes tendered herewith and payment is to be made directly to such
registered holder, or if Notes are tendered for the account of an institution
that is a member of a Signature Guarantee Program recognized by the Depositary
(i.e., the Securities Transfer Agent Medallion Program (STAMP), the Stock
Exchanges Medallion Program (SEMP) and the New York Stock Exchange Medallion
Program (MSP)) (each such entity being hereinafter referred to an as "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 3 of the Letter
of Transmittal. If a Note is registered in the name of a person other than the
person signing a Letter of Transmittal, or if payment is to be made or Notes not
purchased or tendered are to be issued, to a person other than the registered
holder, then such Notes must
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be endorsed or accompanied by a written instrument or instruments of transfer in
a form satisfactory to the Company, in either case, executed by the registered
holder with the signature guarantees by an Eligible Institution.
BOOK-ENTRY DELIVERY. The Depositary will establish an account or accounts
with respect to the Notes at DTC for purposes of the Tender Offer within two
business days after the date of the commencement of the Tender Offer, and any
financial institution that is a participant in DTC's system may make book-entry
delivery of the Notes by causing DTC to transfer such Notes into the
Depositary's account at DTC in accordance with DTC's procedure for such
transfer. Although delivery of Notes may be effected through book-entry transfer
at DTC, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantees or an
Agent's Message, a confirmation of such tender and any other documents required
by the Letter of Transmittal must, in any case, be transmitted to and received
by the Depositary at one of the addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the Holder must comply
with the guaranteed delivery procedures described below.
The term "Agent's Message" means a message transmitted by DTC and received
by the Depositary and forming a part of a Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from a participant in DTC
tendering the Notes, that such participant has received the Letter of
Transmittal and agrees to be bound by the terms of the Letter of Transmittal
(or, in the case of an Agent's Message relating to a guaranteed delivery, that
such participant has received and agrees to be bound by the Applicable Notice of
Guaranteed Delivery) and the Company may enforce such agreement against such
participant.
GUARANTEED DELIVERY. If a Holder desires to tender Notes pursuant to the
Tender Offer and such Holder's 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 such Holder cannot complete the procedures for
book-entry transfer on a timely basis, such Notes may nevertheless be tendered
provided that all of the following conditions are satisfied:
(a) The tender is made by or through an Eligible Institution;
(b) On or prior to the Expiration Date, the Depositary receives from such
Eligible Institution at one of the addresses for the Depositary set forth on the
back cover of this Offer to Purchase, a properly completed and duly executed
Notice of Guaranteed Delivery (by mail, hand delivery or facsimile). Such Notice
of Guaranteed Delivery shall (i) be substantially in the form made available by
the Company, (ii) set forth the name and address of the Holder, (iii) describe
the Notes and the principal amount of the Notes tendered, (iv) state that the
tender is being made thereby and (v) guarantee that, within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, a duly executed Letter of Transmittal (or a manually signed facsimile
thereof) or an Agent's Message together with the certificates representing such
Notes (or appropriate Book-Entry Confirmation) and any other documents required
by the Letter of Transmittal and the instructions thereto will be deposited by
the Eligible Institution with the Depositary; and
(c) The certificates for the tendered Notes in proper form for transfer (or
confirmation of book-entry transfer into the Depositary's account at DTC),
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), or confirmation of a book-entry transfer of
such Notes into the Depositary's account with DTC as described above, including
an Agent's Message in connection therewith, and all other documents required by
the Letter of Transmittal and the instructions thereto, are received by the
Depositary within three New York Stock Exchange trading days after the execution
of such Notice of Guaranteed Delivery.
In all cases, payment for Notes tendered and accepted for payment pursuant
to the Tender Offer will be made only after timely receipt by the Depositary of
certificates for such Notes or confirmation of book-
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entry transfer into the Depositary's account at DTC a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) or
Agent's Message and any other documents required by the Letter of Transmittal.
TENDER CONSTITUTES AN AGREEMENT. The proper tender of Notes pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering Holders and the Company upon the terms and subject to the
conditions of the Tender Offer, and a representation that (i) such Holder owns
the Notes being tendered and is entitled to tender such Notes as contemplated by
the Tender Offer, all within the meaning of Rule 14e-1 under the Exchange Act
and (ii) the tender of such Notes complies with Rule 14e-4 under the Exchange
Act.
Further, by executing a Letter of Transmittal as set forth above or
permitting an Agent's Message to be delivered, and subject to and effective upon
acceptance for payment of and payment for the Notes tendered therewith, a
tendering Holder irrevocably sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to all the Notes tendered
thereby, waives any and all other rights with respect to the Notes (including
without limitation any existing or past defaults and their consequences in
respect of the Notes and the Indenture under which the Notes were issued) and
releases and discharges the Company from any and all claims such Holder may have
now, or may have in the future, arising out of, or related to, the Notes,
including without limitation any claims that such Holder is entitled to receive
additional principal or interest payments with respect to the Notes or to
participate in any redemption or defeasance of the Notes. Each such Holder also
appoints the Depositary the true and lawful agent and attorney-in-fact of such
Holder with respect to such Notes, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (i) deliver such Notes or transfer ownership of
such Notes on the account books maintained by DTC, together, in each case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
the Company, (ii) present such Notes for transfer on the books of the Company,
and (iii) receive all benefits or otherwise exercise all rights of beneficial
ownership of such Notes (except that the Depositary will have no rights to or
control over funds from the Company, except as agent for the Company, for the
purchase price of any Notes tendered pursuant to the Tender Offer that are
purchased by the Company), all in accordance with the terms of the Tender Offer.
DETERMINATION OF VALIDITY; REJECTION OF NOTES; NO OBLIGATION TO GIVE NOTICE
OF DEFECTS. All questions as to the principal amount of Notes to be accepted,
the validity, form, eligibility (including the time of receipt) and acceptance
for payment of any tender of Notes pursuant to the procedures described herein
and the form and validity (including time of receipt of notices of withdrawal)
of all documents will be determined by the Company in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tendered Notes determined by it not to
be in proper form or the acceptance of or payment for which may be unlawful. The
Company also reserves the absolute right to waive any of the conditions of the
Tender Offer and any defect or irregularity in the tender of any particular
Notes. The Company's interpretation of the terms and conditions of the Tender
Offer (including without limitation the instructions in the Letter of
Transmittal) shall be final and binding. No alternative, conditional or
contingent tenders or deliveries will be accepted. Unless waived, any
irregularities in connection with tenders of Notes must be cured within such
time as the Company shall determine. None of the Company, the Trustee, the
Depositary, the Dealer Manager, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in such
tenders of Notes or will incur any liabilities for failure to give such
notification. Tenders of Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Notes received by the Depositary
that are not properly tendered and as to which the irregularities have not been
cured or waived will be returned by the Depositary to the tendering Holders (in
the case of Notes tendered by book-entry transfer into the Depositary's account
at DTC, by crediting the account maintained at DTC from which such Notes were
delivered), unless such Holders have otherwise provided in the Letter of
Transmittal, as promptly as practicable following the Expiration Date.
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LOST OR MISSING CERTIFICATES. If a Holder desires to tender a Note pursuant
to the Tender Offer, but the Note has been mutilated, lost, stolen or destroyed,
such Holder should write to or telephone the Trustee at the address listed
below, about procedures for obtaining replacement certificates for such Notes,
arranging for indemnification or any other matter that requires handling by such
Trustee:
State Street Bank and Trust Company
Corporate Trust Division
Two International Place
Boston, Massachusetts 02110
Attn: Robert Burns
(617) 664-5290
CONDITIONS OF THE TENDER OFFER
Notwithstanding any other provision of the Tender Offer, the Company shall
not be required to accept for purchase, or to pay for, the Notes tendered
pursuant to the Tender Offer, and may terminate, extend or amend the Tender
Offer or delay or refrain (subject to Rule 14e-1(c) under the Exchange Act)
acceptance for purchase or payment of Notes so tendered, if, on or prior to the
Expiration Date, any of the General Conditions have not been satisfied.
The General Conditions shall be deemed to have been satisfied unless any of
the following conditions shall occur on or prior to the Expiration Date (each of
(1) through (7), a "General Condition" and collectively, the "General
Conditions"):
(1) there shall have been threatened, instituted or pending any action or
proceeding by or before any court or governmental regulatory or administrative
authority or tribunal, domestic or foreign, which challenges the making of the
Tender Offer, the acquisition of Notes pursuant to the Tender Offer or otherwise
relates in any manner to the Tender Offer;
(2) a statute, rule, regulation, judgment, order, stay, decree or injunction
shall have been threatened, proposed, sought, promulgated, enacted, entered,
enforced or deemed to be applicable by any court or governmental regulatory or
administrative agency, authority or tribunal, domestic or foreign, which, in the
reasonable judgment of the Company, would or might directly or indirectly
prohibit, prevent, restrict or delay consummation of the Tender Offer;
(3) there shall have occurred or be likely to occur any event affecting the
business or financial affairs of the Company that would or might prohibit,
prevent, restrict or delay consummation of the Tender Offer or that will, or is
reasonably likely to, materially impair the contemplated benefits of the Tender
Offer to the Company or otherwise results in the Tender Offer not being or
reasonably likely not being in the best interests of the Company;
(4)
(i) any general suspension or limitation of trading in, or limitation on
prices for, securities in the financial markets of the United States;
(ii) the declaration of a banking moratorium, or any suspension of
payments in respect of banks, by Federal or New York authorities; or
(iii) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by the United States or
any other substantial state, national, or international calamity or
emergency if the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable in the reasonable
judgment of the Company to proceed with the Tender Offer;
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(5) any change in the general political, market, economic or financial
conditions in the United States or abroad that in the Company's opinion has or
may have a material adverse effect with respect to the Company's business,
operations or prospects or the trading in the securities of the Company, or any
significant decline in either the Dow Jones Industrial Average or the Standard
and Poor's Index of 500 Industrial companies in the reasonable judgment of the
Company;
(6) the Company shall not have obtained any consents, approvals, waivers or
amendments from third parties necessary to permit the consummation of the Tender
Offer; or
(7) any change shall have occurred (or any development shall have occurred
involving any prospective change) in the business, assets, liabilities,
condition (financial or otherwise), operations, results of operations, or
prospects of the Company that, in the reasonable judgment of the Company, has or
may have a material adverse effect on the Company or that would or might
prohibit, prevent, restrict or delay consummation of the Tender Offer.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company, in its sole discretion, regardless of the circumstances
giving rise to any such condition or may be waived by the Company in whole or in
part at any time and from time to time in the Company's sole discretion. The
failure by the Company at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time.
BACKUP FEDERAL INCOME TAX WITHHOLDING
For a discussion of federal income tax consequences relating to backup
withholding, see "Certain Federal Income Tax Consequences--Backup Withholding."
WITHDRAWAL OF TENDERS; ABSENCE OF APPRAISAL RIGHTS
Tenders of Notes may be withdrawn at any time on or prior to the Expiration
Date by delivery of written notice or revocation in accordance with the
following procedures. Holders who wish to exercise their right of withdrawal
with respect to the Tender Offer must give written notice of withdrawal
delivered by mail or hand delivery which notice must be received by the
Depositary at one of the addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date. In order to be effective, a notice
of withdrawal must specify the name of the person who deposited the Notes to be
withdrawn (the "Depositor"), the name in which the Notes are registered if
different from that of the Depositor, and the principal amount of the Notes to
be withdrawn. If certificates have been delivered or otherwise identified
(through confirmation of book-entry transfer of such Notes) to the Depositary,
the name of the registered holder and the certificate number or numbers relating
to such Notes withdrawn must also be furnished to the Depositary as aforesaid
prior to the physical release of certificates for the withdrawn Notes (or, in
the case of Notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited with withdrawn Notes). The notice of withdrawal
must be signed by the Holder or accompanied by an Agent's Message in the same
manner as the Letter of Transmittal (including, in any case, any required
signature guarantee) or an Agent's Message, or be accompanied by documents of
transfer satisfactory to the Company and the Trustee to register the transfer of
such Notes into the name of the Holder withdrawing the tender.
Withdrawals of tenders of Notes may not be rescinded, and any Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Tender Offer. However, properly withdrawn Notes may be retendered by following
one of the procedures described in "--Procedures for Tendering Notes" at any
time on or prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding. None of
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the Company, the Depositary, the Dealer Manager, the Information Agent, the
Trustee or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liabilities
for failure to give any such notification. There are no appraisal or similar
statutory rights available to the Holders in connection with the Tender Offer.
DEALER MANAGER
PaineWebber Incorporated is acting as the Dealer Manager for the Company in
connection with the Tender Offer. Any questions or requests for assistance may
be directed to the Dealer Manager at the address or telephone number set forth
on the back cover of this Offer to Purchase.
DEPOSITARY
The Depositary for the Tender Offer is State Street Bank and Trust Company.
All deliveries, correspondence and questions sent or presented to the Depositary
relating to the Tender Offer should be directed to one of the addresses or
telephone numbers set forth on the back cover of this Offer to Purchase.
INFORMATION AGENT
Kissel-Blake Inc. is acting as the Information Agent for the Company in
connection with the Tender Offer. Requests for copies of the Tender Offer
materials should be directed to the Information Agent at the address or
telephone number set forth on the back cover of this Offer to Purchase.
MISCELLANEOUS
Directors, officers and regular employees of the Company (who will not be
specifically compensated for such services), the Information Agent and the
Dealer Manager may contact Holders by mail, telephone, telex, telegram messages,
mailgram messages, datagram messages and personal interviews regarding the
Tender Offer and may request brokers, dealers and other nominees to forward this
Offer to Purchase and related materials to beneficial owners of Notes.
The Company is not aware of any jurisdiction where the making of the Tender
Offer is not in compliance with the laws of such jurisdiction. If the Company
becomes aware of any jurisdiction where the making of the Tender Offer would not
be in compliance with such laws, the Company will make a good faith effort to
comply with any such laws or seek to have such laws declared inapplicable to the
Tender Offer. If, after such good faith effort, the Company cannot comply with
any such applicable laws, the Tender Offer will not be made to (nor will tenders
be accepted from or on behalf of) the Holders residing in such jurisdiction.
FEES AND EXPENSES
The Company will pay PaineWebber Incorporated reasonable and customary
compensation for its services as the Dealer Manager, plus reimbursement for
out-of-pocket expenses. The Company has agreed to indemnify the Dealer Manager
against certain liabilities in connection with its services as the Dealer
Manager, including liabilities under the federal securities laws. The Dealer
Manager has provided investment banking services to the Company in the past and
expects to provide investment banking services to the Company in the future. The
Dealer Manager has been and expects to be paid usual and customary fees for such
services.
The Company will pay the Depositary and the Information Agent reasonable and
customary compensation for their services in connection with the Tender Offer,
plus reimbursement for out-of-pocket expenses. The Company has agreed to
indemnify the Depositary and the Information Agent against certain liabilities
in connection with their services, including liabilities under the federal
securities laws.
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Brokers, dealers (including the Dealer Manager), commercial banks and trust
companies will be reimbursed by the Company for customary mailing and handling
expenses incurred by them in forwarding material to their customers. The Company
will not pay any fees or commissions to any broker, dealer or other person
(other than the Dealer Manager, the Depositary and the Information Agent) in
connection with the solicitation of tenders of Notes pursuant to the Tender
Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary is a general description of certain United States
federal income tax consequences applicable under current law to the sale of
Notes pursuant to this Offer to Purchase. This summary describes the tax
consequences to a Holder of Notes that is a "U.S. Holder" (which, for the
purpose of this discussion, means a beneficial owner ("Owner") of a Note that is
for United States federal income tax purposes (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof or (c) an estate or trust described in Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the "Code")). This discussion
does not deal with special classes of Owners, such as dealers in securities or
currencies, banks, financial institutions, insurance companies, tax-exempt
organizations, persons subject to the alternative minimum tax, Owners that are
not U.S. Holders, Owners holding Notes as part of a hedge, straddle or in
connection with a synthetic security transaction. In addition, this discussion
does not describe any tax consequences arising out of the laws of any state,
local or foreign jurisdiction. This discussion assumes that the Notes are held
as "capital assets" within the meaning of Code Section 1221. ALL HOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF
TENDERING THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN TAX LAWS.
SALES OF NOTES PURSUANT TO THE TENDER OFFER. Subject to the market discount
and bond premium rules discussed below, a Holder who receives cash for Notes
pursuant to the Tender Offer will recognize capital gain or loss equal to the
difference between the amount of cash received (excluding any amount
attributable to accrued interest) and the Holder's adjusted tax basis in the
Notes sold. Generally, a Holder's adjusted tax basis in a Note will be the cost
of the Note to such Holder. If applicable, a Holder's adjusted tax basis in a
Note will be increased by any market discount previously included in income by
such Holder pursuant to an election to include market discount in gross income
as it accrues, and generally will be reduced by the accrual of amortizable bond
premium which the Holder has previously elected to offset against interest
payments on the Note. The excess of net long-term capital gains over net
short-term capital losses is taxed at a lower rate than ordinary income for
certain noncorporate taxpayers. Noncorporate taxpayers are generally subject to
a maximum rate of 20% on capital gain realized on the disposition of an asset
held for more than one year. The distinction between capital gain or loss and
ordinary income or loss is also relevant for purposes of, among other things,
limitations on the deductibility of capital losses. To the extent that the
amount paid for the Notes represents accrued interest, it will constitute
ordinary income to the Holder unless previously included in income.
A Holder who acquired a Note at a market discount (subject to a
statutorily-defined DE MINIMIS exception) will generally be required to treat
any gain on a sale of the Note pursuant to the Tender Offer as ordinary income
rather than capital gain to the extent of accrued market discount, unless an
election was made to include market discount in income as it accrued. Market
discount generally equals the excess of the stated redemption price at maturity
of a debt instrument over a holder's initial tax basis in the debt instrument.
If a Note purchased at a premium is sold pursuant to the Tender Offer, a
Holder who has elected to deduct bond premium may be able to claim as an
ordinary deduction in the taxable year of disposition an amount equal to any
remaining unamortized bond premium.
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BACKUP WITHHOLDING. A Holder whose Notes are tendered and accepted for
payment may be subject to backup withholding at the rate of 31% with respect to
the gross proceeds from the sale of such Notes unless such Holder (i) is a
corporation or other exempt recipient and, when required, establishes this
exemption or (ii) accurately completes the Substitute Form W-9 included in the
Letter of Transmittal. Holders that do not provide their correct taxpayer
identification number may be subject to penalties imposed by the Internal
Revenue Service (the "IRS"). Any amount withheld under these rules will be
creditable against the Holder's federal income tax liability and any excess or
overpayment of federal income taxes pursuant to the imposition of backup
withholding may be returned to the affected Holder, provided certain required
information is reported to the IRS. See "Important Tax Information" in the
Letter of Transmittal.
INFORMATION REPORTING. The Company will provide information statements to
tendering Holders and to the IRS reporting the cash payments, as required by
law.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES DOES NOT
CONSIDER THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY HOLDER'S SITUATION OR
STATUS. THIS SUMMARY IS BASED ON THE PROVISIONS OF THE CODE, REGULATIONS,
PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF WHICH
ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS.
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal, certificates for Notes and any other required
documents should be sent by each Holder or such Holder's broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of the
addresses set forth below:
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<PAGE>
[LOGO]
THE DEPOSITARY:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER OR BY
HAND:
Corporate Trust (617) 664-5290 Corporate Trust Division
Division (For Eligible Two International Place
Two International Place Institutions Only) Boston, Massachusetts 02110
Boston, Massachusetts CONFIRM BY TELEPHONE Attn: Robert Burns
02110 (617) 664-5314
Attn: Robert Burns
</TABLE>
Any requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and Notice of Guaranteed Delivery should be directed to the
Information Agent at the address and telephone number set forth below.
THE INFORMATION AGENT:
[LOGO]
110 Wall Street, 11th Floor
New York, New York 10005
(212) 344-6733 or (800) 554-7733
Any questions or requests for assistance may be directed to the Dealer
Manager at the address and telephone number set forth below. You may also
contact your broker dealer, commercial bank or trust company or any other
nominee for assistance concerning the Tender Offer.
THE DEALER MANAGER:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
Attention: Paul A. O'Hern
(877) 219-1546
