SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): November 26, 1999
ALGOS PHARMACEUTICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 000-28844 22-3142274
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification Number)
1333 Campus Parkway, Neptune, New Jersey 07753
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(Address of principal executive offices) (Zip Code)
(732) 938-5959
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(Registrants' telephone number, including area code)
N/A
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(former name or former address, if changed since last report)
ITEM 1(b). CHANGE IN CONTROL OF REGISTRANT
On November 26, 1999, Algos Pharmaceutical Corporation (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement") with Endo
Pharmaceuticals Holdings Inc. ("Endo") and Endo's wholly owned subsidiary, Endo
Inc. ("Merger Sub"). The Merger Agreement, attached hereto as Exhibit 2.1
provides that, upon satisfaction of certain conditions, the Company will merge
into Merger Sub, with Merger Sub surviving the merger as a wholly owned
subsidiary of Endo (the "Merger"). Pursuant to the Merger Agreement, each share
of common stock of the Company ("Company Common Stock") will be exchanged for
one share of common stock of Endo, such that the holders of the Company Common
Stock will own 20% of the combined public company's approximately 89.5 million
pro forma fully diluted shares outstanding. In addition, each holder of Company
Common Stock will receive a warrant (the "Warrants"), for each share of Company
Common Stock that the holder exchanges in the Merger. The Warrants will be
subject to a warrant agreement, attached hereto as an exhibit to the Merger
Agreement and will be exercisable for a nominal price per share upon approval of
MorphiDex(R) by the Food and Drug Administration (the "FDA"). If FDA approval of
MorphiDex(R) is obtained on or before December 31, 2001, then upon exercise of
the Warrants, holders of the Warrants will receive an additional 15% of the pro
forma combined company (to be calculated as if all Warrants had been exercised
at the closing of the Merger). This percentage will be reduced by an amount that
represents five percentage points for each six-month period after December 31,
2001 that MorphiDex(R) is not approved. If FDA approval of MorphiDex(R) is not
attained by December 31, 2002, the Warrants expire unexercised. In addition, in
the event that Endo (excluding revenue and expenses related to the Company) does
not meet or exceed a specified gross profit target of $147.4 million for fiscal
year 2000, shares held by current Endo stockholders will be returned to treasury
such that the current Company stockholders' ownership will increase by an
additional five percentage points.
In addition, immediately prior to the Merger, each current Endo stockholder
will receive a warrant to be exercised for a nominal price per share into Endo
common shares if FDA approval of MorphiDex(R) is not attained by December 31,
2002, in which case holders of these warrants will receive upon exercise of the
warrants an addition 5% of the pro forma combined company (to be calculated as
if all of these warrants had been exercised at the closing of the Merger). A
form of the warrant agreement with respect to these warrants is attached hereto
as an exhibit to the Merger Agreement. If FDA approval of MorphiDex(R) is
attained by December 31, 2002, these warrants expire unexercised.
Also in connection with the Merger, certain stockholders of the Company who
own approximately 24% of the outstanding Company Common Stock in the aggregate
have each agreed pursuant to a separate voting agreement with Endo to vote in
their capacities as stockholders in favor of the Merger and against any
competing offer, These stockholders are: Karen B. Lyle, Michael Hyatt, the Trust
Under the Will of Inez L. Kimmel, Frank S. Caruso, John W. Lyle, the Hyatt
Family Trust, the Todd Kimmel Trust, the Melissa Kimmel Trust, Roger H. Kimmel,
the Frank S. Caruso Irrevocable Trust, the Anita Hyatt Family Trust, James R.
Ledley, Donald G. Drapkin and Patricia Caruso. The form of voting agreement is
attached hereto as an exhibit to the Merger Agreement.
In addition, John W. Lyle, the Chief Executive Officer of the Company will
enter into an employment agreement (the "Lyle Employment Agreement") with Endo,
whereby Mr. Lyle will become the employee of Endo in a senior executive
capacity. The Lyle Employment Agreement is attached hereto as an exhibit to the
Merger Agreement.
In addition, the Company entered into a binding letter agreement (the
"Kelso Side Letter") with Endo and Endo's majority stockholder, in which this
majority stockholder has agreed not to transfer any of its holdings of Endo
for a period of two years from the consummation of the merger, except under
conditions specified in the Kelso Side Letter. The Kelso Side Letter is attached
hereto as Exhibit 99.5.
The Exhibits hereto are incorporated by reference herein and form an integral
part hereof.
Item 7. Financial Statements and Exhibits.
Exhibits.
2.1 The Merger Agreement, dated November 26, 1999, by and among
Endo Pharmaceutical Holdings Inc., Endo Inc. and Algos
Pharmaceutical Corporation (the "Merger Agreement").
99.1 Form of Warrant Agreement of Endo Pharmaceutical Holdings Inc.
(attached as Exhibit C to the Merger Agreement).
99.2 Form of Warrant Agreement of Endo Pharmaceutical Holdings Inc.
(attached as Exhibit I to the Merger Agreement).
99.3 Form of Stockholder Voting Agreement between Endo
Pharmaceuticals Holdings Inc. and the stockholder named therein
(attached as Exhibit B to the Merger Agreement).
99.4 Form of Employment Agreement between Endo Pharmaceuticals
Holdings Inc. and John W. Lyle (attached as Exhibit H to the
Merger Agreement).
99.5 Letter Agreement, dated November 26, 1999, among Algos
Pharmaceutical Corporation, KIA V, L.P. and KEP V, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 26, 1999
ALGOS PHARMACEUTICAL CORPORATION
By: /s/ John W. Lyle
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John W. Lyle
President and Chief Executive Officer
EXHIBIT INDEX
Sequentially
Exhibit No. Numbered Page
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2.1 The Merger Agreement, dated November 26, 1999, by and among Endo
Pharmaceutical Holdings Inc., Endo Inc. and Algos Pharmaceutical
Corporation (the "Merger Agreement").
99.1 Form of Warrant Agreement of Endo Pharmaceutical Holdings Inc.
(attached as Exhibit C to the Merger Agreement).
99.2 Form of Warrant Agreement of Endo Pharmaceutical Holdings Inc.
(attached as Exhibit I to the Merger Agreement).
99.3 Form of Stockholder Voting Agreement between Endo Pharmaceuticals
Holdings Inc. and the stockholder named therein (attached as
Exhibit B to the Merger Agreement).
99.4 Form of Employment Agreement between Endo Pharmaceuticals Holdings
Inc. and John W. Lyle (attached as Exhibit H to the Merger Agreement).
99.5 Letter Agreement, dated November 26, 1999, among Algos Pharmaceutical
Corporation, KIA V, L.P. and KEP V, L.P.