Exhibit 4.1
IMMUNOMEDICS, INC.
300 AMERICAN ROAD
MORRIS PLAINS, NEW JERSEY 07950
AMENDED AND RESTATED EXCHANGE OFFER NOTICE
To the holders of our 5% Senior Convertible Notes due 2008 and related Common
Stock Warrants:
Following is an amended and restated Exchange Offer Memorandum wherein we are
requesting that you exchange your existing 5% Senior Convertible Notes due 2008
("Old Notes") and related Common Stock Warrants ("Old Warrants") for "Exchange
Notes" and "Exchange Warrants". The terms of the Exchange Notes and Exchange
Warrants will be materially the same in all respects to your Old Notes and Old
Warrants except for the changes summarized below which changes are fully set
forth in the attached Exchange Offer Memorandum. You should read the attached
Exchange Offer Memorandum carefully because it contains and incorporates by
reference important information, including without limitation, the information
contained in the section labeled "Risk Factors" beginning on page 13 of the
attached Exchange Offer Memorandum.
Exchange Notes
The Exchange Notes may not be fully converted into Common Stock until the
Company's stockholders approve at a special meeting two proposals; by the first
proposal, we request the stockholders authorize a 40 million share increase to
our authorized common stock and by the second proposal, we request the
stockholders authorize conversion of the Exchange Notes and exercise of the
Exchange Warrants into Common Stock. The Company will also agree in the
Indenture to use best efforts to have the special meeting and related
stockholder votes occur by August 29, 2005 (120 days after the initial issuance
of the Old Notes and Old Warrants), and to extend the period during which you
may exercise your option to purchase additional Exchange Notes (the "Option
Exchange Notes") to December 17, 2005 (compared to August 29, 2005 for the
current option to purchase Old Notes).
The Old Notes permit first-come, first-served conversion into up to 8.915
million common shares, from the date of issuance through the date of stockholder
approval of an authorized common stock share increase.
Exchange Warrants
The definition of "Exercise Period" set forth in the Warrant Agreement shall be
amended so that the Exercise Period for the Exchange Warrants shall commence,
instead of from the effective date of the above mentioned share increase to the
later of the date that the stockholders (i) approve the exercise of the Exchange
Warrants and (ii) the effective date of the share increase. The exercise price
of the Exchange Warrants will be reduced to $2.41 per share of common stock
purchased thereby (compared to $2.98 per share for the current Warrants). The
option to purchase additional Exchange Warrants (the "Option Exchange Warrants"
and together with the Option Exchange Notes, the "Option") will be issued to
holders of Option Exchange Notes (which Option Exchange Notes may be purchased
through and including December 17, 2005) on the same terms as the current Option
Warrants would have been issued except that the Option Exchange Warrants will
also be exercisable at $2.41 per share of common stock purchased.
The Old Warrants are not exercisable until the date that the share increase
referenced in the Old Notes is filed with the Secretary of State of the State of
Delaware and have an exercise price of $2.98 per warrant share.
Purpose
Our primary purpose in effecting this Exchange Offer is to facilitate compliance
with NASDAQ Marketplace Rule 4350(i)(1)(D)(ii) (the "Rule") to potentially
continue the listing of our Common Stock on The NASDAQ National Market System
("NASDAQ NMS"). On June 29, 2005, the Company and certain members of the NASDAQ
Staff discussed the plan embodied in the attached Exchange Offer Memorandum. The
Staff noted that, if successfully completed, the Staff believed that the plan
would permit the Company to regain compliance with the Rule and potentially to
avoid delisting. The Staff was clear, however, that its advice was informal
guidance only and should not be considered as binding on the NASDAQ.
In the alternative, the Exchange Offer would also assist us to comply with
Section 711 of the American Stock Exchange ("AMEX") Listed Company Guide,
required for initial listing of the Common Stock on the AMEX. The Company has
filed an application to transfer the listing of its Common Stock to the AMEX.
We believe that it is important to the Company and in the best interest of the
holders to continue to list its Common Stock on the NASDAQ NMS or to list its
Common Stock on the AMEX. The Company believes that if the Exchange Offer is
completed and in effect, the Proposed Changes are approved, the Company may
regain compliance with the NASDAQ Marketplace Rule and its Common Stock may
continue to be listed on the NASDAQ NMS or alternatively may be accepted for
listing on the AMEX. There can, however, be no assurance that either will
happen. See "Risk Factors" beginning on page 13 of the attached Exchange Offer
Memorandum.
There is no assurance, even if the Exchange Offer is successfully completed,
that the Company will be able to continue its listing on the NASDAQ NMS or
obtain approval to transfer its listing to the AMEX.
By tendering Old Notes and Old Warrants in the Exchange Offer, you will, in
effect, be agreeing to all of the "Proposed Changes" to the Indenture governing
the Exchange Notes and the warrant agreement governing the Exchange Warrants
(the "Warrant Agreement") described in the attached Exchange Offer Memorandum.
Board Recommendation
Our Board has unanimously determined that this Exchange Offer is advisable and
in the best interest of the Company and respectfully request that you tender
your Old Notes and Old Warrants for Exchange Notes and Exchange Warrants. The
Exchange Offer will terminate on August 3, 2005, unless earlier terminated or
extended pursuant to the terms described in the attached Exchange Offer
Memorandum. The Board, however, requests that you tender your Old Notes and Old
Warrants as early as possible to allow the Company time to address its Common
Stock listing issues.
Sincerely yours,
By: /s/ Cynthia L. Sullivan
-------------------------------------
Cynthia L. Sullivan,
President and Chief Executive Officer
JULY 19, 2005
MORRIS PLAINS, NEW JERSEY
The Exchange Offer is made only by the Exchange Offer Memorandum. Any questions
regarding the procedures for tendering Old Securities or requests for assistance
or for additional copies of this Memorandum and the accompanying Letter of
Transmittal or may be directed to the Exchange Agent and Depositary to be
provided. Holder may also contact the Company at 300 American Road, Morris
Plains, NJ 07950, Attention: Investor Relations, or by telephone at (973)
605-8200, regarding the terms of the Exchange Offer and any related matters.
Immunomedics, Inc. has filed a preliminary proxy statement with the SEC
concerning the special meeting described above. INVESTORS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain the documents free of charge at the website
maintained by the SEC at www.sec.gov. In addition, investors may obtain
documents filed with the SEC by Immunomedics, Inc. free of charge by requesting
them in writing from Immunomedics, Inc. at 300 American Road, Morris Plains, NJ
07950, Attention: Investor Relations, or by telephone at (973) 605-8200.
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AMENDED AND RESTATED EXCHANGE OFFER MEMORANDUM
IMMUNOMEDICS, INC.
AMENDED AND RESTATED EXCHANGE OFFER FOR ALL OUTSTANDING
5% SENIOR CONVERTIBLE NOTES DUE 2008
AND
RELATED COMMON STOCK WARRANTS
Immunomedics, Inc. ("we" or the "Company") is seeking to exchange, subject to
the terms and conditions stated below, its 5% Senior Convertible Notes due 2008
(the "Old Notes") and its warrants to purchase Common Stock (the "Old Warrants"
and together with the Old Notes, the "Old Securities") for a new series of notes
(the "Exchange Notes") and warrants to purchase Common Stock (the "Exchange
Warrants", and together with the Exchange Notes, the "Exchange Securities")
that, if the Exchange Offer is completed, will be identical in all respects to
the Old Securities except for the changes specified in this amended and restated
Exchange Offer Memorandum (this "Memorandum").
In connection with the Company's effort to continue the listing of its Common
Stock ("Common Stock") on The NASDAQ National Market System ("NASDAQ NMS") and,
alternatively, to assist its effort to gain approval for its application to
transfer the listing of its Common Stock to the American Stock Exchange
("AMEX"), as described in more detail below, the Company is seeking consents
from the holders (the "Holders") of the Old Notes and Old Warrants (together the
"Old Securities") to amend the terms of the Old Securities by amending the terms
of the related indenture as more fully described herein. Under the federal
securities laws, such a consent solicitation may be deemed to be an exchange
offer. As a result, this offer is being made in the form of an exchange offer of
the Old Securities for the Exchange Securities.
The terms of the Exchange Securities and the related indenture and warrant
agreement will be identical in all respects to the terms of the Old Securities
and the related indenture and warrant agreement except for the changes specified
below (and described more fully under "Proposed Changes" beginning on page 15 of
the Exchange Offer) and for the fact that the Exchange Notes will have new CUSIP
numbers. As a result, the rights of the Holders of the Old Securities will be
identical to the rights of the holders of the Exchange Securities in all
respects except with respect to the following proposed changes:
. Holders would agree not to convert Exchange Notes into Common Stock
until the Stockholder Vote (described herein).
. In addition, the Company would agree in the indenture to the Exchange
Notes (i) not to enter into a transaction that would otherwise trigger
the "full ratchet" anti-dilution protection contained in Sections
12.3(g) and 12.3(h) thereof until the Stockholder Vote and (ii) to use
best efforts to have the stockholder vote occur by August 29, 2005
(120 days after the initial issuance of the Old Notes and Old
Warrants).
. Holders would agree to amend the definition of "Exercise Period" set
forth in the warrant agreement so that it commences, instead of from
the effective date of the Share Increase to the later of the date that
the Stockholders (i) approve the exercise of the Warrants and (ii) the
effective date of the Share Increase.
. The Company would agree to extend the period during which holders can
purchase additional Exchange Securities to December 17, 2005 from the
date of the current option relating to the Old Securities of August
29, 2005.
. The Company would agree to reduce the exercise price of the Exchange
Warrants (including the option to purchase additional Exchange
Warrants) to $2.41 per warrant share from $2.98 per share for Old
Warrants.
The Exchange Offer will expire at 11:59 p.m., New York City time, on August 3,
2005 (20 business days after the date on which the Exchange Offer is first
published and sent to Holders and 10 business days after the date on which the
amended and restated Exchange offer is first published and sent to Holders),
unless such Exchange Offer is extended by the Company (such time and date, as it
may be extended, the "Expiration Date"). There will be no payment of any kind
made by the Company to any Holder for tendering Old Securities in the Exchange
Offer.
THIS MEMORANDUM CONTAINS IMPORTANT INFORMATION, WHICH SHOULD BE READ CAREFULLY
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE EXCHANGE OFFER.
The Company recommends that each Holder participate in this Exchange Offer by
tendering its Old Securities for Exchange Securities for the reasons stated in
this Memorandum. However, each Holder must make its own decision as to whether
or not to participate in the Exchange Offer.
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IMPORTANT INFORMATION
Any Holder desiring to tender Old Securities should do one of the following:
(a) if the Old Notes (CUSIP No.: 452907 AG 3) and Old Warrants
(CUSIP No.: 452907 14 0) are held by Accredited Investors (as
defined under the Securities Act of 1933), complete and sign the
accompanying Letter of Transmittal or a facsimile copy of the
Letter of Transmittal in accordance with the instructions in the
Letter of Transmittal, mail or deliver it, the certificates and
any other required documents to the Exchange Agent and Depositary
for the Exchange Offer (or transfer such Old Securities pursuant
to the book-entry transfer procedures described herein);
(b) request the Holder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction; or
(c) if the Old Notes (CUSIP No.: 452907 AB 4) and Old Warrants
(CUSIP No.: 452907 14 0) are held by Qualified Institutional
Buyers (as defined under the Securities Act of 1933), tender
through The Depository Trust Company ("DTC") pursuant to DTC's
Automated Tender Offer Program ("ATOP").
For more information about the procedures for participating in the Exchange
Offer, see "Procedures for Tendering" below.
Any questions regarding the procedures for tendering Old Securities or requests
for assistance or for additional copies of this Memorandum and the accompanying
Letter of Transmittal may be directed to the Exchange Agent and Depositary. A
Holder may also contact the Company at 300 American Road, Morris Plains, NJ
07950, Attention: Investor Relations, or by telephone at (973) 605-8200,
regarding the terms of the Exchange Offer and any related matters.
This Memorandum is confidential and is being furnished by Immunomedics, Inc. in
connection with certain exemptions from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act
of 1934, as amended ("Exchange Act"), solely for the purpose of enabling a
Holder of Old Securities to consider accepting the Exchange Offer on the terms
set forth herein. The information contained and incorporated by reference in
this Exchange Offer has been provided by the Company. The Company accepts full
responsibility for the accuracy of the information contained and incorporated by
reference in the Memorandum. No representation or warranty, express or implied,
regarding the accuracy or completeness of the information contained and
incorporated by reference in this Memorandum is made by Law Debenture Trust
Company of New York, a New York Banking corporation, the Trustee under the
indenture, or JPMorgan Chase Bank, N.A., the Registrar, Paying Agent and
Conversion Agent under the indenture for the Old Notes and warrant agent under
the warrant agreement for the Old Warrants, or any financial advisor to the
Company. Nothing contained in this Exchange Offer is, or should be relied upon
as, a promise or representation, whether to the past or future by such persons.
Such persons expressly disclaim any and all liability that may be based on such
information, errors therein or omissions therefrom. Any reproduction or
distribution of this proposal, in whole or in part, and any disclosure of its
contents or use of any information herein for any purpose other than considering
the acceptance of this Exchange Offer is prohibited. Each Holder, by accepting
delivery of this Exchange Offer, agrees to the foregoing.
IMMUNOMEDICS, INC.'S EXCHANGE OFFER IS BEING MADE IN RELIANCE ON ONE OR MORE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
ACCORDINGLY, THIS EXCHANGE OFFER IS BEING DISTRIBUTED ONLY TO HOLDERS BELIEVED
BY IMMUNOMEDICS, INC. TO BE "QUALIFIED INSTITUTIONAL BUYERS" AND "INSTITUTIONAL
ACCREDITED INVESTORS" AS DEFINED IN THE RULES UNDER THE SECURITIES ACT. IN THE
EVENT THAT THIS MEMORANDUM IS DELIVERED TO A PERSON THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, SUCH DELIVERY SHALL
BE FOR INFORMATIONAL PURPOSES ONLY AND NO OFFER OF SECURITIES IS MADE TO SUCH
PERSON. EACH HOLDER TENDERING FOR EXCHANGE SECURITIES PURSUANT TO THE EXCHANGE
OFFER, IN MAKING SUCH TENDER, WILL BE DEEMED TO HAVE MADE CERTAIN
ACKNOWLEDGMENTS, REPRESENTATIONS AND AGREEMENTS AS SET FORTH IN THE LETTER OF
TRANSMITTAL.
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NONE OF THE SECURITIES OFFERED HEREBY HAVE BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE OR FOREIGN SECURITIES AUTHORITY OR
ANY OTHER REGULATORY AUTHORITY, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY SUCH AUTHORITY PASSED UPON THE FAIRNESS OR MERITS OF THE EXCHANGE OFFER
OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS EXCHANGE
OFFER, ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
BECAUSE THE EXCHANGE NOTES AND EXCHANGE WARRANTS HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAWS, NONE OF SUCH
SECURITIES MAY BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR FOREIGN SECURITIES
LAWS. ACCORDINGLY, THE RESALE OF EXCHANGE SECURITIES BY HOLDERS PARTICIPATING IN
THE EXCHANGE OFFER WILL BE RESTRICTED.
THIS EXCHANGE OFFER DOES NOT CONSTITUTE AN EXCHANGE OFFER IN ANY JURISDICTION IN
WHICH, OR FROM ANY PERSON FROM WHOM, IT IS UNLAWFUL TO MAKE SUCH SOLICITATION
UNDER APPLICABLE SECURITIES OR BLUE SKY LAWS.
THE DELIVERY OF THIS STATEMENT SHALL NOT UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN ANY ANNEXES HERETO OR IN THE AFFAIRS OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES SINCE THE DATE HEREOF.
No person has been authorized to give any information or make any representation
on behalf of Immunomedics, Inc., which is not contained in this Memorandum and
if given or made, such information or representation should not be relied upon.
IRS CIRCULAR 230 NOTICE
The discussion contained in this Memorandum as to federal, state and local tax
matters is not intended or written to be used, and cannot be used, for the
purpose of avoiding U.S. federal, state, or local tax penalties. This discussion
is written in connection with the promotion or marketing by the Company of the
transactions or matters addressed in this Memorandum. You should seek advice
based on your particular circumstances from an independent tax advisor.
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EXCHANGE OFFER
Immunomedics, Inc. ("we" or the "Company") is seeking to exchange, subject to
the terms and conditions stated below, for its 5% Senior Convertible Notes due
2008 and its warrants to purchase Common Stock, for a new series of notes and
warrants to purchase Common Stock that, if the Exchange Offer is completed, will
be identical in all respects to the Old Securities except for the changes
specified in this Exchange Offer Memorandum (this "Memorandum").
In connection with the Company's effort to continue the listing of its Common
Stock on The NASDAQ National Market System ("NASDAQ NMS") and to assist its
effort alternatively to gain approval for its application to transfer the
listing of its Common Stock to the American Stock Exchange ("AMEX"), as
described in more detail below, the Company is seeking consents from the holders
(the "Holders") to amend the terms of the Old Securities by amending the terms
of the related indenture and warrant agreement. Under the federal securities
laws, such a consent solicitation may be deemed to be an exchange offer. As a
result, this offer is being made in the form of an exchange offer of the
Exchange Securities for the Old Securities.
Old Securities.......... 5% Senior Convertible Notes due 2008 (the "Old
Notes") issued pursuant to that certain indenture
(the "Indenture"), dated April 29, 2005, among
Immunomedics, Inc., Law Debenture Trust Company of
New York, a New York Banking corporation, as Trustee
(the "Trustee"), and JPMorgan Chase Bank, N.A., as
Registrar, Paying Agent, and Conversion Agent (the
"Agent").
Common Stock Warrants ("Old Warrants") issued
pursuant to that certain Warrant Agreement ("Warrant
Agreement") between Immunomedics, Inc. and JPMorgan
Chase Bank, N.A. as Warrant Agent (the "Warrant
Agent").
Exchange Securities..... A new series of 5% Senior Convertible Notes due 2008
(the "Exchange Notes") to be issued under an
indenture to be entered into among the Company, the
Trustee and the Agent.
A new series of warrants to purchase Common Stock
(the "Exchange Warrants" and, together with the
Exchange Notes, the "Exchange Securities") to be
issued under a warrant agreement to be entered into
between the Company and the Warrant Agent.
The Exchange Offer being made to Holders is to
exchange the same principal amount of Exchange
Securities for Old Securities as each Holder
currently owns.
For all purposes of the Exchange Offer and this
Memorandum, references to the Old Securities and the
Exchange Securities include the related option of the
Holders thereof to purchase additional securities as
the case may be, as specified in the original
purchase agreements (the "Purchase Agreements")
pursuant to which the Old Securities were sold (the
"Option"). The Option will also be a provision of the
Exchange Securities. In addition, if a Holder tenders
any Old Securities, it is required to tender all of
its Old Securities into the Exchange Offer.
PROPOSED CHANGES
The terms of the Exchange Securities and the related indenture and warrant
agreement will be identical in all respects to the terms of the Old Securities
and the related indenture and warrant agreement except for the changes specified
below and for the fact that the Exchange Securities will have new CUSIP numbers.
As a result, the rights of the Holders of the Old Securities will be identical
to the rights of the holders of the Exchange Securities in all respects except
with respect to those changes specified below (the "Proposed Changes"). By
tendering Old Securities in the Exchange Offer, a Holder will, in effect, be
agreeing to all of the Proposed Changes that will be contained in the indenture
and warrant agreement governing the Exchange Securities.
5
Exchange Notes.......... The terms of the Exchange Notes and the related
indenture would differ from the Old Notes and the
related indenture as follows:
Holders would agree not to convert Exchange Notes
into Common Stock until the Stockholder Vote
(described herein). The Company will also agree in
the indenture for the Exchange Notes to use best
efforts to have the special meeting and the related
stockholder votes occur by August 29, 2005 (120 days
after the initial issuance of the Old Notes and Old
Warrants).
The Company would agree to extend the period during
which holders can purchase additional Exchange Notes
to December 17, 2005, from the date of the current
option relating to the Old Notes of August 29, 2005.
In addition, the Company would agree in the indenture
to the Exchange Notes not to enter into a transaction
that would otherwise trigger the "full ratchet"
anti-dilution protection contained in Sections
12.3(g) and 12.3(h) thereof until the Stockholder
Vote.
Exchange Warrants....... The terms of the Exchange Warrants and the related
Warrant Agreement would differ from the Old Warrants
and the related warrant agreement in that Holders
would agree to amend the definition of "Exercise
Period" set forth therein so that it commences,
instead of from the effective date of the Share
Increase to the later of the date that the
Stockholders (i) approve the exercise of the Warrants
and (ii) the effective date of the Share Increase.
The Company would agree to extend the issuance of
Option Exchange Warrants to be concurrent with the
period during which holders can purchase additional
Exchange Notes exercise period which is through
December 17, 2005.
In addition, the Company would reduce the exercise
price of the Exchange Warrants (including the option
to purchase additional Exchange Warrants) to $2.41
per warrant share from $2.98 per share for Old
Warrants.
Proposed Changes........ For a more complete description of the Proposed
Changes, see the "Proposed Changes", beginning on
page 15.
Purpose ................ Our primary purpose in effecting this Exchange Offer
is to facilitate compliance with NASDAQ Marketplace
Rule 4350(i)(1)(D)(ii) (the "Rule") to potentially
continue the listing of our Common Stock on the
NASDAQ NMS. In the alternative, the Exchange Offer
would also assist the Company to comply with Section
711 of the AMEX Listed Company Guide, required for
initial listing of the Common Stock on the AMEX. The
Company has filed an application to transfer the
listing of its Common Stock to the AMEX. There is no
assurance, even if the Exchange Offer is completed,
that the Company will be able to continue its listing
on the NASDAQ NMS or obtain approval to transfer its
listing to the AMEX.
We believe that it is important to the Company and in
the best interest of the Holders to continue to list
its Common Stock on the NASDAQ NMS or to list its
Common Stock on the AMEX. The Company believes that
if the Exchange Offer is completed and in effect, the
Proposed Changes are approved, the Company may regain
compliance with the NASDAQ Marketplace Rule and its
Common Stock may continue to be listed on the NASDAQ
NMS or alternatively may be accepted for listing on
the AMEX. There can, however, be no assurance that
either will happen. See "Risk Factors" beginning on
page 13.
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Requisite Participation. The closing of the Exchange Offer requires the
participation of, and tender of Old Securities by,
all Holders (the "Requisite Participation").
EXPIRATION; CONDITION; CLOSING DATE
Expiration of Exchange.. The Exchange Offer will expire at 11:59 p.m., New
York City time, on August 3, 2005, (20 business days
after the date on which the Exchange Offer is first
published and sent to Holders and 10 business days
after the date on which the amended and restated
Exchange offer is first published and sent to
Holders), unless such Exchange Offer is extended
(such time and date, as it may be extended, the
"Expiration Date"). There will be no payment of any
kind made by the Company to any Holder for tendering
Old Securities in the Exchange Offer.
On the Expiration Date, subject to obtaining the
Requisite Participation, the Company will proceed to
issue the Exchange Securities and affect the Proposed
Changes.
If we make a material change in the terms of the
Exchange Offer or there occurs a material change in
the information concerning the Exchange Offer, or if
we waive a material condition of the Exchange Offer,
we will extend the Exchange Offer to the extent
required under the Exchange Act.
Condition............... The only condition to the closing of the Exchange
Offer is the receipt of the Requisite Participation
in the Exchange Offer.
Closing Date............ The closing date will be within five business days
after the Expiration Date, assuming that the
condition precedent has been satisfied.
PROCEDURES FOR TENDERING THE OLD SECURITIES
Procedures.............. Any Holder desiring to tender Old Securities should
do one of the following:
(a) if the Old Notes (CUSIP No.: 452907 AG 3) and Old
Warrants (CUSIP No.: 452907 14 0) are held by
Accredited Investors (as defined under the Securities
Act of 1933), complete and sign the accompanying
Letter of Transmittal or a facsimile copy of the
Letter of Transmittal in accordance with the
instructions in the Letter of Transmittal, mail or
deliver it, the certificates and any other required
documents to the Exchange Agent and Depositary for
the Exchange Offer (the "Exchange Agent" and
"Depositary") (or transfer such Old Securities
pursuant to the book-entry transfer procedures
described herein);
(b) request the Holder's broker, dealer, commercial
bank, trust company or other nominee effect the
transaction; or
(c) if the Old Notes (CUSIP No.: 452907 AB 4) and Old
Warrants (CUSIP No.: 452907 14 0) are held by
Qualified Institutional Buyers (as defined under the
Securities Act of 1933), tender through The
Depository Trust Company ("DTC") pursuant to DTC's
Automated Tender Offer Program ("ATOP").
Withdrawal Rights....... Tenders may be withdrawn at any time prior to the
Expiration Date. To be effective, the Exchange Agent
and Depositary must receive a written or facsimile
notice of withdrawal by 11:59 p.m. on the Expiration
Date. See "Withdrawal of Tenders."
For more information about procedures for tendering,
withdrawal of tenders and related matters, see
"Procedures for Tendering."
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MISCELLANEOUS
Exchange Agent
and Depositary.......... The name, address and contact information for the
bank that will serve as the Exchange Agent and
Depositary for the Exchange Offer will be provided
under separate cover.
Questions &
Additional Copies ...... Any questions regarding the procedures for tendering
Old Securities or requests for assistance or for
additional copies of this Memorandum and the
accompanying Letter of Transmittal or may be directed
to the Exchange Agent and Depositary. Holder may also
contact the Company at 300 American Road, Morris
Plains, NJ 07950, Attention: Investor Relations, or
by telephone at (973) 605-8200, regarding the terms
of the Exchange Offer and any related matters.
8
THE COMPANY
Immunomedics, Inc. (the "Company," "we," "our," or "us") is a New Jersey-based
biopharmaceutical company focused on the development of monoclonal
antibody-based products for the targeted treatment of cancer, autoimmune and
other serious diseases. We have developed a number of advanced proprietary
technologies that allow us to create humanized antibodies that can be used
either alone in unlabeled or "naked" form, or conjugated with radioactive
isotopes, chemotherapeutics or toxins, in each case to create highly targeted
agents. Using these technologies, we have built a pipeline of therapeutic
product candidates that utilize several different mechanisms of action. Our lead
product candidate, epratuzumab, is currently in two pivotal Phase III trials,
for the treatment of patients with moderate and severe lupus. At present, there
is no cure for lupus and no new lupus drug has been approved in the U.S. in the
last 40 years. We believe that our portfolio of intellectual property, which
includes approximately 90 issued patents in the United States, and more than 250
other issued patents worldwide, protects its product candidates and
technologies.
Our proprietary technologies have also enabled us to develop highly specific
diagnostic imaging agents, one of which, CEA-Scan(R), has been approved for use
in the United States, Canada and the European Union, where it is currently being
marketed for the detection of colorectal cancers. Our second diagnostic product,
LeukoScan(R), has been approved in Europe, Australia, Canada and the Middle East
where it is currently being marketed for the detection of bone infections. The
sale of diagnostic imaging agents is not a critical part of our business;
however, these diagnostic products provide revenues that offset a portion of our
expenditures on our therapeutic product candidates.
On January 5, 2005, the Company received notice from the U.S. Food and Drug
Administration approving Fast Track Product designation of epratuzumab for the
treatment of patients with moderate and severe systemic lupus erythematosus.
Accordingly, the Company's requirement for substantial additional capital for
research and development expenses and initially to fund commencement of Phase
III clinical trials of epratuzumab for the treatment of patients with moderate
and severe lupus increased substantially. The issuance of the Old Securities was
vital to executing our development plans for epratuzumab, and allowing us
flexibility and leverage to advance trials, as well as to affording us a base to
negotiate with potential strategic development partners. Our choice to pursue
the foregoing and to issue the Old Securities at that juncture in our research
and development program has allowed us to continue evaluating potential
strategic partnerships without delaying the Phase III clinical trials.
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BACKGROUND
THE APRIL FINANCING
On April 29, 2005, we issued $37,675,000 million principal amount of Old Notes
and Old Warrants in a private placement exempt from the registration
requirements of the Securities Act (the "April Financing"). We reserved
approximately 8.9 million shares of our authorized and unissued Common Stock for
conversion of the Old Notes, which represents all of our currently available
authorized and unissued Common Stock. To convert all of the Old Notes
outstanding at the initial conversion price, we require approximately 14.39
million shares of Common Stock, or approximately 5.5 million shares more than we
currently have available under Delaware law. The Old Notes are convertible at
the option of the Holders on a first-come, first served basis up to the 8.9
million shares reserved for issuance as described above, subject to the Share
Increase (defined below).
At the closing of the April Financing on April 29, 2005, we deposited with an
escrow agent in an interest bearing account $14.3 million of the net proceeds of
the April Financing, which amount represents the approximate portion of the
original principal amount of the Old Notes that we would be unable to convert in
the event we do not obtain an affirmative stockholder vote to the Share
Increase. If the Share Increase is not effected we will be subject to the
"alternatives" under the indenture, which are an increase in the interest rate
on the Old Notes from 5% to a maximum of 15% annually, in 1% (on an annualized
basis) monthly increments beginning on August 29, 2005, and eventually, on
January 15, 2007, a right of the Holders to "put" their Old Notes to us at any
time and from time-to-time in the future.
For each $1,000 principal face amount of Old Notes purchased, the purchaser
received an Old Warrant to purchase approximately 76.39 shares of Common Stock.
The Old Warrants are exercisable commencing on the effective date of filing with
the Secretary of State of the State of Delaware effecting a share increase of
not less than 5.5 million shares (the "Share Increase"). The Old Warrants are
detachable from the Old Notes and may be traded separately subject to certain
restrictions on transfer. The Old Warrants expire in any event on April 27, 2008
and are exercisable at $2.98 per share of Common Stock, subject to specified
adjustments.
Each purchaser was also granted a 120-day option to purchase up to an amount
equal to 20% of the Old Notes and Old Warrants purchased by such purchasers at
the initial closing (the "Option") at the offering price plus accrued interest.
At closing, we retired our outstanding $10 million principal amount of 3.25%
Convertible Notes due January 2006 (the "2006 Notes") by paying to the holder
thereof approximately $5.09 million from the proceeds of the offering and
issuing to the holder a 2008 Note in the original principal amount of $5.0
million (the cash represented $5 million face value of the 2006 Notes plus
interest accrued on the 2006 Notes through April 29, 2005).
Interest
Interest on the Old Notes is payable semi-annually in arrears and, if the Share
Increase is approved, may be paid at our discretion, in cash or shares of our
Common Stock that would be valued at 95% of the daily volume weighted average
price of our Common Stock over the three trading day period ending on the
trading day prior to the interest payment date. The initial conversion price of
the Old Notes is $2.62. The Old Notes are exercisable at the option of the
holders on a first-come, first served basis up to the 8.9 million shares
reserved for issuance as described above, subject to the Share Increase. After
obtaining the Requisite Participation, we may also cause the holders to convert
the Old Notes into shares of Common Stock prior to the maturity date, if for at
least 20 trading days in any consecutive 30 trading day period, the current
stock price exceeds 150% of the conversion price on such 30th trading day. Upon
conversion, in addition to principal and accrued but unpaid interest, holders
will receive a lump sum payment equal to the amount of interest that would have
otherwise accrued on the Old Notes for the remainder of the 3 year term, payable
at our election in cash or in shares of Common Stock (valued as set forth
below).
10
Immunomedics' Right to Elect to Cause Conversion of the Old Notes; Holders'
Right to Elect to Convert the Old Notes
Under the indenture for the Old Notes, we have the right under certain
circumstances to require the Holder to convert their Old Notes into our Common
Stock. If the Old Notes are converted into Common Stock at our election, the
stock issued upon conversion will be valued at the greater of (i) $3.93 (subject
to adjustment as provided in that indenture) and (ii) 95% of the daily volume
weighted average price of our Common Stock for the three day period beginning on
and including the trading day prior to the conversion date, to and including the
trading day following the conversion date. If the conversion is at the Holder's
option, the stock issued upon conversion will be valued at the greater of (i)
$2.38, and (ii) 95% of the daily volume weighted average price of our Common
Stock for the three day period beginning on and including the trading day prior
to the conversion date, to and including the trading day following the
conversion date.
Anti-Dilution Provisions
If, while any Old Notes or Old Warrants are outstanding, we issue Common Stock
or securities convertible into or exchangeable or exercisable for Common Stock,
at a price per share less than the then applicable conversion or exercise price
in effect for the Old Notes and Old Warrants, respectively, the conversion price
of the outstanding Old Notes and exercise price of the Old Warrants will be
adjusted to such price. In addition, the Old Notes and Old Warrants contain
customary anti-dilution provisions relating to stock dividends, stock splits and
similar matters.
Participation
Furthermore, if we propose to issue additional securities in the future (other
than under the Option described above and stock issuances under our long-term
stock incentive plan) for a price per share less than the conversion price or
exercise price at that time in effect with respect to the Old Notes and Old
Warrants, we are required to give the holders thereof at least 10 days' prior
notice detailing the proposed issuance. Each holder has the option, exercisable
within five days of such notice, to subscribe for an amount of securities equal
to such Holder's pro rata percentage of shares outstanding on an as-if-converted
basis on terms not materially less beneficial to the Holder than those set forth
in the notice.
Registration Rights
We entered into a registration rights agreement with the Holders of the Old
Notes, Old Warrants and Common Stock issuable upon conversion of the Old Notes
or exercise of the Old Warrants to register the resale of these securities
pursuant to a shelf registration statement that we have agreed to use our best
efforts to file by August 29, 2005, and cause to be effective under the
Securities Act of 1933 by October 27, 2005. If, on or prior to August 29, 2005,
we have not filed the shelf registration statement with the SEC, or if on or
prior to October 27, 2005, the shelf registration statement has not been
declared effective by the SEC, we will be subject to successive 0.5% per month
increases in the interest rate payable on the 2008 Notes, to a maximum of an
additional 2.0% per annum.
Lock-ups
Pursuant to the terms of the April Financing, the Company and two of our
executive officers and directors (Dr. David M. Goldenberg and Ms. Cynthia L.
Sullivan) agreed (subject to certain limited exceptions) not to offer or sell,
directly or indirectly, any shares of Common Stock or Company debt securities
owned by them until the later of (i) 90 days from the initial closing date, and
(ii) the date on which all of the 2008 Notes and Common Stock issuable upon
conversion of the Old Notes or exercise of the Old Warrants are registered under
the Securities Act of 1933.
NASDAQ ADDITIONAL LISTING NOTIFICATION
On May 19, 2005, the Company received a letter from the listing qualifications
staff ("Staff") of The NASDAQ Stock Market, Inc. ("NASDAQ") notifying the
Company that the Staff believed that April Financing was deficient with respect
to its shareholder voting requirements for continued listing. The Staff stated
that it believed that the April Financing did not comply with NASDAQ Marketplace
Rule 4350(i)(1)(D)(ii) (the "Rule"). The Rule provides that stockholders must
approve an issuance of securities other than a public offering when the sale,
issuance or potential issuance by the Company of Common Stock or securities
convertible into or exercisable for Common Stock equals 20% or more of the
Common Stock or 20% or more of the voting power outstanding before the issuance
for less than the greater of book or market value of the stock outstanding
before the issuance of the stock or securities. During the weeks following the
Company's receipt of the May 19 letter, the Company engaged in various
discussions with, and submitted various letters in response to, the Staff making
all possible efforts to address the issues raised by the May 19 letter,
including a specific written plan and timetable. Although the Company believed
it had submitted a detailed plan and timetable responsive to various discussions
with the Staff, the Company received a notice of delisting from the NASDAQ NMS
on June 10, 2005.
11
On May 25, 2002, the Company filed a Current Report on Form 8-K announcing that
it received a letter on May 19, 2005, from the Staff stating that the Staff
believed the Company may have violated NASDAQ's shareholder approval rules.
Specifically, the Staff commented that the anti-dilution protections contained
in the Indenture and Warrant Agreement have the effect of potentially reducing
the conversion price of the Old Notes and exercise price of the Old Warrants to
a price below market value on the date of issue which, under the NASDAQ Rule,
requires prior shareholder consent.
On June 3, 2005, the Company submitted a plan and timeline (which it
subsequently supplemented and amended on June 9, 2005) intended to regain
compliance with the Rule. On June 10, 2005, the Company received a letter from
the Staff advising that the Staff believed that the Company's plan would not
definitively achieve compliance with the Rule. As a result, the Staff determined
that the Company did not provide a definitive plan to regain compliance and that
the Company's securities would be delisted from the NASDAQ NMS on June 21, 2005
unless, by June 17, 2005, the Company requested a hearing before NASDAQ's
Listing Qualifications Panel (the "Panel").
The position of the Staff is that the 'full ratchet" anti-dilution provision of
the indenture and warrant agreement could potentially reduce the conversion
price to below market value without stockholder approval. As a result, the Staff
stated that the April Financing violated the Rule. The Company had planned,
pursuant to the terms of the Indenture, to hold a special meeting of
stockholders to increase its authorized and unissued Common Stock sufficient to
cover the conversion of all Old Notes and exercise of the Old Warrants by
obtaining approval at the special meeting and by amending its certificate of
incorporation to effect that share increase, with the proviso that, (1) if it
did not effect the Share Increase by August 29, 2005, additional interest would
accrue on the Old Notes at an annualized rate of 1% per month, increasing by an
additional annualized 1% monthly thereafter, up to a maximum aggregate interest
rate of 15% and (2) if the Share Increase did not occur by January 15, 2007,
holders would have the right to require the Company to purchase the Old Notes,
in whole or in part, at any time or from time-to-time, at 100% of their
principal amount plus any accrued and unpaid interest to the repurchase date.
On June 16, 2005, the Company initiated an appeal of the Staff determination by
requesting a hearing before a NASDAQ listing and qualification panel (the
"Panel") pursuant to the procedures set forth in the NASDAQ Marketplace Rules.
This appeal temporarily suspends the delisting pending the Panel's decision.
Within 45 days of the filing, the Panel may schedule a hearing. The Company may
also appeal an adverse Panel ruling to NASDAQ Listing and Hearing Review Council
(the "Council"), but, such an appeal would likely not further delay a delisting
order nor is the Council required to entertain such appeal.
On June 29, 2005, the Company and certain members of the Staff discussed the
terms of this Exchange Offer. The Staff noted that, if successfully completed,
the Staff believed that the plan would permit the Company to regain compliance
with the Rule and potentially to avoid delisting. The Staff was clear, however,
that its advice was informal guidance only and should not be considered as
binding on the NASDAQ.
On July 6, 2005, the Company initiated an offer, which it amended and restated
on July [19], 2005, to exchange its 2008 Notes and its related warrants for a
new series of notes ("Exchange Notes") and warrants ("Exchange Warrants"),
which, if the exchange offer is completed, will be materially the same as the
securities initially issued except for limited changes specified in the exchange
offer memorandum distributed to holders of the 2008 Notes and Warrants (the
"Exchange Offer Memorandum") and described briefly below.
The Company has undertaken, and will continue to undertake, all possible efforts
to address the Staff's concerns and comply with NASDAQ's continued listing
requirements and also to appeal the delisting notification. The Company believes
that despite its best efforts, it may not be able to satisfy the Staff's
requirements for continued listing on the NASDAQ NMS. In addition, the Company
believes that it is premature to evaluate its chances of success on appeal.
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TRANSFER OF LISTING TO THE AMEX
The Company believes that despite its best efforts to appeal the NASDAQ Staff's
decision, it may not be able to persuade NASDAQ to accept the Company's
position, nor satisfy the Staff's requirements for continued listing on the
NASDAQ NMS. The Company therefore has explored with the AMEX the potential for
transferring the listing of its Common Stock to the AMEX. The Company will
continue to pursue its potential application to list its Common Stock on the
AMEX, which it filed with the AMEX on June 3, 2005.
There is no assurance that the Company's listing application will be approved by
the AMEX or that, if it is approved, such approval will be obtained before the
effective date of the delisting of its Common Stock from the NASDAQ NMS.
PROXY STATEMENT & SPECIAL MEETING OF STOCKHOLDERS
Pursuant to the indenture for the Old Notes and in connection with its attempt
to regain compliance with the NASDAQ Rule, to continue listing on the NASDAQ NMS
or alternatively to obtain initial listing on the AMEX, the Company has called a
special meeting of stockholders scheduled for August 19, 2005 (the "Special
Meeting"), for the issuance of Common Stock upon conversion of Exchange Notes
and exercise of the Exchange Warrants, in accordance with their respective
terms. On June 15, 2005, the Company filed with the SEC preliminary proxy
material and intends to hold the special meeting as soon after completion of the
SEC's review as possible.
Stockholders will be asked at the Special Meeting to approve an amendment to the
Company's certificate of incorporation to increase by 40 million shares the
number of shares of Common Stock authorized therein from 70 million to 110
million shares, which shall include an increase of 5.5 million shares required
under the terms of the April Financing, and to authorize the conversion into
Common Stock of the Exchange Notes and exercise of the Exchange Warrants (such
proposals to be submitted to stockholder vote, the "Proposals").
A portion of the forty million shares will be reserved for conversions of the
Exchange Notes and exercises of the Exchange Warrants (including Option Exchange
Notes and Option Exchange Warrants) as well as additional shares of Common Stock
for general corporate purposes.
13
RISK FACTORS
Prior to deciding whether to participate in the Exchange Offer, Holders should
consider carefully the following factors as well as other matters contained and
incorporated by reference in this Memorandum. These risks are not intended to
represent a complete list of the general or specific risks that may affect
Holders who participate or do not participate in the Exchange Offer.
RISKS TO HOLDERS NOT EXCHANGING THEIR OLD SECURITIES FOR EXCHANGE SECURITIES
NASDAQ Delisting
If we are not successful in the Exchange Offer, we believe we will not be
successful on appeal of the NASDAQ Staff delisting determination. Under any
circumstances, however, we cannot assure you that, even if the Exchange Offer is
consummated and we receive the approval of our stockholders at the Special
Meeting for the Proposals, that we will be successful in such appeal.
Notwithstanding that, the failure of the Exchange Offer will impair the
likelihood of success on appeal with the NASDAQ. If our Common Stock is not
listed on the NASDAQ NMS, we will face the following additional consequences:
. We will have higher cash expenses due to the increase in the interest
rate on the Old Notes, which interest expense we will also not be able
to satisfy by the payment of Common Stock as the related indenture
would otherwise permit.
. We may have to repurchase the Old Notes in satisfaction of the
Holders' rights to require that we repurchase these securities on and
after January 15, 2007 for 100% of the principal amount plus unpaid
and accrued interest to the repurchase date. Only a portion of the
funds that would be necessary to make such repurchases is in escrow,
as described below. We cannot assure you that we would have access to
sufficient funds to repurchase the Old Notes if they were all put to
us as described in this paragraph. In that event, we would be in
default under the related indenture, which could give rise to an event
of default thereunder and possibly to cross-defaults or
cross-accelerations to other agreements.
. As a result of the above, we would have less cash (possibly an
insufficient amount) to fund the ongoing clinical trials of our lupus
drug, epratuzumab, and to find any of our other operations at that
time.
. The delisting of our Common Stock from the NASDAQ NMS and the failure
of the Exchange Offer (as well as the failure to receive stockholder
approval of the Proposals) may negatively affect our chance of being
accepted for listing on the AMEX. Even if our listing application with
the AMEX is accepted, we cannot assure you of the timing of that
acceptance.
If our stock is not accepted for listing on either the NASDAQ NMS or the AMEX,
we will make every possible effort to have it listed on the "OTC Bulletin
Board". If our Common Stock were to be traded on the OTC Bulletin Board, the
Exchange Act and related SEC rules would impose additional sales practice
requirements on broker-dealers that sell our securities. These rules may
adversely affect the ability of stockholders to sell our Common Stock and
otherwise negatively affect the liquidity, trading market and price of our
Common Stock.
If our Common Stock would not be able to be traded on the OTC Bulletin Board, we
would make every effort to have it available for trading on the National
Quotation Bureau's "Pink Sheets". The Pink Sheets Market consists of security
firms who act as market makers in the stocks, usually, of very small companies.
The bid and asked prices are not quoted electronically, but are quoted daily in
"hard copy" which is delivered to firms that subscribe. Stocks that trade in the
Pink Sheets are usually not as liquid as those that trade in electronic markets
and, often time, the difference between the bid and the asked prices are
substantial. As a result, if our Common Stock were traded on the Pink Sheets,
there would likely be a further negative affect on the liquidity, trading market
and price of our Common Stock even compared to that we might suffer if we were
traded on the OTC Bulletin Board.
14
As a result of the above, we cannot assure you that our Common Stock will be
listed on a national securities exchange, a national quotation service, the OTC
Bulletin Board or the Pink Sheets or, if it is to be listed, whether or not
there would be an interruption in the trading of our Common Stock. We believe
that the listing our stock on a recognized national trading market, such as the
NASDAQ NMS or the AMEX, is an important part of our business and strategy. Such
a listing helps our stockholders by providing a readily available trading market
with current quotations. Without that, stockholders may have difficult time
getting a quote for the sale or purchase of our stock, the sale or purchase of
our stock would likely be made more difficult and the trading volume and
liquidity of our stock would likely decline. The absence of such a listing may
adversely affect the acceptance of our Common Stock as currency or the value
accorded it by other parties. In that regard, listing on a recognized national
trading market will also affect the Company's ability to benefit from the use of
its operations and expansion plans, including for use in licensing agreements,
joint ventures, the development of strategic relationships and acquisitions,
which are critical to our business and strategy and none of which is currently
the subject of any agreement, arrangement or understanding, any future financing
or strategic relationship it may undertake. The delisting from NASDAQ NMS and
the inability to become listed on the AMEX would result in negative publicity
and would negatively impact our ability to raise capital in the future.
If we were delisted from the NASDAQ NMS, and fail to list on the AMEX, we may
become subject to the trading complications experienced by "Penny Stocks" in the
over-the-counter market."
Delisting from the NASDAQ NMS and failure to list on the AMEX may depress the
price of our Common Stock such that we may become a penny stock. The SEC
generally defines a penny stock as an equity security that has a market price of
less than $5.00 per share or an exercise price of less than $5.00 per share,
subject to specific exemptions. The market price of our Common Stock is
currently less than $5.00 per share. "Penny Stock" rules require, among other
things, that any broker engaging in a purchase or sale of our securities provide
its customers with: (i) a risk disclosure document, (ii) disclosure of market
quotations, if any, (iii) disclosure of the compensation of the broker and its
salespersons in the transaction and (iv) monthly account statements showing the
market values of our securities held in the customer's accounts.
A broker would be required to provide the bid and offer quotations and
compensation information before effecting the transaction. This information must
be contained on the customer's confirmation. Generally, brokers are less willing
to effect transactions in penny stocks due to these additional delivery
requirements. These requirements may make it more difficult for stockholders to
purchase or sell our Common Stock. Because the broker, not us, prepares this
information, we would not be able to assure that such information is accurate,
complete or current.
RISKS TO HOLDERS EXCHANGING THEIR OLD SECURITIES FOR EXCHANGE SECURITIES
If the Exchange Offer is completed, the Proposed Change affords Holders of the
Old Securities fewer rights than those they currently have.
In the event that the Exchange Offer is completed, the conversion right, as set
forth in the indenture and exercise right, as set forth in the warrant agreement
for the Old Securities, will be limited. Holders will be prohibited from
converting any of their Exchange Notes prior to a vote of our stockholders at a
special meeting where the Company will seek to approve both (i) an increase in
our authorized capital, and (ii) conversion of the Exchange Notes and exercise
of the Exchange Warrants into Common Stock. Holders will be prohibited from
exercising any of their Exchange Warrants prior to an affirmative vote of our
stockholders at a special meeting approving both (i) an increase in our
authorized capital, and (ii) conversion of the Exchange Notes and exercise of
the Exchange Warrants into Common Stock.
Successful completion of this Exchange Offer does not guarantee listing on the
NASDAQ NMS or the AMEX.
Even if we are successful in seeking this Exchange Offer, we may not remain
listed on the NASDAQ NMS or become listed on the AMEX, because of the following:
. Staying listed on the NASDAQ NMS through appeal will likely require
getting stockholder approval of both Proposals at the Special Meeting,
and there is no assurance that we will receive those approvals.
15
. Even if we are successful in closing the Exchange Offer and receiving
stockholder approval of both Proposals, we cannot assure you that we
will be successful in staying listed on the NASDAQ NMS or getting
listed on the AMEX, as both are discretionary acts by the respective
stock market administrators.
The Amendment to the indenture may limit the Holders' upside leverage.
If our stockholders approve the Proposal as described above, Holders will be
prohibited from partaking in the upside potential of their investment prior to
the Stockholder Vote even if the price of our Common Stock rises above the
conversion price of the Old Notes.
Conversion of Exchange Notes and exercise of Exchange Warrants may be limited if
our Stockholders fail to approve the Proposals.
If the Exchange Offer is completed but our Stockholders fail to approve either
or both of the Proposals, Holders will be limited to approximately 8.9 million
shares of Common Stock for conversion of the Exchange Notes, which will be on a
first-come, first-served, basis. Under those circumstances, the Exchange
Warrants will not be exercisable.
There will be tax implications for the Holders if the Exchange Offer is deemed
to result in the issuance of "new securities."
It is possible that the adoption of the Proposed Changes would be treated as
resulting in a deemed exchange of the Old Notes for Exchange Notes for federal
income tax purposes reflecting the adoption of the Proposed Changes, with
respect to which U.S. Holders would recognize taxable short-term capital gain or
loss in the taxable year that the Proposed Changes are adopted. Such a gain may
include all or a portion of the original issue discount, if any, arising upon
the original issuance of Old Notes attributable to any allocation of purchase
price of the Old Notes and Warrants to the Warrants to the extent not previously
included in income. For further discussion of tax implications, see "Certain
U.S. Federal Income Tax Considerations for U.S. Holders" on page 21.
16
PROPOSED CHANGES
If the Exchange Offer is completed, the terms of the Exchange Securities
and the related indenture and warrant agreement will be identical in all
respects to the terms of the Old Securities and the related indenture and
warrant agreement except for the changes specified below and for the fact that
the Exchange Securities will have new CUSIP numbers. As a result, the rights of
the Holders of the Old Securities will be identical to the rights of the holders
of the Exchange Securities in all respects except with respect to the Proposed
Changes. By tendering Old Securities in the Exchange Offer, a Holder will be
agreeing to all of the Proposed Changes that will be contained in the indenture
and warrant agreement governing the Exchange Securities.
THE INDENTURE
Section 1.1.... Insert the following additional definitions in alphabetical
order in Section 1.1.
""Conversion Approval" has the meaning set forth in 6.9(a)."
""Stockholder Vote" has the meaning set forth in 6.9(a)."
In addition, corresponding and correlative changes to the
indenture for the Exchange Notes will be made to the
definitions and use of defined terms as a result of the other
changes set forth in this section.
Section 2.1.... Delete the third sentence of Section 2.1 and replace it with
the following:
"On the initial Issue Date, the Company shall issue
$37,675,000 Principal Amount of Securities and may issue up to
an additional $7,535,000 of Securities for a period beginning
on the initial Issue Date and ending December 17, 2005.
Pursuant to the terms of the Purchase Agreements, each
Purchaser was granted an option to purchase up to an
additional 20% principal amount of Securities (which option
may be exercised through and including December 17, 2005).
This option to purchase additional Securities granted as of
the date hereof shall be in the same proportion to the
principal amount of securities originally issued pursuant to
the Purchase Agreements."
Section 6.9.... Delete Section 6.9 in its entirety and replace it with the
following:
"Section 6.9 Share Increase; Conversion Approval. (a) As soon
as possible after the initial Issue Date, the Company will use
its best efforts to obtain, at a special meeting of
stockholders called for such purpose (and we will use best
efforts to have the special meeting and related stockholder
votes occur by August 29, 2005), stockholder approval (the
"Stockholder Vote") for authorization (i) to increase the
Company's authorized capital by at least 5,500,000 additional
shares of its Common Stock and (ii) to permit the conversion
of the Securities into Common Stock (the "Conversion
Approval"). Following the receipt of stockholder approval to
increase the Company's authorized capital pursuant to (i)
above, the Company shall amend its certificate of
incorporation to effectuate the approved authorized capital
increase (the "Share Increase"). The Company will promptly
provide to the Conversion Agent (for dissemination to
Holders), if and when each event has occurred, an Officer's
Certificate certifying that (x) the Stockholder Vote has been
taken, (y) the Conversion Approval has been obtained and (z)
the Share Increase has been effected. In the event that the
Company has not effected the Share Increase and obtained
Conversion Approval within 120 days following the initial
Issue Date, Additional Interest shall accrue and become
payable upon the Securities in addition to the Initial
Interest Rate, at an annual rate of 1%. Such additional
interest shall increase by an additional 1% per annum every
thirty (30) days thereafter up to a maximum aggregate interest
of 15% per annum. Upon the Company's effecting of the Share
Increase and obtaining Conversion Approval, the interest rate
on the Securities shall immediately return to the Initial
Interest Rate (subject to the imposition of Additional
Interest pursuant to the terms of the Registration Rights
Agreement or for other reasons).
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(b) In the event that the Share Increase and Conversion
Approval has not been obtained by January 15, 2007, (an
"Authorization Default") Holders shall have the right to
require the Company to purchase their Notes, in whole or in
part, at any time or from time-to-time, on the terms and in
the manner set forth in Article IV hereof."
Insert the following covenant immediately subsequent to Section 6.11:
"Section 6.12 Dilutive Events. The Company will not, prior to
the Stockholder Vote, enter into any transaction that would
immediately result in a reduction in the Conversion Price
contemplated in Section 12.3(g)-(h)."
Section 12.1... Delete Section 12.1 in its entirety and replace it with the
following:
"Section 12.1 Conversion Right. (a) Prior to the Stockholder
Vote, no Notes may be converted, or Warrants exercised, into
Common Stock.
(b) After the Stockholder Vote and prior to the Stated
Maturity, subject to and upon compliance with the provisions
of this Article XII, a Holder of a Security shall have the
right, at such Holder's option, to convert all or any portion
(if the portion to be converted is $1,000 or an integral
multiple of $1,000) of such Security into Common Stock at the
Conversion Price then in effect, subject to adjustment as
specified herein.
(c) In the event that the Current Stock Price for at least 20
Trading Days in any consecutive 30 Trading Day period (which
30-Trading Day period begins after the date of the later of
the Share Increase and the Conversion Approval, and while a
Registration Statement (as defined in the Registration Rights
Agreement) is effective and available for all Registrable
Securities held by Notice Holders (each as defined in the
Registration Rights Agreement)), including on such 30th
Trading Day, exceeds 150% of the Conversion Price in effect on
such 30th Trading Day, the Company may elect to convert Notes,
in whole or in part, into shares of Common Stock on or prior
to the Trading Day preceding the Stated Maturity."
THE WARRANT AGREEMENT
Section 1.01 Delete Section 1.01(a) in its entirety and replace it with the
following:
"Issuance of Warrants. (a) Pursuant to the terms of the
Purchase Agreements, the Company will sell to each of the
Purchasers multiples of (i) $1,000 in aggregate principal
amount of Notes together with (ii) a Warrant to purchase
76.394 shares of Common Stock per $1,000 principal amount of
Notes, at the Exercise Price set forth in Section 2.01. In
addition, pursuant to the terms of the Purchase Agreements,
each Purchaser was granted an option to purchase up to an
additional 20% principal amount of Notes (which option may be
exercised through and including December 17, 2005) and
currently therewith will be granted an option to purchase
additional Warrants to purchase an additional 20% of Warrant
Shares of the amount initially issued until such date. This
option to purchase additional Warrants to purchase additional
Warrant Shares granted as of the date hereof shall be in the
same proportion to the principal amount of warrants originally
issued pursuant to the Purchase Agreements."
18
Section 2.01 Delete Section 2.01 in its entirety and replace it with the
following:
"Exercise Price. The initial exercise price of each Warrant
shall equal $2.41 per Warrant Share, subject to customary
adjustment for dilutive events."
Section 2.02. Delete Section 2.02 in its entirety and replace it with the
following:
"Duration of Warrants. Each Warrant may be exercised in whole
or in part on any Business Day (as defined below) occurring
during the period (the "Exercise Period") commencing on the
later of the effective date of the Share Increase and the
Exercise Approval (each as defined below), and ending at 5:00
P.M., New York time, on the third anniversary of the issuance
of the Securities (the "Expiration Date"). Each Warrant
remaining unexercised after 5:00 P.M., New York time, on the
Expiration Date shall become void, and all rights of the
Holder under this Agreement shall cease.
As used herein, the term (i) "Business Day" means any day
which is not a Saturday or Sunday and is not a legal holiday
or a day on which banking institutions generally are
authorized or obligated by law or regulation to close in New
York, (ii) "Share Increase" means the approval by the
Company's stockholders to increase the Company's authorized
capital by at least 5,500,000 additional shares of Common
Stock at a special meeting of stockholders called for such
purpose and, following the receipt of such shareholder
approval, the amendment of the Company's certificate of
incorporation to effectuate the approved authorized capital
increase and (iii) "Exercise Approval" means the approval by
the Company's stockholders to permit the exercise of the
Warrants into Common Stock."
19
PROCEDURES FOR TENDERING
OVERVIEW
A Holder may tender Old Securities for Exchange Securities in the Exchange Offer
pursuant to one of the procedures set forth below. Such tender will constitute
an agreement between such Holder and the Company in accordance with the terms
and subject to the conditions set forth in this Memorandum.
PROCEDURES
Any Holder desiring to tender Old Notes should do one of the following:
(a) if the Old Notes (CUSIP No.: 452907 AG 3) and Old Warrants
(CUSIP No.: 452907 14 0) are held by Accredited Investors (as
defined under the Securities Act of 1933), complete and sign
the accompanying Letter of Transmittal or a facsimile copy of
the Letter of Transmittal in accordance with the instructions
in the Letter of Transmittal, mail or deliver it and any other
required documents to the Exchange Agent and Depositary and
deliver the certificates for the tendered Old Securities to
the Exchange Agent and Depositary (or transfer such Old
Securities pursuant to the book-entry transfer procedures
described herein);
(b) request the Holder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction; or
(c) if the Old Notes (CUSIP No.: 452907 AB 4) and Old Warrants
(CUSIP No.: 452907 14 0) are held by Qualified Institutional
Buyers (as defined under the Securities Act of 1933), tender
through The Depository Trust Company ("DTC") pursuant to DTC's
Automated Tender Offer Program ("ATOP").
Any questions regarding the procedures for tendering Old Securities or requests
for assistance or for additional copies of this Memorandum and the accompanying
Letter of Transmittal or may be directed to the Exchange Agent and Depositary. A
Holder may also contact the Company at 300 American Road, Morris Plains, NJ
07950, Attention: Investor Relations, or by telephone at (973) 605-8200,
regarding the terms of the Exchange Offer and any related questions.
The Exchange Agent will seek to establish accounts with respect to the Old
Securities at The Depository Trust Company ("DTC") for the purpose of the
Exchange Offer within two New York Stock Exchange trading days from the date of
this Memorandum. Any financial institution that is a participant in DTC's
book-entry transfer facility system may make book-entry delivery of Old
Securities on behalf of a Holder by causing DTC to transfer such Old Securities
into the Exchange Agent's account in accordance with ATOP procedures for such
transfer. DTC will then send an Agent's Message (as defined below) to the
Exchange Agent. Beneficial Holders of such Old Securities tendering in the
Exchange Offer will still be required to execute and deliver to the Exchange
Agent a Letter of Transmittal. Old Securities will not be deemed surrendered for
exchange until such documents are received by the Exchange Agent. Delivery of
such documents to DTC will not constitute valid delivery to the Exchange Agent.
THE COMPANY UNDERSTANDS THAT DTC WILL MAKE ARRANGEMENTS FOR BOOK-ENTRY DELIVERY
TO ACCOMMODATE RECORD OWNERS THAT DESIRE TO TENDER OLD SECURITIES IN THE
EXCHANGE OFFER.
The term "Agent's Message" means a message transmitted by DTC, received by the
Exchange Agent and forming part of the confirmation of book-entry transfer,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Old Securities that are the subject of such
confirmation of book-entry transfer and that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, including, without
limitation, all of the representations, warranties, waivers and rescissions
contained therein with respect to the Exchange Offer and agrees to be bound by
the terms of the Letter of Transmittal and that the Company may enforce the
terms of the Letter of Transmittal against such participant.
20
The method of delivery of Old Securities and other documents to the Exchange
Agent is at the election and risk of the Holder. Instead of delivery by mail, it
is recommended that Holders use overnight or hand delivery service, properly
insured, supplemented by facsimile transmission. In all cases, sufficient time
should be allowed to ensure delivery to the Exchange Agent and Depositary before
11:59 p.m. on the Expiration Date.
Generally, only a Holder may tender Old Securities in the Exchange Offer. If the
Letter of Transmittal is signed by an entity other than the Holder, such Letter
of Transmittal must be endorsed or accompanied by appropriate bond powers, in
either case signed exactly as the name or names of the Holder or Holders appear
on the Old Securities. If the Letter of Transmittal or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
provide evidence satisfactory to the Company of their authority to so act.
Any beneficial owner whose Old Securities are registered in the name of its
broker, dealer, commercial bank, trust company or other nominee that wishes to
tender its Old Securities in the Exchange Offer should contact its nominee
promptly and instruct the nominee to tender on the Holder's behalf by completing
the Letter of Transmittal.
LETTER OF TRANSMITTAL SHOULD BE SENT TO THE EXCHANGE
AGENT AND NOT TO THE COMPANY OR DTC.
SIGNATURE GUARANTEES
Signatures on a Letter of Transmittal, delivered in connection with the Exchange
Offer, must be guaranteed unless the Old Securities tendered pursuant thereto
are tendered for the account of an Eligible Institution (as defined below). In
the event that a signature on a Letter of Transmittal is required to be
guaranteed, such guarantee must be by a firm that is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. or by a commercial bank or trust company having an
office in the United States (an "Eligible Institution").
WITHDRAWAL OF TENDERS
Old Securities tendered pursuant to the Exchange Offer may be withdrawn at any
time before the Expiration Date. Tendered Old Securities may not be withdrawn
after the Expiration Date.
For a withdrawal of Old Securities to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Exchange Agent
and Depositary. The withdrawal notice must:
. specify the name of the Holder who tendered the Old Securities to be
withdrawn and, if different, the name of the registered Holder of such
Old Securities (or, in the case of Old Securities tendered by
book-entry transfer, the name of the participant for whose account
such Old Securities were tendered and such participant's account
number at DTC, to be credited with the withdrawn Old Securities);
. contain a description of the Old Securities to be withdrawn (including
the principal amount and series of the Old Securities to be withdrawn
and, in the case of Old Securities held by Accredited Investors
tendered by delivery of certificates rather than book-entry transfer,
the certificate numbers thereof); and
. be signed by the Holder of such Old Securities in the same manner as
the original signature on the Letter of Transmittal, including any
required signature guarantees (or, in the case of Old Securities
tendered by a DTC participant through ATOP, be signed by such
participant in the same manner as the participant's name is listed in
the applicable Agent's Message), or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of such Old Securities.
The signature on the notice of withdrawal must be guaranteed by a Medallion
Signature Guarantor unless such Old Securities have been tendered for the
account of an Eligible Institution. If certificates for the Old Securities to be
withdrawn have been delivered or otherwise identified to the Depositary, a
signed notice of withdrawal will be effective immediately upon receipt by the
Depositary of written or facsimile transmission notice of withdrawal even if
physical release is not yet effected.
21
Withdrawal of tenders of Old Securities may not be rescinded, and any Old
Securities properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer. Properly withdrawn Old Securities may, however,
be retendered by again following one of the procedures described above at any
time before the Expiration Date.
Withdrawals of Old Securities can only be accomplished in accordance with the
foregoing procedures.
NO GUARANTEED DELIVERY PROCEDURES
The Company does not intend to permit tenders of Old Securities by guaranteed
delivery procedures.
BROKERAGE FEES, ETC.
Registered owners of Old Securities that tender directly to the Depositary will
not be obligated to pay brokerage fees or commissions or, except as otherwise
provided in the Instructions to the Letter of Transmittal, transfer taxes with
respect to the Company's exchange of Exchange Securities for the Old Securities
pursuant to the Exchange Offer. Holders that hold Old Securities through a
broker or bank should consult that institution as to whether it charges any
service fees. The Company will pay all charges and expenses of the Exchange
Agent and Depositary incurred in connection with the Exchange Offer.
LOST, MISSING OR PREVIOUSLY TENDERED CERTIFICATES
If a Holder is required to tender Old Securities pursuant to the Exchange Offer
but any such Old Security has been mutilated, lost, stolen or destroyed, such
Holder must write to or telephone the Exchange Agent and Depositary at the
address listed below or on the back cover hereof concerning the procedures for
obtaining replacement of such Securities, arranging for indemnification or any
other matter with regard to such tender.
ACCEPTANCE OF OLD SECURITIES; RETURN OF OLD SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the Company
will accept for exchange into Exchange Securities all Old Securities that are
validly tendered pursuant to the Exchange Offer and not validly withdrawn. For
purposes of the Exchange Offer, the Company will be deemed to have accepted for
exchange tendered Old Securities if, as and when the Company gives written
notice to the Depositary of its acceptance for exchange of such Securities.
If the Company terminates the Exchange Offer without exchanging Exchange
Securities for the Old Securities tendered into the Exchange Offer, the Company
will promptly return those Old Securities to the tendering Holders or the
designees they properly specify in their Letters of Transmittal.
If the Company is delayed in its acceptance for exchange of, or exchange for,
any Old Securities or is unable to accept for exchange or exchange Exchange
Securities for Old Securities pursuant to the Exchange Offer for any reason,
then, without prejudice to its rights hereunder, tendered Old Securities may be
retained by the Depositary on its behalf and may not be validly withdrawn,
subject to Rule 14e-1 under the Exchange Act which requires that the Company pay
the consideration offered (which constitutes the Exchange Securities) or return
the Old Securities deposited by or on behalf of the Holders promptly after the
termination or withdrawal of the Exchange Offer.
The Company will announce acceptance for exchange of the Old Securities by
issuing a press release on the PR Newswire.
22
EXTENSION; AMENDMENT; TERMINATION
The Company expressly reserves the right, at any time or from time to time,
regardless of whether or not the conditions set forth above for the Exchange
Offer have been satisfied, subject to applicable law, to (a) extend the
Expiration Date for such Offer, (b) amend the Exchange Offer in any respect or
(c) terminate the Exchange Offer before the Expiration Date and return the Old
Securities tendered pursuant to the Exchange Offer, in each case by giving
written notice of such extension, amendment or termination to the Depositary.
At any time or from time to time, the Company may exercise its right to extend
the Expiration Date. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, with the announcement in
the case of an extension to be issued no later than 9 a.m., New York City time,
on the first business day after the previously scheduled Expiration Date. For
purposes of the Exchange Offer, the term "business day" means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in the place of payment of the purchase price are authorized or
obligated by law or executive order to close. Without limiting the manner in
which the Company may choose to make any public announcement, the Company will
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the PR Newswire.
OTHER MATTERS
All questions as to the form of all documents and the validity (including the
time of receipt), eligibility, acceptance and withdrawal of tendered Old
Securities will be determined by the Company, in its sole discretion, which
determination shall be final and binding. The Company expressly reserves the
absolute right to reject any and all tenders not in proper form and to determine
whether the acceptance of such tenders would be unlawful. The Company also
reserves the absolute right, subject to applicable laws, to waive or amend any
of the conditions of this Exchange Offer or to waive any defect or irregularity
in the tender of any old security. None of the Company, the Exchange Agent and
Depositary or any other person is under any duty to give notice of any defect or
irregularity in the tender of any of the Old Securities, or will incur any
liability for failure to give any such notice. No tender of Old Securities will
be deemed to have been validly made until all defects and irregularities with
respect to such tender have been cured or waived. All Old Securities received by
the Exchange Agent and Depositary that are not properly tendered and as to which
irregularities have not been cured or waived will be returned by the Exchange
Agent and Depositary to the appropriate Holder as soon as practicable. The
Company's interpretation of the terms and conditions of the Exchange Offer and
the Company's reasonable interpretation, expressed in good faith, of the terms
and conditions of the Exchange Offer will be final and binding on all parties.
23
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS
Set forth below is a summary of certain U.S. federal income tax considerations
relevant to the Exchange Offer to beneficial owners of the Old Notes and the Old
Warrants. Except as indicated under "Tax Treatment of Non-U.S. Holders" below,
this summary deals only with owners of Old Notes and Old Warrants that are (i)
citizens or residents of the United States, (ii) corporations (or other entities
that are treated as corporations for U.S. federal tax purposes) created or
organized in or under the laws of the United States or any State (including the
District of Columbia), (iii) estates the income of which is subject to U.S.
federal income taxation regardless of its source, and (iv) trusts if a court
within the United States is able to exercise primary supervision over its
administration and one or more United States persons have the authority to
control all of its substantial decisions (each, a "U.S. Holder"). As used in
this summary, a "Non-U.S. Holder" is a beneficial owner of an Old Note or Old
Warrant that is not treated as a partnership for U.S. federal income tax
purposes and is not a U.S. Holder.
If a partnership (including any entity that is treated as a partnership for U.S.
federal tax purposes) is a beneficial owner of an Old Note or Old Warrant, the
treatment of a partner in the partnership will generally depend upon the status
of the partner and upon the activities of the partnership. A beneficial owner of
an Old Note or Old Warrant that is a partnership, and partners in such a
partnership, should consult their tax advisors about the U.S. federal income tax
consequences of the Exchange Offer.
An individual may, subject to certain exceptions, be deemed to be a resident of
the United States by reason of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year (counting for such
purposes all of the days present in the current year, one-third of the days
present in the immediately preceding year, and one-sixth of the days present in
the second preceding year).
This summary is based on interpretations of the Internal Revenue Code of 1986,
as amended (the "Code"), regulations issued thereunder, and rulings and
decisions currently in effect (or in some cases proposed), all of which are
subject to change. Any such change may be applied retroactively and may
adversely affect the federal income tax consequences described herein. This
summary addresses only U.S. Holders that beneficially own Old Notes and/or Old
Warrants as capital assets and not as part of a "straddle," "hedge," "synthetic
security" or a "conversion transaction" for federal income tax purposes, or as
part of some other integrated investment. This summary does not discuss all of
the tax consequences that may be relevant to particular investors or to
investors subject to special treatment under the federal income tax laws (such
as partnerships, banks, thrifts, or other financial institutions, insurance
companies, small business investment companies, S corporations, retirement plans
or persons holding certificates in tax-deferred or tax-advantaged accounts,
mutual funds, real estate investment trusts, regulated investment companies,
securities dealers or brokers, investors whose functional currency is not the
U.S. dollar, certain former citizens or residents of the United States, persons
subject to the alternative minimum tax or tax-exempt investors that are social
clubs, voluntary employee benefit associations, supplemental unemployment
benefit trusts, qualified group legal services plans, or parent title-holding
corporations). Finally, this summary does not discuss the tax consequences that
may be relevant to the shareholders or other beneficial owners of any investor
in the Old Notes or Old Warrants.
The following discussion is not intended or written to be used, and cannot be
used, for the purpose of avoiding U.S. federal, state, or local tax penalties.
This discussion is written in connection with the promotion or marketing by the
Company of the transactions or matters addressed in this Memorandum. You should
seek advice based on your particular circumstances from an independent tax
advisor.
24
TAX TREATMENT TO U.S. HOLDERS OF OLD NOTES OR OLD WARRANTS
The tax treatment of the Exchange Offer to a U.S. Holder is uncertain and will
depend upon whether the adoption of the Proposed Changes results in a deemed
exchange of the Old Notes for Exchange Notes or the Old Warrants for the
Exchange Warrants for U.S. federal income tax purposes by the U.S. Holders. If
the Proposed Changes are rejected, there should be no U.S. federal income tax
consequences to U.S. Holders resulting solely from such rejection. Although
there is no authority directly on point and the matter is thus unclear, the
Company does not intend to treat the adoption of the Proposed Changes as giving
rise to an actual or deemed exchange for U.S. Holders. Under this position, a
U.S. Holder should not recognize any gain or loss as a result of the adoption of
the Proposed Changes, and the U.S. Holder should continue to have the same tax
basis and holding period with respect to the Exchange Notes as it had
immediately before the adoption of the Proposed Changes.
However, it is possible that in the case of the Old Notes the adoption of the
Proposed Changes would be treated as a deemed exchange of the Old Notes for
Exchange Notes for federal income tax purposes and that this deemed exchange
would be a taxable event for a U.S. Holder upon which gain or loss is
recognized. In this event, the U.S. Holder would be treated as recognizing
taxable short-term capital gain or loss in the taxable year that the Proposed
Changes are adopted, in an amount equal to the difference between the issue
price of the Exchange Notes deemed received in the exchange (which, since
neither the Old Notes nor the Exchange Notes are traded on an established
securities market, is the stated principal amount of the Exchange Notes) and the
U.S. Holder's adjusted tax basis in the Old Notes deemed given up in the
exchange. Thus, U.S. Holders who purchased Old Notes in the initial offering
would recognize gain in an amount equal to any original issue discount ("OID")
on the Old Notes (including OID attributable to any allocation of purchase price
of the Old Notes and Warrants to the Warrants) to the extent not previously
included in income. In the case of a taxable deemed exchange, the U.S. Holder's
tax basis in the Exchange Notes would be increased or decreased by the amount of
gain or loss recognized.
Similarly, it is also possible that the adoption of the Proposed Changes would
be treated as a deemed exchange of the Old Warrants for Exchange Warrants
regardless of whether there is a deemed exchange of the Old Notes for federal
income tax purposes. In this event, the exchange of the Old Warrants for
Exchange Warrants may be treated as a tax-free recapitalization in which the
U.S. Holder recognizes no gain or loss and continues to have the same tax basis
and holding period with respect to the Exchange Warrants as it had immediately
before the adoption of the Proposed Changes. Alternatively, if the exchange of
Old Warrants for Exchange Warrants did not qualify as a tax-free
recapitalization, the U.S. Holder would be treated as recognizing taxable
short-term capital gain or loss in the taxable year that the Proposed Changes
are adopted, in an amount equal to the difference between the fair market value
of the Exchange Warrants deemed received in the exchange and the U.S. Holder's
adjusted tax basis in the Old Warrants deemed given up in the exchange. In such
case its tax basis in the Exchange Warrants would be increased or decreased by
the amount of gain or loss recognized
Furthermore, if the adoption of the Proposed Changes results in a taxable deemed
exchange of the Old Notes or Old Warrants, a U.S. Holder would commence a new
holding period for the Exchange Notes or Exchange Warrants for purposes of
determining short-term or long-term gain or loss and for certain other purposes.
Market Discount. Any gain recognized by a U.S. Holder with respect to the Old
Notes as a result of the adoption of the Proposed Changes will be treated as
ordinary income to the extent of any market discount on the Old Notes that has
accrued during the period that the U.S. Holder held the Old Notes and that has
not previously been included in income by the U.S. Holder. An Old Note generally
will be considered to be acquired with market discount if it was acquired other
than in the initial offering of Old Notes and the initial tax basis of the Old
Note in the hands of the U.S. Holder immediately after the acquisition was less
than the stated principal amount (or the adjusted issue price if the Old Notes
were issued with original issue discount) by more than the product of 0.25
percent of the stated principal amount of the Old Note and the number of
complete years to maturity. Market discount accrues on a ratable basis unless
the U.S. holder elects to accrue the market discount using a constant yield
method.
TAX TREATMENT OF TAX-EXEMPT ORGANIZATIONS
Any income or gain from the Old Notes or Old Warrants held by a tax-exempt
organization will generally not be subject to the tax on unrelated business
taxable income if the Old Notes or Old Warrants are not "debt financed"
property.
25
TAX TREATMENT OF NON-U.S. HOLDERS
A Non-U.S. Holder will not be subject to U.S. federal income tax on any gain in
respect of a deemed exchange, if any, of an Old Note or Old Warrants resulting
from the adoption of the Proposed Changes unless such Holder is an individual
present in the United States for 183 days or more in the taxable year of the
deemed exchange and certain other conditions are met, or unless the gain is
effectively connected with the conduct of a trade or business in the United
States by such Non-U.S. Holder. If the gain is effectively connected with the
conduct of a trade or business in the United States by such Non-U.S. Holder,
such Non-U.S. Holder will generally be subject to U.S. federal income tax with
respect to such gain in the same manner as U.S. Holders, as described above, and
a Non-U.S. Holder that is a corporation could be subject to a branch profits tax
on such income as well.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Distributions made on the Exchange Notes and proceeds from the sale of Exchange
Notes to or through certain brokers may be subject to a "backup" withholding tax
on "reportable payments" (including interest accruals and, under certain
circumstances, distributions in respect of principal amount) unless, in general,
the investor complies with certain procedures or is an exempt recipient. Any
amounts so withheld from distributions on the Exchange Notes would be refunded
by the Internal Revenue Service (the "IRS") or allowed as a credit against the
investor's federal income tax, provided that the required information is
furnished to the IRS.
Reports on IRS Form 1099 will be made to the IRS and to U.S. Holders that are
not excepted from the reporting requirements.
A Non-U.S. Holder that provides the applicable IRS Form W-8BEN or Form W-8IMY,
together with all appropriate attachments, signed under penalties of perjury,
identifying the Non-U.S. Holder and stating that the Non-U.S. Holder is not a
United States person will not be subject to such reporting requirements and U.S.
backup withholding.
Holders should consult their tax advisors to determine the tax consequences of
the Exchange Offer in light of their particular circumstances, including the
application of U.S. federal, state, local and foreign tax laws.
26
MISCELLANEOUS
The Company has agreed to pay the Exchange Agent and Depositary customary fees
for its services in connection with the Exchange Offer and to reimburse the
Exchange Agent and Depositary for certain of its out-of-pocket expenses and to
indemnify it against certain liabilities, including liabilities under the
federal securities laws.
In addition, the Company has retained Lazard Freres & Co. LLC and C.E.
Unterberg, Towbin LLC (together, the "Banks") as financial advisors in
connection with the amendment of the terms of the Old Securities and has agreed
to reimburse them for certain of their out-of-pocket expenses and to indemnify
them against certain liabilities, including liabilities under the federal
securities laws. In connection with this Exchange Offer, the Banks are not
acting as dealer managers or exchange agents and will not be paid any fees in
connection therewith. Previously, the Banks acted as placement agent for the
initial issuance of the Old Securities and, currently, Lazard Freres & Co. LLC
is engaged by the Company with respect to assisting it in connection with third
party licensing arrangements.
The Company accepts responsibility for the information contained and
incorporated by reference in this Memorandum and the accompanying Letter of
Transmittal. To the best of the knowledge and belief of the Company (having
taken all reasonable care to ensure that such is the case) the information
contained and incorporated by reference in this Memorandum is in accordance with
the facts and does not omit anything likely to affect the import of such
information. The Company accepts responsibility accordingly. None of the
Exchange Agent, Depositary or financial advisors assumes any responsibility for
the accuracy or completeness of the information concerning the Company and the
Exchange Offer contained or incorporated by reference in this Memorandum and the
accompanying Letter of Transmittal.
None of the Exchange Agent, Depositary or financial advisors makes any
recommendation as to whether or not Holders should tender all or any portion of
their Notes pursuant to the Exchange Offer. Each Holder must make its own
decision as to whether or not to tender Notes and, if so, the principal amount
of Notes to tender.
AVAILABLE INFORMATION
Our Common Stock is publicly held and as a result we are obligated to file
annual, quarterly and special reports, proxy statements and other information
with the U.S. Securities and Exchange Commission ("SEC"). You may read and copy
any document we file at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You can request copies of these documents by
writing to the SEC and paying a fee for the copying cost. Please call the SEC at
1-800-SEC-0330 for more information about the operation of the public reference
room. Our SEC filings are also available to the public without cost at the SEC's
web site at www.sec.gov. In addition, you can read and copy reports and other
information concerning us at the offices of the National Association of
Securities Dealers, Inc., located at 1735 K Street, Washington D.C. 20006.
Our web address is http://www.immunomedics.com. We make available free of charge
on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on
behalf of directors and executive officers and any amendments to such reports
filed or furnished pursuant to the Securities Exchange Act of 1934, as amended,
or Exchange Act, as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC. Our website is not,
however, incorporated by reference in this Memorandum
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC are incorporated
in this Memorandum by reference:
1. Annual Report on Form 10-K for the fiscal year ended June 30,
2004;
2. Current Report on Form 8-K dated October 13, 2004;
3. Definitive Proxy Statement on Schedule 14A dated October 22,
2004;
27
4. Current Report on Form 8-K dated November 4, 2004;
5. Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2004;
6. Current Report on Form 8-K dated January 12, 2005;
7. Current Report on Form 8-K dated February 7, 2005;
8. Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 2004;
9. Current Report on Form 8-K dated May 2, 2005;
10. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2005;
11. Current Report on Form 8-K dated May 25, 2005;
12. Current Report on Form 8-K dated June 14, 2005; and
13. Preliminary Proxy Statement on Schedule 14A dated June 15, 2005.
All documents filed by the Company pursuant to section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Memorandum and prior to the
termination of the Exchange Offer made hereunder shall be deemed to be
incorporated by reference into this Memorandum 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 superceded for purposes of this Memorandum to the
extent that a statement contained herein or in any other subsequently filed
document which supercedes such statement. Any such statement so modified or
superceded shall not be deemed, except as so modified or superceded, to
constitute a part of this Memorandum.
The Company will furnish without charge to each person, including any Holder, to
whom this Memorandum is delivered, upon written or oral request, a copy of any
or all of the documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents) and copies of the indenture and warrant agreement for the
Exchange Securities. Requests should be directed to:
Immunomedics, Inc.
300 American Road,
Morris Plains, NJ 07950
Attention: Investor Relations
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Memorandum includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact included in this Memorandum,
including, without limitation, statements regarding financial position, budgets
and plans and objectives for future operations are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, the Company can give no assurance
that such expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed in the section captioned "Risk Factors"
and elsewhere in this Memorandum. All subsequent written and oral
forward-looking statements attributable to the Company or any person acting on
its behalf are expressly qualified in their entirety by the Cautionary
Statements.
28
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
5% SENIOR CONVERTIBLE NOTES DUE 2008
AND
COMMON STOCK WARRANTS
OF
IMMUNOMEDICS, INC.
PURSUANT TO THE
AMENDED AND RESTATED EXCHANGE OFFER MEMORANDUM
DATED JULY [ ], 2005
THE EXCHANGE OFFER WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON AUGUST 3
2005, (20 BUSINESS DAYS AFTER THE DATE ON WHICH THE EXCHANGE OFFER IS FIRST
PUBLISHED AND SENT TO HOLDERS AND 10 BUSINESS DAYS AFTER THE DATE ON WHICH THE
AMENDED AND RESTATED EXCHANGE OFFER IS FIRST PUBLISHED AND SENT TO HOLDERS)
UNLESS SUCH EXCHANGE OFFER IS EXTENDED (SUCH TIME AND DATE, AS IT MAY BE
EXTENDED, THE "EXPIRATION DATE"). OLD SECURITIES TENDERED PURSUANT TO THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THEY ARE ACCEPTED FOR
EXCHANGE BY THE COMPANY.
THIS LETTER OF TRANSMITTAL MUST BE DELIVERED TO THE EXCHANGE AGENT AT THE
ADDRESS AND/OR FACSIMILE NUMBER TO BE PROVIDED.
THIS EXCHANGE OFFER DOES NOT CONSTITUTE AN EXCHANGE OFFER IN ANY JURISDICTION IN
WHICH, OR FROM ANY PERSON FROM WHOM, IT IS UNLAWFUL TO MAKE SUCH SOLICITATION
UNDER APPLICABLE SECURITIES OR BLUE SKY LAWS.
The undersigned acknowledges receipt of the Exchange Offer Memorandum dated July
5, 2005 (as amended and restated on July 19, 2005, and as the same may from time
to time be further amended, the "Memorandum") of Immunomedics, Inc. (the
"Company"), relating to the offer of the Company, upon the terms and subject to
the conditions set forth in the Memorandum, this Letter of Transmittal (the
"Letter of Transmittal") and the instructions hereto, (which together constitute
the "Exchange Offer"), to issue for the (a) 5% Senior Convertible Notes due 2008
(the "Old Notes") or (b) Common Stock Warrants (the "Old Warrants," and together
with the Old Notes, the "Old Securities"): (i) in the case of Holder of Old
Notes, new 5% Senior Convertible Notes due 2008 of the Company ("Exchange
Notes") in an aggregate principal amount equal to the principal amount of Old
Notes held by such Holder or (ii) in the case of Holders of Old Warrants, new
warrants exercisable for Common Stock ("Exchange Warrants," and together with
the Exchange Notes, the "Exchange Securities"), in a number equal to the number
of Old Warrants held by such Holder (on the terms more fully set forth in the
Memorandum).
For all purposes of the Exchange Offer and this Memorandum, references to the
Old Securities and the Exchange Securities include the related option of the
Holders thereof to purchase additional securities as the case may be, as
specified in the original purchase agreements (the "Purchase Agreements")
pursuant to which the Old Securities were sold (the "Option"). The Option will
also be a provision of the Exchange Securities. In addition, if a Holder tenders
any Old Securities, it is required to tender all of its Old Securities into the
Exchange Offer.
Capitalized terms used in this Letter of Transmittal but not defined herein have
the meanings given thereto in the Memorandum.
PLEASE READ THE ENTIRE LETTER
OF TRANSMITTAL CAREFULLY BEFORE
COMPLETING ANY BOX BELOW
This Letter of Transmittal is to be completed by a Holder (i) if Old Securities
are to be physically delivered herewith or (ii) if delivery of Old Securities is
to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in "Procedures for Tendering" in the Memorandum. Delivery of documents to
DTC does not constitute delivery to the Exchange Agent or Depositary.
Holders who tender their Old Securities and execute this Letter of Transmittal
will also be deemed to have waived all existing and past defaults and their
consequences under such Old Securities and under the indenture and warrant
agreement pursuant to which they were issued. The tender of Old Securities under
this Letter of Transmittal will constitute such waiver.
2
Holders who wish to tender their Old Securities must, complete the questions
proffered in columns (1) through (5) in the table below and sign in the
appropriate box below.
DESCRIPTION OF OLD SECURITIES TENDERED
Name and Address of registered Holder Old Notes Tendered Old Warrants Tendered
(Please fill in, if blank, exactly as ISIN Number _______ ISIN Number _______
name appears on Old Securities) CUISIP Number _______ CUISIP Number _______
- ------------------------------------- ---------------------------------- ------------------------------------------
(1) (2) (3) (4) (5)
- ------------------------------------- -------------- ---------------- -------------------- ------------------
Certificate Principal Amount Certificate Number Number of Common
Number* of 5% Senior Stock Warrants
Secured Notes Tendered
Tendered**
You hereby waive all existing and past defaults and their consequences under the
Old Securities and under the indenture and warrant agreement under which the Old
Securities were issued. If you are not the Record Holder of your Old Securities,
you must either have the Old Securities registered in your name or obtain
consent from the Record Holder of such Old Securities to tender them.
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified , it will be assumed that the entire aggregate
principal amount represented by the Old Notes described above is being tendered.
3
Please check the box below to participate in the Exchange Offer by agreeing to
change the referenced sections of the indenture and the warrant agreement
pursuant to which the Old Securities were issued (as described more fully in the
Memorandum).
PROPOSED CHANGES
[ ] CHECK HERE TO AGREE TO PROPOSED CHANGES TO:
INDENTURE SECTIONS 1.1, 2.1, 6.9 AND 12.1;
WARRANT AGREEMENT SECTION 1.01, 2.02, AND 2.02
ADD INDENTURE SECTIONS 6.12;
By checking the box you are agreeing to Proposed Changes that (i) prohibit
conversion of Old Notes into Common Stock before the Stockholder Vote and (ii)
prohibit the exercise of Old Warrants into Common stock before the Share
Increase and Conversion approval (described in "The Exchange Offer" in the
Memorandum).
METHOD OF DELIVERY
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD WARRANTS ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY SPECIFIED ABOVE AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: __________________________________
Name of Book-Entry Transfer Facility: The Depository Trust Company
Account Number: ____________________ Transaction Code Number: ______
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN
ADDITIONAL COPIES OF THE EXCHANGE OFFER AND ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:____________________________________________________________
Address:_________________________________________________________
_________________________________________________________________
4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
TENDER OF OLD SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the Old Securities indicated above.
Holders who tender their Old Securities will be deemed to have waived all
existing and past defaults and their consequences under those Old Securities and
under the applicable indenture or Warrant Agreement on any Old Securities
tendered.
Subject to, and effective upon the acceptance for exchange of the Old Securities
tendered herewith, the undersigned hereby sells, assigns and transfers to or
upon the order of the Company all right, title and interest in and to all of the
Old Securities that are being tendered hereby, and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Old Securities, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to (a) deliver
such Old Securities or transfer ownership of such Old Securities on the account
books maintained by DTC, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Company, (b) present such
Old Securities for transfer on the register and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED ACCEPTS THE
TERMS AND CONDITIONS OF THE EXCHANGE OFFER, OWNS THE OLD SECURITIES TENDERED
HEREBY (WITHIN THE MEANING OF RULE 10B-4 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED), HAS FULL POWER AND AUTHORITY TO TENDER, SELL, ASSIGN AND
TRANSFER THE OLD SECURITIES TENDERED HEREBY AND THAT THE COMPANY WILL ACQUIRE
GOOD AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS,
CHARGES AND ENCUMBRANCES AND NOT SUBJECT TO ANY ADVERSE CLAIM. THE UNDERSIGNED
WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE
EXCHANGE AGENT OR THE COMPANY TO BE NECESSARY OR DESIRABLE TO COMPLETE THE SALE,
ASSIGNMENT AND TRANSFER OF THE OLD SECURITIES HEREBY TENDERED. THE UNDERSIGNED
HEREBY FOREVER WAIVES ALL RIGHTS TO RECEIVE ANY PAYMENTS NOT HERETOFORE PAID
WITH RESPECT TO ACCRUED BUT UNPAID INTEREST ON SUCH OLD SECURITIES TENDERED
PURSUANT HERETO. SUCH WAIVER SHALL NOT BE DEEMED TO BE EFFECTIVE IF SUCH
SECURITIES ARE NOT ACCEPTED FOR EXCHANGE PURSUANT TO THE EXCHANGE OFFER.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tenders of Old Securities may be withdrawn,
subject to the procedures described in "Procedures for Tendering - Withdrawal of
Tenders" in the Memorandum, at any time before they are accepted for exchange by
the Company. The Company shall be deemed to have accepted for exchange, and to
have exchanged, all validly tendered Old Securities in the Exchange Offer if,
when and as of the time that the Company gives oral or written notice thereof to
the Exchange Agent.
The undersigned understands that tenders of Old Securities pursuant to any one
of the procedures described under "Procedures for Tendering" in the Memorandum
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Company in accordance with the terms and subject to the
conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in the
Exchange Offer, the Company may not be required to accept for exchange any of
the Old Securities tendered. Old Securities not accepted for exchange or
withdrawn will be returned to the undersigned at the address set forth above
unless otherwise indicated under "SPECIAL DELIVERY INSTRUCTIONS" below.
5
Unless otherwise indicated under "SPECIAL ISSUANCE INSTRUCTIONS" or "SPECIAL
DELIVERY INSTRUCTIONS" below, the Exchange Agent of the Exchange Securities will
deliver the applicable Exchange Securities to the undersigned at the address set
forth above. The undersigned recognizes that the Company has no obligation
pursuant to "SPECIAL ISSUANCE INSTRUCTIONS" to transfer any Old Securities from
the name of the registered Holder thereof if the Company does not accept for
exchange any of such Old Securities.
THE UNDERSIGNED, BY COMPLETING THE BOXES ENTITLED "DESCRIPTION OF SECURITIES
TENDERED" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED ALL OF
THE UNDERSIGNED'S OLD SECURITIES, WAIVED CERTAIN RIGHTS AND MADE CERTAIN
REPRESENTATIONS, AS DESCRIBED HEREIN AND IN THE EXCHANGE OFFER, AND CONSENTED TO
THE INDICATED PROPOSED CHANGES. IF THE UNDERSIGNED IS NOT THE REGISTERED HOLDER
OF THE OLD SECURITIES TENDERED PURSUANT HERETO, THE UNDERSIGNED MUST EITHER HAVE
THE OLD SECURITIES REGISTERED IN THE UNDERSIGNED'S NAME OR HAVE THE REGISTERED
HOLDER SIGN A VALID BOND POWER.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT HE, SHE OR IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(a) PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). ONLY HOLDERS WHO ARE REASONABLY BELIEVED BY THE
COMPANY TO BE QUALIFIED INSTITUTIONAL BUYERS OR INSTITUTIONAL ACCREDITED
INVESTORS WILL BE ELIGIBLE TO HAVE OLD SECURITIES EXCHANGED FOR EXCHANGE NOTES
AND EXCHANGE WARRANTS IN THE EXCHANGE OFFER. ONLY HOLDERS WHO INITIAL IN
APPROPRIATE SPACES ON ANNEX A ATTACHED HERETO WILL BE ISSUED EXCHANGE NOTES AND
EXCHANGE WARRANTS.
NONE OF THE EXCHANGE NOTES AND EXCHANGE WARRANTS BEING OFFERED PURSUANT TO THE
EXCHANGE OFFER HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE OR FOREIGN SECURITIES AUTHORITY OR ANY OTHER REGULATORY
AUTHORITY, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCH AUTHORITY
PASSED UPON THE FAIRNESS OR MERITS OF THE TRANSACTIONS CONTEMPLATED BY THE
EXCHANGE OFFER OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THE REVISED OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
BECAUSE THE EXCHANGE NOTES AND EXCHANGE WARRANTS HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAWS, NONE OF SUCH
EXCHANGE NOTES OR EXCHANGE WARRANTS MAY BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE OR FOREIGN SECURITIES LAWS.
6
IMPORTANT
PLEASE SIGN HERE
By completing, executing and delivering this Letter of Transmittal, the
undersigned hereby tenders the principal amount of Old Securities of the series
listed in the boxes above labeled "Description of Old Securities Tendered" under
the column heading "Principal Amount of 5% Senior Convertible Notes due 2008
Tendered" or "Number of Common Stock Warrants Tendered" (or, if nothing is
indicated in those columns, the undersigned hereby tenders the entire aggregate
principal amount represented by the Old Securities described in each such box).
X_______________________________________________________________________________
X_______________________________________________________________________________
Signature of Holder(s)
Area Code and Telephone Number: (________)___________________________
This Letter of Transmittal must be signed by the registered Holder(s) of Old
Securities as their name(s) appear(s) on the Old Securities or, if tendered by a
participant or participants of DTC, exactly as such participant's or
participants' name(s) appear(s) on a security position listing as the owners of
Old Securities, or by a person or persons authorized to become a registered
Holder or registered Holders, by endorsement of any documents transmitted
herewith. If the signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, please set forth your full title. See Instruction 3.
Name(s): ___________________________________________________________
___________________________________________________________
Please Type or Print
Capacity: ___________________________________________________________
Address: ___________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:________________________________________________
(Authorized Signature)
________________________________________________
(Title)
________________________________________________
(Name of Firm)
Dated:________________________ ________, ________
Tax Identification Number_______________________________________________
7
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if Exchange Notes AND Exchange To be completed ONLY if Exchange Notes and Exchange
Warrants are to be issued in the name of, or paid Warrants are to be sent to someone other than the
to, someone other than the person who submits this person who submits this Letter of Transmittal or to
letter of transmittal or issued to an address an address other than that shown in the box entitled
different from that shown in the box entitled "DESCRIPTION OF SECURITIES TENDERED" above in this
"DESCRIPTION OF NOTES TENDERED" above in this Letter Letter of Transmittal.
of Transmittal or if Old Securities are to be
returned by credit to an account maintained by DTC.
ISSUE TO: MAIL TO:
Name: _________________________________________________ Name: ______________________________________________
(Please Print) (Please Print)
Address: ______________________________________________ Address: ___________________________________________
Zip Code Zip Code
_______________________________________________________ ____________________________________________________
Taxpayer Identification Number or Taxpayer Identification Number or
Social Security Number Social Security Number
or, if none, Applied For or, if none, Applied For
Credit Unaccepted Old Securities Tendered by
book-entry transfer to:
[ ] The Depository Trust Company
account set forth below
_______________________________________________________
(DTC account number)
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
A. DELIVERY OF LETTER OF TRANSMITTAL AND OLD SECURITIES. The Old
Securities, or any book-entry transfer into the Exchange Agent's account at DTC
of Old Securities tendered electronically, as well as a properly completed and
duly executed Letter of Transmittal or facsimile thereof with any signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent and Depositary at its addresses set forth
herein on or prior to the Expiration Date. THE METHOD OF DELIVERY OF THIS LETTER
OF TRANSMITTAL, THE OLD SECURITIES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE TENDERING HOLDER, AND EXCEPT AS OTHERWISE PROVIDED
BELOW, THE DELIVERY WILL BE DEEMED MADE WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. INSTEAD OF EFFECTING DELIVERY BY MAIL, IT IS RECOMMENDED THAT TENDERING
HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF OLD SECURITIES ARE SENT BY
MAIL, THEN REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY. NO DOCUMENTS SHOULD BE SENT TO THE COMPANY, THE EXCHANGE AGENT, THE
TRUSTEE FOR THE OLD SECURITIES OR THE EXCHANGE AGENT FOR THE EXCHANGE NOTES AND
EXCHANGE WARRANTS.
If the person signing this Letter of Transmittal is not the registered Holder of
the securities tendered hereby, then such person must either have the securities
tendered hereby registered in such person's name or obtain from the registered
Holders and submit to the Exchange Agent a valid bond power.
If a Holder desires to tender Old Securities and such Holder's Old Securities
are not immediately available or time will not permit such Holder's Letter of
Transmittal, Old Securities or other required documents to reach the Exchange
Agent on or before the Expiration Date, such Holder's tender may be effected if
such tender is made by or through an Eligible Institution (as defined);
All questions as to the validity, form, eligibility (including time of receipt),
acceptance, and withdrawal of tendered Old Securities will be resolved by the
Company, whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders and withdrawals of Old Securities
that are not in proper form or the acceptance of which would, in the opinion of
the Company or counsel for the Company, be unlawful. The Company also reserves
the right to waive any irregularities or conditions of tender, consent or proxy
as to particular Old Securities. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding. Unless waived, any irregularities in
connection with tenders and withdrawals of Old Securities must be cured within
such time as the Company shall determine. Neither the Company nor the Exchange
Agent shall be under any duty to give notification of defects in such tenders,
withdrawals, or deliveries or shall incur any liability for failure to give such
notification. Tenders, withdrawals and deliveries of Old Securities will not be
deemed to have been made until such irregularities have been cured or waived.
Any Old Securities received by the Exchange Agent that are not properly tendered
or delivered, and as to which the irregularities have not been cured or waived,
will be returned by the Exchange Agent to the tendering Holder(s), unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
None of the Company, the Exchange Agent, or any other person shall be obligated
to give notification of defects or irregularities in any tender, or shall incur
any liability for failure to give any such notification.
B. WITHDRAWALS. Tenders of Old Securities may be withdrawn, subject to the
procedures described in "Procedures for Tendering - Withdrawal of Tenders" in
the Memorandum and below, at any time before they are accepted for exchange by
the Company. To be effective, a written telegraphic or facsimile transmission
(or delivered by hand or by mail) notice of withdrawal with respect to the
Exchange Offer must (a) be timely received by the Exchange Agent at its address
specified on the front of this Letter of Transmittal prior to the Expiration
Date (b) specify the name of the person that tendered the Old Securities, the
principal amount or number of such Old
9
Securities to be withdrawn and, if Old Securities have been tendered, the name
of the Holder(s) of such Old Security as set forth thereon, if different from
that of the person that tendered such Old Securities, (c) identify the Old
Securities to be withdrawn and (d) be signed by the Holder in the same manner as
the original signature on this Letter of Transmittal (including any required
signature guarantees). If Old Securities to be withdrawn have been delivered or
otherwise identified to the Exchange Agent, then the name of the Holder and the
certificate numbers of the particular Old Securities to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Old Securities tendered by an Eligible
Institution, in which case no signature guarantee will be required), must also
be so furnished to the Exchange Agent prior to the physical release of the
withdrawn Old Securities. If Old Securities have been tendered pursuant to the
procedures for book-entry transfer as set forth in "Procedures for Tendering" in
the Exchange Offer, any notice of withdrawal must also specify the name and
number of the account at DTC to be credited with the withdrawn Old Securities.
The Company reserves the right to contest the validity of any withdrawal. A
purported withdrawal, which is not received by the Exchange Agent in a timely
fashion, will not be effective.
All properly withdrawn Old Securities will thereafter be deemed not validly
tendered and all properly withdrawn tenders will be deemed not validly delivered
for purposes of the Exchange Offer; provided, that withdrawn Old Securities and
withdrawn tenders may be re-tendered and given again by following one of the
appropriate procedures described in the "Procedures for Tendering" in the
Memorandum at any time prior to the Expiration Date.
Holders can withdraw the tender of their Old Securities only in accordance with
the foregoing procedures.
C. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS, AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered Holder(s) of the Old Securities tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificate(s) without
alteration or any change whatsoever.
If any of the Old Securities tendered hereby are registered in the names of two
or more joint owners, all owners must sign this Letter of Transmittal. If any
tendered Old Securities are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal and any other required documents as there are different
names in which certificates are registered.
If tendered Old Securities are registered in the name of a person other than the
person signing this Letter of Transmittal, the tendered Old Securities must be
endorsed or accompanied by appropriate bond powers, signed by the registered
Holder or Holders of the Old Securities transmitted hereby, with signatures
guaranteed in either case.
If this Letter of Transmittal or any Old Security or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence, satisfactory to the
Company, of their authority so to act must be submitted.
Endorsements on Old Securities or signatures on bond powers required by this
Instruction C must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless (i) the Old Securities are tendered by the registered
Holder(s) which term, for purposes of this Letter of Transmittal, shall include
any participant in DTC whose name appears on a security position listing as the
owner of Old Securities, who has not completed the box entitled "SPECIAL
ISSUANCE INSTRUCTIONS" or "SPECIAL DELIVERY INSTRUCTIONS" on this Letter of
Transmittal, or (ii) the Old Securities are being tendered for the account of an
Eligible Institution.
D. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders of Old
Securities should indicate, in the applicable box, the name and address to which
the certificates representing Exchange Securities are to be issued or sent, if
different from the name and address of the person submitting this Letter of
Transmittal. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated and a substitute Form W-9 for
such recipient must be completed. See Instruction E. If no such instructions are
given, such Old Securities not exchanged will be returned to the name and
address of the person signing this Letter of Transmittal or, at the Company's
option, by crediting the account at DTC designated above in the box entitled
"SPECIAL ISSUANCE INSTRUCTIONS."
10
E. TAXPAYER IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income
tax law generally requires that each Holder must provide the Exchange Agent (as
"Payor") with such Holder's correct Taxpayer Identification Number ("TIN"),
which, in the case of a Holder who is an individual, is such Holder's social
security number. A Holder may furnish its TIN by completing and returning IRS
Form W-9 or a substitute IRS Form W-9 if such form was not previously furnished
upon original issuance or if any information previously furnished in IRS Form
W-9 or substitute IRS Form W-9 has changed or if the Exchange Notes or Exchange
Warrants are to be issued in the name of, or paid to someone other than the
person who submits the letter of transmittal. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for an exemption, such Holder
may be subject to a $50 penalty imposed by the Internal Revenue Service and
backup withholding in an amount equal to 28% of any reportable payment made by
the Company (or its paying agent) to the Holder. If withholding results in an
overpayment of taxes, a refund may be obtained.
If the Holder does not have a TIN, such Holder should consult the instructions
to IRS Form W-9 for instructions on applying for a TIN, write "Applied For" in
the space for the TIN in Part 1 of the IRS Form W-9 or Substitute IRS Form W-9,
and sign and date the form. If the Holder does not provide such Holder's TIN to
the Payor within 60 days, backup withholding will begin and continue until such
Holder furnishes such Holder's TIN to the Exchange Agent. Note: Writing "Applied
For" on the form means that the Holder has already applied for a TIN or that
such Holder intends to apply for one in the near future.
If certificates representing Exchange Securities are to be held in more than one
name or are not in the name of the actual owner, consult your tax advisor for
information on which TIN to report.
Exempt Holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt Holder
should write "Exempt" in Part 2 of IRS Form W-9 or Substitute IRS Form W-9. In
order for a nonresident alien or foreign entity to qualify as exempt, such
person generally must submit a completed IRS Form W-8BEN or other appropriate
form signed under penalty of perjury, attesting to such exempt status if such
form was not previously furnished upon original issuance. Such form may be
obtained from the Payor.
F. TRANSFER TAXES. The Company will pay all transfer taxes applicable to
the exchange of the Old Securities pursuant to the Exchange Offer, except in the
case of deliveries of Exchange Securities that are to be made to persons other
than the registered Holder.
Except as provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the Old Securities listed in this Letter of
Transmittal.
G. WAIVER OF CONDITIONS. The Company (or the Exchange Agent, if delegated
such authority) reserves the right to waive any irregularities or defects in the
surrender of any of the Old Securities, any irregularities or defects in this
Letter of Transmittal or any other condition set forth herein. Neither the
Company nor the Exchange Agent is under any duty to give notification of any
defects in any Letter of Transmittal, defects in other required documents or
failure to comply with any other conditions set forth herein and shall not incur
any liability for failure to give such notification. Any and all Letters of
Transmittal and any other required documents not in proper form are subject to
rejection.
H. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions regarding
the procedures for tendering Old Securities or requests for assistance or for
additional copies of this Memorandum and the accompanying Letter of Transmittal
may be directed to the Exchange Agent and Depositary (the "Exchange Agent" and
"Depositary"). A Holder may also contact the Company at 300 American Road,
Morris Plains, NJ 07950, Attention: Investor Relations, or by telephone at (973)
605-8200, regarding the terms of the Exchange Offer and any related matters.
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I. INADEQUATE SPACE. If the space provided herein is inadequate, the Old
Securities certificate number(s) and/or the total principal amount of Old
Securities tendered should be listed on a separate signed schedule attached
hereto.
J. CORRECTION OR CHANGE IN NAME. For a correction of names or for a change
in names which in either case does not involve a change of ownership, proceed as
follows: (i) for a change in name, by marriage, etc., the surrendered
certificate(s) should be endorsed, e.g., "Mary Doe, now by marriage Mrs. Mary
Jones," with the signature guaranteed (see Instruction C); and (ii) for a
correction in name, the surrendered certificate(s) should be endorsed, e.g.,
"James E. Brown, incorrectly inscribed as J.E. Brown," with the signature
guaranteed (see Instruction C).
K. MISCELLANEOUS. The terms and conditions of the Exchange Offer are
incorporated herein by reference in their entirety and are deemed to form a part
of the terms and conditions of this Letter of Transmittal.
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