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EXHIBIT 5
[COCENSYS LOGO]
August 12, 1999
Dear Option Holder:
We are pleased to inform you that on August 5, 1999, the Company entered
into an agreement and plan of merger (the "Merger Agreement") providing for the
acquisition of the Company by Purdue Pharma L.P. ("Purdue Pharma"). Pursuant to
the Merger Agreement, Purdue Pharma, through an indirect wholly-owned
subsidiary, has commenced a tender offer for all outstanding shares of the
Company's common stock at the offer price of $1.16 in cash per share (the "Offer
Price"). As an option holder you have the opportunity to participate in the
tender offer by exercising your options and tendering the shares you receive
upon exercise into the tender offer.
You currently hold at least one grant of stock options. The exercise price
of your options will vary depending on when your options were granted. As a
result of, and contingent upon, the closing of the tender offer, all of your
options will be vested prior to the closing of the tender. As explained in the
enclosed Offer to Purchase and Letter of Transmittal, you can "contingently"
exercise all or any of your options by following the instructions in the Offer
to Purchase and the Letter of Transmittal. This exercise is "contingent" because
it will be done if, but only if, the tender offer is consummated. In summary,
you are required to deliver a Letter of Transmittal that indicates which, if
any, options you wish to exercise. In addition to instructions regarding your
contingent exercise, such Letter of Transmittal will instruct American Stock
Transfer & Trust Company (which is acting as depositary for the shares in the
tender offer) to send to the Company from the tender offer proceeds, an amount
equal to the exercise price for the options you wish to exercise. You will
receive from such proceeds, on a per share basis, the Offer Price less the
exercise price of the option (subject to such wage and employment withholding
taxes and any other withholding that may be required, as described in the Offer
to Purchase and the Letter of Transmittal). Of course, you are not required to
exercise "contingently;" you can exercise by direct payment of the exercise
price to the Company or choose not to exercise at all.
ALTHOUGH YOU ARE NOT REQUIRED TO EXERCISE YOUR OPTIONS AS A RESULT OF THIS
TRANSACTION, YOU SHOULD BE AWARE THAT UPON THE CONSUMMATION OF THE MERGER
CONTEMPLATED BY THE MERGER AGREEMENT, ANY OPTIONS THAT YOU HAVE NOT EXERCISED
(EITHER BEFORE THE DATE OF SUCH CONSUMMATION OR CONTINGENTLY UPON THE
CONSUMMATION OF THE TENDER OFFER) WILL BE TERMINATED AS OF THE CONSUMMATION OF
THE MERGER CONTEMPLATED BY THE MERGER AGREEMENT.
The tender offer is currently scheduled to expire at 12:00 midnight, New
York City time, on Thursday, September 9, 1999.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT WITH PURDUE PHARMA AND HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS AND HAS RECOMMENDED TO THE COMPANY'S STOCKHOLDERS THAT THEY TENDER
THEIR SHARES PURSUANT TO THE TENDER OFFER.
The Merger Agreement represents the culmination of a comprehensive effort
by your Board to enter into a transaction that would provide maximum benefits to
stockholders. In pursuit of this goal, your Board, with the assistance of its
financial advisor, Xxxxxxxxx & Xxxxx LLC, evaluated various alternative
transactions.
In determining to approve the Merger Agreement and the transactions
contemplated thereby, your Board gave careful consideration to a number of
factors described in the attached Schedule 14D-9 that has been filed
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with the Securities and Exchange Commission. Among other things, your Board
considered the opinion of Xxxxxxxxx & Xxxxx LLC, dated August 5, 1999 (a copy of
which is included with the Schedule 14D-9), that the consideration to be
received by the holders of common stock of the Company in connection with the
proposed merger is fair, from a financial point of view, to such stockholders.
The enclosed Schedule 14D-9 describes the Board's decision and contains
other important information relating to such decision. We urge you to read it
carefully.
Accompanying this letter and the Schedule 14D-9 is the Offer to Purchase
and related materials, including a Letter of Transmittal to be used for
tendering your shares or contingently exercising any or all of your options.
These documents describe the terms and conditions of the tender offer and
provide instructions regarding how to participate in the tender offer with
respect to your options. WE URGE YOU TO READ THE ENCLOSED MATERIAL CAREFULLY.
If you need information about the exercise price of your options or have
other questions about your options or how to participate in the tender offer,
please contact Xxx Xxxxxx at the Company at (000) 000-0000.
Very truly yours,
/s/ F. Xxxxxxx Xxxxxx
F. Xxxxxxx Xxxxxx, Ph.D.
Chairman, President and Chief
Executive Officer
