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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
------------------------
AND
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------
CN BIOSCIENCES, INC.
(NAME OF SUBJECT COMPANY)
EM ACQUISITION CORP.
EM INDUSTRIES, INCORPORATED
MERCK KGAA, DARMSTADT, GERMANY
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
125946 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
STEPHEN J. KUNST, ESQ.
GROUP VICE PRESIDENT AND GENERAL COUNSEL
EM INDUSTRIES, INCORPORATED
7 SKYLINE DRIVE
HAWTHORNE, NY 10532
TELEPHONE: (914) 592-4660
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
THOMAS J. DRAGO, ESQ.
COUDERT BROTHERS
1114 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 626-4400
FACSIMILE: (212) 626-4120
------------------------
NOVEMBER 18, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$158,230,675 $31,646.14
* This amount assumes the purchase, pursuant to the Offer to Purchase, of all
of the 5,721,790 shares of Common Stock, par value $.01 per share ("Shares"),
of the Subject Company outstanding as of November 17, 1998 and 607,437 Shares
issuable upon exercise of certain options at $25.00 per Share.
** 1/50 of 1% of Transaction Valuation.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE
0-11(A)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS
PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
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Amount Previously Paid:................................................. None
Form or Registration No.:............................................... N/A
Filing Party:........................................................... N/A
Date Filed:............................................................. N/A
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(Continued on following pages)
Page 1 of pages
Exhibit Index on page 9
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<PAGE>
CUSIP No. 125946 10 3 SCHEDULE 14D-1 AND 13D Page 2 of
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1. NAMES OF REPORTING PERSONS:
EM Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF, WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,248,485
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES / /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
39.3% of the Shares issued and outstanding as of November 17, 1998.
10. TYPE OF REPORTING PERSON
CO
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CUSIP No. 125946 10 3 SCHEDULE 14D-1 AND 13D Page 3 of
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1. NAMES OF REPORTING PERSONS:
EM Industries, Incorporated
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF, WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,248,485
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES / /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
39.3% of the Shares issued and outstanding as of November 17, 1998.
10. TYPE OF REPORTING PERSON
CO
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<PAGE>
CUSIP No. 125946 10 3 SCHEDULE 14D-1 AND 13D Page 4 of
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1. NAMES OF REPORTING PERSONS:
Merck KGaA
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,248,485
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES / /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
39.3% of the Shares issued and outstanding as of November 17, 1998.
10. TYPE OF REPORTING PERSON
CO
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<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by
EM Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of EM Industries, Incorporated, a New York corporation ("Parent"), to
purchase all the outstanding shares of Common Stock, par value $.01 per share
(the "Shares"), of CN Biosciences, Inc., a Delaware corporation (the "Company"),
at a purchase price of $25.00 per Share, net to the seller in cash without
interest thereon (the "Per Share Amount"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 25, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer").
Copies of the Offer to Purchase and the Letter of Transmittal are attached
hereto as Exhibits (a)(1) and (a)(2), respectively. Parent is an indirect
subsidiary of Merck KGaA, Darmstadt, Germany, a corporation organized under the
laws of Germany ("Merck KGaA").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is CN Biosciences, Inc., a Delaware
corporation. The address of the Company's principal executive offices is 10394
Pacific Center Court, San Diego, CA 92121.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $.01 per share, of the Company. The information
set forth in the Introduction of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends on Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed on behalf of Purchaser, Parent and
Merck KGaA. The principal executive offices of Purchaser and Parent are located
at 7 Skyline Drive, Hawthorne, NY 10532. The principal executive offices of
Merck KGaA are located at Frankfurter Strasse 250, D-64293 Darmstadt, Germany.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser, Parent, Merck KGaA and Certain Related Parties") of the Offer to
Purchase and in Schedule I thereto is incorporated herein by reference.
Purchaser is incorporated under the laws of the State of Delaware, Parent is
incorporated under the laws of the State of New York and Merck KGaA is
incorporated under the laws of Germany.
(e) During the last five years, none of Purchaser, Parent or Merck KGaA
nor, to the best knowledge of Purchaser, Parent and Merck KGaA, any of the
persons described in Section 9 ("Certain Information Concerning Purchaser,
Parent, Merck KGaA and Certain Related Parties") of the Offer to Purchase or
listed in Schedule I to the Offer to Purchase has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(f) During the last five years, none of Purchaser, Parent or Merck KGaA
nor, to the best knowledge of Purchaser, Parent and Merck KGaA, any of the
persons listed described in Section 9 ("Certain Information Concerning
Purchaser, Parent, Merck KGaA and Certain Related Parties") of the Offer to
Purchase or in Schedule I to the Offer to Purchase was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, in Section 11
("Contacts with the Company; Background of the Offer") and Section 12 ("Purpose
of the Offer; The Merger Agreement and the Stockholder Agreement") of the Offer
to Purchase is incorporated herein by reference.
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction and in Section 11
("Contacts with the Company; Background of the Offer"), Section 12 ("Purpose of
the Offer; The Merger Agreement and the Stockholder Agreement"), Section 7
("Effect of the Offer on the Market for Shares, Nasdaq Listing and Exchange Act
Registration") and Section 13 ("Dividends and Distributions") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning Purchaser, Parent, Merck KGaA and Certain
Related Parties"), Section 12 ("Purpose of the Offer; The Merger Agreement and
the Stockholder Agreement") and Schedule I to the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Purchaser, Parent, Merck KGaA and Certain Related
Parties"), Section 11 ("Contacts with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; The Merger Agreement and the Stockholder
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction, Section 11 ("Contacts with
the Company; Background of the Offer"), Section 16 ("Fees and Expenses") and
Section 17 ("Miscellaneous") of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser, Parent, Merck KGaA and Certain Related Parties") of the Offer to
Purchase is incorporated herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a stockholder of the Company whether to sell, tender or hold
Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction and in Section 9
("Certain Information Concerning Purchaser, Parent, Merck KGaA and Certain
Related Parties"), Section 11 ("Contacts with the Company; Background of the
Offer") and Section 12 ("Purpose of the Offer; The Merger Agreement and the
Stockholder Agreement") of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) The information set forth in Section 12 ("Purpose of the Offer;
The Merger Agreement and the Stockholder Agreement"), Section 7 ("Effect of the
Offer on the Market for Shares, Nasdaq Listing and Exchange Act Registration")
and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer
to Purchase is incorporated herein by reference.
<PAGE>
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for Shares, Nasdaq Listing and Exchange Act Registration") and
Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated November 25, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release issued by Parent and the Company dated
November 19, 1998.
(a)(8) Summary Advertisement dated November 25, 1998.
(c)(1) Agreement and Plan of Merger, dated as of November 18, 1998, by and
among the Company, Parent, and Purchaser.
(c)(2) Stockholder Agreement, dated as of November 18, 1998, by and among
Parent, Purchaser and Warburg, Pincus Investors, L.P.
(c)(3) Confidentiality Agreement, dated as of June 3, 1998, by and between
the Company and Merck KGaA.
(c)(4) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and Stelios B. Papadopoulos.
(c)(5) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and Dr. Robert C. Mierendorf.
(c)(6) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and James G. Stewart.
(c)(7) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and Dr. John T. Snow.
(c)(8) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and Mark Zimmerman.
(c)(9) Employment Agreement, dated as of November 18, 1998, by and among
the Company, Parent and Douglas T. Greenwold.
(c)(10) Form of Letter Agreement, dated as of November 18, 1998 between
the Company and Dr. Robert C. Mierendorf.
(c)(11) Form of Letter Agreement, dated as of November 18, 1998 between
the Company and Mark Zimmerman.
(c)(12) Letter dated November 18, 1998 from Merck KGaA to the Company.
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: November 25, 1998
EM ACQUISITION CORP.
By: /s/ DIETER JANSSEN
----------------------------------
Name: Dieter Janssen
Title: President & CEO
EM INDUSTRIES, INCORPORATED
By: /s/ RICHARD K. HACKETT
----------------------------------
Name: Richard K. Hackett
Title: Vice President, Finance
MERCK KGaA, DARMSTADT, GERMANY
By: /s/ KLAUS-PETER BRANDIS
----------------------------------
Name: Klaus-Peter Brandis
Title: Head of Legal Department
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EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER DESCRIPTION NO.
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(a)(1) Offer to Purchase dated November 25, 1998.........................................................
(a)(2) Letter of Transmittal.............................................................................
(a)(3) Notice of Guaranteed Delivery.....................................................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees..................
(a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees..........................................................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.............
(a)(7) Text of Press Release issued by Parent and the Company dated November 19, 1998....................
(a)(8) Summary Advertisement dated November 25, 1998.....................................................
(c)(1) Agreement and Plan of Merger, dated as of November 18, 1998, by and among the Company, Parent and
Purchaser.........................................................................................
(c)(2) Stockholder Agreement, dated as of November 18, 1998, by and among Parent, Purchaser and Warburg,
Pincus Investors, L.P.............................................................................
(c)(3) Confidentiality Agreement, dated as of June 3, 1998, by and between the Company and Merck KGaA....
(c)(4) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and Stelios
B. Papadopoulos...................................................................................
(c)(5) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and Dr.
Robert C. Mierendorf..............................................................................
(c)(6) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and James G.
Stewart...........................................................................................
(c)(7) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and Dr. John
T. Snow...........................................................................................
(c)(8) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and Mark
Zimmerman.........................................................................................
(c)(9) Employment Agreement, dated as of November 18, 1998, by and among the Company, Parent and Douglas
J. Greenwold......................................................................................
(c)(10) Form of Letter Agreement, dated as of November 18, 1998, between the Company and Dr. Robert C.
Mierendorf........................................................................................
(c)(11) Form of Letter Agreement, dated as of November 18, 1998, between the Company and Mark Zimmerman...
(c)(12) Form of Letter dated November 18, 1998 from Merck KGaA to the Company.............................
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<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CN BIOSCIENCES, INC.
AT
$25.00 NET PER SHARE
BY
EM ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
EM INDUSTRIES, INCORPORATED,
AN INDIRECT SUBSIDIARY
OF
MERCK KGAA, DARMSTADT, GERMANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 18, 1998, BY AND AMONG CN BIOSCIENCES, INC. (THE "COMPANY"), EM
INDUSTRIES, INCORPORATED ("PARENT") AND EM ACQUISITION CORP. ("PURCHASER"). THE
BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER AGREEMENT AND HAS DETERMINED THAT THE OFFER AND THE MERGER (AS SUCH TERMS
ARE DEFINED HEREIN) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) A
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
ON A FULLY DILUTED BASIS, AND (ii) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED, OR ANY SIMILAR APPLICABLE FOREIGN LAW. THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 14.
------------------------
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions contained in the Letter of Transmittal, have such stockholder's
signature thereon guaranteed (if required by Instruction 1 to the Letter of
Transmittal), mail or deliver the Letter of Transmittal (or a facsimile thereof)
and any other required documents to the Depositary (as defined herein) and
either deliver the certificates for such Shares to the Depositary or tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section 3
of this Offer to Purchase or (ii) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect such transaction for
such stockholder. Any stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of the
Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Dealer Manager or the Information Agent,
or from brokers, dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
NOVEMBER 25, 1998
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TABLE OF CONTENTS
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INTRODUCTION ......................................................................................... 1
1. Terms of the Offer..................................................................... 3
2. Acceptance for Payment and Payment for Shares.......................................... 4
3. Procedures for Tendering Shares........................................................ 6
4. Withdrawal Rights...................................................................... 8
5. Certain Federal Income Tax Consequences................................................ 9
6. Price Range of Shares; Dividends on Shares............................................. 10
7. Effect of the Offer on the Market for Shares, Nasdaq Listing and Exchange Act
Registration........................................................................... 10
8. Certain Information Concerning the Company............................................. 11
9. Certain Information Concerning Purchaser, Parent, Merck KGaA and Certain Related
Parties................................................................................ 13
10. Source and Amount of Funds............................................................. 16
11. Contacts with the Company; Background of the Offer..................................... 16
12. Purpose of the Offer; the Merger Agreement and the Stockholder Agreement............... 17
13. Dividends and Distributions............................................................ 31
14. Certain Conditions of the Offer........................................................ 31
15. Certain Legal Matters and Regulatory Approvals......................................... 32
16. Fees and Expenses...................................................................... 35
17. Miscellaneous.......................................................................... 35
SCHEDULE I Directors and Executive Officers of Purchaser, Parent and Merck KGaA and General
Partners and Members of the Executive Board and Partners Council of E. Merck........... 36
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i
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To the Holders of Common Stock of CN Biosciences, Inc.:
INTRODUCTION
EM Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned
subsidiary of EM Industries, Incorporated, a New York corporation ("Parent"),
hereby offers to purchase all outstanding shares of Common Stock, par value $.01
per share (the "Shares"), of CN Biosciences, Inc., a Delaware corporation (the
"Company"), at $25.00 per Share, net to the seller in cash without interest
thereon (the "Per Share Amount"), upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"). Parent is an indirect subsidiary of Merck KGaA, Darmstadt, Germany, a
corporation organized under the laws of Germany ("Merck KGaA").
Tendering stockholders of record who tender directly will not be obligated
to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant
to the Offer. Purchaser will pay all fees and expenses of Bear, Stearns & Co.
Inc., which is acting as dealer manager for the Offer (in such capacity, the
"Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., which is acting as
the depositary (in such capacity, the "Depositary"), and D.F. King & Co., Inc.,
which is acting as the information agent (in such capacity, the "Information
Agent"), incurred in connection with the Offer. See Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 18, 1998 (the "Merger Agreement"), by and among the Company,
Parent and Purchaser. The Merger Agreement provides, among other things, that as
soon as practicable after consummation of the Offer and the satisfaction or
waiver of the conditions to the Merger (as defined below) and in accordance with
the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation in the Merger (the "Surviving Corporation") and as a
wholly owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each issued and outstanding Share not tendered in the Offer
(other than Shares held by Parent or any direct or indirect wholly owned
subsidiary of Parent, Shares held in the treasury of the Company and Shares held
by stockholders who properly exercise their dissenters' rights under the DGCL),
will be converted into the right to receive the Per Share Amount (the "Merger
Consideration"), without interest thereon. The Merger Agreement is more fully
described in Section 12.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"), AND (II) THE EXPIRATION OR TERMINATION
OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND SIMILAR APPLICABLE
FOREIGN LAWS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 14.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER AGREEMENT AND HAS DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
VECTOR SECURITIES INTERNATIONAL, INC., THE COMPANY'S FINANCIAL ADVISOR
("VECTOR"), HAS DELIVERED TO THE COMPANY BOARD ITS WRITTEN OPINION TO THE EFFECT
THAT, AS OF NOVEMBER 18, 1998, THE DATE OF SUCH OPINION, AND BASED UPON THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF REVIEW SET FORTH THEREIN, THE
CASH CONSIDERATION TO BE OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER AND
THE MERGER WAS FAIR TO SUCH HOLDERS FROM A FINANCIAL POINT OF VIEW. SUCH OPINION
IS SET FORTH IN FULL AS AN EXHIBIT TO THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9") WHICH THE COMPANY HAS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") AND WHICH IS
BEING MAILED TO THE COMPANY'S STOCKHOLDERS SIMULTANEOUSLY WITH THIS OFFER TO
PURCHASE.
<PAGE>
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into a Stockholder Agreement, dated as of November 18, 1998
(the "Stockholder Agreement"), with Warburg, Pincus Investors, L.P. ("WP
Investors"), which beneficially owns approximately 39.3% of the outstanding
Shares. Pursuant to the Stockholder Agreement, WP Investors has, among other
things, agreed (i) to vote the Shares beneficially owned by it in favor of the
Merger and the Merger Agreement and against any Takeover Proposal (as defined in
Section 12) and (ii) to tender its Shares pursuant to the Offer. In addition,
pursuant to the Stockholder Agreement, WP Investors has granted to Parent or
Purchaser, as Parent may designate, an option (the "Option") to purchase the
Shares beneficially owned by WP Investors under certain circumstances. See
Section 12.
The Merger Agreement provides that promptly upon the purchase by Purchaser
of any Shares pursuant to the Offer (assuming the Minimum Condition has been
satisfied), Parent will be entitled to designate such number of members, rounded
up to the next whole number, of the Company Board as will give Purchaser,
subject to compliance with Section 14(f) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") representation on the Company Board equal to at
least that number of directors which is the product of (i) the total number of
directors on the Company Board (giving effect to the directors appointed or
elected pursuant to such entitlement of Parent) multiplied by (ii) the
percentage that (a) the aggregate number of such Shares beneficially owned by
Parent or any affiliate of Parent (including such Shares as are accepted for
payment pursuant to the Offer, but excluding Shares held by the Company) bears
to (b) the number of Shares outstanding. Notwithstanding the foregoing, Parent
and Purchaser have agreed that, until the Effective Time, the Company Board will
have at least one member who was a director on the date of the Merger Agreement
and who is neither an officer of the Company nor a designee, stockholder,
affiliate or associate (within the meaning of the federal securities laws) of
Parent (one or more of such directors, the "Independent Directors"), provided
that, if no Independent Directors remain, the Merger Agreement requires the
other members of the Company Board to designate one person to fill one of the
vacancies who shall be neither an officer of the Company nor a designee,
shareholder, affiliate or associate of Parent, and such person will be deemed to
be an Independent Director for purposes of the Merger Agreement. The Company has
agreed to increase the size of the Company Board as is necessary to enable
Purchaser's designees to be elected or appointed to the Company Board. Purchaser
is similarly entitled to proportionate representation on the Boards of Directors
of the Company's subsidiaries and on committees of such Boards of Directors and
of the Company Board. The information required by Section 14(f) of the Exchange
Act, and Rule 14f-1 promulgated thereunder relating to Parent's designees to the
Company Board is included as Schedule II to the Schedule 14D-9.
The Merger is subject to a number of conditions, including approval by the
stockholders of the Company if required by the DGCL. Under the DGCL, if
Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the then
outstanding Shares, Purchaser will be able to adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger, without any prior
notice to, or the vote or consent of, any other stockholder of the Company. In
such event, Parent, Purchaser and the Company have agreed to take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition. If, however, Purchaser does not acquire at
least 90% of the then outstanding Shares pursuant to the Offer or otherwise, a
vote of the stockholders of the Company will be required to adopt the Merger
Agreement under the DGCL and a significantly longer period of time may be
required to effect the Merger. If, however, the Minimum Condition has been
satisfied in connection with the Offer, Purchaser will have sufficient voting
power to adopt the Merger Agreement without the vote or consent of any other
stockholder of the Company. See Section 12.
According to the Company, as of the close of business on November 17, 1998,
5,721,790 Shares were issued and outstanding. For purposes of the Offer, in
determining the number of Shares outstanding calculated on a "fully diluted
basis," there will be included the number of outstanding securities of the
Company entitled to vote in the election of directors or in a merger ("Voting
Securities") together with Voting Securities issuable pursuant to obligations
outstanding at that date under the Company's employee stock option or other
benefit plans or otherwise. Based upon the foregoing, the Minimum Condition
would be satisfied if at least 3,164,614 Shares were validly tendered in the
Offer and not properly withdrawn.
As of the date of this Offer to Purchase, neither Parent nor Purchaser
beneficially owns any Shares. Pursuant to the Stockholder Agreement, Parent or
Purchaser, as Parent may designate, has the Option, exercisable upon the
occurrence of certain future events, to acquire the 2,248,485 Shares
(approximately 39.3% of the outstanding Shares) beneficially owned by WP
Investors. See Section 12.
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The Merger Agreement and the Stockholder Agreement are more fully discussed
in Section 12. Certain Federal income tax consequences of the sale of Shares
pursuant to the Offer and the exchange of Shares for the Merger Consideration
pursuant to the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not theretofore properly
withdrawn as described in Section 4. The term "Expiration Date" means
12:00 Midnight, New York City time, on Wednesday, December 23, 1998, unless and
until Purchaser, in its sole discretion (but subject to the terms and conditions
of the Merger Agreement and the applicable rules and regulations of the
Commission), shall have extended the period during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms of the Merger Agreement and the applicable rules and regulations of
the Commission), at any time and from time to time, and regardless of whether or
not any of the events set forth in Section 14 hereof shall have occurred, to
(i) extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) amend the Offer in
any other respect by giving oral or written notice of such amendment to the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER ON THE PER
SHARE AMOUNT, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and certain other conditions (the "Offer Conditions"). See
Section 14, which sets forth in full the Offer Conditions. Subject to the
provisions of the Merger Agreement, including those provisions described in the
next paragraph, and the applicable rules and regulations of the Commission, if,
by the Expiration Date, any or all of the Offer Conditions have not been
satisfied, Purchaser reserves the right (but shall not be obligated) to
(i) terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering stockholders, (ii) waive all the unsatisfied
conditions (other than the Minimum Condition) and, subject to complying with the
terms of the Merger Agreement and the applicable rules and regulations of the
Commission, accept for payment and pay for all Shares validly tendered prior to
the Expiration Date and not theretofore withdrawn, (iii) extend the Offer and,
subject to the rights of stockholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered during the period or periods for
which the Offer is extended, or (iv) amend the Offer.
The Merger Agreement provides that Parent and Purchaser will not terminate
or withdraw the Offer or extend the Expiration Date, unless at the Expiration
Date, the Offer Conditions shall not have been satisfied or earlier waived.
Notwithstanding the foregoing, Purchaser may (i) extend the Expiration Date
(including as it may be extended) for up to ten business days in connection with
an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission and (ii) extend
the initial Expiration Date (including as it may be extended) for up to ten
business days, notwithstanding that on such Expiration Date the Offer Conditions
shall have been satisfied or waived, if the number of Shares that have been
validly tendered and not properly withdrawn represents more than 50% but less
than 90% of the then issued and outstanding Shares. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. Under the terms of the Merger Agreement, however, unless
previously approved by the Company in writing, Parent shall not permit Purchaser
to (i) decrease the Per Share Amount or change the form of consideration payable
in the Offer, (ii) decrease the number of Shares sought in the Offer,
(iii) amend or waive satisfaction of the Minimum Condition, or (iv) impose
additional conditions to the Offer or amend any other terms of the Offer in any
manner adverse to the stockholders of the Company, provided, however, that the
Merger Agreement does not prohibit any waiver of any condition or term of the
Offer (other than the Minimum Condition) or any other action permitted thereby.
As used in this Offer to Purchase, "business day" has the meaning set forth in
Rule 14d-1 under the Exchange Act.
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There can be no assurance that Purchaser will exercise its right to extend
the Offer (other than as may be required by applicable law). Any extension,
waiver, amendment or termination will be followed as promptly as practicable by
public announcement thereof. In the case of an extension, Rule 14e-l(d) under
the Exchange Act requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser will not have any obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser extends the Offer or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its acceptance for payment of,
or payment for, Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in Section 4. However, the ability of Purchaser
to delay the payment for Shares that Purchaser has accepted for payment is
limited by Rule 14e-1 under the Exchange Act, which requires that a bidder pay
the consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer.
If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the materiality of the changes. With respect to a change in price or,
subject to certain limitations, a change in the percentage of securities sought,
a minimum of ten business days is generally required to allow for adequate
dissemination to stockholders.
The Company has provided Purchaser with a list of its stockholders and
security position listings for the purpose of disseminating the Offer to
stockholders. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares validly
tendered and not properly withdrawn on or prior to the Expiration Date. Any
determination concerning the satisfaction of such terms and conditions will be
within the sole discretion of Purchaser and such determination will be final and
binding on all tendering stockholders. In addition, subject to the applicable
rules of the Commission, Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, Shares until any applicable waiting
period under the HSR Act and any similar applicable foreign law shall have
expired or been terminated prior to the Expiration Date. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act.
On November 20, 1998, Parent filed a Notification and Report Form with
respect to the Offer under the HSR Act. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on
December 5, 1998, the 15th day after the date such form was filed, unless early
termination of the waiting period is granted. In addition, the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") may extend the waiting period by requesting
additional information or documentary material from Parent. If such a request is
made, such waiting period will
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expire at 11:59 p.m., New York City time, on the 10th day after substantial
compliance by Parent with such request.
Under German laws and regulations relating to the regulation of monopolies
and competition, certain acquisition transactions may not be consummated in
Germany unless certain information has been furnished to the German Federal
Cartel Office (the "FCO") and certain waiting period requirements have been
satisfied without issuance by the FCO of an order to refrain. The purchase of
Shares by Purchaser pursuant to the Offer and the consummation of the Merger may
be subject to such requirements. Under such laws, the FCO has one month from the
time of filing of such information with the FCO to advise the parties of its
intention to investigate the Offer and the Merger, in which case the FCO has
four months from the date of filing in which to take steps to oppose the Offer
and the Merger. Merck KGaA intends to file promptly the required notification
with the FCO and request early termination of the one-month waiting period.
While Merck KGaA and Parent do not believe that there is any basis for the FCO
to investigate the Offer and the Merger and Merck KGaA and Parent believe that
early termination of the waiting period will be granted, there can be no
assurance that the FCO will not investigate or oppose the transactions or that
early termination of the waiting period will be granted. In addition, Parent may
make additional filings or reports under the antitrust laws of other nations.
See Section 15 for additional information concerning such laws and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
(i) certificates for such Shares or timely confirmation of a book-entry transfer
of such Shares (a "Book-Entry Confirmation") into the Depositary's account at
The Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to
the procedures set forth in Section 3; (ii) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer; and (iii) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any stockholder pursuant to
the Offer will be the highest per Share consideration paid to any other
stockholder pursuant to the Offer.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering Shares that such participant has received and agrees
to be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as of the Expiration Date, if, as and when Purchaser gives oral or
written notice to the Depositary of Purchaser's acceptance for payment of such
Shares pursuant to the Offer. Upon the terms and subject to the conditions of
the Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payments
from Purchaser and transmitting such payments to stockholders whose Shares have
been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY
PURCHASER ON THE PER SHARE AMOUNT, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
If, for any reason whatsoever, acceptance for payment of, or payment for,
any Shares validly tendered pursuant to the Offer is delayed or Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then without prejudice to Purchaser's rights set forth herein, the Depositary
may nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that the tendering stockholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share certificates are submitted for more Shares than are tendered, Share
certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to the appropriate stockholder's account maintained at the Book-Entry
Transfer Facility) as promptly as practicable following the expiration or
termination of the Offer.
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Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent, or to one or more direct or indirect wholly owned
subsidiaries of Parent, the right to purchase Shares tendered pursuant to the
Offer. Any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or such Shares must be delivered pursuant to the procedure
for book-entry transfer set forth below (and a Book-Entry Confirmation received
by the Depositary), in each case prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below.
The Depositary will establish an account with respect to the Shares at the
Book-Entry Transfer Facility for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to transfer such
Shares into the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The method of delivery of Share certificates, the Letter of Transmittal and
all other required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder, and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered holder
of Shares (which, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of such Shares) tendered therewith and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (ii) such Shares are tendered for the account of a firm that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share certificates are not immediately
available, or such stockholder cannot deliver the Share certificates and all
other required documents in time to reach the Depositary on or prior to the
Expiration Date, or
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such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered, provided
that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer
to Purchase, is received by the Depositary as provided below on or prior to
the Expiration Date; and
(iii) the Share certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, together with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three Nasdaq National Market (as defined below) trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time and will depend upon when Share certificates are received by the Depositary
or when Book-Entry Confirmation of such Shares into the Depositary's account at
the Book-Entry Transfer Facility is received. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID BY PURCHASER ON THE PER SHARE AMOUNT, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder will irrevocably appoint designees of Purchaser as such
stockholder's attorneys-in-fact and proxies, with full power of substitution, in
the manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to Shares tendered by such stockholder and
accepted for payment by Purchaser (and with respect to any and all other Shares
or other securities issued or issuable in respect of such Shares on or after
November 18, 1998). All such powers of attorney and proxies shall be considered
irrevocable and coupled with an interest in the tendered Shares (and such other
Shares and securities). Such appointment will be effective when, and only to the
extent that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares (and such other Shares and securities) will be revoked
without further action, and no subsequent powers of attorney and proxies may be
given nor any subsequent written consents executed (and, if given or executed,
will not be deemed effective). The designees of Purchaser will, with respect to
Shares (and such other Shares and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of such
stockholder as they, in their sole discretion, may deem proper at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's payment for such Shares, Purchaser must
be able to exercise full voting and other rights with respect to such Shares and
other securities, including rights in respect of voting at any meeting of
stockholders and acting by written consent.
Determination of Validity. All questions as to the form and validity
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser in its sole discretion, which determination
shall be final and binding on all parties. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any of the conditions of the Offer (other than the Minimum Condition) or
any defect or irregularity in any tender of Shares of any particular stockholder
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have
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been cured or waived. None of Parent, Purchaser, any of their affiliates or
assigns, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding on all parties.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Backup Federal Income Tax Withholding and Substitute Form W-9. In order to
avoid "backup withholding" of Federal income tax on payments of cash pursuant to
the Offer, a stockholder surrendering Shares in the Offer must provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalty of perjury that such
TIN is correct and that such stockholder is not subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to Purchaser and the Depositary). Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also be
withdrawn at any time after January 23, 1999. If Purchaser extends the Offer, is
delayed in its acceptance for payment of Shares, or is unable to purchase Shares
validly tendered pursuant to the Offer for any reason, then without prejudice to
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of Purchaser, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as described in this Section 4. Any such delay in acceptance for payment
will be accompanied by an extension of the Offer to the extent required by law.
See Section 1.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses or facsimile numbers set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered Shares to be withdrawn, the number of Shares to be withdrawn and the
name of the registered stockholder, if different from that of the person who
tendered such Shares. If Share certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary, and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
8
<PAGE>
of Parent, Purchaser, any of their affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of cash by
stockholders of the Company pursuant to the Merger) will be taxable transactions
for Federal income tax purposes under the Internal Revenue Code of 1986, as
amended (the "Code"), and may also be taxable transactions under applicable
state, local, foreign and other tax laws. For Federal income tax purposes, a
tendering stockholder will generally recognize gain or loss equal to the
difference between the amount of cash received by the stockholder pursuant to
the Offer (or pursuant to the Merger) and the aggregate tax basis in the Shares
tendered by the stockholder and purchased pursuant to the Offer (or exchanged
pursuant to the Merger). Gain or loss will be calculated separately for each
block of Shares tendered and purchased pursuant to the Offer (or exchanged
pursuant to the Merger).
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. For noncorporate
stockholders, including individuals, estates and trusts, net capital gain (the
excess of net long-term capital gain over net short-term capital loss) currently
is taxed at a maximum Federal income tax rate of 20%. (Tendering stockholders
subject to the "alternative minimum tax" may be subject to higher effective tax
rates on their long-term capital gains.) Short-term capital gain is taxed at the
same rate as ordinary income. Capital loss generally is deductible only to the
extent of capital gain plus $3,000. Net capital loss in excess of $3,000 may be
carried forward to subsequent taxable years. For corporate stockholders, capital
losses are allowed only to the extent of capital gains, and net capital gain is
taxed at the same rate as ordinary income. Corporations generally may carry back
capital losses up to three years and carry forward such losses up to five years.
A stockholder that tenders Shares may be subject to 31% backup withholding
unless the stockholder provides the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9, included as part of the Letter
of Transmittal. If the tendering stockholder is an individual, the TIN is his or
her social security number. Certain stockholders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such stockholder must submit to the Depositary a
properly completed IRS Form W-8, signed under penalty of perjury, attesting to
that individual's exempt status. Exempt stockholders, other than foreign
individuals, should file a Substitute Form W-9 certifying the stockholder's
exempt status in order to avoid backup withholding. A stockholder that does not
furnish its correct TIN to the Depositary, or otherwise establish a basis for
exemption from backup withholding, may be subject to a $50 penalty imposed by
the IRS. If backup withholding applies to a stockholder, the Depositary is
required to withhold 31% from payments to such stockholder. Backup withholding
is not an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
<PAGE>
6. PRICE RANGE OF SHARES; DIVIDENDS ON SHARES
Since October 2, 1996, the Shares have been traded on the Nasdaq Stock
Market's National Market System (the "Nasdaq National Market") (Symbol: CNBI).
The following table sets forth the high and low closing sales prices per Share
for the quarters indicated on the Nasdaq National Market as reported in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 with
respect to periods occurring in 1996 and 1997 and as reported by the Dow Jones
News Service thereafter.
<TABLE>
<CAPTION>
SALES PRICE
-----------------
HIGH LOW
------- ------
<S> <C> <C>
Year Ended December 31, 1996:
Fourth Quarter (October 2 through December 31)(1).......................................... $18.50 $12.75
Year Ended December 31, 1997:
First Quarter.............................................................................. $18.50 $13.75
Second Quarter............................................................................. 19.00 13.50
Third Quarter.............................................................................. 24.50 18.00
Fourth Quarter............................................................................. 26.00 22.25
Year Ended December 31, 1998:
First Quarter.............................................................................. $28.38 $24.00
Second Quarter............................................................................. 29.13 20.00
Third Quarter.............................................................................. 32.00 18.75
Fourth Quarter (through November 18, 1998)................................................. 28.00 19.25
</TABLE>
- ------------------
(1) On October 2, 1996, the Company completed an initial public offering of its
Shares.
On November 18, 1998, the last full trading day prior to the public
announcement of the Merger Agreement and Purchaser's intention to commence the
Offer, the closing sales price per Share reported on the Nasdaq National Market
was $23.13. On November 24, 1998, the last full trading day before commencement
of the Offer, the closing sales price per Share reported on the Nasdaq National
Market was $24.56. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
No dividends have been paid by the Company on its Shares for the periods
reported. Pursuant to the Merger Agreement, the Company has agreed, from the
date of the Merger Agreement until the Effective Time, not to declare, pay or
set aside any dividend or other distribution, without the prior written consent
of Parent.
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, NASDAQ LISTING AND EXCHANGE ACT
REGISTRATION
Market for Shares. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares which could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the National Association of Securities Dealers Inc. ("NASD")
for continued inclusion in the Nasdaq National Market, which require that an
issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 holders of round lots, with a market value of at least
$1,000,000 and have net tangible assets of at least $1,000,000. If the Shares
were no longer eligible for inclusion in the Nasdaq National Market, they may
nevertheless continue to be included in the Nasdaq SmallCap Market unless, among
other things, the number of holders of Shares were to fall below 300, the number
of publicly held Shares were to fall below 100,000 or there were not at least
two registered and active market makers for Shares, in which case the NASD's
rules provide that the Shares would no longer be "qualified" for Nasdaq Stock
Market reporting and the Nasdaq Stock Market would cease to provide any
quotations. Shares held directly or indirectly by directors, officers or
beneficial owners of more than 10% of Shares are not considered as being
publicly held for this purpose. The Company has informed Purchaser that, as of
November 17, 1998, there were approximately 22 holders of record and that, as of
the close of business on such date, 5,721,790 Shares were issued and
outstanding. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market and the Shares are no longer included in
10
<PAGE>
the Nasdaq National Market or in any other tier of the Nasdaq Stock Market, as
the case may be, the market for the Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that such Shares would continue to trade on other securities exchanges or in the
over-the-counter market and that price quotations would be reported by such
exchanges or through other sources. However, the extent of the public market for
Shares and the availability of such quotations would depend upon such factors as
the number of stockholders and the aggregate market value of Shares remaining at
such time, the interest in maintaining a market in Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
Shares.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in Shares
becoming eligible for deregistration under the Exchange Act. Registration of
Shares may be terminated upon application of the Company to the Commission if
the Shares are not listed on a national securities exchange and there are fewer
than 300 record holders. The termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and would make certain provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b), the requirement of furnishing a proxy statement in connection
with stockholders' meetings and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Shares. Furthermore, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to dispose
of their securities pursuant to Rule 144 under the Securities Act of 1933.
Parent intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon as practicable
following completion of the Offer, as the requirements for such termination will
be met. If registration of the Shares is not terminated prior to the Merger,
then the registration of the Shares under the Exchange Act will be terminated
following the consummation of the Merger.
Margin Stock. The Shares are currently "margin securities" under the rules
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to extend
credit on the collateral of such Shares for the purpose of buying, carrying or
trading in securities ("Purpose Loans"). Depending upon factors similar to those
described above with respect to listing and market quotations, it is possible
that, following the Offer, the Shares might no longer constitute "margin
securities" for purposes of the Federal Reserve Board's margin regulations and,
therefore, could no longer be used as collateral for Purpose Loans made by
brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Section 8 and
elsewhere in this Offer to Purchase, including financial information, has been
taken or derived from information furnished to Purchaser, Parent and Merck KGaA
by the Company or on file with the Commission and other public sources,
including, among other things, the Company's Annual Reports on Form 10-K for the
years ended December 31, 1997 and December 31, 1996 and the Company's Quarterly
Reports on Form 10-Q for the quarters ended September 30, 1998 and
September 30, 1997. Although none of Purchaser, Parent and Merck KGaA have any
knowledge that would indicate that any statements contained herein are untrue in
any material respect, neither Purchaser, Parent nor Merck KGaA assumes any
responsibility for the accuracy or completeness of the information contained
herein, or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information but
which are unknown to Purchaser, Parent and Merck KGaA.
General. The Company is a Delaware corporation with its principal offices
located at 10394 Pacific Center Court, San Diego, CA 92121. The telephone number
of the Company at such offices is (619) 450-5500. According to the Company's
Annual Report for the fiscal year ended December 31, 1997, the Company is
engaged in the development, production, marketing and distribution of a broad
array of products used worldwide
11
<PAGE>
in disease-related life sciences research at pharmaceutical and biotechnology
companies, academic institutions and government laboratories.
Summary Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company taken or derived
from the Company's Annual Reports on Form 10-K for the years ended December 31,
1997 and December 31, 1996 and the Company's Quarterly Reports on Form 10-Q for
the quarters ended September 30, 1998 and September 30, 1997, each as filed by
the Company with the Commission. The summary financial information set forth
below is qualified in its entirety by reference to such reports and should be
considered in conjunction with the more comprehensive financial and other
information in such reports and other publicly available reports and documents
filed by the Company with the Commission and other publicly available
information. Such reports and other documents should be available for inspection
and copies thereof should be obtainable in the manner set forth below under
"Available Information."
CN BIOSCIENCES, INC.
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, FISCAL YEAR ENDED
(UNAUDITED) DECEMBER 31,
------------------ -----------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales.................................................... $38,180 $29,421 $39,445 $33,725 $26,966
Income (loss) from operations............................ 5,891 3,878 (1,676) 3,493 1,835
Net income (loss)........................................ 3,810 2,836 (2,980) 2,001 1,017
BALANCE SHEET DATA
Working capital.......................................... $31,873 $35,879 $26,975 $30,231 $15,424
Total assets............................................. 55,116 51,778 60,411 46,262 31,197
Total assets less excess cost of assets acquired over
book value............................................ 45,654 47,226 50,081 41,426 25,130
Long-term debt and other obligations net of current
portion............................................... 3,376 1,021 3,565 1,233 8,601
Redeemable preferred stock............................... -- -- -- -- 18,343
Stockholders' equity (deficit)........................... 44,716 44,710 39,106 38,900 (544)
PER SHARE DATA
Net income (loss) per share.............................. $ 0.67 $ 0.53 $ (0.55) $ 0.54 $ 0.31
Net income (loss) per share on fully diluted basis....... 0.65 0.50 (0.55) 0.50 0.30
</TABLE>
Other Financial Information. During the course of the discussions between
Merck KGaA, Parent and the Company that led to the execution of the Merger
Agreement, the Company provided Merck KGaA and Parent with certain information
about the Company and its financial performance which is not publicly available.
The information provided included financial projections for the Company as an
independent company (i.e., without regard to the impact to the Company of a
transaction with Parent), which included sales and net income of $51.5 million
and $5.2 million, respectively, for fiscal 1998 and $60.6 million and
$7.0 million, respectively, for fiscal 1999. The foregoing information was
prepared by the Company solely for internal use and not for publication or with
a view to complying with the published guidelines of the Commission regarding
projections or with the guidelines established by the American Institute of
Certified Public Accountants and are included in this Offer to Purchase only
because they were furnished to Merck KGaA and Parent. The foregoing information
is "forward-looking" and inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, including
industry performance, general business and economic conditions, changing
competition, adverse changes in applicable laws, regulations or rules governing
environmental, tax or accounting matters and other matters. One cannot predict
whether the assumptions made in preparing the foregoing information will be
accurate, and actual results may be materially higher or lower than those
described above. The inclusion of this information should not be regarded as an
indication that Parent, Purchaser, Merck
12
<PAGE>
KGaA, the Company or anyone who received this information considered it a
reliable predictor of future events, and this information should not be relied
upon as such. None of Parent, Purchaser, Merck KGaA or the Company assumes any
responsibility for the validity, reasonableness, accuracy or completeness of the
projections and the Company has made no representations to Parent, Purchaser or
Merck KGaA regarding the financial information described above. None of the
Company, Parent, Purchaser, Merck KGaA or any other party intends publicly to
update or otherwise publicly revise the projections even if experience or future
changes make it clear that the projections will not be realized.
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Certain information as of particular dates concerning the Company's directors
and officers, their remuneration, options granted to them, the principal holders
of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in such proxy
statements and distributed to the stockholders of the Company and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at prescribed rates at the
regional offices of the Commission located at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and
other information may also be obtained at the Web site that the Commission
maintains at http://www.sec.gov. Copies of this material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
such material should also be available for inspection at the library of the
Nasdaq National Market System, 1735 K Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, MERCK KGAA AND CERTAIN
RELATED PARTIES
General. Purchaser, a Delaware corporation and a wholly owned subsidiary
of Parent, was organized in connection with the Offer and has not carried on any
activities to date other than those incident to its formation and the
commencement of the Offer. The address of Purchaser's principal offices and the
telephone number for Purchaser at such offices are the same as those of Parent
set forth below.
Parent, a New York corporation, has its principal offices at 7 Skyline
Drive, Hawthorne, NY 10532. The telephone number for Parent at such offices is
(914) 592-4660. Parent is engaged in the manufacture, importation and sale of
specialty chemicals for the health and human nutrition, biopharmaceutical, food
and industrial business sectors.
Parent is 60.2% owned by Merck AG, a corporation organized under the laws
of Switzerland ("Merck AG"), and 39.8% owned by Merck KGaA. Merck AG is a
holding company and the address of its principal offices is Gotthard Strasse 20,
CH-4660 Zug, Switzerland. Merck AG is substantially wholly owned (approximately
99.9%) by Merck KGaA. Merck KGaA is engaged in the pharmaceutical, laboratory
supplies and chemicals business. The address of Merck KGaA's principal offices
is Frankfurter Strasse 250, D-64293 Darmstadt, Germany.
Merck KGaA is controlled by E. Merck, which holds a 74% interest in Merck
KGaA. The remaining 26% interest in Merck KGaA is held by public shareholders.
E. Merck is a German offene Handelsgesellschaft, a general partnership, with
eight offene Gesellschafter ("general partners") and approximately 100 stille
Gesellschafter ("silent partners"). The general partners of E. Merck constitute
seven of the eight members of the Executive Board of E. Merck. The Executive
Board is responsible for the management of, and controls all business decisions
for, E. Merck. Approval of a nine member Partners Council of E. Merck is
required for major transactions over a certain monetary amount. No general
partner or silent partner of E. Merck holds 5% or more of the equity interests
in E. Merck.
The name, citizenship, business address, present principal occupation or
employment and material occupations, positions, offices or employments during
the last five years of each of the directors and executive
13
<PAGE>
officers of Purchaser, Parent and Merck KGaA, and of the general partners and
members of the Executive Board of E. Merck and certain other information are set
forth in Schedule I hereto.
Summary Financial Information--Parent. Parent is not subject to the
informational reporting requirements of the Exchange Act and as such, is not
required to file reports, proxy statements or other information with the
Commission. Set forth below is a summary of certain consolidated financial data
with respect to Parent taken or derived from Parent's audited financial
statements for the years ended December 31, 1997, December 31, 1996 and
December 31, 1995 and interim unaudited financial statements for the nine months
ended September 30, 1998 and for the nine months ended September 30, 1997. Such
statements have been prepared in accordance with United States generally
accepted accounting principles ("US GAAP"), except in the case of unaudited
financial statements for normal recurring year-end adjustments.
EM INDUSTRIES, INCORPORATED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, FISCAL YEAR ENDED
(UNAUDITED) DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales.............................................. $131,717 $146,916 $191,670 $200,964 $194,465
Operating income................................... 13,763 1,774 8,239 12,018 3,735
Net income (loss).................................. 20,254 8,436 16,021 12,036 (10,240)
BALANCE SHEET DATA
Working capital.................................... $ 79,520 $ 79,170 $ 71,197 $ 64,049 $ 64,938
Total assets....................................... 354,955 349,344 355,066 304,378 298,503
Total indebtedness................................. 48,282 62,925 64,104 67,745 70,159
Stockholders' equity............................... 306,673 286,419 290,962 236,633 288,344
</TABLE>
Summary Financial Information--Merck KGaA. Merck KGaA is not subject to
the informational reporting requirements of the Exchange Act and as such, is not
required to file reports, proxy statements or other information with the
Commission. Set forth below is a summary of certain consolidated financial data
with respect to Merck KGaA taken or derived from Merck KGaA's audited financial
statements for the years ended December 31, 1997, December 31, 1996 and
December 31, 1995 and interim unaudited financial statements for the nine months
ended September 30, 1998 and for the nine months ended September 30, 1997.
The financial information set forth below was prepared in accordance with
uniform accounting policies using the International Accounting Standards
Committee's published standards ("IAS"), which differ in certain respects from
US GAAP. Such differences between IAS and US GAAP relate to, among other things,
translation, recognition and measurement criteria. However, Parent believes that
such differences are not material to a decision by a stockholder of the Company
whether to sell, transfer or hold any Shares, since such differences would not
affect the ability of Merck KGaA to provide the necessary funds to Parent and/or
Purchaser to pay for the Shares to be acquired pursuant to the Offer and the
Merger. See Section 10.
The consolidated financial statements of Merck KGaA are published in
Deutsche Marks ("DM").
14
<PAGE>
MERCK KGAA, DARMSTADT, GERMANY
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS OF DM EXCEPT AS NOTED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30,
(UNAUDITED) FISCAL YEAR ENDED DECEMBER 31,
------------------------------ ----------------------------------------
1998 1997
IN U.S. IN U.S.
DOLLARS(1) 1998 1997 DOLLARS(1) 1997 1996 1995
---------- -------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales............................... $3,613 DM6,102 DM5,919 $4,721 DM7,974 DM6,953 DM6,269
Operating income.................... 524 885 821 802 1,354 878 888
Net income.......................... 316 534 367 433 731 486 355
BALANCE SHEET DATA
Working capital(2).................. $1,293 DM2,184 DM1,767 $1,315 DM2,221 DM1,034 DM1,315
Total assets........................ 6,806 11,497 10,279 6,675 11,276 9,056 7,615
Total indebtedness.................. 2,669 4,508 3,709 2,561 4,326 2,922 2,354
Stockholders' equity................ 2,065 3,488 3,101 2,040 3,445 2,883 2,497
</TABLE>
- ------------------
(1) Deutsche Marks have been translated into U.S. Dollars solely for the
convenience of the reader on the basis of the Noon Buying Rate (as defined
below) on November 20, 1998.
(2) Less pension reserves.
The following table sets forth, for the periods and dates indicated,
certain information concerning the exchange rate for the Deutsche Marks into
U.S. Dollars based upon the noon buying rate for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank in New
York City (the "Noon Buying Rate").
<TABLE>
<CAPTION>
DM PER U.S. DOLLAR
----------------------------------------
AT PERIOD AVERAGE
PERIOD END RATE(1) HIGH LOW
- ------------------------------------------------------------------------- --------- ------- ------ ------
<S> <C> <C> <C> <C>
1995..................................................................... 1.4345 1.4261 1.5232 1.3785
1996..................................................................... 1.5387 1.5070 1.5387 1.4703
1997..................................................................... 1.7991 1.7394 1.8379 1.6362
1998 (through November 20, 1998)......................................... 1.6892 1.7741 1.8500 1.6565
</TABLE>
- ------------------
(1) The average of the Noon Buying Rates on the last day of each month during
the period. The Noon Buying Rate on November 20, 1998 was U.S.
$1.00=DM1.6892.
Beneficial Ownership of the Company Securities; Contacts with the
Company. Except for the transactions contemplated by the Merger Agreement and
the Stockholder Agreement, as of the date of this Offer to Purchase, none of
Purchaser, Parent, Merck AG, Merck KGaA or E. Merck nor, to the knowledge of
Purchaser, Parent or Merck KGaA, any of the persons listed on Schedule I hereto,
or any associate or majority owned subsidiary of Purchaser, Parent, Merck AG,
Merck KGaA or E. Merck or any of the persons so listed, beneficially owns or has
a right to acquire directly or indirectly any Shares, and none of Purchaser,
Parent, Merck AG, Merck KGaA or E. Merck nor, to the knowledge of Purchaser,
Parent or Merck KGaA, any of the persons or entities referred to above, or any
of the respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transactions in the Shares during the past 60 days.
Except as otherwise set forth in this Offer to Purchase, including, without
limitation, Sections 11 and 12, there have been no contacts, negotiations or
transactions between Purchaser, Parent, Merck AG, Merck KGaA or E. Merck or, to
the knowledge of Purchaser, Parent or Merck KGaA, any of the persons listed in
Schedule I hereto, or any subsidiary of such persons, on the one hand, and the
Company or its executive officers, directors or affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors, or a sale or other transfer of
a material amount of assets that would require reporting under the rules of the
Commission. Except as otherwise set forth in this Offer to Purchase, including,
without limitation, Section 12, none of Purchaser, Parent, Merck AG, Merck KGaA
or E. Merck, or, to the best knowledge of Purchaser, Parent or Merck KGaA, any
of the persons listed in Schedule I hereto, or any subsidiary
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of such persons, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to purchase all outstanding
Shares pursuant to the Offer, to make payments in respect of the Company Options
(as defined in Section 12) and to pay fees and expenses related to the Offer and
the proposed Merger is estimated to be approximately $149,000,000.
Purchaser plans to obtain all funds necessary for the consummation of the
Offer and the Merger through a capital contribution or a loan or combination
thereof from Parent, Merck KGaA or another affiliate of Merck KGaA. Merck KGaA
has delivered to the Company a letter dated November 18, 1998, a copy of which
is filed as an Exhibit to the Schedule 14D-1, pursuant to which Merck KGaA has
agreed to make available to Parent and Purchaser all funds necessary to
consummate the Offer and the Merger. Any funds provided to Purchaser or Parent
in connection with the Offer and the Merger that are borrowed from Merck KGaA or
one of its affiliates will be repayable by Parent or Purchaser within 90 days of
the loan and will bear interest at the applicable federal rate under the Code
for related-company loans (currently approximately 4.5%). Any funds obtained by
Parent or Purchaser through loans from Merck KGaA or one of its affiliates would
be repaid with internally generated funds (including, if the Merger is
consummated, those of the Company) and from other sources which may include the
proceeds of future refinancings. The plans for repayment of any such borrowings
will be based on Parent's and Merck KGaA's review from time to time of the
advisability of particular actions, as well as prevailing interest rates,
financial and other economic conditions and such other factors as Parent and
Merck KGaA may deem appropriate. Any funds provided to Parent or Purchaser by
Merck KGaA or any of its affiliates in connection with the Offer and the Merger
will be obtained from the working capital of Merck KGaA or such affiliate.
While the foregoing represents the current intention of Merck KGaA, Parent
and Purchaser with respect to the financial arrangements for the funds necessary
to consummate the Offer and the Merger, such financial arrangements may change
depending upon such factors as Merck KGaA, Parent and Purchaser may deem
appropriate.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
At a board meeting held on April 21, 1998, the Company Board initiated a
process to explore strategic alternatives, including the possible sale of the
Company, and approved the retention of Vector to assist in such process. On
May 15, 1998, a representative of Vector contacted a representative of Merck
KGaA to inquire as to whether Merck KGaA would be interested in exploring the
possible acquisition of the Company. On May 20, 1998, representatives of Merck
KGaA telephoned representatives of Vector to express an interest in exploring
the possible acquisition of the Company by Parent.
Merck KGaA and the Company executed a confidentiality agreement on June 3,
1998, providing for, among other things, the receipt and treatment of
confidential information regarding the Company. During the remainder of June and
July 1998, Merck KGaA reviewed certain documentation provided by the Company
regarding the business and operations of the Company.
On August 3, 1998, Stelios B. Papadopoulos, Chief Executive Officer of the
Company, James G. Stewart, Chief Financial Officer and Vice President,
Administration of the Company, and a representative of Vector visited the
headquarters of Merck KGaA in Darmstadt, Germany. During such visit,
representatives of the Company and Merck KGaA discussed various matters as to
the business of the Company, and its reasons for exploring strategic
alternatives. At such meeting, there were general discussions regarding
potential transactions and matters regarding Company valuations. On August 4,
1998, Merck KGaA provided a series of questions to the Company to obtain further
information. The Company sent written responses to these questions to Merck KGaA
on August 6, 1998 and provided additional written information on September 2,
1998.
On September 14, 1998, Merck KGaA sent a letter to Vector expressing an
interest in Parent acquiring all of the Shares of the Company at between $24.00
to $25.00 per Share.
On September 28, 1998, Merck KGaA sent the Company a list of due diligence
subjects for an impending visit to the headquarters of the Company in San Diego
by Merck KGaA. Merck KGaA's accountants visited the Company's headquarters on
October 6, 1998. On October 7 and 8, 1998, executives of Merck KGaA and Parent
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visited the Company's headquarters. Additional due diligence in San Diego was
carried out by Merck KGaA and Parent on October 19 and 20, 1998.
On October 16, 1998, Mr. Papadopoulos and a representative of Vector
visited the headquarters of Merck KGaA in Darmstadt, Germany. During such visit,
the Company and Merck KGaA discussed various matters relating to the business of
the Company.
A telephone conference between Mr. Papadopoulos of the Company and
Mr. Wolfgang Honn, a general partner and Member of the Executive Board of E.
Merck, was held on October 29, 1998. During such telephone conference, Mr. Honn
indicated that Merck KGaA was prepared to offer a price of $23.00 per Share for
the acquisition of all of the Shares of the Company. Mr. Papadopoulos expressed
the view that the Company Board would not be interested in pursuing a sale of
the Company at that price.
On November 4, 1998, a telephone conference was held between
Mr. Papadopoulos of the Company and Dr. Bernd Reckmann, General Manager,
Scientific Laboratory Products, of Merck KGaA, in which the two representatives
discussed moving forward the proposed acquisition and the pricing thereof.
Dr. Reckmann informed representatives of the Company that $24.00 to $25.00 per
Share was the maximum price that Merck KGaA would be prepared to pay for an
acquisition of 100% of the Shares. Further discussions concerning price were
held but no specific proposal was made.
On November 5, 1998, Dr. Reckmann advised Mr. Papadopoulos in a telephone
conference that Merck KGaA would be prepared to offer $25.00 per Share in cash
for all of the Shares of the Company, subject to terms which would provide a
high level of assurance that the transaction would be completed. These terms
included the receipt of an irrevocable option and agreement to tender by WP
Investors, a break-up fee and a no-shop covenant which specifically defined the
types of transactions that would be excepted therefrom. Dr. Reckmann also stated
that Merck KGaA would require that satisfactory employment arrangements be
agreed upon by certain members of senior management of the Company as a part of
the transaction. Mr. Papadopoulos conveyed this information to the Company Board
in a telephonic board meeting held on November 9, 1998. At that meeting, the
Company authorized Mr. Papadopoulos to proceed to negotiate a definitive
agreement on the basis of the price that had been offered.
Further due diligence visits were carried out by Merck KGaA and Parent in
Switzerland, Germany and the United Kingdom in early November 1998.
The parties met in New York on November 12, 1998 to discuss the structure
of the transaction and the proposed documentation for the Merger Agreement and
the Stockholder Agreement. During the next several days, the parties reached
agreement on the outstanding substantive matters relating to the transaction and
also obtained the agreement of WP Investors to the principal terms of the
Stockholder Agreement.
On November 18, 1998, the Board of Directors of Parent and Purchaser
unanimously approved the Merger Agreement, the Stockholder Agreement and the
transactions contemplated thereby, including the Offer and the Merger. The
Partners Council of E. Merck approved the same at its meeting held on
November 18, 1998.
At a special meeting of the Board of Directors of the Company held on
November 18, 1998, Vector rendered its opinion to the Company Board that as of
the date of such opinion and based upon the assumptions made, matters considered
and limits of review set forth therein, the cash consideration to be offered to
the holders of Shares pursuant to the Offer and the Merger was fair to such
holders from a financial point of view. After considering, among other things,
the presentations of management and legal counsel, reviewing the opinion of
Vector and the Merger Agreement and the Stockholder Agreement, the Company Board
unanimously approved the Merger Agreement, the Stockholder Agreement and the
transactions contemplated thereby, including the Offer and the Merger.
On the evening of November 18, 1998, the parties executed the Merger
Agreement and the Stockholder Agreement and the parties made a public
announcement of the transaction on the morning of November 19, 1998.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT
PURPOSE
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the Offer, Parent and Purchaser intend to
acquire all Shares not purchased pursuant to the Offer by consummating the
Merger.
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MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, a copy of which
has been filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference. The Merger Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 8.
The Offer. The Offer is being made pursuant to the Merger Agreement. Upon
the terms and subject to the conditions of the Offer, Parent will cause
Purchaser to accept for payment and purchase, as soon as practicable after the
expiration of the Offer, all Shares validly tendered and not properly withdrawn
prior to the Expiration Date.
Directors. The Merger Agreement provides that, promptly upon the purchase
by Purchaser of any Shares pursuant to the Offer (and assuming that the Minimum
Condition has been satisfied), Parent shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Company Board as will
give Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company Board equal to at least that number of directors
which equals the product of (i) the total number of directors on the Company
Board (giving effect to the directors appointed or elected pursuant to such
entitlement of Parent) multiplied by (ii) the percentage that (a) the aggregate
number of Shares beneficially owned by Parent or any affiliate of Parent
(including for purposes of such calculations such Shares as are accepted for
payment pursuant to the Offer, but excluding Shares held by the Company) bears
to (b) the number of Shares outstanding. At such times, if requested by Parent,
the Company will also cause each committee of the Company Board and the Board of
Directors of each Company Subsidiary (as defined in the Merger Agreement) to
include persons designated by Parent constituting the same percentage of each
such committee and the Board of Directors of each Company Subsidiary as Parent's
designees are of the Company Board. The Company shall, upon request by Parent,
promptly increase the size of the Company Board and of the Boards of Directors
of the Company Subsidiaries by whatever number of directors as is necessary to
enable Parent's designees to be elected to the Company Board and the Boards of
Directors of the Company Subsidiaries in accordance with the terms of the Merger
Agreement and shall cause Parent's designees to be so elected.
The Merger Agreement further provides that in the event that Parent's
designees are appointed or elected to the Company Board and the Boards of
Directors of the Company Subsidiaries, until the Effective Time, the Company
Board shall have at least one Independent Director (defined as a director who is
a director of the Company on the date of the Merger Agreement and who is neither
an officer of the Company nor a designee, stockholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent). If no
Independent Directors remain, the other members of the Company Board shall
designate one person to fill one of the vacancies who shall not be either an
officer of the Company or a designee, shareholder, affiliate or associate of
Parent, and such person shall be deemed to be an Independent Director for
purposes of the Merger Agreement. Following the time Parent's designees
constitute a majority of the Company Board and prior to the Effective Time, any
(i) amendment or termination of the Merger Agreement on behalf of the Company,
(ii) exercise or waiver of any of the Company's rights or remedies under the
Merger Agreement, (iii) extension of the time for performance of Parent's
obligations under the Merger Agreement or (iv) the taking of any other action by
the Company in connection with the Merger Agreement required to be taken by the
Company Board will require the affirmative vote of a majority of the Independent
Directors then in office.
The Merger. The Merger Agreement provides that as soon as practicable
after the satisfaction or waiver of the conditions to the Merger set forth in
the Merger Agreement, at the Effective Time, upon the terms and subject to the
conditions of the Merger Agreement and in accordance with the DGCL, Purchaser
shall be merged with and into the Company, and the separate existence of
Purchaser shall cease, and the Company, as the Surviving Corporation in the
Merger shall continue its corporate existence under the laws of the State of
Delaware as a subsidiary of Parent. At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of Purchaser. In the event of such an election, the Merger
Agreement provides that the parties agree to execute an appropriate amendment to
the Merger Agreement to reflect such election. The parties will prepare and
execute a Certificate of Merger in order to comply in all respects with the
requirements of the DGCL and with the provisions of the Merger Agreement or, if
applicable, a Certificate of Ownership and Merger (each, a "Certificate of
Merger"). The Merger will become effective at the time of the
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filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time as is specified in
the Certificate of Merger.
Pursuant to the Merger Agreement, at the Effective Time, by virtue of the
Merger, each Share issued and outstanding immediately before the Effective Time
(other than Shares held in the treasury of the Company or owned by Parent or any
direct or indirect wholly owned subsidiary of Parent or Dissenting Shares, as
defined below) will be cancelled and extinguished and converted into the right
to receive the Merger Consideration, without interest thereon. Although it is
Parent's intention to consummate the Merger as promptly as practicable, there
can be no assurance that the Merger will be consummated or, if consummated, of
the timing thereof.
The Merger Agreement also provides that at the Effective Time, the
Certificate of Incorporation and the Bylaws of the Surviving Corporation shall
be the Certificate of Incorporation and the Bylaws of Purchaser in effect at the
Effective Time (subject to any subsequent amendments) and that the directors of
Purchaser immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, in each case
until their successors are duly elected or appointed and qualified.
Stockholders Meeting and Approval. Pursuant to the Merger Agreement, if
required by applicable law in order to consummate the Merger, the Company,
acting through the Company Board, will, in accordance with applicable law,
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders for the purpose of considering and taking action upon the Merger
Agreement and the transactions contemplated thereby (the "Company Proposals") as
soon as practicable following the acceptance for payment and purchase of the
Shares by Purchaser pursuant to the Offer; (ii) prepare and file with the
Commission a preliminary proxy or information statement relating to the Merger
and the Merger Agreement; (iii) obtain and furnish the information required to
be included by the Commission in the definitive proxy statement or information
statement (as amended or supplemented, the "Proxy Statement"); (iv) after
consultation with Parent, respond promptly to any comments made by the
Commission with respect to the preliminary proxy or information statement;
(v) cause the Proxy Statement to be mailed to stockholders; and (vi) obtain the
necessary approvals of the Merger and the Merger Agreement by the stockholders.
The Merger Agreement further provides that the Company will include in the Proxy
Statement the recommendation of the Company Board that the stockholders of the
Company vote in favor of approval of the Merger and the adoption of the Merger
Agreement.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Parent, Purchaser or any other subsidiary of Parent shall acquire at
least 90% of the outstanding Shares pursuant to the Offer or otherwise, the
parties will take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition without a meeting
of the Company's stockholders, in accordance with the "short form" merger
provisions of Section 253 of the DGCL.
Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, the Company or the holder of any of
the following securities:
(i) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled as described in
clause (ii) below and any Dissenting Shares) shall be cancelled and
extinguished and be converted into the right to receive the Merger
Consideration, without interest, promptly upon surrender of the certificate
representing such Share or appropriate proof of lost certificates, in
accordance with the Merger Agreement and from and after the Effective Time,
the holders of certificates evidencing ownership of any such Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided for in the
Merger Agreement or by applicable law;
(ii) each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
immediately before the Effective Time, including Purchaser, shall be
cancelled and extinguished and no payment or other consideration shall be
made with respect thereto; and
(iii) the shares of Purchaser common stock outstanding immediately
prior to the Merger shall be converted into one validly issued, fully paid
and non-assessable share of the common stock of the Surviving
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Corporation, which one share shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall be owned
by Parent.
The Merger Agreement further provides that, notwithstanding any provision
of the Merger Agreement to the contrary, any Shares issued and outstanding
immediately prior to the Effective Time and held by a stockholder who has
demanded and perfected such stockholder's demand for appraisal of such
stockholder's Shares in accordance with the DGCL (including, but not limited to
Section 262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost such stockholder's right to such appraisal ("Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration, but the holder thereof shall be entitled to only such
rights as are granted by the DGCL. Notwithstanding the foregoing, if any
stockholder who demands appraisal of such stockholder's Shares under the DGCL
shall effectively withdraw or lose (through failure to perfect or otherwise)
such stockholder's right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such stockholder's Shares
shall automatically be converted into and represent only the right to receive
the Merger Consideration, without interest thereon, upon surrender of the Share
certificate(s).
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval of the stockholders of the Company and
the stockholders of Parent, as described in the Merger Agreement:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company:
(i) if the Offer is terminated or withdrawn pursuant to its terms
without any Shares being purchased under the Offer, provided that such
provision may not be used by Parent or the Company to terminate the
Merger Agreement if such party has materially breached the Merger
Agreement;
(ii) if any nation or government, any state or other political
subdivision thereof, any entity, authority or body exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board,
commission, administrator, instrumentality, court, tribunal or
arbitrator and any self-regulatory organization, domestic or foreign
(each a "Governmental Authority") shall have issued an order, decree,
ruling or injunction or taken any other action permanently enjoining,
restraining or otherwise prohibiting acceptance for payment of Shares
pursuant to the Offer or the consummation of the Merger or, for the
benefit of Parent only, the Stockholder Agreement, and such order,
decree, ruling, injunction or other action shall have become final and
nonappealable; provided that Parent or the Company, as the case may be,
may not terminate the Merger Agreement on such basis if it has not
complied with its obligation under the Merger Agreement to use its
reasonable best efforts to (A) obtain all consents from Governmental
Authorities and other third parties required for the consummation of the
Offer and the Merger and the transactions contemplated thereby,
(B) timely make all necessary filings under the HSR Act and similar
foreign laws and (C) have vacated, dismissed or withdrawn any order,
stay, decree, judgment or injunction of any Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the
transactions contemplated by the Merger Agreement;
(c) by the Company if (i) Parent or Purchaser fails to commence the
Offer as provided in the Merger Agreement, or (ii) Parent or Purchaser
shall not have accepted for payment and paid for Shares pursuant to the
Offer in violation of the terms of the Merger Agreement and of the Offer,
provided that such provision may not be used by the Company to terminate
the Merger Agreement if the Company has materially breached the Merger
Agreement;
(d) by Parent if the Company shall have breached in any material
respect any of its material covenants or other agreements in the Merger
Agreement which breach or failure to perform is incapable of being cured
or, the Company having been given reasonable written notice of such breach
by Parent, has not been cured within one business day prior to the then
scheduled Expiration Date;
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(e) by Parent if (i) the Company Board or any committee thereof shall
have withdrawn or modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer or recommendation of
the Company Proposals, or approved or recommended any Takeover Proposal (as
defined below) or (ii) the Company Board or any committee thereof shall
have resolved to take any of the foregoing actions;
(f) by the Company if Parent shall have breached in any material
respect any of its material covenants or other agreements contained in the
Merger Agreement, which breach or failure to perform is incapable of being
cured or, Parent having been given reasonable written notice of such breach
by the Company, has not been cured within one business day prior to the
Expiration Date;
(g) by the Company in order to enter into an Acquisition Agreement (as
defined below) providing for a Superior Proposal (as defined below) entered
into in accordance with the exceptions to the non-solicitation covenants
described below, provided that prior thereto the Company has reimbursed
Parent for all reasonable out-of-pocket charges and expenses (not to exceed
$1,500,000) incurred by Parent and Purchaser in connection with the Merger
Agreement, the Offer and the Merger in accordance with the Merger
Agreement; or
(h) by Parent if the Company, any of its officers or directors or
financial or legal advisors shall take any of the actions that would be
proscribed by the non-solicitation covenants described below but for the
exceptions thereto described below.
No Solicitation Covenants. The Merger Agreement provides that the Company
may not, nor permit any of the Company Subsidiaries to, nor authorize or permit
any of the respective officers, directors or employees of the Company and the
Company Subsidiaries, or any investment banker, attorney, accountant or other
representative retained by it or any of the Company Subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information, other than publicly available information provided pursuant to
routine stockholder requests consistent with past practice), or take any other
action designed or reasonably likely to facilitate, any inquiries or the making
of any proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal. In addition, except as set forth in the Merger
Agreement, neither the Company Board nor any committee thereof may (a) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by the Company Board or such committee of
the Offer, the Merger or the Stockholder Agreement, or (b) approve or recommend
any Takeover Proposal, or (c) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or similar agreement
related to any Takeover Proposal (each, an "Acquisition Agreement").
Notwithstanding the provisions contained in the preceding paragraph, if at
any time prior to the Expiration Date and following the receipt of a Superior
Proposal, the Company Board determines in good faith, based upon the advice of
outside counsel, that such action is consistent with its fiduciary duties to the
Company's stockholders under applicable law, in response to a Superior Proposal
that was made in circumstances not otherwise involving a breach of the Merger
Agreement, and subject to compliance with the covenants described in the second
succeeding paragraph, the Company may (i) furnish information with respect to
the Company and the Company Subsidiaries to any person pursuant to a
confidentiality agreement having terms substantially the same as the
Confidentiality Agreement (as defined below), provided that (a) such
confidentiality agreement may not include any provision calling for an exclusive
right to negotiate with the Company and (b) the Company advises Parent of all
such nonpublic information delivered to such person concurrently with, or
promptly following, its delivery to the requesting party, (ii) participate in
negotiations regarding such Superior Proposal, and (iii) take any of the actions
set forth in the last sentence of the preceding paragraph at any time that is
after the second business day following Parent's receipt of written notice
advising Parent that the Company Board has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal and providing notice of the
determination of the Company Board of what action referred to herein the Company
Board expects to take. The foregoing proviso does not prevent the Company Board
from taking any actions described above within two business days of the
Expiration Date so long as the notice described in the foregoing proviso is
received by Parent prior to Noon, New York City time, on the then scheduled
Expiration Date.
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Under the Merger Agreement (i) the term "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company and the
Company Subsidiaries or 15% or more of any class of equity securities of the
Company or any Company Subsidiary, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any Company Subsidiary, or any
merger, consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Company Subsidiary, other than the transactions contemplated by the Merger
Agreement, and (ii) the term "Superior Proposal" means a bona fide written
Takeover Proposal which the majority of the members of the Company Board
determines, in their good faith judgment (which may be based on the opinion of
independent financial advisors) that the value of the consideration provided for
in such proposal exceeds the Per Share Amount then provided in the Offer, and,
considering all relevant factors, is more favorable to the Company and its
stockholders than the Offer and the Merger and for which financing, to the
extent required, is fully committed.
The Merger Agreement requires the Company to promptly advise Parent orally
and in writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the person making such request or Takeover Proposal and to promptly
advise Parent of all significant developments which could reasonably be expected
to culminate in the Company Board withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the transactions contemplated by the
Merger Agreement.
The Merger Agreement does not prohibit the Company from (i) taking and
disclosing to the Company's stockholders a position contemplated by Rule
14e-2(a) under the Exchange Act or (ii) from making any disclosure to the
stockholders, provided, however, that neither the Company nor the Company Board
nor any committee thereof shall, except in accordance with the covenants in the
Merger Agreement described above, withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Offer or the Company
Proposals or approve or recommend, or propose publicly to approve or recommend,
a Takeover Proposal.
Expense Reimbursement. The Merger Agreement provides that in the event
that:
(i) the Company terminates the Merger Agreement in order to enter into
an Acquisition Agreement providing for a Superior Proposal entered into in
accordance with the non-solicitation provisions of the Merger Agreement; or
(ii) Parent terminates the Merger Agreement after the Company Board or
any committee thereof has withdrawn or modified or changed in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer
or any of the Company Proposals, or approved or recommended any Takeover
Proposal, or the Company Board or any committee thereof has resolved to
take any of the foregoing actions,
the Company shall promptly pay Parent upon its request all reasonable
out-of-pocket charges and expenses incurred by Parent or any of its affiliates
in connection with the Merger Agreement and the transactions contemplated
thereby, including, without limitation, reasonable attorneys' and accountants'
fees and disbursements, fees and expenses of Parent's financial advisor and any
information agent and depositary retained in connection with the Offer and all
printing and mailing fees and expenses, in an amount not to exceed $1,500,000.
Except as described above, each party will bear its own expenses in
connection with the Merger Agreement and the transactions contemplated thereby.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company is obligated to, and to
cause its accountants and legal counsel to, provide Parent and its respective
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at all reasonable times, access as
reasonably requested to all personnel, offices and other facilities and to all
contracts, agreements, commitments, books and records of or pertaining to the
Company and the Company Subsidiaries. The Company will also permit the foregoing
persons to make such reasonable inspections as they may require and will cause
its officers promptly to furnish Parent with (i) such financial and operating
data and other information with respect to the business and properties of the
Company and the Company
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Subsidiaries as Parent may from time to time reasonably request, and (ii) a copy
of each report, schedule and other document filed or received by the Company or
any of the Company Subsidiaries pursuant to the requirements of applicable
securities laws or the NASD.
The Merger Agreement further provides that each of Parent, Purchaser and
the Company will hold and will cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement dated June 3, 1998 between Merck KGaA and the Company (the
"Confidentiality Agreement"). A copy of such Confidentiality Agreement is filed
as an Exhibit to the Schedule 14D-1.
Efforts to Consummate. Upon the terms and subject to the conditions of the
Merger Agreement, each of Parent and the Company has agreed to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by the
Merger Agreement, including, but not limited to, (i) obtaining all consents,
approvals, waivers or authorizations of, notices to or declarations or filings
("Consents") from Governmental Authorities and other third parties required for
the consummation of the Offer and the Merger and the transactions contemplated
thereby, (ii) timely making all necessary filings under the HSR Act and similar
foreign laws and (iii) having vacated, dismissed or withdrawn any order, stay,
decree, judgment or injunction of any Governmental Authority which temporarily,
preliminarily or permanently prohibits or prevents the transactions contemplated
by the Merger Agreement. Upon the terms and subject to the conditions of the
Merger Agreement, each of Parent and the Company has committed to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary to satisfy the other conditions to the
closing of the transactions contemplated by the Merger Agreement.
Notwithstanding any other provision contained in the Merger Agreement, in no
event will Parent, Purchaser or any of their affiliates be required to take or
fail to take any action in order to obtain or make a Consent arising out of any
contractual or legal obligation of or applicable to the Company or the Company
Subsidiaries, other than obligations such as those under the HSR Act which apply
to both the Company and Parent, Purchaser and any of their affiliates and then
only to the extent applicable to Parent, Purchaser and any of their affiliates,
and in no event will Parent, Purchaser or any of their affiliates be required to
enter into or offer to enter into any divestiture, hold-separate, business
limitation or similar agreement or undertaking in connection with the Merger
Agreement or the transactions contemplated thereby.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, except for certain exceptions set
forth in the Merger Agreement, during the period from the date of the Merger
Agreement to the Effective Time, the Company shall, and shall cause the Company
Subsidiaries to, conduct their businesses in the ordinary course and consistent
with past practice, and the Company shall, and shall cause the Company
Subsidiaries to, use their reasonable best efforts to preserve intact their
business organization, keep available the services of their officers and
employees and preserve intact the present commercial relationships of the
Company and the Company Subsidiaries with all persons with whom they do
business. Without limiting the generality of or effect of the foregoing, the
Company has agreed that it will not, and will cause the Company Subsidiaries not
to:
(i) amend or propose to amend its Certificate of Incorporation or
Bylaws (or comparable governing instruments) or change the number of
directors constituting the entire Company Board or the Board of Directors
of any of the Company Subsidiaries;
(ii) authorize for issuance, issue, deliver, grant, sell, pledge, or
otherwise dispose of or propose to issue, deliver, grant, sell, pledge or
otherwise dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, the
capital stock or other securities of the Company or any of the Company
Subsidiaries including, but not limited to, stock appreciation rights,
phantom stock, any securities convertible into or exchangeable for shares
of stock of any class of the Company or any of the Company Subsidiaries;
provided, however, that the foregoing shall not prohibit the issuance of
Shares upon the exercise of options granted prior to the date of the Merger
Agreement;
(iii) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in
cash, stock, securities or other property or any combination thereof) in
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respect of its capital stock, or directly or indirectly redeem, purchase or
otherwise acquire or offer to acquire, directly or indirectly, any shares
of its capital stock or other securities;
(iv) (a) except in the ordinary course of business consistent with
past practice (1) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for
the obligations of any person or (2) make any loans, advances or capital
contributions to, or investments in, any other person (other than to a
Company Subsidiary); (b) acquire the stock or assets of, or merge or
consolidate with, any other person; (c) voluntarily incur any liability or
obligation (absolute, accrued, contingent or otherwise) other than in the
ordinary course of business consistent with past practice; (d) sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree
to sell, transfer, mortgage, pledge or otherwise dispose of or encumber,
any assets or properties, real, personal or mixed of the Company and the
Company Subsidiaries other than sales of products in the ordinary course of
business and in a manner consistent with past practice; (e) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in the
ordinary course of business consistent with past practice); (f) enter into
any contract or agreement other than in the ordinary course of business
consistent with past practice or amend, alter or terminate any Company
Material Contract (as defined in the Merger Agreement); or (g) subject to
certain exceptions set forth in the Merger Agreement, authorize any single
capital expenditure which is in excess of $200,000 or capital expenditures
(during any one-month period) which are, in the aggregate, in excess of
$200,000 for the Company and the Company Subsidiaries taken as a whole;
(v) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend or terminate any
Benefit Plan (as defined below), employment, consulting, retention, change
in control, collective bargaining, bonus or other incentive compensation,
profit sharing, health or other welfare, stock option or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any stockholder, officer, director, other
employee, agent, consultant or affiliate other than as required pursuant to
the terms of agreements in effect on the date of the Merger Agreement and
specifically disclosed to Parent. A "Benefit Plan" includes (a) an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, together with all regulations thereunder
("ERISA"), even if, because of some other provision of ERISA, such plan is
not subject to any or all of ERISA's provisions, and (b) whether or not
described in the preceding clause (a), any pension, profit sharing,
severance, employment, change-in-control, bonus, stock bonus, deferred or
supplemental compensation, retiree medical or life insurance, death benefit
or insurance, retirement, thrift, stock purchase or stock option plan or
any other compensation, welfare, fringe benefit, perquisite or retirement
plan, or other material program, policy or arrangement of any kind or
nature whatsoever, whether oral or written, providing for compensation,
benefits for or the welfare of any or all of the current or former
employees, directors, consultants or agents of the Company or any of the
Company Subsidiaries or their beneficiaries or dependents;
(vi) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(vii) make any material tax election, settle or compromise any
material federal, state, local or foreign tax liability, or waive any
statute of limitations for any tax claim or assessment;
(viii) settle or compromise any material pending or threatened suit,
action or claim;
(ix) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Company Subsidiary (other than the
Merger);
(x) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (a) in the ordinary course of
business consistent with past practice of liabilities reflected or reserved
against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice
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and (b) of liabilities required to be paid, discharged or satisfied
pursuant to the terms of any contract in existence on the date of the
Merger Agreement or entered into in accordance with the Merger Agreement;
(xi) permit any insurance policy naming the Company or any of the
Company Subsidiaries as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except in the ordinary
course of business consistent with past practice; or
(xii) take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described above or take or omit to take
any action which would make any of the representations or warranties of the
Company contained in the Merger Agreement untrue and incorrect in any
material respect as of the date when made if such action had then been
taken or omitted, or would result in any of the Offer Conditions or certain
covenants of the Company in the Merger Agreement as described herein not
being satisfied.
The Company also agreed to, and to cause the Company Subsidiaries to, use
its or their best efforts to comply in all material respects with all laws
applicable to it or any of its properties, assets or business and maintain in
full force and effect all the Permits (as defined in the Merger Agreement)
necessary for such business.
Employment Arrangements. In connection with the Merger Agreement, Parent
has entered into new employment agreements with certain of the Company's
executive officers which will become effective upon the consummation of the
Offer. If the Merger Agreement is terminated prior to the Effective Time, the
new employment agreements will be null and void and the existing employment
agreements and severance agreements covering those executive officers will
continue in effect. See Item 3 and Schedule II of the Schedule 14D-9 for a
description of the existing employment agreements. The following is a summary of
the material terms of the new employment agreements entered into in connection
with the Merger Agreement (the "New Employment Agreements"), the forms of which
are filed as an Exhibit to the Schedule 14D-1 and are incorporated herein by
reference.
Each of Stelios B. Papadopoulos, the Company's Chairman, Chief Executive
Officer and President, Robert C. Mierendorf, President and General Manager of
Novagen, Inc., a subsidiary of the Company, James G. Stewart, Vice President,
Administration, Chief Financial Officer and Secretary of the Company, Douglas J.
Greenwold, Vice President, Sales and Marketing of the Company, Dr. John T. Snow,
Vice President, New Business Development of the Company and Mark Zimmerman has
entered into a New Employment Agreement.
Mr. Papadopoulos will be employed as the Chief Executive Officer of the
Company after the Merger. Mr. Papadopoulos' New Employment Agreement provides
for a three year term which will automatically be extended for consecutive one
year periods unless notice of termination of employment is given by either the
Company or Mr. Papadopoulos at least ninety days prior to the expiration of the
initial or any renewal term. Mr. Papadopoulos will receive an annual base salary
of $275,000, to be reviewed at least annually. Bonuses and increases in base
salary may be awarded to Mr. Papadopoulos in the sole discretion of the Company
Board, based upon the Company's performance and consistent with the Company's
compensation policies. In addition to his participation in any group life
insurance programs provided by the Company to its employees, the Company will
provide Mr. Papadopoulos with term life insurance in the amount of $150,000.
Mr. Papadopoulos will be entitled to participate in a new long-term incentive
compensation plan to be developed by the Company and will receive an allocation
of units under such plan effective as of the Effective Time, which allocation
shall be commensurate with his position and consistent in incentive opportunity
with allocations to similarly situated employees of the Company. If
Mr. Papadopoulos' New Employment Agreement is terminated due to disability, he
will receive disability pay from the date of such termination until the second
anniversary of the Effective Time at the rate of 50% of his base salary, reduced
by applicable payroll taxes and amounts received under any Company-maintained
disability insurance policy or plan or under Social Security or similar laws. If
Mr. Papadopoulos is involuntarily terminated without cause, or if he voluntarily
terminates his employment as the result of the assignment to him of duties which
are materially inconsistent with his duties (a "Material Demotion") or if the
Company does not offer to continue his employment at the expiration of the
three-year term at a base salary at least equal to his then base salary, he will
receive salary continuation pay for twelve months from the date of such
termination equal to his then most recent base salary. Mr. Papadopoulos' New
Employment Agreement contains a covenant not to compete with the Company for one
year from the date of his termination of employment
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(except for termination due to disability, termination without cause or
voluntary termination following a Material Demotion). The covenant also
prohibits Mr. Papadopoulos from interfering with the Company's business
relationships for such one-year period. If Mr. Papadopoulos breaches his
covenant not to compete or interfere with the Company's business relationships,
the amount of his severance payments will be reduced. Mr. Papadopoulos' New
Employment Agreement contains an assignment to the Company of his rights in
inventions and other intellectual property and an agreement to maintain
confidentiality about the Company's know-how, trade secrets, proprietary
processes and other confidential matters.
The New Employment Agreements for Dr. Mierendorf, Messrs. Stewart,
Greenwold and Zimmerman and Dr. Snow (each, an "Executive Officer") provide for
a two-year term (other than the New Employment Agreement for Dr. Snow which
provides for a three-year term), each of which will automatically be extended
for consecutive one year periods unless notice of termination of employment is
given by either the Company or the Executive Officer at least ninety days prior
to the expiration of the initial or any renewal term. The New Employment
Agreements for Dr. Mierendorf, Messrs. Stewart, Greenwold and Zimmerman and
Dr. Snow provide for annual base salaries of $165,000, $195,000, $145,000,
$145,000 and $150,000, respectively. Each of Dr. Mierendorf and Mr. Zimmerman
shall be entitled to receive a $50,000 bonus to the extent he is an employee of
the Company at the Effective Time and enters into a letter agreement with the
Company, the forms of which are filed as Exhibits to the Schedule 14D-1 and are
incorporated herein by reference. Each of the Executive Officers will have the
same title as he held prior to the Merger and will perform duties consistent
with his title. The base salary for each Executive Officer is determined
annually by the Compensation Committee of the Company Board and may be adjusted
based upon certain factors including the Executive Officer's performance, the
financial performance of the Company and economic conditions. Each Executive
Officer will be eligible for an executive bonus of up to a maximum of 35% of his
base salary, based on the achievement of objectives established by the
Compensation Committee and to be awarded in the sole discretion of the
Compensation Committee. Each Executive Officer will also be entitled to
participate in a new long-term incentive compensation program to be developed by
the Company and will receive an allocation of units under such plan effective as
of the Effective Time, which allocation shall be commensurate with his position
and consistent in incentive opportunity with allocations to similarly situated
employees of the Company. Each Executive Officer will also be eligible for
fringe benefits as are generally provided to executives of the Company. If an
Executive Officer is involuntarily terminated without cause, or if an Executive
Officer voluntarily terminates employment as the result of a material reduction
in his responsibilities, he will receive salary continuation pay equal to his
base salary in effect at the time of termination for the greater of (i) the
remaining term of his New Employment Agreement and (ii) twelve months from the
date of termination, provided that the salary continuation payments will cease
if the Executive Officer engages in any business which is competitive with the
Company or interferes with the Company's business relationships. The New
Employment Agreements for the Executive Officers contain the same provisions
with respect to the assignment of inventions and other intellectual property and
confidentiality as are contained in Mr. Papadopoulos' New Employment Agreement.
Indemnification. Purchaser and Parent have agreed in the Merger Agreement
that all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in favor of the
current or former directors, officers or employees of the Company as provided in
the Company's Certificate of Incorporation or Bylaws or pursuant to agreements
existing on the date of the Merger Agreement will be assumed by the Surviving
Corporation, and Parent will cause the Surviving Corporation to honor such
obligations in accordance with the terms thereof, without further action, as of
the Effective Time, and such rights will continue in full force and effect in
accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's related obligations, shall apply in all respects to
the current or former directors, officers and employees of each of the Company
Subsidiaries as though such directors, officers and employees were entitled to
indemnification rights pursuant to the Company's Certificate of Incorporation or
Bylaws as in effect on the date of the Merger Agreement or pursuant to such
agreements, as the case may be. In addition, from and after the Effective Time,
directors and officers of the Company who become or remain directors or officers
of Parent will be entitled to the same indemnity rights and protections
(including those provided by directors' and officers' liability insurance) as
are afforded to other directors and officers of Parent. The Merger Agreement
provides further that Parent will, and will cause the Surviving Corporation or
one of its affiliates to, maintain for six years from the Effective Time
policies of directors' and officers' liability insurance equivalent in all
material respects to those maintained by or on behalf of the Company and the
Company
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Subsidiaries on the date of the Merger Agreement (and having coverage and
containing terms and conditions which in the aggregate are not less advantageous
to the persons currently covered by such policies as insured) with respect to
claims arising from any actual or alleged wrongful act or omission occurring at
or prior to the Effective Time for which a claim has not been made against any
director or officer of the Company or any director or officer of the Company
Subsidiaries prior to the Effective Time.
Options. The Merger Agreement provides that all outstanding options to
purchase Shares (the "Company Options") granted under the Company's stock option
plans, each as amended (collectively, the "Company Option Plans"), whether or
not then exercisable or vested, pursuant to the terms of the Company Option
Plans, will be cancelled as of the consummation of the Offer and the holders of
Company Options will be entitled to receive from Parent upon consummation of the
Offer, in respect of each Share subject to such Company Option, an amount in
cash equal to the excess, if any, of the Per Share Amount over the exercise
price per Share of such Company Option (such payment to be net of applicable
withholding taxes).
The Company has agreed to cause the Company Option Plans to terminate as of
the Effective Time and the Company has represented and warranted to Parent that
all Company Option Plans provide, or have been or will be amended as and when
required to provide, for the actions described in the preceding paragraph. The
Company has represented and warranted that 607,437 Shares were issuable pursuant
to Company Options as of November 18, 1998 (and will, unless exercised prior to
the Effective Time, be cancelled pursuant to the preceding paragraph).
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's capitalization, the absence of any required filings and consents, the
absence of conflicts with charter documents and contracts, financial statements,
the absence of certain changes or events, compliance with laws, the absence of
litigation, employee benefit plans, ownership and use of assets and properties,
intellectual property, insurance, the filing and compliance of reports with the
requirements of the Commission and the accuracy thereof, environmental matters,
labor relations, brokers and taxes.
Merger Conditions. Under the Merger Agreement, the obligations of each
party to effect the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions, provided that the
obligation of each party to effect the Merger shall not be relieved by the
failure of any such conditions if such failure is the proximate result of any
breach by such party of any of its material obligations under the Merger
Agreement:
(i) Purchaser shall have accepted for payment all Shares validly
tendered in the Offer and not withdrawn; provided, however, that neither
Parent nor Purchaser may invoke this condition if Purchaser shall have
failed to purchase Shares so tendered and not withdrawn in violation of the
terms of the Merger Agreement or the Offer;
(ii) if required, the Company Proposals shall have been approved at or
prior to the Effective Time by the requisite vote of the stockholders of
the Company in accordance with the DGCL and the Company's Certificate of
Incorporation and Bylaws, which the Company has represented shall be solely
the affirmative vote of a majority of the outstanding Shares;
(iii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or
withdrawn prior to the Effective Time; and
(iv) on or prior to the closing date of the Merger, the waiting period
(and any extension thereof) applicable to the Merger under the HSR Act and
similar foreign laws (see Section 15) shall have been terminated or shall
have expired, and all consents necessary for the consummation of the Merger
shall have been obtained.
Pursuant to the Merger Agreement, the obligations of Parent and Purchaser
to effect the Merger are subject to the satisfaction of the condition (which may
be waived in whole or in part by Parent) that the Company shall have performed
in all material respects all obligations required to be performed by it under
the Merger
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Agreement on or before the earlier of (i) such time as Parent's or Purchaser's
designees shall constitute at least a majority of the Company Board and
(ii) the closing date of the Merger; provided, however, that no failure by the
Company to have so performed any such material obligation shall constitute a
failure of satisfaction of the foregoing condition where the Company's failure
of performance was caused by Parent.
STOCKHOLDER AGREEMENT
The following summary of the material terms of the Stockholder Agreement is
qualified in its entirety by reference to the copy of the Stockholder Agreement
filed as an Exhibit to the Schedule 14D-1 and incorporated herein by reference.
In connection with the execution of the Merger Agreement, WP Investors,
which beneficially owns 2,248,485 Shares, or approximately 39.3% of the issued
and outstanding Shares (the "Option Shares"), entered into the Stockholder
Agreement with Parent and Purchaser pursuant to which WP Investors has agreed to
tender the Option Shares pursuant to the Offer and has granted Parent or
Purchaser, as Parent may designate (the "Optionee"), the irrevocable Option to
purchase all of such Option Shares at $25.00 per Share (or such higher price as
may be paid in the Offer). The Option may be exercised by the Optionee if the
Company becomes obligated to pay Parent its reasonable expenses incurred in
connection with the Merger Agreement, the Offer or the Merger pursuant to the
Merger Agreement (see "Expense Reimbursement" above) or if the Offer is
consummated but (due to the failure by WP Investors to validly tender the Option
Shares or a withdrawal of the Option Shares by WP Investors) Purchaser has not
accepted for payment or paid for the Shares in the Offer (in which case the
price per Option Share will be equal to the highest price paid in the Offer).
The Option will become exercisable, in whole but not in part, on the first to
occur of the foregoing events or, if later, the date on which the HSR Act and
similar foreign law waiting periods required for the purchase of the Option
Shares upon exercise of the Option shall have expired or been terminated and
there is not in effect any preliminary or final injunction or other order issued
by any court or other governmental, administrative or regulatory agency or
authority prohibiting the exercise of the Option pursuant to the Merger
Agreement. The Option will remain exercisable for a period of 20 days after the
Option first becomes exercisable.
Voting of Shares. In the Stockholder Agreement, WP Investors agrees that
from the date thereof until the termination of the Stockholder Agreement, at any
meeting of the Company's stockholders, however called, and in any action by
consent of the Company's stockholders, WP Investors shall vote its Shares
(except to the extent that WP Investors no longer has any voting rights in
respect of the Shares as a result of the exercise of the Option) (i) in favor of
the Merger and the Merger Agreement (as amended from time to time),
(ii) against any Takeover Proposal and against any proposal for action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which is reasonably likely to result in any of the conditions of
the Company's obligations under the Merger Agreement not being fulfilled, any
change in the directors of the Company, any change in the present capitalization
of the Company or any amendment to the Company's Certificate of Incorporation or
Bylaws, any other material change in the Company's corporate structure or
business, or any other action which in the case of each of the matters referred
to in this clause (ii) could reasonably be expected to impede, interfere with,
delay, postpone or materially adversely affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of the Company's stockholders or in such consent, and in connection
therewith to execute any documents which are necessary or appropriate in order
to effectuate the foregoing, including the ability of Purchaser or its nominees
to vote the Shares directly.
Agreement not to Dispose or Encumber Shares. WP Investors has agreed that,
except pursuant to the Offer, during the term of the Stockholder Agreement, it
will not, and will not offer or agree to, sell, transfer, tender, assign,
pledge, hypothecate or otherwise dispose of, or create or permit to exist any
encumbrance on any of its Shares.
Agreement to Tender. WP Investors has agreed to validly tender (or cause
the record owner of such Shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer, its Shares. For its Shares
validly tendered in the Offer
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and not properly withdrawn, WP Investors will be entitled to receive the highest
price paid by Parent pursuant to the Offer.
No Solicitation. WP Investors has agreed in the Stockholder Agreement that
during the term of the Stockholder Agreement, it will not, directly or
indirectly, through any officer, director, agent or other representative,
solicit, initiate or encourage, or take any other action designed or reasonably
likely to facilitate, any inquiries or the making of any proposal from any
person (other than Parent, Purchaser and any of their affiliates) relating to
(i) any acquisition of all or any of the Option Shares or (ii) any transaction
that constitutes a Takeover Proposal, or participate in any negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in or facilitate
or encourage, any effort or attempt by any person to do or seek any of the
foregoing. WP Investors has agreed to notify Parent and Purchaser promptly if
any such proposal or offer, or any inquiry or contact with any person with
respect thereto, is made and shall, in any such notice to Parent and Purchaser,
indicate in reasonable detail the identity of the person making such proposal,
offer, inquiry or contact and the terms and conditions of such proposal, offer,
inquiry or contact. Notwithstanding any provision of this paragraph to the
contrary, if WP Investors or any officer, director, agent or representative of
WP Investors is a member of the Company Board, such member may take actions in
such capacity to the extent permitted by the Merger Agreement.
Representations and Warranties. The Stockholder Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by WP Investors as to
organization, power and authority, the absence of any failure to make required
filings and consents, the absence of conflicts with charter documents and
contracts and title to its Shares. The Stockholder Agreement also provides that,
as of the Effective Time, any and all contractual rights in favor of WP
Investors and its affiliates then in effect between WP Investors or its
affiliates, on the one hand, and the Company or its affiliates, on the other
hand, shall terminate except for indemnification, contribution or exculpation
provisions contained in any contracts, agreements or instruments or in the
Certificate of Incorporation or Bylaws of the Company in favor of WP Investors
or any of its affiliates as in effect as of the Effective Time.
Termination. The Stockholder Agreement shall terminate and be of no
further force and effect (i) by the written mutual consent of the parties
thereto, or (ii) automatically and without any required action of the parties
thereto upon the earlier to occur of (a) the Effective Time and (b) the calendar
day immediately after the termination of the Merger Agreement in accordance with
its terms; provided, however, that in the event that the Option shall become
exercisable, the provisions of the Stockholder Agreement governing the exercise
and exercisability of the Option, the representations, warranties and covenants
of WP Investors, the representations and warranties of Parent and Purchaser and
other miscellaneous matters of the Stockholder Agreement shall survive the
termination of the Stockholder Agreement until the earlier to occur of the
closing of the exercise of the Option and the expiration of the Option. No such
termination of the Stockholder Agreement shall relieve any party thereto from
any liability for any breach of the Stockholder Agreement prior to termination.
VOTE REQUIRED TO APPROVE THE MERGER
The Company Board has approved the Merger Agreement in accordance with the
DGCL. If required for approval of the Merger, the Company has agreed, subject to
the satisfaction of the conditions to the Merger set forth in the Merger
Agreement, in accordance with and subject to the DGCL, to duly convene a meeting
of its stockholders as soon as practicable following consummation of the Offer
for the purpose of considering and taking action on the Merger Agreement. If
stockholder approval is required, the Merger Agreement must generally be adopted
by the vote of the holders of a majority of the outstanding Shares. As a result,
if the Minimum Condition is satisfied, Purchaser will have the power to adopt
the Merger Agreement without the affirmative vote of any other stockholder of
the Company. If Purchaser acquires at least 90% of the outstanding Shares,
Purchaser intends to take, and the Company has agreed to take, all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with the "short form" merger provisions of
Section 253 of the DGCL.
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APPRAISAL RIGHTS
Stockholders of the Company do not have appraisal or dissenters' rights in
connection with the Offer. However, if the Merger is consummated, stockholders
of the Company at the time of the Merger who do not vote in favor of the Merger
and comply with all statutory requirements will have the right under the DGCL to
demand appraisal of, and receive payment in cash of the fair value of, their
Shares outstanding immediately prior to the effective date of the Merger in
accordance with Section 262 of the DGCL.
Under the DGCL, stockholders of the Company who properly demand appraisal
and otherwise comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares (exclusive
of any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of Shares, including asset values and the investment
value of the Shares. The value so determined could be equal to or higher or
lower than the Per Share Amount or the Merger Consideration.
THE FOREGOING DESCRIPTION OF THE DGCL AND SUMMARY OF THE RIGHTS OF
STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
PLANS FOR THE COMPANY
If Purchaser obtains control of the Company pursuant to the Offer, Parent
expects to conduct a detailed review of the Company and the Company Subsidiaries
and their businesses, assets, corporate structure, capitalization, operations,
properties, policies, management and personnel and to consider what, if any,
changes would be desirable in light of the circumstances that then exist. Such
changes could include changes in the businesses, corporate structure,
Certificate of Incorporation, Bylaws, capitalization, board of directors,
management and dividend policy of the Company and the Company Subsidiaries.
Except as described in this Offer to Purchase, none of Purchaser, Parent,
Merck AG, Merck KGaA or E. Merck nor, to the best knowledge of Purchaser, Parent
or Merck KGaA, any of the persons listed on Schedule I, have any present plans
or proposals that would relate to or result in an extraordinary corporate
transaction such as a merger, reorganization or liquidation involving the
Company or any of the Company Subsidiaries or a sale or other transfer of a
material amount of assets of the Company or any of the Company Subsidiaries, any
material change in the capitalization or dividend policy of the Company or the
Company Subsidiaries or any other material change in the corporate structure,
businesses, or the composition of the Board of Directors or management of the
Company or any of the Company Subsidiaries.
Parent and Purchaser have agreed in the Merger Agreement that following the
purchase of Shares pursuant to the Offer, Parent and Purchaser will not, and
will cause their affiliates not to, acquire any Shares other than pursuant to
the Merger and the Option. If the Offer is terminated, Parent or Purchaser may,
following the consummation or termination of the Offer, seek to acquire
additional Shares through the exercise of the Option if the Option is then
exercisable, or through open market purchases, privately negotiated
transactions, a tender offer or exchange offer, or otherwise, upon such terms
and at such prices as it shall determine, which may be more or less than the
price to be paid pursuant to the Offer. Parent, Purchaser and Parent's
affiliates also reserve the right to dispose of any or all Shares acquired by
them.
GOING PRIVATE TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger. Rule 13e-3 should not be applicable
to the Merger if the Merger is consummated within one year after the expiration
or termination of the Offer and the Merger Consideration is not less than the
Per Share Amount. However, in the event that Purchaser is deemed to have
acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is
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<PAGE>
effected whereby stockholders of the Company receive consideration less than
that paid pursuant to the Offer, in either case at a time when Shares are still
registered under the Exchange Act, Purchaser may be required to comply with
Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning the Company
and certain information relating to the fairness of the Merger or such
alternative transaction and the consideration offered to minority stockholders
in the Merger or such alternative transaction, be filed with the Commission and
disclosed to stockholders prior to consummation of the Merger or such
alternative transaction. The purchase of a substantial number of Shares pursuant
to the Offer may result in the Company being able to terminate its Exchange Act
registration prior to consummation of the Merger or such alternative
transaction. See Section 7. If such registration were terminated, Rule 13e-3
would be inapplicable to the Merger or such alternative transaction.
13. DIVIDENDS AND DISTRIBUTIONS
The Company has agreed that, from the date of the Merger Agreement until
the Effective Time, the Company will neither split, combine or reclassify any
Shares of its capital stock nor declare, pay, or set aside any dividends or
other distributions in respect of its capital stock.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
subject to any such rules or regulations, may delay the acceptance for payment
of any tendered Shares and (except as provided in the Merger Agreement) amend or
terminate the Offer (whether or not any Shares have been theretofore purchased
or paid for pursuant to the Offer) (i) unless the following conditions shall
have been satisfied: (a) there shall be validly tendered and not withdrawn prior
to the Expiration Date that number of Shares which satisfies the Minimum
Condition and (b) any applicable waiting period under the HSR Act and similar
applicable foreign law (see Section 15) shall have expired or been terminated
prior to the Expiration Date and the required approval of any Governmental
Authority for the Merger Agreement or the consummation of the transactions
contemplated by the Merger Agreement shall have been obtained, or (ii) if at any
time after the date of the Merger Agreement and before the time of payment for
any such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
occur and be continuing:
(a) there shall be any law, injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction
promulgated, enacted, issued or taken by a Governmental Authority of
competent jurisdiction which in any such case (1) restrains or prohibits
the making or consummation of the Offer, the consummation of the Merger or
the transactions contemplated by the Stockholder Agreement, (2) prohibits
or restricts the ownership or operation by Parent (or any of its affiliates
or subsidiaries) of any portion of the business or assets of Parent, the
Company or the Company Subsidiaries which is material to the business of
all such entities taken as a whole, or compels Parent (or any of its
affiliates or subsidiaries) to dispose of or hold separate any portion of
the business or assets of Parent, the Company or the Company Subsidiaries
which is material to the business of all such entities taken as a whole,
(3) imposes material limitations on the ability of Purchaser effectively to
acquire or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
Purchaser on all matters properly presented to the stockholders, or
(4) imposes any material limitations on the ability of Parent or any of its
affiliates or subsidiaries effectively to control in any material respect
the business and operations of the Company or the Company Subsidiaries;
(b) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which
gives Parent or Purchaser the right to terminate the Merger Agreement or
not to consummate the Merger;
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a material adverse effect on the business, assets,
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<PAGE>
condition (financial or otherwise), liabilities or results of operations of
the Company and the Company Subsidiaries taken as a whole (a "Company
Material Adverse Effect");
(d) there shall have occurred (1) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered by
price fluctuations on a trading day) for, trading in securities on any
national securities exchange or the over-the-counter market, (2) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) any material limitation (whether
or not mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, on the extension of
credit by banks or other lending institutions, (4) a commencement of a war
or armed hostilities or other national calamity directly involving the
United States, and Parent shall have determined that there is a reasonable
likelihood that such event may be of material adverse significance to it or
the Company or (5) in the case of any of the foregoing existing at the time
of the execution of the Merger Agreement, a material acceleration or
worsening thereof;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to a Company
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true
and correct in any respect that is reasonably likely to have a Company
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement;
(g) the Company shall have entered into an Acquisition Agreement with
any person with respect to a Takeover Proposal or shall have resolved to do
so; or
(h) the Company Board or any committee thereof shall have withdrawn,
or modified or changed in a manner adverse to Parent or Purchaser
(including by amendment of the Schedule 14D-9) its recommendation of the
Offer, the Merger or the Merger Agreement, or approved or recommended a
Takeover Proposal, or shall have resolved to do so;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of, or payment for, Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition and (other than the Minimum Condition) may be waived by Purchaser in
whole or in part at any time and from time to time in its sole discretion
(subject to the terms of the Merger Agreement). The failure by Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
General. Except as set forth below, based upon its examination of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor Purchaser is
aware of any licenses or other regulatory permits that appear to be material to
the business of the Company and the Company Subsidiaries, taken as a whole, that
might be adversely affected by Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company Subsidiaries) as contemplated
herein, or of any filings, approvals or other actions by or with any
Governmental Authority that would be required prior to the acquisition of Shares
(or the indirect acquisition of the stock of the Company Subsidiaries) by
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is Purchaser's present intention to seek such
approval or action. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions, that
adverse consequences might not result to the businesses of the Company, Parent
or Purchaser, that certain parts of the businesses of the Company, Parent or
Purchaser might not have to be disposed of or held separate or other substantial
conditions
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<PAGE>
complied with in order to obtain such approval or other action or in the event
that such approval was not obtained or such other action was not taken, any of
which could cause Purchaser to elect (subject to the terms of the Merger
Agreement) to terminate the Offer without the purchase of the Shares thereunder.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 15. See Section 14.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents
an "interested stockholder" (including a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder unless, among other things,
the "business combination" or the transaction which resulted in the stockholder
becoming an "interested stockholder" is approved by the Board of Directors of
such corporation prior to such date. The Company Board has approved the Merger
Agreement, the Offer, the Merger and the Stockholder Agreement and Section 203
is therefore inapplicable to the Offer, the Merger and the transactions
contemplated by the Stockholder Agreement.
A number of other states have adopted takeover laws and regulations which
purport to varying degrees to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, principal executive offices or
principal places of business therein. In Edgar v. Mite Corp., the Supreme Court
of the United States invalidated on constitutional grounds the Illinois Business
Takeovers Act, which as a matter of state securities law made takeovers of
corporations meeting certain requirements more difficult. However, in CTS Corp.
v. Dynamics Corp. of America, the Supreme Court of the United States held that
the State of Indiana could, as a matter of corporate law and in particular those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside of
the state of enactment.
The Company, directly or through the Company Subsidiaries, conducts
business in a number of states throughout the United States, some of which have
enacted takeover laws. Purchaser does not know whether any of these laws will,
by their terms, apply to the Offer or the Merger and has not complied with any
such laws. Should any person seek to apply any state takeover law, Purchaser
will take such action as then appears desirable, which may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws is
applicable to the Offer or the Merger, and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such event,
Purchaser may not be obligated to accept for payment any Shares tendered. See
Section 14.
Pursuant to the Merger Agreement, the Company and the Company Board will
grant such approvals and take such actions as are necessary so that the
transactions contemplated by the Merger Agreement and the Company Proposals may
be consummated as promptly as practicable upon the terms contemplated thereby
and otherwise act to eliminate or minimize the effects of any takeover statute
on any of the transactions contemplated by the Merger Agreement.
Other Governmental or Foreign Approvals. The Company, directly or through
the Company Subsidiaries, owns property in a number of foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to the
Offer, the laws of certain of those foreign countries and jurisdictions may
require the filing of information with, or the obtaining of the approval of,
Governmental Authorities in such countries and jurisdictions. The governments in
such countries and jurisdictions might attempt to impose additional conditions
on the Company's operations conducted in such countries and jurisdictions as a
result of the acquisition of the Shares pursuant to the Offer or the Merger. The
Company has represented to Parent that no Consent of any Governmental Authority
on the part of the Company or any of the Company Subsidiaries is required in
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<PAGE>
connection with the execution, delivery or performance by the Company of the
Merger Agreement or the performance by the Company of the transactions
contemplated thereby other than (i) the filing of the Certificate of Merger with
the Secretary of State of Delaware in accordance with the DGCL, (ii) filings
with the Commission and the NASD, and (iii) filings under the HSR Act and the
rules and regulations promulgated thereunder and similar foreign requirements.
Antitrust. Under the HSR Act and the rules and regulations promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares pursuant to the Offer is subject to such requirements. See Section 2.
There may be similar antitrust requirements in other jurisdictions.
On November 20, 1998, Parent filed with the FTC and the Antitrust Division
a Premerger Notification and Report Form in connection with the acquisition of
Shares pursuant to the Merger Agreement and the Stockholder Agreement. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent, unless both the
Antitrust Division and the FTC terminate the waiting period prior thereto. If,
within such 15-calendar day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material from Parent, the
waiting period would be extended for an additional 10 calendar days following
substantial compliance by Parent with such request. Thereafter, the waiting
period could be extended only by court order. If the acquisition of Shares is
delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. See Section 2. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order. Any
such extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. The foregoing provisions also
apply to the purchase of the Shares pursuant to the Option. See Section 2.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, its subsidiaries
or the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.
Under German laws and regulations relating to the regulation of monopolies
and competition, certain acquisition transactions may not be consummated in
Germany unless certain information has been furnished to the FCO and certain
waiting period requirements have been satisfied without issuance by the FCO of
an order to refrain. The purchase of Shares by Purchaser pursuant to the Offer
and the consummation of the Merger may be subject to such requirements. Under
such laws, the FCO has one month from the time of filing of such information
with the FCO to advise the parties of its intention to investigate the Offer and
the Merger, in which case the FCO has four months from the date of filing in
which to take steps to oppose the Offer and the Merger. Merck KGaA intends to
file promptly the required notification with the FCO and request early
termination of the one-month waiting period. While Merck KGaA and Parent do not
believe that there is any basis for the FCO to investigate the Offer and the
Merger and Merck KGaA and Parent believe that early termination of the waiting
period will be granted, there can be no assurance that the FCO will not
investigate or oppose the transactions or that early termination of the waiting
period will be granted. In addition, Parent may make additional filings or
reports under the antitrust laws of other nations.
Although Purchaser believes that the acquisition of Shares pursuant to the
Offer would not violate the antitrust laws, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 14 for certain
conditions of the Offer, including conditions with respect to litigation and
certain government actions.
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<PAGE>
16. FEES AND EXPENSES
Bear, Stearns & Co. Inc. is acting as Dealer Manager in connection with the
Offer and serving as financial advisor to Parent and Purchaser in connection
with the acquisition of the Company. Parent has agreed, pursuant to an
engagement letter dated September 21, 1998, to pay to Bear, Stearns & Co. Inc.
an advisory fee of 1% of the consideration to be paid by Purchaser and Parent
pursuant to the Offer and the Merger upon the consummation of the Offer and the
Merger. Parent and Purchaser will also reimburse Bear, Stearns & Co. Inc. for
reasonable out-of-pocket expenses, including reasonable attorneys' fees, and
have also agreed to indemnify Bear, Stearns & Co. Inc. for certain liabilities
and expenses in connection with the Offer, including certain liabilities under
the federal securities laws.
Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, facsimile and personal interview and may request brokers,
dealers and other nominee stockholders to forward the Offer materials to
beneficial owners. The Information Agent and the Depositary will receive
reasonable and customary compensation for services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses. Parent and Purchaser have
also agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager, the Information Agent and the Depositary). Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all stockholders of the Company.
Purchaser is not aware of any state where the making of the Offer is prohibited
by administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If after such good faith
effort Purchaser cannot comply with such state statute, the Offer will not be
made to, nor will tenders be accepted from or on behalf of, the stockholders in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Purchaser, Parent and Merck KGaA have filed with the Commission a Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the offices of the Commission (except that they will
not be available at the regional offices of the Commission) in the manner set
forth in Section 8 of this Offer to Purchase.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser, Parent or Merck KGaA not contained herein
or in the Letter of Transmittal and if given or made, such information or
representation must not be relied upon as having been authorized.
EM ACQUISITION CORP.
EM INDUSTRIES, INCORPORATED
MERCK KGaA, DARMSTADT, GERMANY
November 25, 1998
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER, PARENT AND MERCK KGAA AND GENERAL
PARTNERS AND MEMBERS OF THE EXECUTIVE BOARD OF E. MERCK
1. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of Purchaser and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is 7 Skyline Drive, Hawthorne, NY 10532. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Purchaser. Stephen J. Kunst and Richard K. Hackett are citizens
of the United States and Dieter Janssen is a citizen of Germany.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS,
OFFICES OR EMPLOYMENTS HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Dieter Janssen............................ Director, President and Chief Executive Officer of Purchaser since
November of 1998; Group Vice President and Chief Financial Officer of
Parent since 1994; previously, 1994-1996, Divisional Manager of
Purchasing and Controlling for MEPRO, an affiliate of Merck KGaA;
Director of VWR Scientific Products Corp., 49.89% of the shares of
which are owned by Merck KGaA ("VWR"); previously, 1988-1994, Chief
Financial Officer of Merck S.A., Caracas, an affiliate of Merck KGaA.
Stephen J. Kunst.......................... Director, Vice President and Secretary of Purchaser since November of
1998; Director of Parent; Group Vice President and General Counsel of
Parent; previously, 1989-1995, Vice President, Administrative
Services of Parent; Director, EM Laboratories, Incorporated, a wholly
owned subsidiary of Parent ("EML"); Director of VWR.
Richard K. Hackett........................ Director, Vice President and Treasurer of Purchaser since November of
1998; Vice President, Finance of Parent.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address,
present principal occupation or employment and material occupations, positions,
offices or employments during the last five years of each director and executive
officer of Parent and certain other information are set forth below. Unless
otherwise indicated, the business address of each such director and executive
officer is 7 Skyline Drive, Hawthorne, NY 10532. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent. All directors and executive officers listed below are citizens of
the United States, except that Harald Schroder, Dieter Janssen, and Karin A.
Maul are citizens of Germany and Thomas E. Colclough is a citizen of Canada.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR POSITIONS,
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS
OFFICES OR EMPLOYMENTS HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Dr. Harald Schroder ...................... Chairman, Board of Directors of Parent; Vice Chairman of the
Frankfurter Strasse 250 Executive Board of E. Merck; Director, VWR.
D-64293 Darmstadt
Germany
Peter A. Wriede .......................... Director of Parent; President and Chief Executive Officer, since
April, 1998; Regional Manager, North America, of Merck KGaA
previously, 1994-1998, Director and General Manager of the Pigments &
Cosmetics Division of Merck KGaA; previously, 1987-1994, Group Vice
President in charge of the Specialty Chemicals Division of Parent;
Director of Dey, Inc., an indirect subsidiary of Merck KGaA; Director
of EML.
</TABLE>
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<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR POSITIONS,
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS
OFFICES OR EMPLOYMENTS HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Stephen J. Kunst ......................... See Part 1 of this Schedule I.
Thomas E. Colclough ...................... Director of Parent; Group Vice President, EM Science Division; President,
EM Science BDH Inc., an affiliate of Merck KGaA. ("BDH")
480 Democrat Road
Gibbstown, NJ 08027
Charles A. Rice .......................... Director of Parent; President, Dey Laboratories, Inc.
Dey Laboratories, Inc.
2751 Napa Valley Corporate Drive
Napa, CA 94558
Dieter Janssen ........................... See Part 1 of this Schedule I.
Stephen D. Feiman......................... Group Vice President, Chemicals and Pigments Division.
Karin A. Maul ............................ Group Vice President, Health and Human Nutrition Division since
August, 1998; previously, 1996-1998, Marketing Manager, Fine
Chemicals and Laboratory Supply, Merck KGaA; previously, 1994-1996,
Business Development Manager, Specialty and Fine Chemicals Division,
Merck KGaA.
Richard K. Hackett ....................... See Part 1 of this Schedule I.
Clifford A. Pettinelli ................... Director, Human Resources.
John Vecchione ........................... Director, Information Services since 1997; 1996-1997, Vice President,
MIS of Pavion Limited; previously, 1995-1996, self-employed MIS
consultant; previously 1984-1995, Vice President, MIS of Dawson Home
Fashions.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF MERCK KGAA AND E. MERCK. The name,
business address, present principal occupation or employment and material
occupations, positions, offices or employments during the last five years of
each director and executive officer of Merck KGaA and each general partner of E.
Merck (other than positions with the same organization, or comparable positions
with multiple related organizations) and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is Frankfurter Strasse 250, D-64293 Darmstadt, Germany.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Merck KGaA. All directors and executive officers
listed below are citizens of Germany.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS,
OFFICES OR EMPLOYMENT HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
MERCK KGAA
Dr. Heinrich Hornef....................... Chairman, Supervisory Board (Aufsichtsrat); Member of partners
council of SAP, Walldorf, a computer industry/software company, of
Neurottstrasse 16.69190 Germany and of Friatec AG, a machine
building/engineering company, of Steinzeugstrasse 50, 68229 Mannheim,
Germany.
Flavio Battisti........................... Vice Chairman, Supervisory Board (Aufsichtsrat).
Michael Fletterich........................ Supervisory Board Member (Aufsichtsrat) since October, 1998;
previously, member of works council of Merck KGaA.
Jon Baumhauer............................. Supervisory Board Member (Aufsichtsrat); Chief Executive Officer,
Matthias Kraus KG, a beverage manufacturer, of Mariastrasse 14, 80639
Munchen, Germany.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS,
OFFICES OR EMPLOYMENT HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Klaus Brauer.............................. Supervisory Board Member (Aufsichtsrat); Member of partners council
of Peguform-Werke GmbH, a plastics industry company, of
Schlossmattenstrasse 18, 79268 Botzingen, Germany.
Prof. Dr. Christoph Clemm................. Supervisory Board Member (Aufsichtsrat).
Dr. Michael Kasper........................ Supervisory Board Member (Aufsichtsrat).
Brigitte Niems............................ Supervisory Board Member (Aufsichtsrat).
Dr. Arend Oetker.......................... Supervisory Board Member (Aufsichtsrat); Member of partners councils
of Cognos AG, an education/counselling company, of Kielortallee 1,
20144 Hamburg, Germany, Jungheinrich AG, a
warehousing/transport/service company of Freidrich-Ebert-Damm 129,
22047 Hamburg, Germany, VAW Aluminium AG, an aluminum manufacturer,
of Georg-von-Boeselager-Strasse 25, 53117 Bonn, Germany.
Hans Schonhals............................ Supervisory Board Member (Aufsichtsrat); Member of partners councils
of Pirelli Deutschland AG, a tyre-industry business, of 64741
Breuberg Germany, Rohm GmbH, a plastic-industry/chemistry company, of
Kirschenallee, 64293 Darmstadt, Germany.
Dr. Gerhard Ziener........................ Supervisory Board Member (Aufsichtsrat); Member of advisory boards of
Benckiser Holding GmbH, a machine-building company, of
Ludwig-Bertram-Strasse 8, 67059 Ludwigshafen, Germany and Dohler
GmbH, a good stuffs company, of Riedstrasse 9, 64295 Darmstadt,
Germany.
Peter Zuhlsdorff.......................... Supervisory Board Member (Aufsichtsrat); Member of partners councils
of Deutz AG, a vehicle engineering company, of Muhlheimer Strasse
107, 51063 Koln, Germany, GFK AG, an opinion research company, of
Nordwestring 101, 90419 Nurnberg, Germany, and Deutsche
Hypothekenbank AG, a banking company, of Taunusanlage 9, 60329
Frankfurt, Germany.
Dr. Walter Bardorff....................... Director (Direktor).
Prof. Dr. Gerd Bauer...................... Director (Direktor).
Dr. Michael Becker........................ Director (Direktor) since October 1998; previously, Director of BASF
AG, Ludwigshafen, Germany.
Dr. Klaus Bofinger........................ Director (Direktor).
Rolf Peter Deutsch........................ Director (Direktor).
Dr. Manfred Engelhardt.................... Director (Direktor).
Prof. Dr. Christian Flamig................ Director (Direktor).
Walter Galinat............................ Director (Direktor).
Dr. Hartmut Hartner....................... Director (Direktor).
Dr. Ullrich Hanstein...................... Director (Direktor).
Dr. Ingeborg Lues......................... Director (Direktor).
Prof. Dr. Hans-Eckart Radunz.............. Director (Direktor).
Dr. Bernd Reckmann........................ Director (Direktor); General Manager, Scientific Laboratory Products,
since April 1998; previously, 1997 to April 1998, General Manager,
Environmental and Bioanalysis, Laboratory Products Division; 1994 to
1996, Director of Marketing and Sales, Diagnostic Products Division;
previously, Director of Marketing and Sales, Immuno Diagnostic
Products, Diagnostic Products Division.
Prof. Dr. Erhard Schnurr.................. Director (Direktor).
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS,
OFFICES OR EMPLOYMENT HELD
NAME AND BUSINESS ADDRESS DURING THE LAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Joachim Szebel............................ Director (Direktor).
Jurgen Schupp............................. Director (Direktor).
Gerardo Uflerbaumer....................... Director (Direktor).
Dr. Gregor Wehner......................... Director (Direktor).
Ernst-Jorg Zehelein....................... Director (Direktor).
Walter Zywoftek........................... Director (Direktor).
York Bernau............................... Departmental Director (Abteilungsdirektor).
Rudolf Bracher............................ Departmental Director (Abteilungsdirektor).
Klaus-Peter Brandis....................... Departmental Director (Abteilungsdirektor).
Dr. Rolf Fohring.......................... Departmental Director (Abteilungsdirektor).
Dr. Jurgen Gehlhaus....................... Departmental Director (Abteilungsdirektor).
Winfried Muller........................... Departmental Director (Abteilungsdirektor).
Gerd Reinhardt............................ Departmental Director (Abteilungsdirektor).
Friedrich Schmitt......................... Departmental Director (Abteilungsdirektor).
Gerhard Weber............................. Departmental Director (Abteilungsdirektor).
E. MERCK
Prof. Dr. Hans Joachim Langmann........... Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck.
Wolfgang Honn............................. Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck; Director of VWR.
Dr. Michael Romer......................... Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck.
Prof. Dr. Bernhard Scheuble............... Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck.
Prof. Dr. Thomas Schreckenbach............ Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck.
Dr. Harald J. Schroder.................... Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck; see also Part 2 of this Schedule I.
Dr. Johannes Sombroek..................... Executive Board Member (Geschaftsleitung), E. Merck; general partner,
E. Merck.
Peter Merck............................... General partner, E. Merck.
Jon Baumhauer............................. Chairman, Partners Council E. Merck; see also above under Merck KGaA.
Dr. Heinrich Hornef....................... Partners Council Member, E. Merck.
Karl-Heinrich Kraft....................... Partners Council Member, E. Merck.
Albrecht Merck............................ Partners Council Member, E. Merck.
Dr. Arend Oetker.......................... Partners Council Member, E. Merck.
Dr. Frank Stangenberg-Haverkamp........... Partners Council Member, E. Merck.
Peter Zuhlsdorff.......................... Partners Council Member, E. Merck.
Prof. Dr. Christoph Clemm................. Partners Council Member, E. Merck; see also above under Merck KGaA.
</TABLE>
39
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway--13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Mail drop: Reorganization Department
(registered or certified mail
recommended)
By Facsimile Transmission:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent or the Dealer Manager. You may also contact your
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers call collect:
(212) 269-5550
All others call toll free:
(800) 290-6432
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Call toll free:
(877) 478-9530
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CN BIOSCIENCES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 25, 1998
OF
EM ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
EM INDUSTRIES, INCORPORATED,
AN INDIRECT SUBSIDIARY
OF
MERCK KGAA, DARMSTADT, GERMANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway--13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Mail Drop: Reorganization Department
(registered or certified
mail recommended)
</TABLE>
By Facsimile Transmission:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2)
is utilized, if delivery of Shares (as defined below) is to be made by
book-entry transfer to an
<PAGE>
account maintained by the Depositary at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase. Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders."
Stockholders whose certificates for Shares are not immediately available or who
cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
in accordance with the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY
TRANSFER):
Name(s) of Tendering Institution(s): __________________________________
The Depository Trust Company Account Number: __________________________
Transaction Code Number: ______________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s): ______________________________________
Window Ticket Number (if any): ________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________
Name of Institution which Guaranteed Delivery: ________________________
If delivered to Book-Entry Transfer Facility check this box: / /
The Depository Trust Company Account Number: __________________________
Transaction Code Number: ______________________________________________
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY
AS NAME(S) TOTAL NUMBER OF
APPEAR(S) ON CERTIFICATE(S)) SHARES NUMBER OF
(ATTACH ADDITIONAL SIGNED LIST IF CERTIFICATE REPRESENTED BY SHARES
NECESSARY) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES:
----------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES EVIDENCED BY
CERTIFICATES DELIVERED TO THE DEPOSITARY ARE BEING TENDERED HEREBY. SEE
INSTRUCTION 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to EM Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of EM Industries,
Incorporated, a New York corporation ("Parent"), the above-described shares of
Common Stock, par value $.01 per share (the "Shares"), of CN Biosciences, Inc.,
a Delaware corporation (the "Company"), pursuant to Purchaser's offer to
purchase all outstanding Shares at a price of $25.00 per Share, net to the
seller in cash, without interest thereon (the "Per Share Amount"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
November 25, 1998 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). The
undersigned understands that Parent reserves the right to transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, the right
of Purchaser to purchase all or any portion of the Shares tendered pursuant to
the Offer but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged.
Subject to, and effective upon, acceptance for payment of, and payment for,
Shares tendered herewith, in accordance with the terms of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the undersigned hereby sells, assigns and transfers to,
or upon the order of, Purchaser all right, title and interest in and to all
Shares that are being tendered hereby and all dividends, distributions
(including, without limitation, distributions of additional Shares) and rights
declared, paid or distributed in respect of such Shares on or after
November 18, 1998 (collectively, "Distributions"), and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares and all Distributions, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (i) deliver certificates evidencing such
Shares and all Distributions, or transfer ownership of such Shares and all
Distributions on the account books maintained by the Book-Entry Transfer
Facility, together, in either case, with all accompanying evidences of transfer
and authenticity to, or upon the order of, Purchaser, (ii) present such Shares
and all Distributions for transfer on the books of the Company and
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares and all Distributions, all in accordance with the terms
of the Offer.
The undersigned hereby irrevocably appoints Dieter Janssen, Stephen J.
Kunst and Richard K. Hackett, in their respective capacities as officers of
Purchaser, and any individual who shall hereafter succeed to any such office of
Purchaser, and each of them, and any other designees of Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper, to execute
any written consent concerning any matter as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper, with respect to all Shares tendered hereby that
have been accepted for payment by Purchaser prior to the time any such action is
taken and with respect to which the undersigned is entitled to vote (and with
respect to any and all Distributions). This appointment is effective when, and
only to the extent that, Purchaser accepts for payment such Shares as provided
in the Offer to Purchase. This power of attorney and proxy are irrevocable and
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior powers of attorney and proxies granted
by the undersigned at any time with respect to such Shares (and any such
Distributions) and no subsequent powers of attorney or proxies will be granted
by the undersigned, or be effective, with respect thereto.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges, claims and encumbrances. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions.
No authority herein conferred or agreed to be conferred pursuant to this
Letter of Transmittal shall be affected by, and all such authority shall
survive, the death or incapacity of the undersigned. All obligations of the
undersigned hereunder shall
<PAGE>
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned. Except as otherwise stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and/or return all certificates evidencing Shares not tendered or not
purchased, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all certificates evidencing Shares
not tendered or not purchased (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing above under "Description
of Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price of all Shares purchased and return all
certificates evidencing Shares not purchased or not tendered in the name(s) of,
and mail such check and/or certificates to, the person(s) so indicated. Unless
otherwise indicated in the box entitled "Special Payment Instructions," please
credit any Shares tendered hereby and delivered by book-entry transfer which are
not purchased by crediting the account at the Book-Entry Transfer Facility. The
undersigned recognizes that Purchaser has no obligation, pursuant to the Special
Payment Instructions, to transfer any Shares from the name of the registered
holder(s) thereof if Purchaser does not purchase any of the Shares tendered
hereby.
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares accepted for
payment is to be issued in the name of someone other than the undersigned, if
certificates for Shares not tendered or not accepted for payment are to be
issued in the names of someone other than the undersigned or if Shares tendered
hereby and delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility other than the account indicated above.
Issue / / check / / Share certificate(s) to:
Name ___________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Address ________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
------------------------------------
(ACCOUNT NUMBER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
and/or certificates evidencing Shares not tendered or purchased are to be mailed
to someone other than the undersigned or to the undersigned at an address other
than that shown under "Description of Shares Tendered."
Mail / / check / / Share certificate(s) to:
Name ___________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Address ________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ___________________________, 1998
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature(s) is (are) by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
(SEE INSTRUCTION 5)
ADDRESS:________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Employer Identification or Social Security Number: _____________________________
GUARANTEE OF SIGNATURE(S)
IF REQUIRED--(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Title: _________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"). NO SIGNATURE
GUARANTEE IS REQUIRED ON THIS LETTER OF TRANSMITTAL (A) IF THIS LETTER OF
TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER(S) (WHICH TERM, FOR PURPOSES OF
THIS DOCUMENT, SHALL INCLUDE ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY
WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF SUCH SHARES)
OF SHARES TENDERED HEREWITH, UNLESS SUCH HOLDER(S) HAS (HAVE) COMPLETED EITHER
THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL
PAYMENT INSTRUCTIONS," OR (B) IF SUCH SHARES ARE TENDERED FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION. SEE INSTRUCTION 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be completed by stockholders either if Share certificates
are to be forwarded herewith or, unless an Agent's Message (as defined below) is
utilized, if delivery of Shares is to be made pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase. For a
stockholder validly to tender Shares pursuant to the Offer, either (a) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date and either (i) certificates for tendered Shares must be
received by the Depositary at one of such addresses prior to the Expiration Date
or (ii) Shares must be delivered pursuant to the procedures for book-entry
transfer set forth herein and a Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Date or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below and in Section 3
of the Offer to Purchase. If Share certificates are forwarded to the Depositary
in multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery.
Stockholders whose Share certificates are not immediately available, who
cannot deliver their Share certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedures described in Section 3 of the
Offer to Purchase. Pursuant to such procedures: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share certificates evidencing all physically delivered Shares in
proper form for transfer, or a Book-Entry Confirmation for all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three Nasdaq National Market trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
described in Section 3 of the Offer to Purchase. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of this Letter of Transmittal and that Purchaser may enforce such
agreement against the participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share certificate numbers, the number of
Shares evidenced by such Share certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS. (Not applicable to Stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share certificate(s)
delivered to the Depositary herewith will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the box entitled "Special
Delivery Instructions", as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. ALL SHARES EVIDENCED BY SHARE
CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN TENDERED
UNLESS OTHERWISE INDICATED.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share certificate(s) evidencing such Shares without alteration
or any other change whatsoever. If any Share tendered hereby is owned of record
by two or more persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share certificates or separate stock
powers are required, unless payment is to be made to, or Share certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case the Share
certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share certificate(s).
Signatures on such Share certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
<PAGE>
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share certificate(s). Signatures on such
Share certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered", the appropriate boxes in this Letter
of Transmittal must be completed. With respect to stockholders delivering Shares
tendered hereby by book-entry transfer, all Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility designated
in this Letter of Transmittal as the account from which such Shares were
delivered.
8. WAIVER OF CONDITIONS. Except as described in the Offer to Purchase, the
conditions to the Offer may be waived by Purchaser, in whole or in part, at any
time and from time to time, in Purchaser's sole discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or the Dealer Manager or from brokers, dealers, commercial banks or trust
companies.
10. SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required to provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the
correct TIN or an adequate basis for exemption, the Internal Revenue Service may
subject the stockholder or other payee to a $50 penalty. In addition, payments
that are made to such stockholder or other payee with respect to Shares
purchased pursuant to the Offer may be subject to a 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. Backup withholding is
not an additional income tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld, provided that
the required information is given to the Internal Revenue Service. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Share certificate(s). If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share certificate(s)
representing Shares has been lost, destroyed or stolen, the tendering
Stockholder should promptly notify the Company's Transfer Agent, Harris Trust
Company of California at 601 S. Figueroa Street, Los Angeles, CA 90017. The
tendering stockholder will then be instructed as to the steps that must be taken
in order to replace the Share certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT. THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES OR,
IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
<PAGE>
<TABLE>
<S> <C> <C>
SUBSTITUTE PAYOR'S NAME: _______________________________
FORM W-9 PART 1 -- PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER -------------------------------
(TIN) IN FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING Social Security Number(s)
DEPARTMENT OF THE AND DATING BELOW.
TREASURY INTERNAL OR
REVENUE SERVICE
-------------------------------
Employer Identification Number
PART 2 PART 3
PAYER'S REQUEST FOR CERTIFICATES -- Under penalties of perjury, I certify that: Awaiting TIN / /
TAXPAYER
IDENTIFICATION (1) The number shown on this form is my correct Taxpayer
NUMBER (TIN) Identification Number (or I am waiting for a number to
be issued to me), and
(2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
</TABLE>
<TABLE>
<S> <C>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because you have failed to
report all interest or dividends on your tax returns. However, if after being notified by
the IRS that you were subject to backup withholding you received another notification from
the IRS stating that you are no longer subject to backup withholding, do not cross out item
(2).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
SIGNATURE DATE
-------------------------------------------------------- ---------------------------
NAME ------------------------------------------------------------
(PLEASE PRINT)
</TABLE>
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
<PAGE>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that, notwithstanding
that I have written "Applied For" in Part I and have completed the Certificate
of Awaiting Taxpayer Identification Number, 31% of all reportable payments made
to me prior to the time I provide a properly certified Taxpayer Identification
Number will be withheld.
SIGNATURE __________________________ DATE ____________________________________
NAME _______________________________
(PLEASE PRINT)
Any questions or requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective telephone numbers and
addresses listed below. Additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below. You may also contact your broker, dealer,
commercial bank, trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers call collect:
(212) 269-5550
All others call toll free:
(800) 290-6432
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Call toll free:
(877) 478-9530
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF
COMMON STOCK
OF
CN BIOSCIENCES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of Common Stock, par value $.01 per
share (the "Shares"), of CN Biosciences, Inc., a Delaware corporation (the
"Company"), are not immediately available; (ii) if Share Certificates and all
other required documents cannot be delivered to ChaseMellon Shareholder
Services, L.L.C., as depositary (the "Depositary"), on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase); or (iii) if
the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile transmission or mail to the Depositary and must include
a guarantee by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway--13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Mail Drop: Reorganization Department
(registered or certified
mail recommended)
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to EM Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of EM Industries, Incorporated, a New
York corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated November 25, 1998 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedures described in Section 3 of the Offer to Purchase.
Number of Shares:
---------------------------------------------------------------
Certificate Nos. (if available):
-----------------------------------------------
- --------------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: / /
The Depository Trust Company
Account No.:
-------------------------------------------------------------------
Dated:
-------------------------------------------------------------------------
Name(s) of Record Holder(s):
---------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s):
------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program hereby guarantees to deliver to the
Depositary either the Share Certificates tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to
Purchase), of a transfer of such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal, or a manually signed
facsimile thereof, with any required signature guarantees, or an Agent's Message
(as defined in Section 2 of the Offer to Purchase), and any other documents
required by the Letter of Transmittal within three Nasdaq National Market
trading days after the date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:_____________________________ ___________________________________
AUTHORIZED SIGNATURE
Address:__________________________________ Name:______________________________
PLEASE PRINT
__________________________________________ Title:_____________________________
ZIP CODE
Area Code & Telephone No.:________________ Date:______________________________
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE
SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CN BIOSCIENCES, INC.
AT
$25.00 NET PER SHARE
BY
EM ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
EM INDUSTRIES, INCORPORATED,
AN INDIRECT SUBSIDIARY
OF
MERCK KGAA, DARMSTADT, GERMANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
November 25, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by EM Acquisition Corp. a Delaware corporation
("Purchaser"), and a wholly owned subsidiary of EM Industries, Incorporated a
New York corporation ("Parent"), to act as Dealer Manager in connection with
Purchaser's offer to purchase all the outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of CN Biosciences, Inc., a Delaware
corporation (the "Company"), at a price of $25.00 per Share, net to the seller
in cash without interest thereon (the "Per Share Amount"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 25,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares registered in your name or in
the name of your nominee.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 18, 1998 (the "Merger Agreement"), among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions to the Merger set
forth in the Merger Agreement, on the terms and subject to the conditions of the
Merger Agreement, and in accordance with the Delaware General Corporation Law,
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation in the Merger and as a wholly
owned subsidiary of Parent. At the effective time of the Merger, subject to
certain exceptions, each issued and outstanding Share not tendered in the Offer
will be converted into the right to receive the Per Share Amount, less any
required withholding taxes. The Merger Agreement is more fully described in
Section 12 of the Offer to Purchase.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares which represents at least a majority of the outstanding Shares on a
fully diluted basis, and (ii) the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and similar applicable foreign laws. The Offer is also subject to
other conditions. See Section 14 of the Offer to Purchase.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger Agreement and has determined that the Offer and the Merger are
fair to, and in the best interests of, the Company and its stockholders and
unanimously recommends that the stockholders of the Company accept the Offer and
tender their Shares pursuant to the Offer.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase;
<PAGE>
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents are not immediately available
or cannot be delivered to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") by the expiration of the Offer, or if the procedure for
book-entry transfer cannot be completed by the expiration of the Offer;
4. A letter to stockholders of the Company from Mr. Stelios B.
Papadopoulos, Chairman, President and Chief Executive Officer of the
Company, together with the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 filed with the Securities and Exchange Commission by the
Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date (as defined in the Offer to
Purchase) and not theretofore properly withdrawn when, as and if Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment pursuant to the Offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates evidencing such Shares or a confirmation of a book-entry transfer
of such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in the Offer to Purchase), a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, or an Agent's Message (as defined
in the Offer to Purchase), and any other required documents in accordance with
the instructions contained in the Letter of Transmittal.
Stockholders who wish to tender Shares but cannot deliver the Share
certificates or other required documents, or cannot comply with the procedures
for book-entry transfer, prior to the expiration of the Offer, must follow the
guaranteed delivery procedures described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer, or
other person (other than the Dealer Manager or the Information Agent as
described in the Offer) in connection with the solicitation of tenders of Shares
pursuant to the Offer. However, Purchaser will reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. Purchaser will pay or cause to be paid any stock
transfer taxes payable with respect to the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to or obtained from the Information Agent or
the Dealer Manager at their respective telephone numbers and addresses set forth
on the back cover of the Offer to Purchase.
Very truly yours,
BEAR, STEARNS & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CN BIOSCIENCES, INC.
AT
$25.00 NET PER SHARE
BY
EM ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
EM INDUSTRIES, INCORPORATED,
AN INDIRECT SUBSIDIARY OF
MERCK KGAA, DARMSTADT, GERMANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
November 25, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated November 25,
1998 (the "Offer to Purchase") and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") in
connection with the offer by EM Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of EM Industries, Incorporated, a
New York corporation ("Parent"), to purchase all the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of CN Biosciences, Inc.,
a Delaware corporation (the "Company"), at a price of $25.00 per Share, net to
the seller in cash without interest thereon (the "Per Share Amount"), upon the
terms and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to Stockholders of the Company from Mr. Stelios B. Papadopoulos,
Chairman, President and Chief Executive Officer of the Company, together with
the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 18, 1998 (the "Merger Agreement"), among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions to the Merger (as
defined below) set forth in the Merger Agreement, on the terms and subject to
the conditions of the Merger Agreement, and in accordance with the Delaware
General Corporation Law, Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation in the
Merger as a wholly owned subsidiary of Parent. At the effective time of the
Merger, subject to certain exceptions, each issued and outstanding Share will be
converted into the right to receive the Per Share Amount less any required
withholding taxes. The Merger Agreement is more fully described in Section 12 of
the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender, on your
behalf, any or all Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $25.00 per Share, net to the seller in cash
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger Agreement and has determined that the terms of the
Offer and the Merger are fair to, and in the best interests of, the Company
and its stockholders and unanimously recommends that the stockholders of
the Company accept the Offer and tender their Shares pursuant to the Offer.
4. Purchaser and Parent have entered into a Stockholder Agreement,
dated as of November 18, 1998 (the "Stockholder Agreement"), with Warburg,
Pincus Investors, L.P., which beneficially owns 2,248,485 Shares, or
approximately 39.3% of the outstanding Shares. Under the Stockholder
Agreement, Warburg, Pincus Investors, L.P. has agreed, among other things,
to tender all such Shares to Purchaser pursuant to the Offer and has
granted Parent an option to acquire such shares under certain circumstances
at the Per Share Amount.
5. Offer and Withdrawal Rights will expire at 12:00 Midnight, New York
City time, on Wednesday, December 23, 1998, unless the Offer is extended.
<PAGE>
6. The Offer is conditioned upon, among other things, (i) there having
been validly tendered and not withdrawn prior to the expiration of the
Offer a number of Shares which represents at least a majority of the
outstanding Shares on a fully diluted basis, and (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and similar applicable
foreign laws. The Offer is also subject to certain other conditions. See
Section 14 of the Offer to Purchase.
7. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the transfer and sale of Shares pursuant to the
Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form attached to
this letter. A return envelope is enclosed for your use in delivering your
instructions to us. If you authorize the tender of your Shares, all such Shares
will be tendered, unless otherwise specified in your instructions. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares of the Company. The Offer
is not being made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction in which the Offer is required by law to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF CN BIOSCIENCES, INC.
AT $25.00 NET PER SHARE
BY EM ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
EM INDUSTRIES, INCORPORATED,
AN INDIRECT SUBSIDIARY OF
MERCK KGAA, DARMSTADT, GERMANY
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated November 25, 1998 and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), in connection with the offer by EM Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of EM Industries, Incorporated, a New
York corporation, to purchase all the outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of CN Biosciences, Inc., a Delaware
corporation.
This will instruct you to instruct your nominee to tender the number of
Shares indicated below (or, if no number is indicated below, all Shares) that
are held for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Dated: _______
<TABLE>
<S> <C>
NUMBER OF SHARES
TO BE TENDERED*
---------------------------------------------------
---------------------------------------------------
SHARES Signature(s)
---------------------------------------------------
---------------------------------------------------
Please print name(s)
---------------------------------------------------
Address
---------------------------------------------------
(Include Zip Code)
---------------------------------------------------
Area Code and Telephone Number
---------------------------------------------------
Taxpayer Identification or Social Security Number
</TABLE>
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor or incompetent person
7. (a) The usual revocable savings trust The grantor-trustee(5)
account (grantor is also a
trustee)
(b) So-called trust account that is The actual owner(5)
not a legal or valid trust under
State law
8. Sole proprietorship account The owner(4)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district or
prison) that receives agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person or a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on broker transactions
include the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under section 403(b)(7) if the account
satisfies the requirements of Section 401(f)(2).
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or any
agency, or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank issue.
Payments of dividends not generally subject to backup withholding including the
following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under Section 1451.
o Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 or Substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THE FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE
FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6019 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
[CN BIOSCIENCES LOGO]
Contact: Richard K. Hackett-V.P. James Stewart-V.P.
EM Industries, Incorporated CN Biosciences, Inc.
(914) 592-4660 (619) 450-5589
For Immediate Release
EM INDUSTRIES, INCORPORATED TO ACQUIRE
CN BIOSCIENCES, INC.
HAWTHORNE, NEW YORK AND SAN DIEGO, CALIFORNIA, NOVEMBER 19, 1998--EM
Industries, Incorporated and CN Biosciences, Inc. (NASDAQ:CNBI) announced today
that they had executed a definitive merger agreement providing for EM
Industries, Incorporated's acquisition of all of the outstanding shares of CN
Biosciences, Inc. for $25.00 per share in cash for a total transaction value of
approximately $150,000,000.
The merger agreement provides for a cash tender offer by EM Acquisition
Corp., a subsidiary of EM Industries, Incorporated, for all outstanding CN
Biosciences, Inc. shares at $25.00 per share. The tender offer will be commenced
within five business days. The tender offer will be conditioned upon, among
other things, there being validly tendered and not withdrawn at least a majority
of the outstanding shares of CN Biosciences, Inc. Any CN Biosciences, Inc.
shares not purchased pursuant to the tender offer will be acquired in a
subsequent merger at the same $25.00 per share cash price.
In connection with the execution of the merger agreement, EM Industries,
Incorporated has entered into an agreement with the holder of approximately 39%
of CN Biosciences, Inc. outstanding shares under which such holder has agreed to
tender its shares in the tender offer and has granted EM Industries,
Incorporated an option to acquire such shares under certain circumstances at the
$25.00 per share price.
EM Industries, Incorporated is a member of the Merck KGaA Darmstadt,
Germany group of companies focused on the global Pharmaceutical, Specialty
Chemicals and Laboratory markets. Dr. Peter Wriede, President & CEO of EM
Industries, Incorporated, said today "the merger with CN Biosciences, Inc. will
strengthen Merck KGaA's position as a manufacturer of specialty products for the
rapidly growing Life Sciences Reagents market. The product portfolio of CN
Biosciences, Inc. closes gaps in Merck KGaA's existing biochemical reagent
product line and enables the group, together with its strong European and US
distribution activities (49.9% equity position in VWR Scientific Products
Corporation), to solidify its position in the world laboratory market."
CN Biosciences, Inc. is engaged in the development, production, marketing
and distribution of a broad array of products used worldwide in disease-related
life sciences research at pharmaceutical and biotechnology companies, academic
institutions and government laboratories. The Company's products include
biochemical and biological reagents, antibodies, assays and research kits which
it sells principally through its general and specialty catalogs under its well
established brand names, Calbiochem, Novabiochem, Oncogene Research Products and
Novagen.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated November 25, 1998 and the related Letter of Transmittal and is being
made to all holders of Shares. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction or any
administrative or judicial action pursuant thereto. In any jurisdiction
where securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
EM Acquisition Corp. by Bear, Stearns & Co. Inc. or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
CN Biosciences, Inc.
at
$25.00 Net Per Share
by
EM Acquisition Corp.,
a wholly owned subsidiary of EM Industries, Incorporated, an indirect
subsidiary of Merck KGaA, Darmstadt, Germany
EM Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned
subsidiary of EM Industries, Incorporated, a New York corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Shares"), of CN Biosciences, Inc., a Delaware
corporation (the "Company"), at $25.00 per Share, net to the seller in cash
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated November 25, 1998 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Parent is an
indirect subsidiary of Merck KGaA, Darmstadt, Germany, a corporation
organized under the laws of Germany.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (A) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents at least a majority of the outstanding Shares on a
fully diluted basis, and (B) the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and any similar applicable foreign laws.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 18, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the purchase of Shares pursuant to the
Offer and the satisfaction or waiver of the other conditions set forth in
the Merger Agreement and in accordance with the relevant provisions of the
General Corporation Law of the State of Delaware (the "DGCL"), Purchaser
will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation and will be a wholly owned subsidiary of Parent. At the
effective time of the Merger (the "Effective Time"), each issued and
outstanding Share (other than each Share held in the treasury of the Company
and each Share owned by Parent or any direct or indirect wholly owned
subsidiary of Parent immediately prior to the Effective Time, and Shares
issued and outstanding immediately prior to the Effective Time and held by a
holder who has demanded and perfected his demand for appraisal of his Shares
in accordance with the DGCL, including Section 262 thereof, and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal) will be converted into the right to receive $25.00 in cash,
without interest.
In connection with the Merger Agreement, Parent and Purchaser have entered
into a Stockholder Agreement, dated as of November 18, 1998, with Warburg,
Pincus Investors, L.P. (the "Selling Stockholder"), which beneficially owns
2,248,485 Shares, or approximately 39.3% of the issued and outstanding
Shares, pursuant to which, among other things, the Selling Stockholder has
agreed to tender its Shares in the Offer, and has granted to Parent or
Purchaser, as Parent may designate, an option to purchase such Shares under
certain circumstances.
The Board of Directors of the Company has unanimously approved the Offer and
the Merger Agreement and has determined that the Offer and the Merger are
fair to, and in the best interests of, the Company and its stockholders, and
unanimously recommends that the stockholders of the Company accept the Offer
and tender their Shares pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn
if, as and when Purchaser gives oral or written notice to the Depositary (as
defined in the Offer to Purchase) of Purchaser's acceptance for payment of
such Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting such payments
to tendering stockholders whose Shares have been accepted for payment. In
all cases, payment for Shares tendered and accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing such Shares or confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase) pursuant to the
procedures set forth in the Offer to Purchase, (ii) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees, or in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase), and (iii) any other documents
required under the Letter of Transmittal. All questions as to form and
validity (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole discretion, whose determination
will be final and binding. Under no circumstances will interest on the
purchase price for Shares be paid, regardless of any extension of the Offer
or delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
Wednesday, December 23, 1998, unless and until Purchaser, in its sole
discretion (in accordance with the terms of the Offer but subject to the
limitations of the Merger Agreement), shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms of the Merger Agreement and applicable laws), at any time and
from time to time, and regardless of whether or not any of the events set
forth in Section 14 of the Offer to Purchase shall have occurred, to (i)
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) amend the
Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. There can be no assurance that the Purchaser
will exercise its right to extend the Offer (other than as may be required
by applicable laws). Any such extension will be followed by a public
announcement thereof by no later than 9:00 a.m, New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw such Shares. Without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser currently intends to make
announcements by issuing a press release to the Dow Jones News Service.
Except as otherwise provided below or as provided by applicable law, tenders
of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration
Date and, unless theretofore accepted for payment by Purchaser pursuant to
the Offer, may also be withdrawn at any time after January 23, 1999. For a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page of the Offer to Purchase. Any such notice
of withdrawal must specify the name of the person who tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then prior to the
physical release of such Share certificates, the serial numbers shown on
such Share certificates must be submitted to the Depositary and, unless such
Shares have been tendered by an Eligible Institution (as defined in the
Offer to Purchase), the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant
to the procedures for book-entry transfer as set forth in the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered by again following one of the procedures described in Section 3
of the Offer to Purchase at any time prior to the Expiration Date. All
questions as to form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination will be final and binding.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to holders of Shares whose names
appear of record on the Company's stockholder list and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners
of Shares.
The information required to be disclosed by Paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in
the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their addresses and telephone numbers set
forth below. Additional copies of the Offer to Purchase and the related
Letter of Transmittal and other tender offer materials may be obtained from
the Information Agent as set forth below. No fees or commissions will be
paid to brokers, dealers or other persons (other than the Dealer Manager)
for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6432
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Toll Free: (877) 478-9530
November 25, 1998
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EM INDUSTRIES, INCORPORATED
EM ACQUISITION CORP.
and
CN BIOSCIENCES, INC.
Dated as of November 18, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I. TENDER OFFER AND MERGER.................................................................... 2
1.1 The Offer.................................................................................. 2
1.2 Company Action............................................................................. 4
1.3 Directors.................................................................................. 5
1.4 The Merger................................................................................. 6
1.5 Effective Time............................................................................. 6
1.6 Conversion of Shares....................................................................... 6
1.7 Dissenting Shares.......................................................................... 7
1.8 Surrender of Shares........................................................................ 8
1.9 Options.................................................................................... 9
1.10 Certificate of Incorporation and Bylaws.................................................... 10
1.11 Directors and Officers..................................................................... 10
1.12 Other Effects of Merger.................................................................... 10
1.13 Proxy Statement............................................................................ 10
1.14 Merger Without Meeting of Stockholders..................................................... 11
1.15 Additional Actions......................................................................... 11
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................. 11
2.1 Organization and Good Standing............................................................. 11
2.2 Capitalization............................................................................. 12
2.3 Subsidiaries............................................................................... 12
2.4 Authorization; Binding Agreement........................................................... 13
2.5 Governmental Approvals..................................................................... 13
2.6 No Violations.............................................................................. 14
2.7 Securities Filings......................................................................... 14
2.8 Company Financial Statements............................................................... 15
2.9 Absence of Certain Changes or Events....................................................... 15
2.10 Compliance With Laws....................................................................... 16
2.11 Permits.................................................................................... 16
2.12 Litigation................................................................................. 16
2.13 Contracts.................................................................................. 16
2.14 Employee Benefit Plans..................................................................... 16
2.15 Taxes and Tax Returns...................................................................... 18
2.16 Ownership and Use of Assets and Properties................................................. 20
2.17 Intellectual Property...................................................................... 22
2.18 Insurance.................................................................................. 22
2.19 Environmental Matters...................................................................... 22
2.20 Labor Relations............................................................................ 24
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
2.21 Offer Documents; Proxy Statement........................................................... 24
2.22 Finders and Investment Bankers............................................................. 25
2.23 Fairness Opinion........................................................................... 25
2.24 Related Party Transactions................................................................. 25
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT................................................... 25
3.1 Organization and Good Standing............................................................. 25
3.2 Authorization; Binding Agreement........................................................... 26
3.3 Governmental Approvals..................................................................... 26
3.4 No Violations.............................................................................. 26
3.5 Offer Documents; Proxy Statement........................................................... 26
3.6 Finders and Investment Bankers............................................................. 27
3.7 Financing.................................................................................. 27
3.8 No Prior Activities........................................................................ 27
ARTICLE IV. ADDITIONAL COVENANTS OF THE COMPANY........................................................ 27
4.1 Conduct of Business of the Company and the Company Subsidiaries............................ 27
4.2 Notification of Certain Matters............................................................ 30
4.3 Access and Information..................................................................... 30
4.4 Stockholder Approval....................................................................... 30
4.5 Reasonable Best Efforts.................................................................... 31
4.6 Public Announcements....................................................................... 31
4.7 Compliance................................................................................. 31
4.8 No Solicitation............................................................................ 32
4.9 SEC and Stockholder Filings................................................................ 34
4.10 Takeover Statutes.......................................................................... 34
4.11 Related Party Agreements................................................................... 34
ARTICLE V. ADDITIONAL COVENANTS OF PARENT............................................................. 34
5.1 Reasonable Best Efforts.................................................................... 34
5.2 Public Announcements....................................................................... 35
5.3 Compliance................................................................................. 35
5.4 [Intentionally omitted].................................................................... 35
5.5 Indemnification, Exculpation and Insurance................................................. 35
5.6 Certain Share Purchases Prohibited......................................................... 36
ARTICLE VI. MERGER CONDITIONS.......................................................................... 36
6.1 Offer...................................................................................... 36
6.2 Stockholder Approval....................................................................... 36
6.3 No Injunction or Action.................................................................... 36
6.4 Other Approvals............................................................................ 36
6.5 Conditions of Obligations of Parent and Merger Sub......................................... 37
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE VII. TERMINATION AND ABANDONMENT................................................................ 37
7.1 Termination................................................................................ 37
7.2 Effect of Termination and Abandonment...................................................... 38
ARTICLE VIII. MISCELLANEOUS.............................................................................. 39
8.1 Confidentiality............................................................................ 39
8.2 Amendment and Modification................................................................. 39
8.3 Waiver of Compliance; Consents............................................................. 39
8.4 Survival................................................................................... 39
8.5 Notices.................................................................................... 40
8.6 Binding Effect; Assignment................................................................. 41
8.7 Expenses................................................................................... 41
8.8 Governing Law.............................................................................. 41
8.9 Counterparts............................................................................... 41
8.10 Interpretation............................................................................. 41
8.11 Entire Agreement........................................................................... 41
8.12 Severability............................................................................... 42
8.13 Specific Performance....................................................................... 42
8.14 Third Parties.............................................................................. 42
</TABLE>
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<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
<S> <C>
Term Section
Acquisition Agreement .......................................................................................4.8(b)
Affiliate .....................................................................................................8.10
Agreement ..................................................................................................Parties
Benefit Plan ..................................................................................................2.14
Certificate of Merger ..........................................................................................1.4
Closing ........................................................................................................1.5
Closing Date ...................................................................................................1.5
Code........................................................................................................2.14(b)
Company ....................................................................................................Parties
Company Benefit Plan ..........................................................................................2.14
Company Class A Common Stock ...................................................................................2.2
Company Common Stock ......................................................................................Recitals
Company Disclosure Letter ........................................................................................2
Company Filed Documents ........................................................................................2.7
Company Financial Statements ...................................................................................2.8
Company Material Adverse Effect ................................................................................2.1
Company Material Contract .....................................................................................2.13
Company Option Plans ........................................................................................1.9(a)
Company Options .............................................................................................1.9(a)
Company Permits ...............................................................................................2.11
Company Proposals ..............................................................................................4.4
Company Securities Filings .....................................................................................2.7
Company Subsidiary .............................................................................................2.1
Confidentiality Agreement ......................................................................................8.1
Consent ........................................................................................................2.5
DGCL ...........................................................................................................1.4
Dissenting Shares ..............................................................................................1.7
Effective Time .................................................................................................1.5
Environmental Claim ........................................................................................2.19(b)
Environmental Laws .........................................................................................2.19(b)
Environmental Permit .......................................................................................2.19(b)
ERISA .........................................................................................................2.14
ERISA Affiliate.............................................................................................2.14(b)
Exchange Agent ..............................................................................................1.8(a)
Expiration Date .............................................................................................1.1(d)
Financial Advisor ...........................................................................................1.2(a)
Governmental Authority .........................................................................................2.5
Hazardous Materials ........................................................................................2.19(b)
HSR Act ........................................................................................................2.5
Independent Directors ..........................................................................................1.3
Law ...........................................................................................................2.6
Leased Real Property .......................................................................................2.16(b)
Litigation ....................................................................................................2.12
Merger ....................................................................................................Recitals
Merger Consideration ........................................................................................1.6(a)
Merger Sub .................................................................................................Parties
Minimum Condition ..........................................................................................Annex I
Multiemployer Plan .........................................................................................2.14(a)
NASD ...........................................................................................................2.5
Offer .....................................................................................................Recitals
Offer Conditions ............................................................................................1.1(a)
Offer Documents .............................................................................................1.1(c)
Offer to Purchase ...........................................................................................1.1(c)
Parent .....................................................................................................Parties
Parent Group ...................................................................................................5.1
Parent Information .............................................................................................3.5
Per Share Amount ..........................................................................................Recitals
Person ........................................................................................................8.10
Proxy Statement ........................................................................................1.13(a)(ii)
Related Party .................................................................................................2.24
Schedule 14D-1...............................................................................................1.1(c)
Schedule 14D-9 ..............................................................................................1.2(b)
SEC .........................................................................................................1.1(c)
Securities Act ................................................................................................2.13
Securities Exchange Act .....................................................................................1.1(a)
Series A Preferred Stock .......................................................................................2.2
Series B Preferred Stock .......................................................................................2.2
Shares ....................................................................................................Recitals
Special Meeting .........................................................................................1.13(a)(i)
Stockholder ...............................................................................................Recitals
Stockholder Agreement .....................................................................................Recitals
Subsidiary ....................................................................................................8.10
Superior Proposal ...........................................................................................4.8(b)
Surviving Corporation ..........................................................................................1.4
Surviving Corporation Common Stock ..........................................................................1.6(c)
Takeover Proposal ...........................................................................................4.8(a)
Takeover Statute ..............................................................................................4.10
Tax ........................................................................................................2.15(f)
Tax Return .................................................................................................2.15(f)
Voting Securities ..........................................................................................Annex I
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of November 18, 1998, by and among EM Industries, Incorporated,
a New York corporation ("Parent"), EM Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and CN Biosciences, Inc.,
a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company, Merger Sub
and Parent have approved the acquisition by Parent of the Company in accordance
with the provisions of this Agreement;
WHEREAS, in furtherance thereof, it is proposed that, upon the terms
and subject to the conditions set forth herein, Merger Sub will make a cash
tender offer (as it may be amended from time to time in accordance herewith, the
"Offer") to purchase all of the outstanding shares (the "Shares") of common
stock, $.01 par value, of the Company (the "Company Common Stock"), for $25.00
per Share (such price or any higher price as may be paid in the Offer, the "Per
Share Amount"), in each case net to the seller in cash, without interest;
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of the Company, Merger Sub and Parent have each approved
the merger (the "Merger") of Merger Sub with and into the Company following
the expiration of the Offer in accordance with the laws of the State of
Delaware and the provisions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
simultaneously with the execution and delivery hereof, a certain holder of
Shares (the "Stockholder") enters into an agreement (the "Stockholder
Agreement") providing for certain matters with respect to its Shares, the
tender of its Shares and certain other actions relating to the Offer and the
other transactions contemplated by this Agreement and, in order to induce
Parent and Merger Sub to enter into this Agreement, the Company has approved
the execution and delivery by Parent and Merger Sub and Stockholder of the
Stockholder Agreement, and Stockholder has executed and delivered the
Stockholder Agreement;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Stockholder Agreement, has resolved to recommend acceptance
of the Offer and the Merger to the holders of Shares and has determined that
the consideration to be paid for each Share in the Offer and the Merger is
fair to the holders of such Shares and to recommend that the holders of such
Shares accept the Offer and adopt this Agreement and the transactions
contemplated hereby; and
<PAGE>
WHEREAS, the Company, Merger Sub and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I.
TENDER OFFER AND MERGER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 hereof and no event set forth in
Annex I hereto shall have occurred and be existing, Parent shall cause Merger
Sub to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Securities Exchange Act")) the Offer as promptly as practicable, but in
no event later than five business days following the public announcement of
this Agreement; provided, however, that Parent may designate another direct
subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under
the Securities Exchange Act) in the Offer, in which case references herein to
Merger Sub shall be deemed to apply to such subsidiary, as appropriate. The
obligation of Parent to cause Merger Sub to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set
forth in Annex I hereto (the "Offer Conditions"). The Per Share Amount shall
be net to each seller in cash, subject to reduction only for any applicable
federal back-up withholding or stock transfer taxes payable by such seller.
The Company agrees that no Shares held by the Company shall be tendered
pursuant to the Offer.
(b) Without the prior written consent of the Company,
Parent shall not permit Merger Sub to (i) decrease the Per Share Amount or
change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought in the Offer, (iii) amend or waive satisfaction of the
Minimum Condition (as defined in Annex I hereto) or (iv) impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares, provided that nothing herein shall prohibit
any waiver of any condition or term of the Offer (other than the Minimum
Condition) or any other action permitted hereby. Upon the terms and subject to
the conditions of the Offer, Parent shall cause Merger Sub to accept for
payment and purchase, as soon as practicable after the expiration of the
Offer, all Shares validly tendered and not withdrawn prior to the expiration
of the Offer. It is agreed that the Offer Conditions are for the benefit of
Merger Sub and may be asserted by Merger Sub regardless of the circumstances
giving rise to any such condition (except for any action or inaction by Parent
or Merger Sub constituting a breach of this Agreement) or, except with respect
to the Minimum Condition, may be waived by Merger Sub, in whole or in part at
any time and from time to time, in its sole discretion.
2
<PAGE>
(c) The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") having only the conditions set forth in
Annex I hereto. On the date the Offer is commenced, Parent and Merger Sub
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer that
shall contain (including as an exhibit) or incorporate by reference the Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, and any other SEC schedule or form which is filed in connection with
the Offer and related transactions, are referred to collectively herein as the
"Offer Documents") and shall mail the Offer to Purchase to the holders of the
Shares. Parent and Merger Sub agree promptly to correct the Schedule 14D-1 if
and to the extent it shall become false and misleading in any material respect
(and the Company, with respect to written information supplied by it
specifically for use in the Schedule 14D-1, shall promptly notify Parent and
Merger Sub of any required corrections of such information and cooperate with
the Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-1 to include any information that
shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and Parent and
Merger Sub shall take all steps necessary to cause the Schedule 14D- 1 as so
corrected to be filed with the SEC and disseminated to the Company's
stockholders to the extent required by applicable Laws, including federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on any Offer Documents before they are filed
with the SEC. In addition, Parent and Merger Sub agree to provide the Company
and its counsel in writing with any comments or other communications that
Parent, Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments or other communications.
(d) The Offer to Purchase shall provide for an initial
expiration date for the Offer (the "Expiration Date") of 20 business days (as
defined in Rule 14d-1 under the Securities Exchange Act) from the date of
commencement of the Offer. Parent and Merger Sub agree that they shall not
terminate or withdraw the Offer or extend the Expiration Date unless at the
Expiration Date any of the Offer Conditions shall not have been satisfied or
earlier waived. Notwithstanding the foregoing, Merger Sub may (i) extend the
Expiration Date (including as it may be extended) for up to ten business days
in connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the SEC and
(ii) extend the initial Expiration Date (including as it may be extended) for
up to ten business days, notwithstanding that on such Expiration Date the
Offer Conditions shall have been satisfied or waived, if the number of Shares
that have been validly tendered and not withdrawn represents more than 50
percent but less than 90 percent of the then issued and outstanding Shares.
3
<PAGE>
1.2 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that (A) the Board of Directors of the
Company, at a meeting duly called and held on November 18, 1998, at which all
of the Directors were present, duly approved by unanimous vote this Agreement
and the transactions contemplated hereby, including the Offer, the Merger and
the Stockholder Agreement, resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares pursuant to the Offer and adopt
this Agreement and the transactions contemplated hereby, including the Merger,
and determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of
the stockholders of the Company and (B) Vector Securities International, Inc.
(the "Financial Advisor") has delivered to the Board of Directors of the
Company its written opinion that as of the date hereof the consideration to be
received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the stockholders of the Company from a financial point
of view. The Company has been authorized by the Financial Advisor to permit
the inclusion of such fairness opinion (or a reference thereto) in the Offer
Documents and in the Schedule 14D-9 referred to below. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company's Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, no later than
the fifth business day following the public announcement of this Agreement, a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that shall
comply in all material respects with the provisions of all applicable Law (as
hereinafter defined), including federal securities laws. The Company shall
mail such Schedule 14D-9 to the stockholders of the Company promptly after the
commencement of the Offer together with the initial mailing of the Offer
Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if
and to the extent that it shall become false or misleading in any material
respect (and each of Parent and Merger Sub, with respect to written
information supplied by it specifically for use in the Schedule 14D-9, shall
promptly notify the Company of any required corrections of such information
and cooperate with the Company with respect to correcting such information)
and to supplement the information contained in the Schedule 14D-9 to include
any information that shall become necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
the Company's stockholders to the extent required by applicable Laws,
including federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it
is filed with the SEC. In addition, the Company agrees to provide Parent,
Merger Sub and their counsel in writing with any comments or other
communications that the Company or its counsel may receive from time to time
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments or other communications.
4
<PAGE>
(c) In connection with the Offer, the Company shall
promptly upon execution of this Agreement furnish Parent with mailing labels
containing the names and addresses of all record holders of Shares,
non-objecting beneficial owner lists (to the extent reasonably available),
security position listings of Shares held in stock depositories, each as of a
recent date, and shall promptly furnish Parent with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other information and assistance as
Parent or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Shares.
1.3 Directors. Promptly upon the purchase by Merger Sub of any Shares
pursuant to the Offer (and assuming that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
as will give Merger Sub, subject to compliance with Section 14(f) of the
Securities Exchange Act, representation on the Board of Directors of the
Company equal to at least that number of directors which equals the product of
the total number of directors on the Board of Directors of the Company (giving
effect to the directors appointed or elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Parent or any affiliate of Parent (including for purposes of this
Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares
outstanding. At such times, if requested by Parent, the Company shall also
cause each committee of the Board of Directors of the Company and the Board of
Directors of each Company Subsidiary (as hereinafter defined) to include
persons designated by Parent constituting the same percentage of each such
committee and the Board of Directors of each Company Subsidiary as Parent's
designees are of the Board of Directors of the Company. The Company shall,
upon request by Parent, promptly increase the size of the Board of Directors
of the Company and of the Company Subsidiaries as is necessary to enable
Parent's designees to be elected to the Board of Directors of the Company and
of the Company Subsidiaries in accordance with the terms of this Section 1.3
and shall cause Parent's designees to be so elected; provided, however, that,
subject to the following proviso, in the event that Parent's designees are
appointed or elected to the Board of Directors of the Company and of the
Company Subsidiaries, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least one director who is a
director on the date hereof and who is neither an officer of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the
federal securities laws) of Parent (one or more of such directors, the
"Independent Directors"); provided further, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of Parent, and such person shall be deemed
to be an Independent Director for purposes of this Agreement. Subject to
applicable Law, the Company shall promptly take all action necessary pursuant
to Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and
shall include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if Parent has not theretofore designated directors)
such information with respect to the Company and its officers and directors as
5
<PAGE>
is required under Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 1.3. Parent shall supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Board of Directors
of the Company and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement on behalf of the Company, (ii) exercise or waive any of
the Company's rights or remedies hereunder, (iii) extend the time for
performance of Parent's obligations hereunder or (iv) take any other action by
the Company in connection with this Agreement required to be taken by the Board
of Directors of the Company.
1.4 The Merger. Upon the terms and subject to the conditions of this
Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "DGCL"). At the Effective Time (as defined in
Section 1.5 hereof), upon the terms and subject to the conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the DGCL and the separate existence of Merger Sub shall thereupon cease,
and the Company, as the surviving corporation in the Merger (the "Surviving
Corporation"), shall continue its corporate existence under the laws of the
State of Delaware as a Subsidiary of Parent. At Parent's election, any direct
or indirect Subsidiary of Parent other than Merger Sub may be merged with and
into the Company instead of Merger Sub. In the event of such an election, the
parties agree to execute an appropriate amendment to this Agreement to reflect
such election. The parties shall prepare and execute a certificate of merger
in order to comply in all respects with the requirements of the DGCL and with
the provisions of this Agreement or, if applicable, a certificate of ownership
and merger (each, a "Certificate of Merger").
1.5 Effective Time. The Merger shall become effective at the time of
the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the DGCL or at such
later time as may be specified in the Certificate of Merger. As soon as
practicable after all of the conditions set forth in Article VI of this
Agreement have been satisfied or waived by the party or parties entitled to
the benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "Closing") shall
occur. The time when the Merger shall become effective is herein referred to
as the "Effective Time" and the date on which the Effective Time occurs is
herein referred to as the "Closing Date."
1.6 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately
before the Effective Time (other than any Shares to be cancelled pursuant to
Section 1.6(b) hereof and any Dissenting Shares (as hereinafter defined)) shall
be cancelled and extinguished and be converted into the
6
<PAGE>
right to receive the Per Share Amount (the "Merger Consideration") in cash
payable to the holder thereof, without interest, promptly upon surrender of
the certificate representing such Share or appropriate proof of lost
certificates, in accordance with Section 1.8 hereof. From and after the
Effective Time, the holders of certificates evidencing ownership of any such
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares except as otherwise provided for herein
or by applicable Law.
(b) Each Share held in the treasury of the Company and
each Share owned by Parent or any direct or indirect wholly owned Subsidiary of
Parent immediately before the Effective Time, including without limitation
Merger Sub, shall be cancelled and extinguished and no payment or other
consideration shall be made with respect thereto.
(c) The shares of Merger Sub common stock outstanding
immediately prior to the Merger shall be converted into one validly issued,
fully paid and non-assessable share of the common stock of the Surviving
Corporation (the "Surviving Corporation Common Stock"), which one share of the
Surviving Corporation Common Stock shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall be owned by
Parent.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares issued and outstanding immediately prior to the Effective
Time and held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with the DGCL (including but not limited
to Section 262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration, but
the holder thereof shall be entitled to only such rights as are granted by the
DGCL.
(b) Notwithstanding the provisions of Section 1.7(a)
hereof, if any holder of Shares who demands appraisal of his Shares under the
DGCL shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL which are received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of
Parent, settle or offer to settle any such demands.
7
<PAGE>
1.8 Surrender of Shares.
(a) Prior to the Closing Date, Parent shall appoint First
Chicago Trust Company of New York or another agent reasonably acceptable to the
Company to act as exchange agent (the "Exchange Agent") for the Merger. No later
than the business day following the mailing of the letter of transmittal
referred to in Section 1.8(b) hereof, Parent shall make available to the
Exchange Agent for the benefit of holders of Shares, the aggregate Merger
Consideration to which such holders shall be entitled at the Effective Time
pursuant to Section 1.6 hereof. Such funds shall be invested by the Exchange
Agent as directed by Parent or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments shall be payable to the Merger Sub or Parent, as Parent
directs.
(b) On the Closing Date, Parent shall instruct the
Exchange Agent to mail to each holder of record of a certificate representing
any Shares cancelled upon the Merger pursuant to Section 1.6(a) hereof, within
five business days of receiving from the Company a list of such holders of
record, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates shall pass, only upon
delivery of the certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. Each holder
of a certificate or certificates representing any Shares cancelled upon the
Merger pursuant to Section 1.6(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending one year after the Effective Time. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares or Shares referred to in Section
1.6(b) hereof) shall represent solely the right to receive the aggregate Merger
Consideration relating thereto.
(c) If payment of cash in respect of cancelled Shares is
to be made to a person other than the person in whose name a surrendered
certificate or instrument is registered, it shall be a condition to such payment
that the certificate or instrument so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such payment shall have paid any transfer and other Taxes (as hereinafter
defined) required by reason of such payment in a name other than that of the
registered holder of the certificate or instrument surrendered or shall have
established to the satisfaction of Parent or the Exchange Agent that such Tax
either has been paid or is not payable.
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(d) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time.
In the event that, after the Effective Time, certificates for Shares (other than
Shares referred to in Section 1.6(b) hereof) are presented to the Surviving
Corporation, its transfer agent or the Exchange Agent, they shall be cancelled
and exchanged for cash as provided in Section 1.6(a) hereof. No interest shall
accrue or be paid on any cash payable upon the surrender of a certificate or
certificates which immediately before the Effective Time represented outstanding
Shares.
(e) The Merger Consideration paid in the Merger shall be
net to the holder of Shares in cash, subject to reduction only for any
applicable federal back-up withholding or, as set forth in Section 1.8(c)
hereof, stock transfer Taxes payable by such holder.
(f) Promptly following the date which is one year after
the Effective Time, the Exchange Agent shall deliver to Parent all cash
(including interest received with respect thereto), certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares (other than certificates representing Dissenting
Shares and Shares referred to in Section 1.6(b) hereof) may surrender such
certificate to Parent and (subject to applicable abandoned property, escheat and
similar Laws) receive in consideration thereof the aggregate Merger
Consideration relating thereto payable upon surrender of such certificate,
without any interest or dividends thereon.
(g) None of the Company, Merger Sub, Parent or the
Exchange Agent shall be liable to any holder of Shares for cash delivered to a
public official pursuant to any abandoned property, escheat or similar law,
rule, regulation, statute, order, judgment or decree.
1.9 Options.
(a) The Company hereby represents and warrants, and based
thereon Parent and Merger Sub hereby acknowledge, that (i) all outstanding
options to purchase Shares (the "Company Options") granted under the Company's
stock option plans referred to in Section 2.14 of the Company Disclosure Letter
(as hereinafter defined), each as amended (collectively, the "Company Option
Plans"), whether or not then exercisable or vested, shall, pursuant to the terms
of the Company Option Plans, be cancelled as of the consummation of the Offer
and the holders thereof shall be entitled to receive from Parent upon
consummation of the Offer, in respect of each Share subject to such Company
Option, an amount in cash equal to the excess, if any, of the Per Share Amount
over the exercise price per share thereof (such payment to be net of applicable
withholding taxes).
(b) The Company hereby represents and warrants that all
Company Option Plans provide, or have been or will be amended as and when
required to provide for the actions
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described in Section 1.9(a) hereof. The Company shall cause the Company Option
Plans to terminate as of the Effective Time.
1.10 Certificate of Incorporation and Bylaws. Subject to Section 5.5
hereof, at the Effective Time, the Certificate of Incorporation and the Bylaws
of the Surviving Corporation shall be the Certificate of Incorporation and the
Bylaws of Merger Sub in effect at the Effective Time (subject to any
subsequent amendments).
1.11 Directors and Officers. At the Effective Time, the directors of
Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, in
each case until their successors are duly elected or appointed and qualified.
1.12 Other Effects of Merger. The Merger shall have all further
effects as specified in the applicable provisions of the DGCL.
1.13 Proxy Statement.
(a) If required by applicable Law in order to consummate
the Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable Law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as soon
as practicable following the acceptance for payment and purchase of
the Shares by Merger Sub pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and shall (x) obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
statement (as amended or supplemented, the "Proxy Statement") to be
mailed to its stockholders and (y) obtain the necessary approvals of
the Merger and this Agreement by its stockholders; and
(iii) include in the Proxy Statement the
recommendation of the Board that stockholders of the Company vote in
favor of approval of the Merger and the adoption of this Agreement.
(b) Parent agrees that it will provide the Company with
the information concerning Parent and Merger Sub required to be included in the
Proxy Statement and will vote, or
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cause to be voted, all of the Shares then owned by it, Merger Sub or any of its
other Subsidiaries and affiliates in favor of approval of the Merger and the
adoption of this Agreement.
(c) Each of Parent, Merger Sub and the Company agrees
promptly to correct any information provided by it for use in the Proxy
Statement as and to the extent it shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Proxy Statement to include any information that shall have become
necessary, in order to make statements contained therein, in light of the
circumstances in which they were made, not misleading, and the Company further
agrees to take all steps necessary to cause the Proxy Statement, as so corrected
or supplemented, to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
1.14 Merger Without Meeting of Stockholders. Notwithstanding Section
1.13 hereof, in the event that Parent, Merger Sub or any other Subsidiary of
Parent shall acquire at least 90 percent of the outstanding Shares pursuant to
the Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with the DGCL.
1.15 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary
or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Merger Sub or the Company or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Merger Sub or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Merger Sub or the Company, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the correspondingly numbered Sections of the letter,
dated the date hereof, from the Company to Parent (the "Company Disclosure
Letter"):
2.1 Organization and Good Standing. The Company and each of the
Company Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and
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authority and any necessary governmental approval to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not, individually
or in the aggregate, have or be reasonably likely in the future to have a
material adverse effect on the business, assets, condition (financial or
otherwise), liabilities or results of operations of the Company and the Company
Subsidiaries taken as a whole ("Company Material Adverse Effect") or prevent or
delay the consummation of the Offer or the Merger. The Company has heretofore
made available to Parent accurate and complete copies of the Certificate of
Incorporation and Bylaws or other governing instruments, as currently in effect,
of the Company and each Company Subsidiary. For purposes of this Agreement, the
term "Company Subsidiary" shall mean any corporation, partnership or other legal
entity of which the Company (either alone or through or together with any other
Subsidiary) owns a majority of the capital stock or other equity interests, and
the Company is entitled to vote for the election of the board of directors or
other governing body of such corporation, partnership or other legal entity.
2.2 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (a) 30,000,000 shares of Company Common
Stock, (b) 800,000 shares of Class A Common Stock, par value $.01 per share
(the "Company Class A Common Stock"), (c) 5,000 shares of Series A Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock"), (d) 200,000
shares of Series B Preferred Stock (the "Series B Preferred Stock"), par value
$1.00 per share, and (e) 500,000 shares of preferred stock, par value $.01 per
share. As of the close of business on November 17, 1998, (a) 5,721,790 shares
of Company Common Stock were issued and outstanding, and (b) no shares of
Company Class A Common Stock, Series A Preferred Stock, Series B Preferred
Stock or preferred stock were issued and outstanding. No other capital stock
of the Company is authorized or issued. All issued and outstanding shares of
the Company Common Stock are duly authorized, validly issued, fully paid and
non-assessable and free of preemptive or similar rights. Except as set forth
in the Company Filed Documents (as hereinafter defined) or Section 2.2 of the
Company Disclosure Letter, as of the date hereof there were no, and as of the
Expiration Date there will be no, outstanding options, warrants, rights or
other commitments of any character whatsoever relating to any of the
outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other interest in the ownership or earnings of the
Company or other security of the Company, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security and there are no contracts, commitments,
understandings or arrangements by which the Company is bound to issue
additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares. Except as set forth in
Section 2.2 of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiaries to
repurchase, redeem or otherwise acquire any shares of common stock of the
Company or the capital stock of any Company Subsidiary or to provide funds
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to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity.
2.3 Subsidiaries. Section 2.3 of the Company Disclosure Letter sets
forth the name and jurisdiction of incorporation or organization of each
Company Subsidiary, each of which is, except for directors' qualifying shares
disclosed in the Company Disclosure Letter, wholly owned by the Company or
another Company Subsidiary. All of the capital stock and other interests of the
Company Subsidiaries so held by the Company are owned by it or a Company
Subsidiary as indicated in Section 2.3 of the Company Disclosure Letter, free
and clear of any claim, lien, encumbrance, security interest or agreement with
respect thereto. All of the outstanding shares of capital stock in each of the
Company Subsidiaries directly or indirectly held by the Company are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive or similar rights and in compliance with applicable Laws. There
are no outstanding options, warrants, rights or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares.
2.4 Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but
not limited to, the Merger, have been duly and validly authorized by the
Company's Board of Directors and no other corporate proceedings on the part of
the Company or any Company Subsidiary are necessary to authorize the execution
and delivery of this Agreement or to consummate the transactions contemplated
hereby (other than the adoption of this Agreement by the stockholders of the
Company to the extent required by the DGCL). This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies. The Board of
Directors of the Company has approved this Agreement, the Stockholder
Agreement and the transactions contemplated hereby and thereby (including but
not limited to the Offer, the Merger and the matters provided for in the
Stockholder Agreement) so as to render inapplicable hereto and thereto the
limitation on business combinations contained in Section 203 of the DGCL (or
any similar provision). As a result, the only vote of holders of any class or
series of the Company's capital stock required to adopt this Agreement and the
transactions contemplated hereby, including the Merger, is the affirmative
vote of a majority of the outstanding Shares, and if Section 253 of the DGCL
is applicable to the Merger, no such vote shall be required. No other state
takeover or control share statute or similar statute or regulation
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applies or purports to apply to the Offer, the Merger, the Stockholder Agreement
or any of the transactions contemplated hereby or thereby.
2.5 Governmental Approvals. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("Consent"), any
nation or government, any state or other political subdivision thereof, any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental or regulatory authority, agency,
department, board, commission, administration or instrumentality, any court,
tribunal or arbitrator and any self-regulatory organization, domestic or foreign
("Governmental Authority"), on the part of the Company or any of the Company
Subsidiaries is required in connection with the execution, delivery or
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the DGCL, (ii) filings with the SEC and the National Association of Securities
Dealers, Inc. ("NASD"), and (iii) filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") and similar foreign requirements.
2.6 No Violations. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of the Company or any
of the Company Subsidiaries, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any Company Material Contract (as hereinafter defined), (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of the Company or any Company Subsidiary or (iv) subject to obtaining
the Consents from Governmental Authorities referred to in Section 2.5 hereof,
contravene any applicable provision of any statute, law, rule or regulation or
any order, decision, injunction, judgment, award or decree ("Law") to which
the Company or any Company Subsidiary or its or any of their respective assets
or properties are subject.
2.7 Securities Filings. The Company and, to the extent applicable,
each of its then or current Company Subsidiaries, has filed all forms,
reports, statements and documents required to be filed with the SEC since
October 1996, each of which has complied in all material respects with the
applicable requirements of the Securities Act (as hereinafter defined) or the
Securities Exchange Act, each as in effect on the date so filed. The Company
has made available to Parent true and complete copies of (i) its Annual
Reports on Form 10-K, as amended, for the years ended December 31, 1996 and
1997, as filed with the SEC, (ii) its proxy statements relating to all of the
meetings of stockholders (whether annual or special) of the Company since
October 1996, as filed with the SEC, and (iii) all other reports, statements
and registration statements and amendments thereto (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended)
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filed by the Company with the SEC since October 1996 and prior to the date
hereof (collectively, the "Company Filed Documents"). The reports and statements
required to be filed or furnished to stockholders pursuant to the Securities
Exchange Act subsequent to the date hereof, collectively with the Company Filed
Documents, are referred to collectively herein as the "Company Securities
Filings." As of their respective dates, or as of the date of the last amendment
thereof, if amended after filing, none of the Company Securities Filings
contained or, as to the Company Securities Filings subsequent to the date
hereof, will contain, any untrue statement of a material fact or omitted or, as
to the Company Securities Filings subsequent to the date hereof, will omit, to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company has heretofore furnished or made available to Parent
a complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to executed agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Securities Exchange Act.
2.8 Company Financial Statements. The audited consolidated financial
statements and unaudited interim financial statements of the Company included
in the Company Securities Filings (the "Company Financial Statements") have
been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except, with
respect to any Company Filed Documents, as may be indicated therein or in the
notes thereto) and present fairly the consolidated financial position of the
Company and the Company Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments (which in the aggregate are not material in
nature or amount), and any other adjustments described in the Company Filed
Documents.
2.9 Absence of Certain Changes or Events. Except as set forth in the
Company Filed Documents or Section 2.9 of the Company Disclosure Letter, since
September 30, 1998, the Company and the Company Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been: (i) any event that,
individually or in the aggregate, has had or is reasonably likely in the
future to have a Company Material Adverse Effect, (ii) any declaration,
payment or setting aside for payment of any dividend or other distribution or
any redemption or other acquisition of any shares of capital stock or
securities of the Company by the Company, (iii) any material damage or loss to
any material asset or property, whether or not covered by insurance, (iv) any
change by the Company in accounting principles or practices, (v) any
revaluation by the Company of any material amount of its assets, including but
not limited to, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business, (vi) any
entry by the Company or any Company Subsidiaries into any commitment or
transactions material to the Company and the Company Subsidiaries taken as a
whole (other than commitments or transactions entered into in the ordinary
course of business), or (vii) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation the granting of stock
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options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, or any other increase in the compensation payable or to become
payable to any present or former directors or officers, or any employment,
consulting or severance agreement or arrangement entered into with any such
present or former directors, officers or employees of the Company or any of the
Company Subsidiaries. Since October 1, 1998, neither the Company nor any Company
Subsidiary has taken, or failed to take, any action that would have constituted
a breach of Section 4.1 hereof had the covenants therein applied since that
date.
2.10 Compliance With Laws. Except as set forth in the Company Filed
Documents, the business and operations of the Company and each of the Company
Subsidiaries have been operated in compliance with all Laws applicable
thereto, except for any instances of non-compliance which, individually or in
the aggregate, have not had and would not be reasonably likely in the future
to have a Company Material Adverse Effect.
2.11 Permits. (i) The Company and the Company Subsidiaries have all
material permits, certificates, licenses, approvals and other authorizations
required in connection with the operation of their respective businesses
(collectively, "Company Permits"), (ii) neither the Company nor any of the
Company Subsidiaries is in violation in any material respect of any Company
Permit and (iii) no proceedings are pending or, to the knowledge of the
Company, threatened, to revoke or limit any Company Permit.
2.12 Litigation. Except as disclosed in the Company Filed Documents,
there is no suit, action, investigation, claim or proceeding ("Litigation")
pending or, to the best knowledge of the Company, threatened against the
Company or any of the Company Subsidiaries, nor is there any judgment, decree,
writ, award, injunction, rule or order of any Governmental Authority
outstanding against the Company or any of the Company Subsidiaries.
2.13 Contracts. Except as set forth in Section 2.13 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is
a party or is subject to any note, bond, mortgage, indenture, contract, lease,
license, agreement or instrument that (a) involves the payment of $200,000 or
more, (b) has a remaining term of one year or more, (c) evidences
indebtedness, or (d) is required to be described in or filed as an exhibit to
any Company Securities Filing ("Company Material Contract") which is not so
described in or filed as required by the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the "Securities Act"), or the
Securities Exchange Act. All such Company Material Contracts are valid and
binding and are in full force and effect and enforceable against the Company
or such Subsidiary and, to the knowledge of the Company, against the other
parties thereto in accordance with their respective terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies. Neither the Company nor any of the
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Company Subsidiaries is in violation or breach of or default under any such
Company Material Contract.
2.14 Employee Benefit Plans.
(a) Section 2.14 of the Company Disclosure Letter contains
a complete and accurate list of all Benefit Plans (as hereinafter defined)
maintained or contributed to by the Company or any of the Company Subsidiaries
("Company Benefit Plan"). A "Benefit Plan" shall include (i) an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended, together with all regulations thereunder ("ERISA"), even
if, because of some other provision of ERISA, such plan is not subject to any or
all of ERISA's provisions, and (ii) whether or not described in the preceding
clause, any pension, profit sharing, severance, employment, change-in-control,
bonus, stock bonus, deferred or supplemental compensation, retiree medical or
life insurance, death benefit or insurance, retirement, thrift, stock purchase
or stock option plan or any other compensation, welfare, fringe benefit,
perquisite or retirement plan, or other material program, policy or arrangement
of any kind or nature whatsoever, whether oral or written, providing for
compensation, benefits for or the welfare of any or all of the current or former
employees, directors, consultants or agents of the Company or any of the Company
Subsidiaries or their beneficiaries or dependents. Each of the Company Benefit
Plans has been maintained in compliance in all material respects with its terms
and all applicable Law. Neither the Company nor any of the Company Subsidiaries
contributes to or has contributed to, or has any outstanding liability with
respect to, any Multiemployer Plan as defined in Section 3(37) of ERISA.
(b) Except as set forth in Section 2.14 of the Company
Disclosure Letter: (i) each Benefit Plan has been established and administered
in accordance with its terms and in compliance with applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended, together with all
regulations thereunder, and any substitute or successor provisions thereof or
thereunder (the "Code") and other applicable laws, rules and regulations; (ii)
the Company has received no notice from any Governmental Authority questioning
or challenging such compliance; (iii) each Benefit Plan which is intended to be
qualified (within the meaning of Code Section 401(a)) is so qualified in form
and operation and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that would cause the loss of such qualification; (iv) no event has occurred and
no condition exists with respect to a Benefit Plan that would subject the
Company or any of the Company Subsidiaries, either directly or by reason of
their affiliation with an ERISA Affiliate (as hereinafter defined) to any
material tax, fine, lien or penalty imposed by ERISA, the Code or other
applicable laws, rules and regulations; (v) for each Benefit Plan with respect
to which a Form 5500 has been filed, no material change has occurred with
respect to the matters covered by the most recent Form 5500 since the date
thereof; (vi) no "reportable event" (as such term is defined in ERISA Section
4043), "prohibited transactions" (as such term is defined in ERISA Section 406
and Code Section 4975), "accumulated funding deficiency" (as such term is
defined in ERISA Section 302 and Code Section 412 (whether or not waived)) or
failure to make by its due date a required installment under Code Section 412(m)
has
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occurred with respect to any Benefit Plan or any other plan maintained for
employees of any ERISA Affiliate of the Company or any of the Company
Subsidiaries. "ERISA Affiliate," as applied to any person, means (i) any
corporation which is a member of a controlled group of corporations (within the
meaning of Code Section 414(b)) of which that person is a member, (ii) any trade
or business (whether or not incorporated) which is a member of a group of trades
or businesses under common control (within the meaning of Code Section 414(c))
of which that person is a member and (iii) any member of an affiliated service
group (within the meaning of Code Section 414(m) and (o)) of which that person,
any corporation described in clause (i) above or any trade or business described
in clause (ii) above is a member.
(c) With respect to any Benefit Plan, (i) no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or, to the knowledge of the Company, threatened and (ii) no facts or
circumstances exist, to the knowledge of the Company, that could reasonably be
expected to give rise to any such actions, suits or claims.
(d) Except as set forth in Section 2.14 of the Company
Disclosure Letter and the accelerated vesting and cash-out of Company Options as
described in Section 1.9 hereof, no Benefit Plan exists that could result in the
payment to any present or former employee, director, consultant or agent of the
Company or any Company Subsidiary of any money or other property, or accelerate
or provide any other rights or benefits, to any such person as a result of the
transactions contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code Section 280G, and no
payment in respect of a Benefit Plan would constitute an excess parachute
payment under Code Section 280G.
(e) With respect to each Benefit Plan, the Company has
made available to Parent a true and correct copy of (i) the Benefit Plans and
all amendments thereto, (ii) the most recent annual report on Form 5500 filed
with the IRS, (iii) each trust agreement and group annuity contract, if any, and
all amendments thereto relating to such Benefit Plan, (iv) the most recent
actuarial report or valuation relating to any such Benefit Plan subject to Title
IV of ERISA, (v) the most recent IRS determination letter with respect to any
such Benefit Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code and (vi) the most recent summary plan descriptions.
(f) As of the date hereof, (i) all material payments
required to be made by or under any Benefit Plan, any related trusts, or any
related collective bargaining agreement have been made or are being processed in
accordance with normal operating procedures, and except as set forth in the
Company's financial statements, all material amounts required to be reflected
thereon have been properly accrued to date as liabilities under or with respect
to each Benefit Plan for the current year.
(g) None of the Benefit Plans is subject to Title IV of
ERISA.
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(h) The Company does not have any post-retirement or
similar obligations under any employee welfare benefit plan (as such term is
defined in Section 3(1) of ERISA) or otherwise to provide health or death
benefits to or in respect of current or former employees, directors, agents or
consultants, except as specifically required by the continuation requirements of
Part 6 of Title I of ERISA.
2.15 Taxes and Tax Returns. Except as set forth in Section 2.15
of the Company Disclosure Letter:
(a) The Company and each of the Company Subsidiaries and
any consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of the Company Subsidiaries is or has been a member has
timely filed, or caused to be timely filed all Tax Returns (as hereinafter
defined) required to be filed by it, and has paid, collected or withheld, or
caused to be paid, collected or withheld, all Taxes required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Company Financial Statements have been established in accordance with generally
accepted accounting principles, consistently applied, or which are being
contested in good faith. All such Tax Returns were true, correct and complete in
all material respects. None of the Tax Returns contains any position which is or
would be subject to penalties under Section 6662 of the Code (or any
corresponding provision of state, local or foreign Tax law). There are no claims
or assessments pending against the Company or any of the Company Subsidiaries
for any alleged deficiency in any Tax, and the Company has not been notified in
writing of any proposed Tax claims or assessments against the Company or any of
the Company Subsidiaries (other than in each case, claims or assessments for
which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith or are immaterial in
amount). Neither the Company nor any of the Company Subsidiaries has any waivers
or extensions of any applicable statute of limitations to assess any Taxes.
There are no outstanding requests by the Company or any of the Company
Subsidiaries for any extension of time within which to file any Tax Return or
within which to pay any material amounts of Taxes shown to be due on any return.
No claim has been made in writing to the Company or to any of the Company
Subsidiaries in the past three years by an authority in a jurisdiction where the
Company or the Company Subsidiaries do not file Tax Returns that it is or may be
subject to taxation by that jurisdiction, nor is there any meritorious basis for
an investigation or other proceeding that would result in such an assessment. To
the best knowledge of the Company, there are no liens for Taxes on the assets of
the Company or any of the Company Subsidiaries except for statutory liens for
current Taxes not yet due and payable.
(b) Section 2.15 of the Company Disclosure Letter sets
forth (1) the taxable years of the Company and the Company Subsidiaries as to
which the respective statutes of limitations have not expired, and (2) with
respect to such years, sets forth those years for which examinations have been
completed, those years for which examinations are presently being conducted,
those years for which examinations have not been initiated, and those years for
which Tax Returns have not yet been filed.
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(c) All material elections with respect to Tax affecting
the Company as of the date hereof are set forth in Section 2.15(c) of the
Company Disclosure Letter.
(d) Neither the Company nor any of the Company
Subsidiaries has filed a consent under Section 341(f) of the Code concerning
collapsible corporations. Neither the Company nor any of the Company
Subsidiaries has made any payments, or is obligated to make any payments, or is
a party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Sections 162(m) or 280G of
the Code or any similar provision of foreign, state or local law. Neither the
Company nor any of the Company Subsidiaries is a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement or arrangement. Except for
the group of which the Company is presently the common parent, neither the
Company nor any of its Company Subsidiaries has ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code.
(e) Neither the Company nor any of its Company
Subsidiaries has (i) a material amount of income reportable for a period ending
after the Closing Date but attributable to a transaction (e.g., an installment
sale) occurring in or a change in accounting method made for a period ending on
or prior to the Closing Date which resulted in a deferred reporting of income
from such transaction or from such change in accounting method (other than a
deferred intercompany transaction); or (ii) deferred gain or loss arising out of
any deferred intercompany transaction. Neither the Company nor any Company
Subsidiary has any excess loss account (as defined in Treasury Regulation
Section 1.1502-19) with respect to the stock of any Company Subsidiary. No
"ownership change" (within the meaning of Section 382(g) of the Code) has, to
the Company's knowledge, occurred prior to the date hereof which currently
limits the Company's ability to utilize any net operating loss carryovers under
Section 382 of the Code.
(f) For purposes of this Agreement, the term "Tax" shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
Governmental Authority with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
2.16 Ownership and Use of Assets and Properties.
(a) The Company and its Subsidiaries have good and
marketable title to all assets and properties which the Company and the
Subsidiaries own, including, without limitation, the assets and properties
reflected in the Company Financial Statements or acquired after the date of the
Company Financial Statements (other than assets and properties sold or otherwise
disposed of since such date in the ordinary course of business and consistent
with past practice), free and clear
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of all liens or other encumbrances, except for liens or imperfections of title
which do not, individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate ("Permitted Liens").
(b) The Company and its Subsidiaries do not own any real
property. Section 2.16(b) of the Company Disclosure Letter contains a complete
and correct list of all real property leased by such persons (the "Leased Real
Property"), in each case indicating the entity leasing such property and the
persons from whom such property is being leased. The Company and the Company
Subsidiaries have previously made available to the Parent complete and correct
copies of each such lease (and any amendments). The Company and the Company
Subsidiaries have good and marketable title to all structures, plants, leasehold
improvements, systems, fixtures and other property located on or about any of
the Leased Real Property, to the extent that the same are used by the Company
and the Company Subsidiaries in the conduct of their business, free of any liens
or other encumbrances other than Permitted Liens or as disclosed in Section
2.16(b) of the Company Disclosure Letter. No work has been performed on or with
respect to or in connection with any of the Leased Real Property that would
cause such Leased Real Property to become subject to any mechanics',
materialmen's, workmen's, repairmen's, carriers' or similar liens which would
result in a Company Material Adverse Effect and which will not be paid by the
Company or any such Subsidiary, as the case may be, in the ordinary course of
its business consistent with past practice. The structures, plants,
improvements, systems (including, without limitation, heating, ventilation, air
conditioning, electrical, plumbing, fire sprinkler, lighting, elevator and other
mechanical systems) and fixtures (including, without limitation, storage tanks
or other impoundment vessels, whether above or below ground) located in or about
each such parcel of Leased Real Property conform in all material respects with
all legal requirements and are in good operating condition and repair, ordinary
wear and tear excepted. Each such parcel of Leased Real Property, in view of the
purposes for which it is currently used, conforms in all material respects with
all covenants or restrictions of record and conforms in all material respects
with all applicable building codes and zoning requirements, and the Company is
not aware of any proposed material change in any such governmental or regulatory
requirements or in any such zoning requirements. The Company and the Company
Subsidiaries have all easements, rights-of-way and similar rights necessary to
conduct their respective businesses as presently conducted and to use the items
of Leased Real Property as currently used, including, without limitation,
easements and licenses for pipelines, power lines, water lines, roadways and
other access the absence of which would result in a Company Material Adverse
Effect.
(c) All personal property of the Company, whether or not
reflected in the Company Financial Statements, is in good operating condition
and repair, ordinary wear and tear excepted, is physically located at or about
the places of business of the Company and the Company Subsidiaries and is owned
outright by the Company and the Company Subsidiaries or is validly leased under
one of the personal property leases set forth in Section 2.16(c) of the Company
Disclosure Letter. The maintenance and operation of all such assets and
properties has complied in all material respects with all applicable laws,
regulations, ordinances, contractual commitments and obligations. None of such
personal property with a fair market value of $200,000 or more is subject
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to any agreement, arrangement or understanding for its use by any person other
than the Company and the Company Subsidiaries. Except as set forth in Section
2.16(c) of the Company Disclosure Letter, no item of tangible personal property
with a fair market value of $200,000 or more owned or used by the Company or the
Company Subsidiaries as of the date of this Agreement is subject to any lien or
other encumbrance.
(d) Except as set forth in Section 2.16(d) of the Company
Disclosure Letter, with respect to any lease of Leased Real Property or any
lease of personal property involving annual expenditures of $200,000 or more,
(i) each such lease is in full force and effect; (ii) all lease payments due to
date on any such lease have been paid, and neither the Company, any Subsidiary
nor (to the knowledge of the Company) any other party is in default under any
such lease, and no event has occurred which constitutes, or with the lapse of
time or the giving of notice or both would constitute, a default in any material
respect by the Company, any Subsidiary or (to the knowledge of the Company) any
other party under such lease; and (iii) to the knowledge of the Company, there
are no disputes or disagreements between the Company and the Company
Subsidiaries, on the one hand, and any other party with respect to any such
lease.
2.17 Intellectual Property. With respect to all patents, trademarks,
trade names, service marks, copyrights and any applications therefor,
technology, know-how, trade secrets, computer software programs or applications,
trade names and tangible or intangible proprietary information or materials that
are used in the respective businesses of the Company and the Company
Subsidiaries as currently conducted, the Company has no knowledge (a) that such
use violates the rights of any third person or (b) of any pending or threatened
litigation involving such use, which violation or litigation in the aggregate
has or could be reasonably expected to have a Company Material Adverse Effect.
2.18 Insurance. Section 2.18 of the Company Disclosure Letter
contains a complete and correct list of all insurance policies carried by, or
covering, the Company and the Company Subsidiaries with respect to their
businesses, assets and properties, together with, in respect of each such
policy, the name of the insurer, the policy number, the type of policy and
each pending claim. Complete and correct copies of each such policy have
previously been provided to Parent. All such policies are in full force and
effect, and no notice of cancellation has been given with respect to any such
policy. All premiums due on such policies have been paid in a timely manner
and the Company and the Company Subsidiaries have complied in all material
respects with the terms and provisions of such policies.
2.19 Environmental Matters.
(a) Except as set forth in Section 2.19 of the Company
Disclosure Letter and except as, individually or in the aggregate, have not had
and are not reasonably likely in the future to have a Company Material Adverse
Effect or prevent or materially delay the consummation of the Offer or the
Merger:
(i) the Company and the Company Subsidiaries are,
and within the period of all applicable statutes of limitation have
been, in compliance with all Environmental Laws (as hereinafter
defined);
(ii) the Company and the Company Subsidiaries
hold all Environmental Permits (as hereinafter defined) (each of
which is in full force and effect) required for any of their current
operations and for any property owned, leased, or otherwise operated
by any of them, and are, and within the period of all applicable
statutes of limitation have been, in compliance with the terms of all
such Environmental Permits;
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(iii) no review by, or approval of, any
Governmental Authority or other person is required under any
Environmental Law in connection with the execution or delivery of
this Agreement;
(iv) neither the Company nor any of the Company
Subsidiaries has received any written notice of Environmental Claim
(as hereinafter defined) and, to the knowledge of the Company, no
such Environmental Claims are currently pending or threatened;
(v) to the knowledge of the Company, Hazardous
Materials (as hereinafter defined) are not present on any property
owned, leased or operated by the Company or any Company Subsidiaries
that is reasonably likely to form the basis of any Environmental
Claim against any of them, and neither the Company nor any of the
Company Subsidiaries has reason to believe that Hazardous Materials
are present on any other property that is reasonably likely to form
the basis of any Environmental Claim against any of them; and
(vi) the Company has informed the Parent and
Merger Sub of: (A) all material facts which the Company reasonably
believes could form the basis of a material Environmental Claim
against any person (including, without limitation, any predecessor of
the Company or any of the Company Subsidiaries whose liability the
Company or any of the Company Subsidiaries has or may have retained
or assumed, either contractually or by operation of law, arising out
of non-compliance with any Environmental Law or the presence of
Hazardous Materials at any location owned, operated or leased by the
Company or the Company Subsidiaries or on any other property; (B) all
currently estimated material costs the Company reasonably expects it
and any of the Company Subsidiaries to incur to comply with
Environmental Laws during the next three years; and (C) all currently
estimated material costs the Company and any of the Company
Subsidiaries reasonably expect to incur for ongoing, and reasonably
anticipated, investigation and remediation of Hazardous Materials
(including, without limitation, any payments to resolve any
threatened or asserted Environmental Claim for investigation and
remediation costs).
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(b) For purposes of this Agreement, the terms below shall
have the following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice of alleged noncompliance, violation or liability, by any person or
entity asserting liability or potential liability (including without
limitation, liability or potential liability for enforcement, investigatory
costs, remediation costs, operation and maintenance costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines or penalties), regardless of legal theory, arising out of, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location or (ii) otherwise relating to
obligations or liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees or other legally
enforceable requirement (including, without limitation, common law) of any
foreign government, the United States or any Governmental Authority
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment.
"Environmental Permit" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants and contaminants that are regulated pursuant to any Environmental
Laws.
2.20 Labor Relations. No employee of the Company or any of the
Company Subsidiaries is represented by any union or other labor organization.
There have been no organizational efforts by any labor union or other
collective bargaining representative with respect to any employees of the
Company or any Company Subsidiary. No representation election, arbitration
proceeding, grievance, labor strike, dispute, slowdown, stoppage or other
labor trouble is pending or, to the knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries. No complaint against
the Company or any of the Company Subsidiaries is pending or, to the knowledge
of the Company, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar foreign, state or local
agency, by or on behalf of any employee of the Company or any of the Company
Subsidiaries. The Company and each Company Subsidiary is in compliance in all
material respects with all laws and regulations governing workplace safety,
terms and conditions of employment, payment of wages and overtime, employment
of non-citizens, discrimination in the workplace, and other employment and
labor laws. The Company and each Company Subsidiary has not engaged in any
unfair labor practice.
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2.21 Offer Documents; Proxy Statement. The Proxy Statement will
comply in all material respects with the applicable requirements of the
Securities Exchange Act except that no representation or warranty is being
made by the Company with respect to any information supplied to the Company by
Parent or Merger Sub or any of their Affiliates specifically for inclusion in
the Proxy Statement. The Proxy Statement will not, at the time the Proxy
Statement is filed with the SEC or first sent to stockholders, at the time of
the Company's stockholders' meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the meeting of the Company's
stockholders held for approval of the Merger which has become false or
misleading. Neither the Schedule 14D-9 nor any of the information relating to
the Company or its affiliates provided by or on behalf of the Company
specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at
the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer
Documents are filed with the SEC or are first published, sent or given to
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, except that no representation is made by
the Company with respect to written information supplied by Parent or Merger Sub
or their Affiliates specifically for inclusion in the Schedule 14D-9. The
Schedule 14D-9 will comply in all material respects with the Securities Exchange
Act.
2.22 Finders and Investment Bankers. Neither the Company nor any of
its officers or directors has employed any broker, finder or financial advisor
or otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with the Financial
Advisor, a copy of which has been provided to Parent.
2.23 Fairness Opinion. The Company's Board of Directors has received
from the Financial Advisor a written opinion addressed to it to the effect
that, as of the date hereof, the consideration to be paid to stockholders
pursuant to each of the Offer and the Merger is fair to such stockholders from
a financial point of view.
2.24 Related Party Transactions. Except as set forth in the Company
Filed Documents, no director, officer or affiliate of the Company, including
for these purposes, the Stockholders, or director, officer or partner of such
affiliate (each a "Related Party") (i) has outstanding any indebtedness or
other similar obligation to the Company or any of the Company Subsidiaries or
(ii) other than employment-related benefits contemplated by or disclosed in
this Agreement, is a party to any legally binding material contract,
commitment or obligation to, from or with the Company or any Company
Subsidiary.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
3.1 Organization and Good Standing. Each of Parent and Merger Sub are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation and have all requisite
corporate power and authority and any necessary governmental authority to own,
lease and operate their properties and to carry on business as now being
conducted.
3.2 Authorization; Binding Agreement. Parent and Merger Sub have all
requisite corporate power and authority to execute and deliver this Agreement,
to perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but
not limited to, the Merger, have been duly and validly authorized by the
respective Boards of Directors of Parent and Merger Sub, as appropriate, and
no other corporate proceedings on the part of Parent, Merger Sub or any other
Subsidiary of Parent are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated hereby (other
than the requisite approval by the sole stockholder of Merger Sub of this
Agreement and the Merger). This Agreement has been duly and validly executed
and delivered by each of Parent and Merger Sub and constitutes the legal,
valid and binding agreements of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms, except to the
extent enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies.
3.3 Governmental Approvals. No Consent from or with any Governmental
Authority on the part of Parent or Merger Sub is required in connection with
the execution or delivery by Parent and Merger Sub of this Agreement or the
consummation by Parent and Merger Sub of the transactions contemplated hereby
other than (i) filings under the HSR Act and similar foreign requirements,
(ii) filings with the SEC and the NASD, and (iii) those Consents that, if they
were not obtained or made, would not prevent or materially delay consummation
of the Offer or the Merger, or prevent or materially delay Parent or Merger
Sub from performing its obligations under this Agreement.
3.4 No Violations. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of Parent or any of the
Parent Subsidiaries, (ii) require any Consent under or result in a violation
or breach of, or constitute (with
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or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any material contract, instrument, permit, license
or franchise to which the Parent is a party or by which Parent or any of its
assets or property is subject, (iii) result in the creation or imposition of any
material lien or encumbrance of any kind upon any of the assets of Parent or any
Subsidiary of Parent or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in Section 3.4 hereof, contravene any Law to which
Parent or any Subsidiary of Parent or its or any of their respective assets or
properties are subject.
3.5 Offer Documents; Proxy Statement. None of the information
supplied by Parent, Merger Sub or their respective officers, directors,
representatives, agents or employees (the "Parent Information"), specifically
for inclusion in the Proxy Statement will, on the date the Proxy Statement is
first mailed to stockholders, at the time of the Company's stockholders'
meeting or at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it will be made, will be false or
misleading with respect to any material fact, or will omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for such stockholders' meeting which has become
false or misleading. Neither the Schedule 14D-1, the Offer Documents, nor any
Parent Information provided by Parent or Merger Sub specifically for inclusion
in the Schedule 14D-9 will, at any time the Offer Documents are filed with the
SEC or first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, neither
Parent nor Merger Sub makes any representation or warranty with respect to any
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
3.6 Finders and Investment Bankers. Neither Parent nor Merger Sub nor
any of their respective officers or directors has employed any broker, finder
or financial advisor or otherwise incurred any liability for any brokerage
fees, commissions or financial advisors' or finders' fees in connection with
the transactions contemplated hereby, other than pursuant to an agreement with
Bear, Stearns & Co. Inc.
3.7 Financing. Parent has funds available to it sufficient to
purchase the Shares in accordance with the terms of this Agreement and
sufficient to consummate the Merger.
3.8 No Prior Activities. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions
contemplated hereby (including any financing in connection therewith), Merger
Sub has not incurred any obligations or liabilities, and has not engaged in
any business or activities of
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any type or kind whatsoever or entered into any agreements or arrangements with
any person or entity.
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1 Conduct of Business of the Company and the Company
Subsidiaries.
(a) During the period from the date of this Agreement to
the Effective Time, (i) the Company shall, and shall cause the Company
Subsidiaries to, conduct their businesses in the ordinary course and consistent
with past practice, and the Company shall, and shall cause the Company
Subsidiaries to, use their reasonable best efforts to preserve intact their
business organization, keep available the services of their officers and
employees and preserve intact the present commercial relationships of the
Company and the Company Subsidiaries with all persons with whom they do business
and (ii) without limiting the generality or effect of the foregoing, the Company
shall not, and shall cause each Company Subsidiary not to:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws (or comparable governing instruments) or
change the number of directors constituting the entire Board of
Directors of the Company or any of the Company Subsidiaries;
(B) authorize for issuance, issue, deliver,
grant, sell, pledge, or otherwise dispose of or propose to issue,
deliver, grant, sell, pledge or otherwise dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any
kind to acquire or sell any shares of, the capital stock or other
securities of the Company or any of the Company Subsidiaries
including, but not limited to, stock appreciation rights, phantom
stock, any securities convertible into or exchangeable for shares of
stock of any class of the Company or any of the Company Subsidiaries;
provided, however, that the foregoing shall not prohibit the issuance
of Shares upon the exercise of Company Options granted prior to the
date of this Agreement;
(C) split, combine or reclassify any shares of
its capital stock or declare, pay or set aside any dividend or other
distribution (whether in cash, stock, securities or other property or
any combination thereof) in respect of its capital stock, or directly
or indirectly redeem, purchase or otherwise acquire or offer to
acquire, directly or indirectly, any shares of its capital stock or
other securities;
(D) (a) except in the ordinary course of business
consistent with past practice (i) assume, guarantee, endorse or
otherwise become liable or responsible (whether
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directly, indirectly, contingently or otherwise) for the obligations of
any person or (ii) make any loans, advances or capital contributions
to, or investments in, any other person (other than to a Company
Subsidiary); (b) acquire the stock or the assets of, or merge or
consolidate with, any other person; (c) voluntarily incur any liability
or obligation (absolute, accrued, contingent or otherwise) other than
in the ordinary course of business consistent with past practice; or
(d) sell, transfer, mortgage, pledge or otherwise dispose of, or
encumber, or agree to sell, transfer, mortgage, pledge or otherwise
dispose of or encumber, any assets or properties, real, personal or
mixed of the Company and the Company Subsidiaries other than sales of
products in the ordinary course of business and in a manner
consistent with past practice; (e) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in
the ordinary course of business consistent with past practice); (f)
enter into any contract or agreement, other than in the ordinary
course of business consistent with past practice, or amend, alter or
terminate any Company Material Contract; or (g) except as set forth in
Section 4.1 of the Company Disclosure Letter, authorize any single
capital expenditure which is in excess of $200,000 or capital
expenditures (during any month period) which are, in the aggregate, in
excess of $200,000 for the pany and the Company Subsidiaries taken as a
whole;
(E) increase in any manner the compensation of
any of its directors, officers or employees or enter into, establish,
amend or terminate any Benefit Plan, employment, consulting,
retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in
respect of, any stockholder, officer, director, other employee,
agent, consultant or affiliate other than as required pursuant to the
terms of agreements in effect on the date of this Agreement and set
forth in Section 4.1 of the Company Disclosure Letter;
(F) except as may be required as a result of a
change in Law or in generally accepted accounting principles, change
any of the accounting practices or principles used by it;
(G) make any material Tax election, settle or
compromise any material federal, state, local or foreign Tax
liability, or waive any statute of limitations for any Tax claim or
assessment;
(H) settle or compromise any material pending or
threatened suit, action or claim;
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(I) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(J) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction (a) in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice and (b)
of liabilities required to be paid, discharged or satisfied pursuant
to the terms of any contract in existence on the date hereof or
entered into in accordance with this Section 4.1;
(K) permit any insurance policy naming the
Company or any Company Subsidiary as a beneficiary or a loss payable
payee to be cancelled or terminated without notice to Parent, except
in the ordinary course of business and consistent with past practice;
or
(L) take, or offer or propose to take, or agree
to take in writing or otherwise, any of the actions described in this
Section 4.1(a) or take or omit to take any action which would make
any of the representations or warranties of the Company contained in
this Agreement untrue and incorrect in any material respect as of the
date when made if such action had then been taken or omitted, or
would result in any of the Offer Conditions or the conditions set
forth in Article VI hereof not being satisfied.
(b) The Company shall, and the Company shall cause each of
the Company Subsidiaries to, use its or their best efforts to comply in all
material respects with all Laws applicable to it or any of its properties,
assets or business and maintain in full force and effect all the Company Permits
necessary for such business.
4.2 Notification of Certain Matters. The Company shall give prompt
notice to Parent if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from
any third party alleging that the Consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement;
(ii) receipt of any notice or other communication from any Governmental
Authority (including, but not limited to, the SEC, the NASD or any securities
exchange) in connection with the transactions contemplated by this Agreement;
(iii) the occurrence of an event which would or would be reasonably likely in
the future to (A) have a Company Material Adverse Effect or prevent or delay
the consummation of the Offer or the Merger or (B) cause any Offer Condition
to be unsatisfied at any time prior to the consummation of the Offer; (iv) any
breach by the Company of any provision hereof; or (v) the commencement or
threat of any Litigation involving or affecting the Company or any of the
Company Subsidiaries, or any of their respective properties or assets, or, to
its knowledge, any
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employee, agent, director or officer, in his or her capacity as such, of the
Company or any of the Company Subsidiaries.
4.3 Access and Information. Between the date of this Agreement and
the Effective Time, the Company shall give, and shall cause its accountants
and legal counsel to give, Parent and its respective authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel), at all reasonable times, access as reasonably
requested to all personnel, offices and other facilities and to all contracts,
agreements, commitments, books and records of or pertaining to the Company and
the Company Subsidiaries, shall permit the foregoing persons to make such
reasonable inspections as they may require and shall cause its officers
promptly to furnish Parent with (a) such financial and operating data and
other information with respect to the business and properties of the Company
and the Company Subsidiaries as Parent may from time to time reasonably
request, and (b) a copy of each report, schedule and other document filed or
received by the Company or any of the Company Subsidiaries pursuant to the
requirements of applicable securities laws or the NASD.
4.4 Stockholder Approval. As soon as practicable following the
consummation of the Offer, the Company shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the approval and adoption of this Agreement and the
transactions contemplated hereby and thereby (the "Company Proposals"), if such
meeting is required. Except as otherwise contemplated by this Agreement, (i) the
Board of Directors of the Company shall recommend to the stockholders of the
Company that they approve the Company Proposals, (ii) the Company shall include
in the Proxy Statement the unanimous recommendation of the Company's Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the transactions contemplated hereby and the written opinion
of the Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair from a
financial point of view and (iii) the Company shall use its reasonable best
efforts to obtain any necessary approval by the Company's stockholders of the
Company Proposals. Notwithstanding the foregoing, in the event that Merger Sub
shall acquire at least 90 percent of the outstanding Shares, the Company agrees,
at the request of Merger Sub, subject to Article VI, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
4.5 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, the Company agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby, (ii) timely making
all necessary filings under the HSR Act and similar foreign Laws and (iii)
having vacated, dismissed or withdrawn any order, stay, decree, judgment or
injunction of any
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Governmental Authority which temporarily, preliminarily or permanently prohibits
or prevents the transactions contemplated by this Agreement. Upon the terms and
subject to the conditions hereof, the Company agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein.
4.6 Public Announcements. So long as this Agreement is in effect, the
Company shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the
consent of Parent, except for such of the foregoing as the Company determines
is required by applicable Law or pursuant to any applicable listing agreement
with, or rules or regulations of, the NASD, in which case the Company, prior
to making such announcement, shall consult in advance with Parent regarding
the same.
4.7 Compliance. In consummating the transactions contemplated hereby,
the Company shall comply, and cause the Company Subsidiaries to comply or to
be in compliance, in all material respects, with all applicable Laws.
4.8 No Solicitation.
(a) The Company shall, and shall cause the Company
Subsidiaries and the respective officers, directors, employees, representatives
and agents of the Company and the Company Subsidiaries to, immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
a Takeover Proposal (as hereinafter defined). The Company shall not, nor shall
it permit any of the Company Subsidiaries to, nor shall it authorize or permit
any of the respective officers, directors or employees of the Company and the
Company Subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of the Company
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information other than publicly available
information provided pursuant to routine stockholder requests consistent with
past practice), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal; provided,
however, that if, at any time prior to the Expiration Date and following the
receipt of a Superior Proposal (as hereinafter defined), the Board of Directors
of the Company determines in good faith, based upon the advice of outside
counsel, that such action is consistent with the Board of Directors' fiduciary
duties to the Company's stockholders under applicable Law, the Company may, in
response to a Superior Proposal that was made in circumstances not otherwise
involving a breach of this Agreement, and subject to compliance with Section
4.8(c), (x) furnish information with respect to the Company and the Company
Subsidiaries to any person pursuant to a confidentiality agreement having terms
substantially the same as the Confidentiality Agreement (as hereinafter
defined), provided that (i) such confidentiality agreement may not include any
provision calling for an exclusive right to negotiate with the Company and (ii)
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the Company advises Parent of all such nonpublic information delivered to such
person concurrently with or promptly following its delivery to the requesting
party, and (y) participate in negotiations regarding such Superior Proposal.
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 15 percent or more
of the assets of the Company and the Company Subsidiaries or 15 percent or more
of any class of equity securities of the Company or any Company Subsidiary, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15 percent or more of any class of equity securities of the
Company or any Company Subsidiary, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any Company Subsidiary, but does not
include the transactions contemplated by this Agreement.
(b) Except as set forth in this Section 4.8, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger, or the Stockholder Agreement, (ii) approve
or recommend any Takeover Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Expiration Date
the Board of Directors of the Company determines in good faith, in response to a
Superior Proposal that was made in circumstances not otherwise involving a
breach of this Agreement, upon receipt of written advice from outside counsel,
that such action is consistent with the Board of Directors' fiduciary duties to
the Company's stockholders under applicable Law, the Board of Directors of the
Company may (subject to this and the following sentences) take any of the
foregoing actions at any time that is after the second business day following
Parent's receipt of written notice advising Parent that the Board of Directors
of the Company has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal, identifying the person making such
Superior Proposal and providing notice of the determination of the Board of
Directors of the Company of what action referred to herein the Board of
Directors of the Company expects to take. The foregoing proviso shall not
prevent the Board of Directors of the Company from taking any actions described
in clause (x) within two business days of the Expiration Date so long as the
notice described in the foregoing proviso is received by Parent prior to Noon,
New York City time, on the then scheduled Expiration Date. For purposes of this
Agreement, a "Superior Proposal" means a bona fide written Takeover Proposal
which (i) a majority of the members of the Board of Directors of the Company
determines, in their good faith judgment (which may be based on the opinion of
independent financial advisors) that the value of the consideration provided for
in such proposal exceeds the Per Share Amount then provided in the Offer, and,
considering all relevant factors, is more favorable to the Company and its
stockholders than the Offer and the Merger and (ii) for which financing, to the
extent required, is then fully committed. Notwithstanding anything to the
contrary contained herein, the Board of Directors may not withdraw or modify its
approval of the Stockholders Agreement or the transactions contemplated thereby
for purposes of Section 203 of the DGCL (or any similar provision).
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(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.8, the Company shall promptly
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or the
Takeover Proposal and the identity of the person making such request or Takeover
Proposal and shall keep Parent promptly advised of all significant developments
which could reasonably be expected to culminate in the Board of Directors of the
Company withdrawing, modifying or amending its recommendation of the Offer, the
Merger and the transactions contemplated by this Agreement.
(d) Nothing contained in this Section 4.8 shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or
from making any disclosure to the Company's stockholders; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except in accordance with Section 4.8(b), withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to the Offer or the
Company Proposals or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal.
4.9 SEC and Stockholder Filings. The Company shall send to Parent a
copy of all public reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign Governmental Authority.
4.10 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States (each a "Takeover Statute")
is or may become applicable to the Offer or the Merger, the Company and the
members of its Board of Directors shall grant such approvals, and take such
actions as are necessary so that the transactions contemplated by this
Agreement and the Company Proposals may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any Takeover Statute on any of the transactions
contemplated hereby.
4.11 Related Party Agreements. Except as set forth in Section 4.11 of
the Company Disclosure Letter and except for employment-related agreements or
obligations contemplated by or disclosed in this Agreement, the Company shall
take all actions necessary to terminate, effective as of the Effective Time,
all contracts, commitments or obligations to, from or with the Company or
Company Subsidiary, on the one hand, and any Related Party, on the other hand.
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
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5.1 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, Parent agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but
not limited to, (i) obtaining all Consents from Governmental Authorities and
other third parties required for the consummation of the Offer and the Merger
and the transactions contemplated thereby, (ii) timely making all necessary
filings under the HSR Act and similar foreign Laws and (iii) having vacated,
dismissed or withdrawn any order, stay, decree, judgment or injunction of any
Governmental Authority which temporarily, preliminarily or permanently
prohibits or prevents the transactions contemplated by this Agreement. Upon
the terms and subject to the conditions hereof, Parent agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary to satisfy the other conditions of
the Closing set forth herein. Notwithstanding any other provision hereof, in
no event shall Parent, Merger Sub or any of their Affiliates (collectively,
the "Parent Group") be required to take or fail to take any action in order to
obtain or make a Consent arising out of any contractual or legal obligation of
or applicable to the Company or the Company Subsidiaries, other than
obligations such as those under the HSR Act which apply to both the Company
and the Parent Group and then only to the extent applicable to the Parent
Group, and in no event shall any member of the Parent Group be required to enter
into or offer to enter into any divestiture, hold-separate, business limitation
or similar agreement or undertaking in connection with this Agreement or the
transactions contemplated hereby.
5.2 Public Announcements. So long as this Agreement is in effect,
Parent shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the
consent of the Company, except for such of the foregoing as to which Parent
determines is required by applicable Law or pursuant to any applicable listing
agreement with, or rules or regulations of, any stock exchange on which shares
the Parent's capital stock are listed or the NASD, in which case Parent, prior
to making such announcement, shall consult in advance with the Company
regarding the same.
5.3 Compliance. In consummating the transactions contemplated hereby,
Parent shall comply, and shall cause its Subsidiaries to comply or to be in
compliance, in all material respects, with all applicable Laws.
5.4 [Intentionally omitted].
5.5 Indemnification, Exculpation and Insurance
(a) All rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
existing in favor of the current or former directors, officers or employees of
the Company as provided in the Company's Certificate of Incorporation or Bylaws
or pursuant to agreements existing on the date of this Agreement shall be
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assumed by the Surviving Corporation, and Parent shall cause the Surviving
Corporation to honor such obligations in accordance with the terms thereof,
without further action, as of the Effective Time, and such rights will continue
in full force and effort in accordance with their respective terms. Such rights,
and the Surviving Corporation's and Parent's related obligations, shall apply in
all respects to the current or former directors, officers and employees of each
of the Company Subsidiaries as though such directors, officers and employees
were entitled to indemnification rights pursuant to the Company's Certificate of
Incorporation or Bylaws as in effect on the date hereof or pursuant to such
agreements, as the case may be. In addition, from and after the Effective Time,
directors and officers of the Company who become or remain directors or officers
of Parent shall be entitled to the same indemnity rights and protections
(including those provided by directors' and officers' liability insurance) as
are afforded to other directors and officers of Parent. Notwithstanding any
other provision hereof, the provisions of this Section 5.5 (i) are intended to
be for the benefit of, and shall be enforceable by, each indemnified party, his
or her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.
(b) Parent shall, and shall cause the Surviving
Corporation or one of its Affiliates to, maintain in effect for six years after
the Effective Time policies of directors' and officers' liability insurance
equivalent in all material respects to those maintained by or on behalf of the
Company and the Company Subsidiaries on the date hereof (and having coverage and
containing terms and conditions which in the aggregate are not less advantageous
to the persons currently covered by such policies as insured) with respect to
claims arising from any actual or alleged wrongful act or omission occurring at
or prior to the Effective Time for which a claim has not been made against any
director or officer of the Company or any director or officer of the Company
Subsidiaries prior to the Effective Time.
5.6 Certain Share Purchases Prohibited. Parent and Merger Sub agree
that they shall not, and that they shall cause their Affiliates not to,
purchase or arrange for the purchase of any Shares at any time prior to the
Effective Time, other than pursuant to the Offer or in connection with the
cashout of Company Options to purchase Shares as contemplated by Section 1.9
hereof or pursuant to the Stockholder Agreement.
ARTICLE VI.
MERGER CONDITIONS
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver at or prior to the Effective Time of
the following conditions, provided that the obligation of each party to effect
the Merger shall not be relieved by the failure of any such conditions if such
failure is the proximate result of any breach by such party of any of its
material obligations under this Agreement:
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6.1 Offer. Merger Sub shall have accepted for payment all Shares
validly tendered in the Offer and not withdrawn. Neither Parent nor Merger Sub
may invoke this condition if Merger Sub fails to purchase Shares so tendered and
not withdrawn in violation of the terms of this Agreement or the Offer.
6.2 Stockholder Approval. If required, the Company Proposals shall
have been approved at or prior to the Effective Time by the requisite vote of
the stockholders of the Company in accordance with the DGCL and the Company's
Certificate of Incorporation and Bylaws, which the Company has represented
shall be solely the affirmative vote of a majority of the outstanding Shares.
6.3 No Injunction or Action. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
which temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or withdrawn
prior to the Effective Time.
6.4 Other Approvals. On or prior to the Closing Date, the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
and any similar foreign Laws shall have been terminated or shall have expired
and all Consents necessary for the consummation of the Merger shall have been
obtained.
6.5 Conditions of Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the condition (which may be waived in whole or in part by
Parent) that the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement on or before
the earlier of (i) such time as Parent's or Merger Sub's designees shall
constitute at least a majority of the Company's Board of Directors pursuant to
Section 1.3 of this Agreement and (ii) the Closing Date; provided, however,
that no failure by the Company to have so performed any such obligation shall
constitute a failure of satisfaction of the foregoing condition where the
Company's failure of performance was caused by Parent.
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company and the stockholders of Parent
described herein:
(a) by mutual written consent of Parent and the Company;
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(b) by Parent or the Company:
(i) if the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased thereunder;
provided, however, that neither Parent nor the Company may terminate
this Agreement pursuant to this Section 7.1(b)(i) if such party shall
have materially breached this Agreement; or
(ii) if any Governmental Authority shall have
issued an order, decree, ruling or injunction or taken any other
action permanently enjoining, restraining or otherwise prohibiting
acceptance for payment of Shares pursuant to the Offer or the
consummation of the Merger or, for the benefit of Parent only, the
Stockholder Agreement and such order, decree, ruling, injunction or
other action shall have become final and nonappealable; provided,
however, that Parent or the Company, as the case may be, may not
terminate this Agreement pursuant to this Section 7.1(b)(ii) if it
has not complied with its obligations under Section 5.1 hereof or
Section 4.5 hereof with respect to such order, decree, ruling,
injunction or other action;
(c) by the Company if (i) Parent or Merger Sub fails to
commence the Offer as provided in Section 1.1 hereof, or (ii) Parent or Merger
Sub shall not have accepted for payment and paid for Shares pursuant to the
Offer in violation of the terms hereof and thereof; provided, however, that the
Company may not terminate this Agreement pursuant to this Section 7.1(c) if the
Company shall have materially breached this Agreement;
(d) by Parent if the Company shall have breached in any
material respect any of its material covenants or other agreements contained in
this Agreement which breach or failure to perform is incapable of being cured
or, the Company having been given reasonable written notice of such breach by
Parent, has not been cured within one business day prior to the then scheduled
Expiration Date;
(e) by Parent if (i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified or changed in a manner
adverse to Parent or Merger Sub its approval or recommendation of the Offer or
any of the Company Proposals, or approved or recommended any Takeover Proposal
or (ii) the Board of Directors of the Company or any committee thereof shall
have resolved to take any of the foregoing actions;
(f) by the Company if Parent shall have breached in any
material respect any of its material covenants or other agreements contained in
this Agreement, which breach or failure to perform is incapable of being cured
or, Parent having been given reasonable written notice of such breach by the
Company, has not been cured within one business day prior to the Expiration
Date;
(g) by the Company in order to enter into an Acquisition
Agreement providing for a Superior Proposal entered into in accordance with
Section 4.8, provided that prior thereto the
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Company has reimbursed Parent for all reasonable out-of-pocket charges and
expenses incurred by Parent or its Affiliates in connection with this Agreement
and the transactions contemplated hereby in accordance with Section 7.2; or
(h) by Parent, if the Company, any of its officers or
directors or financial or legal advisors shall take any of the actions that
would be proscribed by Section 4.8 hereof but for the exceptions therein
allowing certain actions to be taken pursuant to the proviso in the second
sentence of Section 4.8(a) hereof or pursuant to the second and following
sentences of Section 4.8(b) hereof.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the
other party in accordance with Section 8.5 hereof.
7.2 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Offer or the Merger pursuant to this Article VII, this
Agreement (other than this Section 7.2 and Article VIII hereof) shall become
void and of no effect with no liability on the part of any party hereto (or of
any of its directors, officers, employees, agents, legal or financial advisors
or other representatives); provided, however, that no such termination shall
relieve any party hereto from any liability for any breach of this Agreement
prior to termination. If this Agreement is terminated as provided herein, each
party shall hold in confidence in accordance with the terms and conditions of
the Confidentiality Agreement all materials obtained from, or based on or
otherwise reflecting or generated in whole or in part from information obtained
from, any other party hereto in connection with the transactions contemplated by
this Agreement, and shall not use any such materials for the purpose of
competing with the businesses of the other parties hereto, whether obtained
before or after the execution hereof.
(b) In the event that this Agreement is terminated (x) by
the Company pursuant to Section 7.1(g) hereof or (y) by Parent pursuant to
Section 7.1(e) hereof, then the Company shall promptly pay Parent upon its
request all reasonable out-of-pocket charges and expenses incurred by Parent or
its Affiliates in connection with this Agreement and the transactions
contemplated hereby, including without limitation reasonable attorneys' and
accountants' fees and disbursements and fees and expenses of Parent's financial
advisor and any information agent and depositary retained in connection with the
Offer and all printing and mailing fees and expenses, in an amount not to exceed
$1,500,000.
ARTICLE VIII.
MISCELLANEOUS
8.1 Confidentiality. Each of Parent, Merger Sub and the Company shall
hold, and shall cause its respective officers, employees, accountants,
counsel, financial advisors and other
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representatives to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement dated June 3, 1998, between Parent and the
Company (the "Confidentiality Agreement").
8.2 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company
(authorized by the affirmative vote required by Section 1.3, if applicable),
Parent and Merger Sub.
8.3 Waiver of Compliance; Consents. Any failure of the Company on the
one hand, or Parent and Merger Sub on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand (authorized by the affirmative
vote required by Section 1.3, if applicable), only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 8.3.
8.4 Survival. The respective representations, warranties, covenants
and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time or the earlier termination of this Agreement in
accordance with its terms, except for those contained in Sections 1.7, 1.8, 1.9,
1.14, 5.5, 7.2(b) and 8.1 hereof, which shall survive beyond the Effective Time
and, in the case of Section 8.1 hereof, which shall survive beyond any such
earlier termination.
8.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to the Company, to:
CN Biosciences, Inc.
10394 Pacific Center Court
San Diego, California 92121
Attention: Stelios B. Papadopoulos
Facsimile: (619) 450-5522
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with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: Peter H. Jakes, Esq.
Facsimile: (212) 728-8111
and
(ii) if to Parent or Merger Sub, to:
EM Industries, Incorporated
7 Skyline Drive
Hawthorne, New York 10532
Attention: Stephen J. Kunst
Facsimile: (914) 592-8775
with copies to:
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036-7703
Attention: Thomas J. Drago, Esq.
Facsimile: (212) 626-4120
8.6 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned or delegated by any of the parties hereto prior to the Effective
Time without the prior written consent of the other party hereto except that
Parent and Merger Sub may assign or delegate all or any of their respective
rights and obligations hereunder to a direct or indirect wholly-owned
Subsidiary or Subsidiaries of Parent, provided, however, that no such
assignment or delegation shall relieve the assigning or delegating party of
its duties hereunder.
8.7 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, subject to the rights of Parent under
Section 7.2(b) hereof.
8.8 Governing Law. This Agreement shall be deemed to be made in, and
in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of New York without regard to
its conflict of laws principles.
41
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8.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"Person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity,
(ii) unless otherwise specified herein, the term "Affiliate," with respect to
any person, shall mean and include any person controlling, controlled by or
under common control with such person and (iii) the term "Subsidiary" of any
specified person shall mean any corporation 50 percent or more of the
outstanding voting power of which, or any partnership, joint venture, limited
liability company or other entity 50 percent or more of the total equity
interest of which, is directly or indirectly owned by such specified person.
8.11 Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Company Disclosure Letter referred to herein, which
Annex(es) and Company Disclosure Letter are incorporated herein by reference,
the Confidentiality Agreement and the Stockholder Agreement embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants, or undertakings, other than those expressly set forth
or referred to herein or therein. This Agreement and such other documents,
instruments and agreements supersede all prior agreements and the
understandings between the parties with respect to such subject matter.
8.12 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other
jurisdiction.
8.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled
under this Agreement, at law or in equity.
42
<PAGE>
8.14 Third Parties. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto
or thereto or a successor or permitted assign of such a party; provided
however, that the parties hereto specifically acknowledge that the provisions
of Sections 1.9 and 5.5 hereof are intended to be for the benefit of, and
shall be enforceable by, the current or former employees, officers and
directors of the Company and/or the Company Subsidiaries affected thereby and
their heirs and representatives and the provisions of Section 1.8(b) are
intended to be for the benefit of, and shall be enforceable by, stockholders
of the Company affected thereby and their heirs and representatives.
43
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
EM INDUSTRIES, INCORPORATED
By: /s/ Richard K. Hackett
----------------------------
Name: Richard K. Hackett
Title: Vice President, Finance
EM ACQUISITION CORP.
By: /s/ Dieter Janssen
----------------------------
Name: Dieter Janssen
Title: President & CEO
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
----------------------------
Name: Stelios B. Papadopoulos
Title: Chairman & CEO
44
<PAGE>
ANNEX I
Conditions to the Offer
Notwithstanding any other provision of the Offer, Merger Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the
Securities Exchange Act (relating to Merger Sub's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of any tendered Shares and (except as provided in this
Agreement) amend or terminate the Offer (whether or not any Shares have been
theretofore purchased or paid for pursuant to the Offer) (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents a majority of the total voting power of the
outstanding securities of the Company entitled to vote in the election of
directors or in a merger ("Voting Securities") on a fully-diluted basis (the
"Minimum Condition") ("on a fully-diluted basis" having the following meaning
as of any date: the number of Voting Securities outstanding, together with
Voting Securities issuable pursuant to obligations outstanding at that date
under employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting period under the HSR Act or any similar applicable foreign
Law shall have expired or been terminated prior to the expiration of the Offer
and the required approval of any Governmental Authority for this Agreement or
the consummation of the transactions contemplated by this Agreement shall have
been obtained or (B) if at any time after the date of this Agreement and
before the time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any
of the following events shall occur and be continuing:
(a) there shall be any Law, injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction
promulgated, enacted, issued or taken by a Governmental Authority of competent
jurisdiction which in any such case (i) restrains or prohibits the making or
consummation of the Offer, the consummation of the Merger or the transactions
contemplated by the Stockholder Agreement, (ii) prohibits or restricts the
ownership or operation by Parent (or any of its affiliates or Subsidiaries) of
any portion of the business or assets of Parent, the Company or the Company
Subsidiaries which is material to the business of all such entities taken as a
whole, or compels Parent (or any of its affiliates or Subsidiaries) to dispose
of or hold separate any portion of the business or assets of Parent, the
Company or the Company Subsidiaries which is material to the business of all
such entities taken as a whole, (iii) imposes material limitations on the
ability of Merger Sub effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by Merger Sub on all matters properly presented to
the stockholders of the Company, or (iv) imposes any material limitations on
the ability of Parent or any of its affiliates or Subsidiaries effectively to
control in any material respect the business and operations of the Company or
the Company Subsidiaries;
A-1
<PAGE>
(b) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which
gives Parent or Merger Sub the right to terminate the Agreement or not to
consummate the Merger;
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely in
the future to have a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered by price
fluctuations on a trading day) for, trading in securities on any national
securities exchange or the over-the-counter market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, on, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national calamity directly involving the United States and Parent shall have
determined that there is a reasonable likelihood that such event may be of
material adverse significance to it or the Company, or (v) in the case of any
of the foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified by reference to a Company Material
Adverse Effect shall not be true and correct, or any such representations and
warranties that are not so qualified shall not be true and correct in any
respect that is reasonably likely to have a Company Material Adverse Effect,
in each case as if such representations and warranties were made at the time
of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
(g) the Company shall have entered into an Acquisition Agreement with
any person with respect to a Takeover Proposal or shall have resolved to do
so; or
(h) the Company's Board of Directors or any committee thereof shall
have withdrawn, or modified or changed in a manner adverse to Parent or Merger
Sub (including by amendment of the Schedule 14D-9) its recommendation of the
Offer, the Merger or this Agreement or approved or recommended a Takeover
Proposal, or shall have resolved to do so;
which, in the judgment of Parent with respect to each and every matter
referred to above and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
A-2
<PAGE>
The foregoing conditions are for the sole benefit of Merger Sub and
may be asserted by Merger Sub regardless of the circumstances giving rise to
any such condition and (other than the Minimum Condition) may be waived by
Merger Sub in whole or in part at any time and from time to time in its sole
discretion (subject to the terms of this Agreement). The failure by Merger Sub
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to
time.
A-3
<PAGE>
STOCKHOLDER AGREEMENT
This Stockholder Agreement, dated as of November 18, 1998 (this
"Agreement"), is made and entered into among EM Industries, Incorporated, a
New York corporation ("Parent"), EM Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and Warburg, Pincus
Investors, L.P., a Delaware limited partnership ("Stockholder").
WHEREAS, as of the date hereof, Stockholder owns (beneficially and of
record) 2,248,485 shares of common stock, par value $.01 per share, of CN
Biosciences, Inc., a Delaware corporation (the "Company") (all such shares so
owned and which may hereafter be acquired by Stockholder prior to the
termination of this Agreement, whether upon the exercise of options or by
means of purchase, dividend, distribution or otherwise, being referred to
herein as the "Shares");
WHEREAS, immediately prior to the execution and delivery of this
Agreement, Parent, Merger Sub and the Company have entered into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
which provides, upon the terms and subject to the conditions set forth
therein, for (i) the commencement by Merger Sub of a tender offer (the
"Offer") for all of the issued and outstanding shares of common stock, par
value $.01 per share, of the Company at a price per share equal to the Per
Share Amount, and (ii) the subsequent merger of Merger Sub with and into the
Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Merger Sub
to enter into the Merger Agreement, Parent and Merger Sub have required that
Stockholder agrees, and in order to induce Parent and Merger Sub to enter into
the Merger Agreement, Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I.
TRANSFER AND VOTING OF SHARES
1.1. Voting of Shares. Stockholder agrees that from the date hereof
until the termination of this Agreement pursuant to Section 6.2 hereof (the
"Term"), at any meeting of the stockholders of the Company, however called,
and in any action by consent of the stockholders of the Company, Stockholder
shall vote its Shares (except to the extent that Stockholder no longer has any
voting rights in respect of the Shares as a result of the exercise of the
Stock Option referred to in Section 3.1 hereof) (i) in favor of the Merger and
the Merger Agreement (as amended from time to time), (ii) against any Takeover
Proposal and against any proposal for action or agreement that would result in
a breach of any covenant, representation or warranty or any other obligation
or agreement of the
<PAGE>
Company under the Merger Agreement or which is reasonably likely to result in
any of the conditions of the Company's obligations under the Merger Agreement
not being fulfilled, any change in the directors of the Company, any change in
the present capitalization of the Company or any amendment to the Company's
Certificate of Incorporation or Bylaws, any other material change in the
Company's corporate structure or business, or any other action which in the case
of each of the matters referred to in this clause (ii) could reasonably be
expected to impede, interfere with, delay, postpone or materially adversely
affect the transactions contemplated by the Merger Agreement or the likelihood
of such transactions being consummated and (iii) in favor of any other matter
necessary for consummation of the transactions contemplated by the Merger
Agreement which is considered at any such meeting of shareholders or in such
consent, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing, including the
ability for Merger Sub or its nominees to vote the Shares directly.
1.2. Disposition or Encumbrance of Shares. Except pursuant to the
Offer, Stockholder hereby agrees that, during the Term, it shall not, and
shall not offer or agree to, sell, transfer, tender, assign, pledge,
hypothecate or otherwise dispose of, or create or permit to exist any
Encumbrance (as hereinafter defined) on any Shares.
1.3. No Solicitation. Stockholder covenants and agrees that, during
the Term, it shall not, directly or indirectly through any officer, director,
agent or other representative, solicit, initiate or encourage, or take any
other action designed or reasonably likely to facilitate, any inquiries or the
making of any proposal from any person (other than Parent, Merger Sub and any
of their Affiliates) relating to (i) any acquisition of all or any Shares or
(ii) any transaction that constitutes a Takeover Proposal, or participate in
any negotiations regarding, or furnish to any person any information with
respect to, or otherwise cooperate in any way with, or assist or participate
in or facilitate or encourage, any effort or attempt by any person to do or
seek any of the foregoing. Stockholder immediately shall cease and cause to be
terminated all existing discussions or negotiations of Stockholder and its
officers, directors, agents or other representatives with any person conducted
heretofore with respect to any of the foregoing. Stockholder shall notify
Parent and Merger Sub promptly if any such proposal or offer, or any inquiry
or contact with any person with respect thereto, is made and shall, in any
such notice to Parent and Merger Sub, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact.
Notwithstanding any provision of this Section 1.3 to the contrary, if
Stockholder or any officer, director, agent or representative of Stockholder
is a member of the Board of Directors of the Company, such member of the Board
of Directors of the Company may take actions in such capacity to the extent
permitted by Section 4.8 of the Merger Agreement.
1.4. Waiver of Appraisal Rights. Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger.
1.5. Stop Transfer. Stockholder agrees with, and covenants to, Parent
and Merger Sub that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise)
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<PAGE>
of any certificate or uncertificated interest representing any of Stockholder's
Shares, unless such transfer is made in compliance with this Agreement
(including the provisions of Article III hereof).
ARTICLE II.
TENDER OF SHARES
2.1. Tender. Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Securities Exchange Act, the
Shares. Stockholder hereby acknowledges and agrees that Parent's and Merger
Sub's obligation to accept for payment and pay for the Shares in the Offer is
subject to the terms and conditions of the Offer. For all the Shares validly
tendered in the Offer and not withdrawn, Stockholder will be entitled to
receive the highest price paid by Merger Sub pursuant to the Offer.
2.2. Certain Warranties. Without limiting the generality or effect of
any other term or condition of the Offer, the transfer by Stockholder of the
Shares to Merger Sub in the Offer shall pass to and unconditionally vest in
Merger Sub good and valid title to the Shares, free and clear of all liens,
claims, restrictions, security interests, pledges, limitations and
Encumbrances whatsoever.
2.3. Disclosure. Stockholder hereby authorizes Parent and Merger Sub
to publish and disclose in the Offer Documents and, if approval of the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC), its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement provided that Stockholder
is provided with a reasonable opportunity to review in advance any such
disclosure contained in the Offer Documents or the Proxy Statement.
ARTICLE III.
OPTION
3.1. Option Shares.
(a) In order to induce Parent and Merger Sub to enter into
the Merger Agreement, Stockholder hereby grants to Parent or Merger Sub, as
Parent may designate (the "Optionee"), an irrevocable option (the "Stock
Option") to purchase all, but not in any part or less than all, the Shares (in
such context, the "Option Shares") at a purchase price per share equal to
$25.00 or such higher price as may be paid by Parent or Merger Sub pursuant to
the Offer.
(b) The Stock Option may be exercised by the Optionee if (i)
the Merger Agreement is terminated (x) by the Company pursuant to Section
7.1(g) of the Merger Agreement
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<PAGE>
or (y) by Parent pursuant to Section 7.1(e) of the Merger Agreement, or (ii) the
Offer is consummated but (due to failure by Stockholder to validly tender and
not withdraw) Merger Sub has not accepted for payment or paid for the aggregate
number of Shares (in which case the price per share for the Option Shares shall
be equal to the highest price paid in the Offer).
(c) The Stock Option (i) shall become exercisable, in whole
but not in part, on the date on which the first event referred to in Section
3.1(b) shall occur or, if later, the date on which (A) all waiting periods
under the HSR Act or similar foreign Law required for the purchase of the
Option Shares upon such exercise shall have expired or been waived and (B)
there shall not be in effect any preliminary or final injunction or other
order issued by any court or governmental, administrative or regulatory agency
or authority prohibiting the exercise of the Stock Option pursuant to this
Agreement, and (ii) shall remain exercisable until the date which is 20 days
following the first such date on which the Stock Option becomes exercisable
pursuant to clause (i) of this paragraph (c).
(d) If the Optionee wishes to exercise the Stock Option it
shall, prior to the expiration thereof, send a written notice to Stockholder
identifying the time and place for the closing of such purchase at least three
business days prior to such closing.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
STOCKHOLDER
Stockholder hereby represents and warrants to Parent and Merger Sub
as follows:
4.1. Due Organization, Authorization, etc. Stockholder is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Stockholder has all requisite power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Stockholder.
This Agreement has been duly executed and delivered by or on behalf of
Stockholder and, assuming its due authorization, execution and delivery by
Parent and Merger Sub, constitutes a legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court
before which any proceeding for such remedy may be brought. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which Stockholder is trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by Stockholder of
the transactions contemplated hereby.
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<PAGE>
4.2. No Conflicts; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Stockholder does not, and the performance of this Agreement by Stockholder
will not, (i) conflict with or violate any partnership agreement or other
similar organizational documents of Stockholder, (ii) conflict with or violate
any Law applicable to Stockholder or by which Stockholder or any of
Stockholder's properties is bound or affected or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any assets of Stockholder or any of its Subsidiaries,
including, without limitation, the Shares, pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Stockholder is a party or by which
Stockholder or any of Stockholder's assets is bound or affected, except, in
the case of clauses (ii) and (iii), for any such breaches, defaults or other
occurrences that would not prevent or delay the performance by Stockholder of
Stockholder's obligations under this Agreement.
(b) The execution and delivery of this Agreement by
Stockholder does not, and the performance of this Agreement by Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority (other than
any necessary filing under the HSR Act or similar foreign Laws or the
Securities Exchange Act), domestic or foreign, except where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay the performance by
Stockholder of Stockholder's obligations under this Agreement.
4.3. Title to Shares. Stockholder is the sole record and beneficial
owner of the Shares, free and clear of any pledge, lien, security interest,
mortgage, charge, claim, equity, option, proxy, voting restriction, voting
trust or agreement, understanding, arrangement, right of first refusal,
limitation on disposition, adverse claim of ownership or use or encumbrance of
any kind ("Encumbrances"), other than restrictions imposed by the securities
laws or pursuant to this Agreement and the Merger Agreement.
4.4. No Inconsistent Arrangements. Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger
Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of the Shares or any interest therein, (ii) enter into
any contract, option or other agreement or understanding with respect to any
transfer of any or all of such shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization in or with respect to such
Shares, (iv) deposit such Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares, or (v) take any other
action that would in any way restrict, limit or interfere with the performance
of its obligations hereunder or the transactions contemplated hereby or by the
Merger Agreement.
-5-
<PAGE>
4.5. No Finder's Fees. No broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of Stockholder. Stockholder, on behalf of itself and its Affiliates, hereby
acknowledges that it is not entitled to receive any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
4.6. Affiliate Agreements. As of the Effective Time, Stockholder, on
behalf of itself and its Affiliates, hereby terminates any and all contractual
rights in favor of Stockholder and its Affiliates then in effect between
Stockholder or Affiliates, on the one hand, and the Company or any of its
affiliates, on the other hand; provided, however, that nothing contained
herein shall be deemed a termination of any indemnification, contribution or
exculpation provisions contained in any contracts, agreements or instruments
or in the Certificate of Incorporation or By-laws of the Company in favor of
Stockholder or any of its Affiliates as in effect as of the Effective Time.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
MERGER SUB AND PURCHASER
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to Stockholder as follows:
5.1. Due Organization, Authorization, etc. Merger Sub and Parent are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation. Merger Sub and Parent have
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by each of Merger Sub and Parent have been
duly authorized by all necessary corporate action on the part of Merger Sub
and Parent, respectively. This Agreement has been duly executed and delivered
by each of Merger Sub and Parent and, assuming its due authorization,
execution and delivery by Stockholder, constitutes a legal, valid and binding
obligation of each of Merger Sub and Parent, enforceable against Merger Sub
and Parent in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding for such
remedy may be brought.
5.2. Funds. Parent has sufficient funds available to it to pay for
the Option Shares in accordance with Section 3.1(a) hereof.
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<PAGE>
ARTICLE VI.
MISCELLANEOUS
6.1. Definitions. Terms used but not otherwise defined in this
Agreement, including those defined in Section 8.10 of the Merger Agreement,
have the meanings assigned to such terms in the Merger Agreement.
6.2. Termination. This Agreement shall terminate and be of no further
force and effect (i) by the written mutual consent of the parties hereto, or
(ii) automatically and without any required action of the parties hereto upon
the earlier to occur of (A) the Effective Time and (B) the calendar day
immediately after the termination of the Merger Agreement in accordance with
its terms; provided, however, that in the event that the Stock Option shall
become exercisable pursuant to Section 3.1 hereof, Articles III, IV, V and VI
of this Agreement shall survive the termination of this Agreement until the
earlier to occur of the closing of the exercise of the Stock Option and the
expiration of the Stock Option. No such termination of this Agreement shall
relieve any party hereto from any liability for any breach of this Agreement
prior to termination.
6.3. Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be for the account of the
party incurring such costs and expenses.
6.4. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
EM Industries, Incorporated
7 Skyline Drive
Hawthorne, New York 10532
Attention: Stephen J. Kunst
Facsimile: (914) 592-8775
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<PAGE>
with copies to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Attention: Thomas J. Drago, Esq.
Facsimile: (212) 626-4120
(b) If to Stockholder, to:
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: Joseph P. Landy
Facsimile: (212) 878-9200
6.5. Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other
jurisdiction.
6.6. Entire Agreement; Assignment. This Agreement and the Merger
Agreement, as amended from time to time, constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect thereto. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated by
any of the parties hereto (whether by operation of law or otherwise),
provided, however, that Parent or Merger Sub may, in its sole discretion,
assign or delegate its rights and obligations hereunder to any direct or
indirect wholly-owned Subsidiary of Parent.
6.7. Parties in Interest. This Agreement shall be binding upon and
shall inure solely to the benefit of, and be enforceable by, the parties
hereto and their respective successors and permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities of any
nature whatsoever under or by reason of this Agreement, provided, however,
that the that the provisions of Section 4.6 hereof are intended to be for the
benefit of, and shall be enforceable by, the Company.
-8-
<PAGE>
6.8. Further Assurance. From time to time, at another party's request
and without consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
6.9. Certain Events. Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of such Shares shall
pass, whether by operation of law or otherwise, including, without limitation,
Stockholder's heirs, guardians, administrators, or successors. Notwithstanding
any transfer of Shares, the transferor shall remain liable for the performance
of all obligations under this Agreement.
6.10. No Waiver. The failure of any party hereto to exercise any
right, power, or remedy provided under this agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, any custom or practice of
the parties at variance with the terms hereof shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
6.11. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled
under this Agreement, at law or in equity.
6.12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to its conflict of laws principles.
6.13. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
6.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-9-
<PAGE>
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be executed by its officer thereunto duly authorized and
Stockholder has caused this Agreement to be executed, or duly executed by an
authorized signatory, as of the date first written above.
EM INDUSTRIES, INCORPORATED
By: /s/ Richard K. Hackett
-------------------------------
Name Richard K. Hackett
Title: Vice President, Finance
EM ACQUISITION CORP.
By: /s/ Dieter Janssen
-------------------------------
Name: Dieter Janssen
Title: President & CEO
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.,
its General Partner
By: /s/ S. Joshua Lewis
-------------------------------
Name: S. Joshua Lewis
Title: General Partner
-10-
<PAGE>
VECTOR
SECURITIES
INTERNATIONAL
Vector Securities
International, Inc.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015
Telephone (847) 940-1970
Fax (847) 940-0774
June 3, 1998
Merck KGaA
Frankfurter Strasse 250
D-6100 Darmstadt
Germany
Attention: Dr. Walter Bardorff
General Manager, Diagnostics Division
In connection with the consideration by Merck KGaA (the "Evaluator") of a
potential business transaction (the "Proposed Transaction") with CN Biosciences,
Inc. (the "Company"), Evaluator has requested proprietary technical, financial
and other information concerning the business and affairs of the Company. As a
condition to the Company furnishing to Evaluator such information, Evaluator
agrees to treat such information as follows:
(1) The term "Evaluation Material" as used in this letter agreement shall
mean any information which has been or will be furnished by the Company or its
officers, directors, employees, representatives or agents (collectively, the
"Company Representatives") to the Evaluator, any Evaluator Affiliate or any of
their officers, directors, employees, representatives or agents (collectively,
the "Evaluator Representatives"), including but not limited to trade secrets,
improvements, computer programs, know-how, formulas, processes, product ideas,
inventions (whether patentable or not), copyrightable materials, schematics and
other technical, business, financial and product development plans, forecasts,
strategies and information.
(2) The term "Evaluator Affiliate" as used in this letter agreement shall
mean (i) a business entity which owns, directly or indirectly, a controlling
interest in Evaluator, by stock ownership or otherwise, (ii) a business entity
which is owned by Evaluator, either directly or indirectly, by stock ownership
or otherwise, or (iii) a business entity, the majority ownership of which is
directly or indirectly common to the majority ownership of Evaluator.
(3) Evaluator recognizes and acknowledges the competitive value and
confidential nature of the Evaluation Material and the damage that could result
to the Company if information contained therein is disclosed to any third party.
(4) Evaluator agrees that the Evaluation Material will be treated
confidentially and used solely for the purpose of evaluating the Proposed
Transaction and not for any other purpose. Evaluator and the Evaluator
Representatives will not disclose any of the Evaluation Material now or
hereafter received or obtained from the Company or the Company Representatives
to any third party without the prior written consent of the Company. Evaluation
Material shall only be disclosed to the Evaluator Representatives who need to
know such information for the purpose of evaluating the Proposed Transaction and
who agree to keep such information confidential and to be bound by this
Agreement to the same extent as if they were parties thereto. Evaluator shall
take all necessary precautions to protect the confidentiality of the Evaluation
Material including, without limitation, all precautions Evaluator employs with
respect to its confidential materials.
<PAGE>
Merck KGaA
June 3, 1998
Page two
(5) No right or license is granted (by implication or otherwise) by the
Company to Evaluator in relation to the Evaluation Material.
(6) Without the prior written consent of the Company, neither Evaluator nor
the Evaluator Representatives will disclose to any person either the fact that
discussions or negotiations are taking place concerning the Proposed Transaction
or any of the terms, conditions or other facts with respect to the Proposed
Transaction, including the status thereof. It is further understood that all
(i) communications regarding the Proposed Transaction; (ii) requests for
additional information; (iii) requests for facility tours or management
meetings; and (iv) discussions or questions regarding procedures will be
submitted or directed to Vector Securities International, Inc. ("Vector").
Evaluator further agrees that without the prior consent of the Company, neither
Evaluator nor the Evaluator Representatives will approach the Company
Representatives or the Company's consultants, scientific advisors, vendors or
customers to discuss the activities of the Company.
(7) Evaluator and the Evaluator Representatives shall have no obligation
hereunder with respect to any information in the Evaluation Material to the
extent that such information (i) has been made public other than by acts by
Evaluator or Evaluator Representatives in violation of this Agreement; (ii) is
already known by Evaluator at the time of disclosure, as evidenced by written
records; or (iii) is made available to Evaluator by a third party having a legal
right to do so.
(8) Evaluator hereby acknowledges that it is aware (and that the Evaluator
Representatives who are apprised of this matter have been or will be advised)
that the United States securities laws restrict the purchase and sale of
securities by persons who possess certain non-public information relating to the
issuer of such securities.
(9) In the event that either the Company or Evaluator decides not to enter
into the Proposed Transaction for any reason, and in any event within ten (10)
days after a request by the Company or Vector, the Evaluation Material and all
copies thereof shall be returned to Vector except that the Evaluator shall be
permitted to retain one copy of the Evaluation Material in its legal department
so that any continuing obligations may be determined.
(10) Evaluator understands that, although the Company believes the
information provided to Evaluator is accurate, neither the Company nor the
Company Representatives is making or is authorized to make any representation or
warranty as to the accuracy or completeness of the Evaluation Material provided
to Evaluator and Evaluator agrees that neither the Company nor any such person
shall incur any liability to Evaluator as a result of Evaluator's use or
reliance on the Evaluation Material for purposes of this Agreement.
(11) Evaluator understands that nothing herein (i) requires the disclosure
of any Evaluation Material of the Company, which shall de disclosed solely at
the option of the Company, or (ii) requires the Company to proceed with the
Proposed Transaction in connection with which Evaluation Material may be
disclosed.
(12) Evaluator acknowledges and agrees that due to the unique nature of the
Evaluation Material, there can be no adequate remedy at law for any breach of
its obligations hereunder, that any such breach may allow Evaluator or third
parties to unfairly compete with the Company resulting in irreparable harm to
the Company, and therefore, that upon any such breach or any threat thereof, the
Company shall be entitled to appropriate equitable relief in addition to
whatever remedies it might have at law. Further, the Company shall be entitled
to indemnification by Evaluator from any loss or harm, including, without
limitation, attorney's fees, in connection with any breach or any enforcement of
Evaluator's obligations hereunder or the unauthorized use or release of any such
Evaluation Material. Evaluator will notify the Company in writing immediately
upon the occurrence of any such unauthorized release or other breach.
<PAGE>
Merck KGaA
June 3, 1998
Page three
(13) In the event that any of the provisions of this letter agreement shall
be held by a court or other tribunal of competent jurisdiction to be
unenforceable, the remaining portions hereof shall remain in full force and
effect.
(14) This letter agreement shall be construed and interpreted in accordance
with the laws of the State of Delaware.
Please acknowledge your agreement to the foregoing by countersigning this
letter in the place provided below.
Very truly yours,
Vector Securities International,
Inc., as agent for CN Biosciences,
Inc.
By: /s/ James L. Foght, Ph.D
--------------------------------
James L. Foght, Ph.D.
President
Received and Consent to
This 3rd day of June, 1998
MERCK KGAA
By: /s/ ppa. Dr. Reckmann By: /s/ I.V. Frolich-Pereira
-------------------------------- --------------------------------
Dr.Reckmann Dr. Frolich-Pereira
Title: General Manager Title: Authorized Representative
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th of November 1998, between
CN Biosciences, Inc., a Delaware corporation (the "Company") and Stelios B.
Papadopoulos (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of its
subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business and
affairs of the Company, its policies, methods, personnel and operations and
the Parent recognizes that the continued service of the Employee is important
to the growth and success of the Company subsequent to the date of closing of
the transactions contemplated by the Merger Agreement ("Closing Date") and
desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee agree
as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until the
Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee is engaged as the Chief Executive Officer of
the Company and promises to perform and discharge well and faithfully the
duties, which may be assigned to him from time to time by the Company in
connection with the conduct of its business. If the Employee is elected as a
director or officer of any subsidiary or affiliate of the Company, the
Employee shall serve in such capacity or capacities without further
compensation.
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during the
term of this Agreement be engaged in any
<PAGE>
other business activity whether or not such business activity is pursued for
gain, profit or other pecuniary advantage; but this shall not be construed as
preventing the Employee from investing his personal assets in businesses which
do not compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation is
solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to that
of the Company, without the express prior written consent of the Company.
5. Compensation.
(a) For services rendered under this Employment Agreement, the
Company shall pay the Employee a salary at the rate determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"), payable
(after deduction of applicable payroll taxes as an employee in the State of
California) in equal bi-weekly installments. Employee's Base Salary as of the
Effective Date shall be $275,000. The Employee shall also be eligible for and
participate in such fringe benefits as shall be generally provided to executives
of the Company, including medical insurance and retirement programs which may be
adopted from time to time during the term hereof by the Company.
(b) The Compensation Committee shall review the Employee's
compensation at least once a year and award such bonuses and effect such
increases in the Base Salary as the Board of Directors, in its sole
discretion, determines are merited, based upon the Employee's performance and
consistent with the Company's compensation policies.
(c) In addition to his participation in any group life insurance
programs that the Company may provide to its employees, the Company shall, at
its sole expense, provide for the Employee term life insurance in the amount
of $150,000.
(d) The Company agrees that, effective as of the Effective Date,
it will establish, or cause to be established, a new long-term incentive
compensation plan (the "New Plan"). The Company further agrees that the
Employee shall be immediately entitled to participate in such New Plan and the
Employee shall receive an allocation of units under the New Plan effective as
of the Effective Date which allocation shall be commensurate with his position
and consistent in incentive opportunity with allocations to similarly situated
employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to twenty-nine (29) paid days off pursuant to the
Company's customary paid time off policy ("CalTime").
2
<PAGE>
7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data. The Employee shall be entitled to utilize business
(or club) class service for all international flights, and first-class service
for all transcontinental flights within the United States, in each case, in
connection with business-related travel.
8. Term.
(a) The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the three year
anniversary date thereof. The term of employment shall automatically be extended
for consecutive periods of one (1) year each unless notice of termination of
employment is given by either party hereto at least ninety (90) days prior to
the expiration of the initial or any renewal term, in which case, this Agreement
shall terminate at the end of such initial or renewal term, as the case may be.
In the case of a renewal and unless otherwise agreed to in writing by both
parties, the terms and conditions of this Employment Agreement shall apply to
any renewals or extensions thereto. Notwithstanding the foregoing, the Company
may, at its election, terminate the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured
so that he is unable to perform the services required of him
hereunder and such inability to perform continues for a
period in excess of six months and is continuing at the time
of such notice; or
(ii) For "Cause" upon notice of such termination to
the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations
hereunder upon (A) the reasonable determination by the Board
of Directors that the Employee has failed substantially to
perform his duties hereunder (other than as a result of his
incapacity due to physical or mental illness or injury),
which failure amounts to an intentional and extended neglect
of his duties hereunder, (B) refusal to carry out any lawful
direction of the Board of Directors, (C) the Board of
Director's reasonable determination that the Employee has
engaged or is about to engage in conduct materially
injurious to the Company, (D) the Employee's having been
convicted of a felony, (E) a material breach by the Employee
of any of the other covenants or representations herein or
any other agreement between Employee and the Company, or (F)
theft, embezzlement or misappropriation of Company property;
or
(iii) Without Cause upon 30 days' notice of such
termination to the Employee; or
3
<PAGE>
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if he shall have been assigned to duties
which are materially inconsistent with those specified in paragraph 3 hereof
(a "Material Demotion").
(b) (i) if this Employment Agreement is terminated pursuant
to paragraph 8(a)(i) above, the Employee shall receive
disability pay from the date of such termination until the
second anniversary of the Effective Date at the rate of 50%
of the Base Salary, reduced by applicable payroll taxes and
further reduced by the amount received by the Employee
during such period under any Company-maintained disability
insurance policy or plan or under Social Security or similar
laws. Such disability payments shall be paid periodically to
the Employee as provided in paragraph 5(a) for the payment
of salary.
(ii) If the Employment Agreement is terminated pursuant
to paragraph 8(a)(ii) or 8(a)(iv) above, the Employee shall
receive no salary continuation pay or severance pay.
(iii) If this Employment Agreement is terminated
pursuant to paragraph 8(a)(iii) above or as a result of the
Employee having terminated this Employment Agreement
following a Material Demotion, or if the Company does not
offer to continue the Employee's employment with the Company
at the expiration of the stated term of this Employment
Agreement at a Base Salary at least equal to his then most
recent Base Salary, the Employee shall receive salary
continuation pay for twelve (12) months from the date of
such termination (the "Salary Continuation Period") equal to
the Base Salary. Such salary continuation payments (less
applicable payroll taxes) shall be paid periodically to the
Employee as provided in paragraph 5(a) for the payment of
the Base Salary.
(c) During the Salary Continuation Period, the Employee
shall be under no obligation to mitigate the costs to the
Company of the salary continuation payments, and, provided
that the Employee is not in breach of his obligations under
paragraph 12 hereof, no compensation that the Employee may
receive from another employer during the Salary Continuation
Period shall be offset against amounts owed to Employee
hereunder.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to
grant to the Company the rights contemplated by paragraph 11 hereof, and (c)
he does not now have, nor
4
<PAGE>
within the last three years has he had, any ownership interest in any business
enterprise (other than interests in publicly traded corporations where his
ownership does not exceed one percent (1%) or more of the equity capital) which
is a customer of the Company, any of its subsidiaries, or from which the Company
or any of its subsidiaries purchases any goods or services or to whom such
corporations owe any financial obligations or are required or directed to make
any payments.
10. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of the
Company and its affiliates as they may exist from time to time are valuable,
special and unique assets of the business of the Company and its affiliates,
access to and knowledge of which are essential to the performance of the
Employee's duties hereunder. The Employee will not, during or after the term
of his employment by the Company or any of its affiliates, in whole or in
part, disclose such secrets, know-how or processes to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall the Employee make use of any such property for his own purposes or
for the benefit of any person, firm, corporation or other entity (except the
Company and its affiliates) under any circumstances during or after the term
of his employment, provided that after the term of his employment these
restrictions shall not apply to such secrets, know-how and processes which are
then in the public domain (provided that the Employee was not responsible,
directly or indirectly, for such secrets, know-how or processes entering the
public domain without the Company's consent).
11. Inventions.
(a) The Employee hereby sells, transfers and assigns to the
Company or to any person or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or jointly,
during the term hereof which relate to methods, apparatus, designs, products,
processes or devices, sold, leased, used or under consideration or development
by the Company or any of its affiliates or which otherwise relate to or
pertain to the business, functions or operations of the Company or any of its
affiliates or which arise from the efforts of the Employee during the course
of his employment for the Company or any of its affiliates. The Employee shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and the Employee shall
execute and deliver to the Company such formal transfers and assignments and
such other papers and documents as may be necessary or required of the
Employee to permit the Company or any person or entity designated by the
Company to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereof. Any invention relating to the business
of the Company and its affiliates and disclosed by the Employee within one
year following the termination of this Agreement shall be deemed to fall
within the provisions of this paragraph unless proved to have been first
conceived and made following such termination.
5
<PAGE>
(b) The Employee has been notified and understands that the
provisions of this paragraph 11 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement which
provides that an employee shall assign, or offer to assign, any of
his or her rights in an invention to his or her employer shall not
apply to an invention that the employee developed entirely on his or
her own time without using the employer's equipment, supplies,
facilities, or trade secret information except for those inventions
that either:
(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business, or
actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
12. Covenants Not to Compete or Interfere. In consideration for the
Parent's and the Company's promise to provide the compensation and benefits
set forth in this Employment Agreement and as an inducement for Parent to
enter into the Merger Agreement, for a period ending twelve (12) months from
and after the date of termination of the Employee's employment hereunder,
except for a termination of employment pursuant to paragraph 8(a) (i) or 8(a)
(iii) or a voluntary termination by the Employee following a Material
Demotion, the Employee shall not engage in any business (whether as an
officer, director, owner, employee, partner or other direct or indirect
participant) which is engaged in the manufacturing, distribution or research
and development of any products being sold by, or under development by, the
Company or its subsidiaries as of the date of such termination of employment,
in any geographic area where the Company or such subsidiaries are then so
manufacturing or distributing such products, nor shall the Employee interfere
with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company and any customer, supplier, lessor, lessee or
employee of the Company.
It is the desire and intent of the parties that the
provisions of this paragraph 12 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought.
6
<PAGE>
Accordingly, if any particular portion of this paragraph 12 shall
be adjudicated to be invalid or unenforceable, this paragraph 12 shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of this
paragraph in the particular jurisdiction in which such adjudication is made.
13. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10, 11 or 12 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from such
breach. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies for such breach or threatened breach.
14. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith.
15. Notices. Any notice required or permitted to be given under this
Employment Agreement shall be sufficient if in writing and if sent by
registered mail to Stelios B. Papadopoulos at his home address as reflected on
the records of the Company, in the case of the Employee, or, in the case of
the Company, to CN Biosciences, Inc., 10394 Pacific Center Court, San Diego,
CA 92121, Attention: Chief Financial Officer, or to such other officer or
address as the Company shall notify Employee.
16. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
17. Governing Law. This Employment Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of law provisions
thereof.
18. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any affiliate of the Company,
or to any person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such assignee
assumes all the liabilities of the Company hereunder.
19. Prior Agreement. Effective as of the Effective Date, the
Employment Agreement between the Company and the Employee dated January 4,
1998 is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
7
<PAGE>
20. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's principal shareholders, affiliates or
subsidiaries. This Employment Agreement may be changed only by an agreement in
writing signed by a party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ James G. Stewart
-----------------------------
Name: James G. Stewart
Title: V.P.
EM INDUSTRIES, INC.
By: /s/Dieter Janssen
-----------------------------
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ Stelios B. Papadopoulos
-----------------------------
Stelios B. Papadopoulos
8
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th day of November 1998,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and
Robert C. Mierendorf (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of
its subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business
and affairs of the Company, its policies, methods, personnel and operations
and the Parent recognizes that the continued service of the Employee is
important to the growth and success of the Company subsequent to the date of
closing of the transactions contemplated by the Merger Agreement ("Closing
Date") and desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee
agree as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until
the Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee shall perform such management duties for
the Company and its affiliates as may from time to time be assigned and
which are consistent with his titles. During the Term, the Employee shall
have the same titles as he held immediately prior to the date of this
Agreement. The Employee hereby promises to perform and discharge well and
faithfully all duties of his position. If Employee is elected as a director
or officer of any affiliate of the Company, the Employee shall serve in such
capacity or capacities without further compensation.
<PAGE>
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during
the term of this Employment Agreement be engaged in any other business
activity whether or not such business activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
the Employee from investing his personal assets in businesses which do not
compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation
is solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to
that of the Company, without the express prior written consent of the
Company.
5. Compensation.
(a) For services rendered under this Employment Agreement,
the Company shall pay the Employee a salary determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"),
payable (after deduction of applicable payroll taxes) in equal bi-weekly
installments. Employee's Base Salary as of the Effective Date shall be
$165,000. The Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives of the Company,
including medical insurance and retirement programs which may be adopted
from time to time during the term hereof by the Company. On an annual basis,
the Compensation Committee shall review Employee's salary and make such
adjustment as may be warranted based upon Employee performance, Company
financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee
shall be eligible for, and the Compensation Committee, in its sole
discretion, may award an executive bonus up to a maximum of 35% of Base
Salary, based on the achievement of objectives established by the
Compensation Committee.
(c) The Company agrees that, effective as of the Effective
Date, it will establish, or cause to be established, a new long-term
incentive compensation plan (the "New Plan"). The Company further agrees
that the Employee shall be immediately entitled to participate in such New
Plan and the Employee shall receive an allocation of units under the New
Plan effective as of the Effective Date, which allocation shall be
commensurate with his position and consistent in incentive opportunity with
allocations to similarly situated employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to the same number of paid days off pursuant to
the Company's customary paid time off policy ("CalTime") as he has on the
date of this Agreement.
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<PAGE>
7. Expenses. During the term of this Employment Agreement, the
Company shall reimburse the Employee for all reasonable out-of-pocket
expenses incurred by the Employee in connection with the business of the
Company and in performance of his duties under this Employment Agreement
upon the Employee's presentation to the Company of an itemized accounting of
such expenses with reasonable supporting data.
8. Term. The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. The term of employment shall automatically be
extended for consecutive periods of one (1) year each unless notice of
termination of employment is given by either party hereto at least ninety
(90) days prior to the expiration of the initial or any renewal term, in
which case, this Agreement shall terminate at the end of such initial or
renewal term, as the case may be. In the case of a renewal and unless
otherwise agreed to in writing by both parties, the terms and conditions of
this Employment Agreement shall apply to any renewals or extensions thereto.
Notwithstanding the foregoing, the Company may, at its election, terminate
the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that
he is unable to perform the services required of him hereunder and
such inability to perform continues for a period in excess of
ninety (90) days and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations hereunder
upon (A) the reasonable determination by the Chief Executive
Officer that the Employee has failed substantially to perform his
duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an
intentional and extended neglect of his duties hereunder, (B)
refusal to carry out any lawful direction of the Chief Executive
Officer or Board of Directors, (C) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about
to engage in conduct materially injurious to the Company, (D) the
Employee's having been convicted of a felony, (E) a material breach
by the Employee of any of the other covenants or representations
herein or any other agreement between Employee and the Company, or
(F) theft, embezzlement or misappropriation of Company property; or
(iii) Without Cause at any time upon notice of
such termination to the Employee, by paying to the Employee salary
continuation pay equal to the Employee's Base Salary in effect at
the time of termination for the remaining term of this Employment
Agreement but not in any event for less than 12 months from the
date of such termination; provided, however, that the salary
continuation payments shall cease if the Employee shall engage in
any business (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) which is engaged
in the manufacturing, distribution or research and development of
any products being sold by, or under development by, the Company or
3
<PAGE>
its affiliates as of the date of such termination of employment, in
any geographic area where the Company or such affiliates are then so
manufacturing or distributing such products, or the Employee shall
interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer,
supplier, lessor, lessee or employee of the Company. If the Company
shall decide not to renew this Employment Agreement, the ninety (90)
day notification of the Company's intention not to renew prior to
expiration of the initial or any subsequent renewal term shall
serve as adequate termination notice and the Employee hereby agrees
to make a smooth transition of responsibilities during that ninety
(90) day period and the Employee further agrees not to take any
legal action against the Company related to said non-renewal and
termination of employment; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if, without his consent, his
responsibilities and duties on the date hereof are materially reduced (a
"Material Demotion") and such Material Demotion continues for ten (10)
business days after the date of notice to the Company. A Material Demotion
shall be treated as a termination by the Company without Cause and the
Employee shall be entitled to receive salary continuation pay as provided
by, and subject to the terms and conditions of, subparagraph 8 (iii) above.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and
to perform the services contemplated herein and is not bound under any
employment or consulting agreement to render services to any third party,
(b) he has the full right, power and authority, subject to no rights of
third parties, to grant to the Company the rights contemplated by paragraph
10 hereof, and (c) he does not now have, nor within the last three years has
had, any ownership interest in any business enterprise (other than interest
in publicly traded corporations where his ownership does not exceed one
percent (1%) or more of the equity capital) which is a customer of the
Company, any of its subsidiaries, or from which the Company or any of its
subsidiaries purchases any goods or services or to whom such corporations
owe any financial obligations or are required or directed to make any
payments.
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or
jointly, during the term hereof which relate to methods, apparatus, designs,
products, processes or devices, sold, leased, used or under consideration or
development by the Company or any of its affiliates or which otherwise
relate to or pertain to the business, functions or operations of the Company
or any of its affiliates or which
4
<PAGE>
arise from the efforts of the Employee during the course of his employment for
the Company or any of its affiliates. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
affiliates and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that
the provisions of this Section 10 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement
which provides that an employee shall assign, or offer to assign,
any of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information
except for those inventions that either:
(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business,
or actual or demonstrably anticipated research
or development of the employer.
(b) Result from any work performed by the
employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of
this state and is unenforceable.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of
the Company and its affiliates as they may exist from time to time are
valuable, special and unique assets of the business of the Company and its
affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company or any of its
affiliates, in whole or in part, disclose such secrets, know-how or
processes to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
5
<PAGE>
Employee make use of any such property for his own purposes or for the benefit
of any person, firm, corporation or other entity (except the Company and its
affiliates) under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, know-how and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, know-how or processes entering the public domain without the
Company's consent).
12. Injunctive Relief. If there is a breach or threatened breach
of the provisions of paragraph 10 or 11 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from
such breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened breach.
13. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the
Employee shall submit to such physical examination and supply such
information as may be required in connection therewith.
14. Notices. Any notice required or permitted to be given under
this Employment Agreement shall be sufficient if in writing and if sent by
registered mail to the Employee at his home address as reflected on the
records of the Company, in the case of the Employee, or Mr. Stelios B.
Papadopoulos, Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
15. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by
the other party.
16. Governing Law. This Employment Agreement shall be governed by
and construed and enforce in accordance with the laws of the State of
California without giving effect to the choice of law or conflict of laws
provisions thereof.
17. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any of its affiliates, or to
any other person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such
assignee assumes all the liabilities of the Company hereunder.
18. Prior Agreement. Effective as of the Effective Date, the
Employment Agreement between the Company and the Employee dated December 27,
1997 and the Severance Agreement between the Company and the Employee are
hereby terminated and superseded in their entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreements to resign following the effective date of a "Change in Control"
of the Company (as defined in such agreements) and any and all other rights
or claims to severance benefits or other compensation or benefits under such
agreements following his termination of employment.
6
<PAGE>
19. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's and the Parent's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement
may be changed only by an agreement in writing signed by a party against
whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
Stelios B. Papadopoulos
Chief Executive officer
EM INDUSTRIES, INC.
By: /s/ Dieter Janssen
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ Robert C. Mierendorf
Robert C. Mierendorf
134022.01
7
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th day of November 1998,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and
James G. Stewart (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of its
subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business
and affairs of the Company, its policies, methods, personnel and operations
and the Parent recognizes that the continued service of the Employee is
important to the growth and success of the Company subsequent to the date of
closing of the transactions contemplated by the Merger Agreement ("Closing
Date") and desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee
agree as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until
the Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee shall perform such management duties for
the Company and its affiliates as may from time to time be assigned and
which are consistent with his titles. During the Term, the Employee shall
have the same titles as he held immediately prior to the date of this
Agreement. The Employee hereby promises to perform and discharge well and
faithfully all duties of his position. If Employee is elected as a director
or officer of any affiliate of the Company, the Employee shall serve in such
capacity or capacities without further compensation.
<PAGE>
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during
the term of this Employment Agreement be engaged in any other business
activity whether or not such business activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
the Employee from investing his personal assets in businesses which do not
compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation
is solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to
that of the Company, without the express prior written consent of the
Company.
5. Compensation.
(a) For services rendered under this Employment Agreement,
the Company shall pay the Employee a salary determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"),
payable (after deduction of applicable payroll taxes) in equal bi-weekly
installments. Employee's Base Salary as of the Effective Date shall be
$195,000. The Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives of the Company,
including medical insurance and retirement programs which may be adopted
from time to time during the term hereof by the Company. On an annual basis,
the Compensation Committee shall review Employee's salary and make such
adjustment as may be warranted based upon Employee performance, Company
financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee
shall be eligible for, and the Compensation Committee, in its sole
discretion, may award an executive bonus up to a maximum of 35% of Base
Salary, based on the achievement of objectives established by the
Compensation Committee.
(c) The Company agrees that, effective as of the Effective
Date, it will establish, or cause to be established, a new long-term
incentive compensation plan (the "New Plan"). The Company further agrees
that the Employee shall be immediately entitled to participate in such New
Plan and the Employee shall receive an allocation of units under the New
Plan effective as of the Effective Date, which allocation shall be
commensurate with his position and consistent in incentive opportunity with
allocations to similarly situated employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to the same number of paid days off pursuant to
the Company's customary paid time off policy ("CalTime") as he has on the
date of this Agreement.
2
<PAGE>
7. Expenses. During the term of this Employment Agreement, the
Company shall reimburse the Employee for all reasonable out-of-pocket
expenses incurred by the Employee in connection with the business of the
Company and in performance of his duties under this Employment Agreement
upon the Employee's presentation to the Company of an itemized accounting of
such expenses with reasonable supporting data.
8. Term. The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. The term of employment shall automatically be
extended for consecutive periods of one (1) year each unless notice of
termination of employment is given by either party hereto at least ninety
(90) days prior to the expiration of the initial or any renewal term, in
which case, this Agreement shall terminate at the end of such initial or
renewal term, as the case may be. In the case of a renewal and unless
otherwise agreed to in writing by both parties, the terms and conditions of
this Employment Agreement shall apply to any renewals or extensions thereto.
Notwithstanding the foregoing, the Company may, at its election, terminate
the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that
he is unable to perform the services required of him hereunder and
such inability to perform continues for a period in excess of
ninety (90) days and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations hereunder
upon (A) the reasonable determination by the Chief Executive
Officer that the Employee has failed substantially to perform his
duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an
intentional and extended neglect of his duties hereunder, (B)
refusal to carry out any lawful direction of the Chief Executive
Officer or Board of Directors, (C) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about
to engage in conduct materially injurious to the Company, (D) the
Employee's having been convicted of a felony, (E) a material breach
by the Employee of any of the other covenants or representations
herein or any other agreement between Employee and the Company, or
(F) theft, embezzlement or misappropriation of Company property; or
(iii) Without Cause at any time upon notice of
such termination to the Employee, by paying to the Employee salary
continuation pay equal to the Employee's Base Salary in effect at
the time of termination for the remaining term of this Employment
Agreement but not in any event for less than 12 months from the
date of such termination; provided, however, that the salary
continuation payments shall cease if the Employee shall engage in
any business (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) which is engaged
in the manufacturing, distribution or research and development of
any products being sold by, or under development by, the Company or
3
<PAGE>
its affiliates as of the date of such termination of employment, in
any geographic area where the Company or such affiliates are then so
manufacturing or distributing such products, or the Employee shall
interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer,
supplier, lessor, lessee or employee of the Company. If the Company
shall decide not to renew this Employment Agreement, the ninety (90)
day notification of the Company's intention not to renew prior to
expiration of the initial or any subsequent renewal term shall
serve as adequate termination notice and the Employee hereby agrees
to make a smooth transition of responsibilities during that ninety
(90) day period and the Employee further agrees not to take any
legal action against the Company related to said non-renewal and
termination of employment; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if, without his consent, his
responsibilities and duties on the date hereof are materially reduced (a
"Material Demotion") and such Material Demotion continues for ten (10)
business days after the date of notice to the Company. A Material Demotion
shall be treated as a termination by the Company without Cause and the
Employee shall be entitled to receive salary continuation pay as provided
by, and subject to the terms and conditions of, subparagraph 8 (iii) above.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and
to perform the services contemplated herein and is not bound under any
employment or consulting agreement to render services to any third party,
(b) he has the full right, power and authority, subject to no rights of
third parties, to grant to the Company the rights contemplated by paragraph
10 hereof, and (c) he does not now have, nor within the last three years has
had, any ownership interest in any business enterprise (other than interest
in publicly traded corporations where his ownership does not exceed one
percent (1%) or more of the equity capital) which is a customer of the
Company, any of its subsidiaries, or from which the Company or any of its
subsidiaries purchases any goods or services or to whom such corporations
owe any financial obligations or are required or directed to make any
payments.
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or
jointly, during the term hereof which relate to methods, apparatus, designs,
products, processes or devices, sold, leased, used or under consideration or
development by the Company or any of its affiliates or which otherwise
relate to or pertain to the business, functions or operations of the Company
or any of its affiliates or which
4
<PAGE>
arise from the efforts of the Employee during the course of his employment for
the Company or any of its affiliates. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
affiliates and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that
the provisions of this Section 10 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement
which provides that an employee shall assign, or offer to assign,
any of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except
for those inventions that either:
(a) Relate at the time of conception
or reduction to practice of the invention to the employer's business,
or actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of
the Company and its affiliates as they may exist from time to time are
valuable, special and unique assets of the business of the Company and its
affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company or any of its
affiliates, in whole or in part, disclose such secrets, know-how or
processes to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
5
<PAGE>
Employee make use of any such property for his own purposes or for the benefit
of any person, firm, corporation or other entity (except the Company and its
affiliates) under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, know-how and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, know-how or processes entering the public domain without the
Company's consent).
12. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10 or 11 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from
such breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened breach.
13. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the
Employee shall submit to such physical examination and supply such
information as may be required in connection therewith.
14. Notices. Any notice required or permitted to be given under
this Employment Agreement shall be sufficient if in writing and if sent by
registered mail to the Employee at his home address as reflected on the
records of the Company, in the case of the Employee, or Mr. Stelios B.
Papadopoulos, Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
15. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by
the other party.
16. Governing Law. This Employment Agreement shall be governed by
and construed and enforce in accordance with the laws of the State of
California without giving effect to the choice of law or conflict of laws
provisions thereof.
17. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any of its affiliates, or to
any other person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such
assignee assumes all the liabilities of the Company hereunder.
18. Prior Agreement. Effective as of the Effective Date, the
Severance Agreement between the Company and the Employee dated February 27,
1997 is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
6
<PAGE>
19. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's and the Parent's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement
may be changed only by an agreement in writing signed by a party against
whom enforcement of any waiver, change, modification, extension or discharge
is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
Stelios B. Papadopoulos
Chief Executive officer
EM INDUSTRIES, INC.
By: /s/ Dieter Janssen
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ James G. Stewart
James G. Stewart
7
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th day of November 1998,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and
John T. Snow (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of
its subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business
and affairs of the Company, its policies, methods, personnel and operations
and the Parent recognizes that the continued service of the Employee is
important to the growth and success of the Company subsequent to the date of
closing of the transactions contemplated by the Merger Agreement ("Closing
Date") and desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee
agree as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until
the Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee shall perform such management duties for
the Company and its affiliates as may from time to time be assigned and
which are consistent with his titles. During the Term, the Employee shall
have the same titles as he held immediately prior to the date of this
Agreement. The Employee hereby promises to perform and discharge well and
faithfully all duties of his position. If Employee is elected as a director
or officer of any affiliate of the Company, the Employee shall serve in such
capacity or capacities without further compensation.
<PAGE>
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during
the term of this Employment Agreement be engaged in any other business
activity whether or not such business activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
the Employee from investing his personal assets in businesses which do not
compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation
is solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to
that of the Company, without the express prior written consent of the
Company.
5. Compensation.
(a) For services rendered under this Employment Agreement,
the Company shall pay the Employee a salary determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"),
payable (after deduction of applicable payroll taxes) in equal bi-weekly
installments. Employee's Base Salary as of the Effective Date shall be
$150,000. The Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives of the Company,
including medical insurance and retirement programs which may be adopted
from time to time during the term hereof by the Company. On an annual basis,
the Compensation Committee shall review Employee's salary and make such
adjustment as may be warranted based upon Employee performance, Company
financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee
shall be eligible for, and the Compensation Committee, in its sole
discretion, may award an executive bonus up to a maximum of 35% of Base
Salary, based on the achievement of objectives established by the
Compensation Committee.
(c) The Company agrees that, effective as of the Effective
Date, it will establish, or cause to be established, a new long-term
incentive compensation plan (the "New Plan"). The Company further agrees
that the Employee shall be immediately entitled to participate in such New
Plan and the Employee shall receive an allocation of units under the New
Plan effective as of the Effective Date, which allocation shall be
commensurate with his position and consistent in incentive opportunity with
allocations to similarly situated employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to the same number of paid days off pursuant to
the Company's customary paid time off policy ("CalTime") as he has on the
date of this Agreement.
2
<PAGE>
7. Expenses. During the term of this Employment Agreement, the
Company shall reimburse the Employee for all reasonable out-of-pocket
expenses incurred by the Employee in connection with the business of the
Company and in performance of his duties under this Employment Agreement
upon the Employee's presentation to the Company of an itemized accounting of
such expenses with reasonable supporting data.
8. Term. The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the three year
anniversary date thereof. The term of employment shall automatically be
extended for consecutive periods of one (1) year each unless notice of
termination of employment is given by either party hereto at least ninety
(90) days prior to the expiration of the initial or any renewal term, in
which case, this Agreement shall terminate at the end of such initial or
renewal term, as the case may be. In the case of a renewal and unless
otherwise agreed to in writing by both parties, the terms and conditions of
this Employment Agreement shall apply to any renewals or extensions thereto.
Notwithstanding the foregoing, the Company may, at its election, terminate
the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that
he is unable to perform the services required of him hereunder and
such inability to perform continues for a period in excess of
ninety (90) days and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations hereunder
upon (A) the reasonable determination by the Chief Executive
Officer that the Employee has failed substantially to perform his
duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an
intentional and extended neglect of his duties hereunder, (B)
refusal to carry out any lawful direction of the Chief Executive
Officer or Board of Directors, (C) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about
to engage in conduct materially injurious to the Company, (D) the
Employee's having been convicted of a felony, (E) a material breach
by the Employee of any of the other covenants or representations
herein or any other agreement between Employee and the Company, or
(F) theft, embezzlement or misappropriation of Company property; or
(iii) Without Cause at any time upon notice of
such termination to the Employee, by paying to the Employee salary
continuation pay equal to the Employee's Base Salary in effect at
the time of termination for the remaining term of this Employment
Agreement but not in any event for less than 12 months from the
date of such termination; provided, however, that the salary
continuation payments shall cease if the Employee shall engage in
any business (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) which is engaged
in the manufacturing, distribution or research and development of
any products being sold by, or under development by, the Company or
3
<PAGE>
its affiliates as of the date of such termination of employment, in any
geographic area where the Company or such affiliates are then so
manufacturing or distributing such products, or the Employee shall
interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer,
supplier, lessor, lessee or employee of the Company. If the Company
shall decide not to renew this Employment Agreement, the ninety (90)
day notification of the Company's intention not to renew prior to
expiration of the initial or any subsequent renewal term shall serve as
adequate termination notice and the Employee hereby agrees to make a
smooth transition of responsibilities during that ninety (90) day
period and the Employee further agrees not to take any legal action
against the Company related to said non-renewal and termination of
employment; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if, without his consent, his
responsibilities and duties on the date hereof are materially reduced (a
"Material Demotion") and such Material Demotion continues for ten (10)
business days after the date of notice to the Company. A Material Demotion
shall be treated as a termination by the Company without Cause and the
Employee shall be entitled to receive salary continuation pay as provided
by, and subject to the terms and conditions of, subparagraph 8 (iii) above.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and
to perform the services contemplated herein and is not bound under any
employment or consulting agreement to render services to any third party,
(b) he has the full right, power and authority, subject to no rights of
third parties, to grant to the Company the rights contemplated by paragraph
10 hereof, and (c) he does not now have, nor within the last three years has
had, any ownership interest in any business enterprise (other than interest
in publicly traded corporations where his ownership does not exceed one
percent (1%) or more of the equity capital) which is a customer of the
Company, any of its subsidiaries, or from which the Company or any of its
subsidiaries purchases any goods or services or to whom such corporations
owe any financial obligations or are required or directed to make any
payments.
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or
jointly, during the term hereof which relate to methods, apparatus, designs,
products, processes or devices, sold, leased, used or under consideration or
development by the Company or any of its affiliates or which otherwise relate
to or pertain to the business, functions or operations of the Company or any
of its affiliates or which
4
<PAGE>
arise from the efforts of the Employee during the course of his employment for
the Company or any of its affiliates. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
affiliates and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that
the provisions of this Section 10 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement
which provides that an employee shall assign, or offer to assign,
any of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except
for those inventions that either:
(a) Relate at the time of conception
or reduction to practice of the invention to the employer's business,
or actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of
the Company and its affiliates as they may exist from time to time are
valuable, special and unique assets of the business of the Company and its
affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company or any of its
affiliates, in whole or in part, disclose such secrets, know-how or
processes to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
5
<PAGE>
Employee make use of any such property for his own purposes or for the benefit
of any person, firm, corporation or other entity (except the Company and its
affiliates) under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, know-how and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, know-how or processes entering the public domain without the
Company's consent).
12. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10 or 11 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from
such breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened breach.
13. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the
Employee shall submit to such physical examination and supply such
information as may be required in connection therewith.
14. Notices. Any notice required or permitted to be given under
this Employment Agreement shall be sufficient if in writing and if sent by
registered mail to the Employee at his home address as reflected on the
records of the Company, in the case of the Employee, or Mr. Stelios B.
Papadopoulos, Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
15. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by
the other party.
16. Governing Law. This Employment Agreement shall be governed by
and construed and enforce in accordance with the laws of the State of
California without giving effect to the choice of law or conflict of laws
provisions thereof.
17. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any of its affiliates, or to
any other person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such
assignee assumes all the liabilities of the Company hereunder.
18. Prior Agreement. Effective as of the Effective Date, the
Severance Agreement between the Company and the Employee dated February 27,
1997 is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
6
<PAGE>
19. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's and the Parent's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement
may be changed only by an agreement in writing signed by a party against
whom enforcement of any waiver, change, modification, extension or discharge
is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
---------------------------
Stelios B. Papadopoulos
Chief Executive officer
EM INDUSTRIES, INC.
By: /s/ Dieter Janssen
-----------------------------
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ John T. Snow
---------------------------
John T. Snow
7
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th day of November 1998,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and
Mark Zimmerman (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of its
subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business
and affairs of the Company, its policies, methods, personnel and operations
and the Parent recognizes that the continued service of the Employee is
important to the growth and success of the Company subsequent to the date of
closing of the transactions contemplated by the Merger Agreement ("Closing
Date") and desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee
agree as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until
the Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee shall perform such management duties for
the Company and its affiliates as may from time to time be assigned and
which are consistent with his titles. During the Term, the Employee shall
have the same titles as he held immediately prior to the date of this
Agreement. The Employee hereby promises to perform and discharge well and
faithfully all duties of his position. If Employee is elected as a director
or officer of any affiliate of the Company, the Employee shall serve in such
capacity or capacities without further compensation.
<PAGE>
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during
the term of this Employment Agreement be engaged in any other business
activity whether or not such business activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
the Employee from investing his personal assets in businesses which do not
compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation
is solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to
that of the Company, without the express prior written consent of the
Company.
5. Compensation.
(a) For services rendered under this Employment Agreement,
the Company shall pay the Employee a salary determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"),
payable (after deduction of applicable payroll taxes) in equal bi-weekly
installments. Employee's Base Salary as of the Effective Date shall be
$145,000. The Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives of the Company,
including medical insurance and retirement programs which may be adopted
from time to time during the term hereof by the Company. On an annual basis,
the Compensation Committee shall review Employee's salary and make such
adjustment as may be warranted based upon Employee performance, Company
financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee shall be
eligible for, and the Compensation Committee, in its sole discretion, may award
an executive bonus up to a maximum of 35% of Base Salary, based on the
achievement of objectives established by the Compensation Committee.
(c) The Company agrees that, effective as of the Effective Date, it
will establish, or cause to be established, a new long-term incentive
compensation plan (the "New Plan"). The Company further agrees that the Employee
shall be immediately entitled to participate in such New Plan and the Employee
shall receive an allocation of units under the New Plan effective as of the
Effective Date, which allocation shall be commensurate with his position and
consistent in incentive opportunity with allocations to similarly situated
employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to the same number of paid days off pursuant to
the Company's customary paid time off policy ("CalTime") as he has on the
date of this Agreement.
2
<PAGE>
7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data.
8. Term. The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. The term of employment shall automatically be
extended for consecutive periods of one (1) year each unless notice of
termination of employment is given by either party hereto at least ninety
(90) days prior to the expiration of the initial or any renewal term, in
which case, this Agreement shall terminate at the end of such initial or
renewal term, as the case may be. In the case of a renewal and unless
otherwise agreed to in writing by both parties, the terms and conditions of
this Employment Agreement shall apply to any renewals or extensions thereto.
Notwithstanding the foregoing, the Company may, at its election, terminate
the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that
he is unable to perform the services required of him hereunder and
such inability to perform continues for a period in excess of
ninety (90) days and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations hereunder
upon (A) the reasonable determination by the Chief Executive
Officer that the Employee has failed substantially to perform his
duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an
intentional and extended neglect of his duties hereunder, (B)
refusal to carry out any lawful direction of the Chief Executive
Officer or Board of Directors, (C) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about
to engage in conduct materially injurious to the Company, (D) the
Employee's having been convicted of a felony, (E) a material breach
by the Employee of any of the other covenants or representations
herein or any other agreement between Employee and the Company, or
(F) theft, embezzlement or misappropriation of Company property; or
(iii) Without Cause at any time upon notice of
such termination to the Employee, by paying to the Employee salary
continuation pay equal to the Employee's Base Salary in effect at
the time of termination for the remaining term of this Employment
Agreement but not in any event for less than 12 months from the
date of such termination; provided, however, that the salary
continuation payments shall cease if the Employee shall engage in
any business (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) which is engaged
in the manufacturing, distribution or research and development of
any products being sold by, or under development by, the Company or
3
<PAGE>
affiliates as of the date of such termination of employment, in any
geographic area where the Company or such affiliates are then so
manufacturing or distributing such products, or the Employee shall
interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer,
supplier, lessor, lessee or employee of the Company. If the Company
shall decide not to renew this Employment Agreement, the ninety
(90) day notification of the Company's intention not to renew prior to
expiration of the initial or any subsequent renewal term shall serve
as adequate termination notice and the Employee hereby agrees to make
a smooth transition of responsibilities during that ninety (90) day
period and the Employee further agrees not to take any legal action
against the Company related to said non-renewal and termination of
employment; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if, without his consent, his
responsibilities and duties on the date hereof are materially reduced (a
"Material Demotion") and such Material Demotion continues for ten (10)
business days after the date of notice to the Company. A Material Demotion
shall be treated as a termination by the Company without Cause and the
Employee shall be entitled to receive salary continuation pay as provided
by, and subject to the terms and conditions of, subparagraph 8 (iii) above.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and
to perform the services contemplated herein and is not bound under any
employment or consulting agreement to render services to any third party,
(b) he has the full right, power and authority, subject to no rights of
third parties, to grant to the Company the rights contemplated by paragraph
10 hereof, and (c) he does not now have, nor within the last three years has
had, any ownership interest in any business enterprise (other than interest
in publicly traded corporations where his ownership does not exceed one
percent (1%) or more of the equity capital) which is a customer of the
Company, any of its subsidiaries, or from which the Company or any of its
subsidiaries purchases any goods or services or to whom such corporations
owe any financial obligations or are required or directed to make any
payments.
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or
jointly, during the term hereof which relate to methods, apparatus, designs,
products, processes or devices, sold, leased, used or under consideration or
development by the Company or any of its affiliates or which otherwise
relate to or pertain to the business, functions or operations of the Company
or any of its affiliates or which
4
<PAGE>
arise from the efforts of the Employee during the course of his employment for
the Company or any of its affiliates. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
affiliates and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that
the provisions of this Section 10 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement
which provides that an employee shall assign, or offer to assign,
any of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except
for those inventions that either:
(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business, or
actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of
the Company and its affiliates as they may exist from time to time are
valuable, special and unique assets of the business of the Company and its
affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company or any of its
affiliates, in whole or in part, disclose such secrets, know-how or
processes to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
5
<PAGE>
Employee make use of any such property for his own purposes or for the benefit
of any person, firm, corporation or other entity (except the Company and its
affiliates) under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, know-how and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, know-how or processes entering the public domain without the
Company's consent).
12. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10 or 11 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from
such breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened breach.
13. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the
Employee shall submit to such physical examination and supply such
information as may be required in connection therewith.
14. Notices. Any notice required or permitted to be given under
this Employment Agreement shall be sufficient if in writing and if sent by
registered mail to the Employee at his home address as reflected on the
records of the Company, in the case of the Employee, or Mr. Stelios B.
Papadopoulos, Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
15. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by
the other party.
16. Governing Law. This Employment Agreement shall be governed by
and construed and enforce in accordance with the laws of the State of
California without giving effect to the choice of law or conflict of laws
provisions thereof.
17. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any of its affiliates, or to
any other person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such
assignee assumes all the liabilities of the Company hereunder.
18. Prior Agreement. Effective as of the Effective Date, the
Severance Agreement between the Company and the Employee dated July 16, 1998
is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
6
<PAGE>
19. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's and the Parent's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement
may be changed only by an agreement in writing signed by a party against
whom enforcement of any waiver, change, modification, extension or discharge
is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
--------------------------------
Stelios B. Papadopoulos
Chief Executive Officer
EM INDUSTRIES, INC.
By: /s/ Dieter Janssen
--------------------------------
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ Mark Zimmerman
--------------------------------
Mark Zimmerman
7
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th day of November 1998,
between CN Biosciences, Inc., a Delaware corporation (the "Company") and
Douglas J. Greenwold (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of
its subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business
and affairs of the Company, its policies, methods, personnel and operations
and the Parent recognizes that the continued service of the Employee is
important to the growth and success of the Company subsequent to the date of
closing of the transactions contemplated by the Merger Agreement ("Closing
Date") and desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee
agree as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until
the Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee shall perform such management duties for
the Company and its affiliates as may from time to time be assigned and
which are consistent with his titles. During the Term, the Employee shall
have the same titles as he held immediately prior to the date of this
Agreement. The Employee hereby promises to perform and discharge well and
faithfully all duties of his position. If Employee is elected as a director
or officer of any affiliate of the Company, the Employee shall serve in such
capacity or capacities without further compensation.
<PAGE>
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during
the term of this Employment Agreement be engaged in any other business
activity whether or not such business activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
the Employee from investing his personal assets in businesses which do not
compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation
is solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to
that of the Company, without the express prior written consent of the
Company.
5. Compensation.
(a) For services rendered under this Employment Agreement,
the Company shall pay the Employee a salary determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"),
payable (after deduction of applicable payroll taxes) in equal bi-weekly
installments. Employee's Base Salary as of the Effective Date shall be
$145,000. The Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives of the Company,
including medical insurance and retirement programs which may be adopted
from time to time during the term hereof by the Company. On an annual basis,
the Compensation Committee shall review Employee's salary and make such
adjustment as may be warranted based upon Employee performance, Company
financial performance, economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee
shall be eligible for, and the Compensation Committee, in its sole
discretion, may award an executive bonus up to a maximum of 35% of Base
Salary, based on the achievement of objectives established by the
Compensation Committee.
(c) The Company agrees that, effective as of the Effective
Date, it will establish, or cause to be established, a new long-term
incentive compensation plan (the "New Plan"). The Company further agrees
that the Employee shall be immediately entitled to participate in such New
Plan and the Employee shall receive an allocation of units under the New
Plan effective as of the Effective Date, which allocation shall be
commensurate with his position and consistent in incentive opportunity with
allocations to similarly situated employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to the same number of paid days off pursuant to
the Company's customary paid time off policy ("CalTime") as he has on the
date of this Agreement.
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<PAGE>
7. Expenses. During the term of this Employment Agreement, the
Company shall reimburse the Employee for all reasonable out-of-pocket
expenses incurred by the Employee in connection with the business of the
Company and in performance of his duties under this Employment Agreement
upon the Employee's presentation to the Company of an itemized accounting of
such expenses with reasonable supporting data.
8. Term. The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. The term of employment shall automatically be
extended for consecutive periods of one (1) year each unless notice of
termination of employment is given by either party hereto at least ninety
(90) days prior to the expiration of the initial or any renewal term, in
which case, this Agreement shall terminate at the end of such initial or
renewal term, as the case may be. In the case of a renewal and unless
otherwise agreed to in writing by both parties, the terms and conditions of
this Employment Agreement shall apply to any renewals or extensions thereto.
Notwithstanding the foregoing, the Company may, at its election, terminate
the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that
he is unable to perform the services required of him hereunder and
such inability to perform continues for a period in excess of
ninety (90) days and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations hereunder
upon (A) the reasonable determination by the Chief Executive
Officer that the Employee has failed substantially to perform his
duties hereunder (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an
intentional and extended neglect of his duties hereunder, (B)
refusal to carry out any lawful direction of the Chief Executive
Officer or Board of Directors, (C) the Chief Executive Officer's
reasonable determination that the Employee has engaged or is about
to engage in conduct materially injurious to the Company, (D) the
Employee's having been convicted of a felony, (E) a material breach
by the Employee of any of the other covenants or representations
herein or any other agreement between Employee and the Company, or
(F) theft, embezzlement or misappropriation of Company property; or
(iii) Without Cause at any time upon notice of
such termination to the Employee, by paying to the Employee salary
continuation pay equal to the Employee's Base Salary in effect at
the time of termination for the remaining term of this Employment
Agreement but not in any event for less than 12 months from the
date of such termination; provided, however, that the salary
continuation payments shall cease if the Employee shall engage in
any business (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) which is engaged
in the manufacturing, distribution or research and development of
any products being sold by, or under development by, the Company or
3
<PAGE>
its affiliates as of the date of such termination of employment, in any
geographic area where the Company or such affiliates are then so
manufacturing or distributing such products, or the Employee shall
interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer,
supplier, lessor, lessee or employee of the Company. If the Company
shall decide not to renew this Employment Agreement, the ninety (90)
day notification of the Company's intention not to renew prior to
expiration of the initial or any subsequent renewal term shall serve as
adequate termination notice and the Employee hereby agrees to make a
smooth transition of responsibilities during that ninety (90) day
period and the Employee further agrees not to take any legal action
against the Company related to said non-renewal and termination of
employment; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if, without his consent, his
responsibilities and duties on the date hereof are materially reduced (a
"Material Demotion") and such Material Demotion continues for ten (10)
business days after the date of notice to the Company. A Material Demotion
shall be treated as a termination by the Company without Cause and the
Employee shall be entitled to receive salary continuation pay as provided
by, and subject to the terms and conditions of, subparagraph 8 (iii) above.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and
to perform the services contemplated herein and is not bound under any
employment or consulting agreement to render services to any third party,
(b) he has the full right, power and authority, subject to no rights of
third parties, to grant to the Company the rights contemplated by paragraph
10 hereof, and (c) he does not now have, nor within the last three years has
had, any ownership interest in any business enterprise (other than interest
in publicly traded corporations where his ownership does not exceed one
percent (1%) or more of the equity capital) which is a customer of the
Company, any of its subsidiaries, or from which the Company or any of its
subsidiaries purchases any goods or services or to whom such corporations
owe any financial obligations or are required or directed to make any
payments.
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or
jointly, during the term hereof which relate to methods, apparatus, designs,
products, processes or devices, sold, leased, used or under consideration or
development by the Company or any of its affiliates or which otherwise
relate to or pertain to the business, functions or operations of the
Company or any of its affiliates or which
4
<PAGE>
arise from the efforts of the Employee during the course of his employment for
the Company or any of its affiliates. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
affiliates and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that
the provisions of this Section 10 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement
which provides that an employee shall assign, or offer to assign,
any of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except
for those inventions that either:
(a) Relate at the time of conception
or reduction to practice of the invention to the employer's business,
or actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of
the Company and its affiliates as they may exist from time to time are
valuable, special and unique assets of the business of the Company and its
affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company or any of its
affiliates, in whole or in part, disclose such secrets, know-how or
processes to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
5
<PAGE>
Employee make use of any such property for his own purposes or for the benefit
of any person, firm, corporation or other entity (except the Company and its
affiliates) under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, know-how and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, know-how or processes entering the public domain without the
Company's consent).
12. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10 or 11 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from
such breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened breach.
13. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the
Employee shall submit to such physical examination and supply such
information as may be required in connection therewith.
14. Notices. Any notice required or permitted to be given under
this Employment Agreement shall be sufficient if in writing and if sent by
registered mail to the Employee at his home address as reflected on the
records of the Company, in the case of the Employee, or Mr. Stelios B.
Papadopoulos, Chief Executive Officer, CN Biosciences, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
15. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by
the other party.
16. Governing Law. This Employment Agreement shall be governed by
and construed and enforce in accordance with the laws of the State of
California without giving effect to the choice of law or conflict of laws
provisions thereof.
17. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any of its affiliates, or to
any other person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such
assignee assumes all the liabilities of the Company hereunder.
18. Prior Agreement. Effective as of the Effective Date, the
Severance Agreement between the Company and the Employee dated February 27,
1997 is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
6
<PAGE>
19. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's and the Parent's principal shareholders,
affiliates or subsidiaries regarding employment. This Employment Agreement
may be changed only by an agreement in writing signed by a party against
whom enforcement of any waiver, change, modification, extension or discharge
is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
------------------------------
Stelios B. Papadopoulos
Chief Executive officer
EM INDUSTRIES, INC.
By: /s/ Dieter Janssen
--------------------------------
Name: Dieter Janssen
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ Douglas J. Greenwold
------------------------------------
Douglas J. Greenwold
7
<PAGE>
[Letterhead of CN Biosciences, Inc.]
November 18, 1998
Dr. Robert Mierendorf
President
Novagen, Inc.
601 Science Drive
Madison, Wisconsin 53711
Dear Bob:
This letter agreement shall supplement the Employment Agreement between CN
Biosciences, Inc. (the "Company") and you dated November 18, 1998 (the
"Employment Agreement").
As consideration for the promises and agreements made by you in the
Employment Agreement, and your agreement to remain in employment with the
Company through the Effective Date (as defined in the Employment Agreement),
as soon as practicable after the Effective Date, the Company will make a
lump sum payment to you, less applicable withholdings, of $50,000 if you are
still in the employ of the Company on the Effective Date.
Please signify your acceptance of this letter agreement by signing below and
returning a copy to the undersigned.
Very truly yours,
- -----------------------------
Stelios B. Papadopoulos
Chairman and CEO
Agreed and Accepted the
18th day of November 1998
- ---------------------------
Dr. Robert Mierendorf
<PAGE>
[Letterhead of CN Biosciences, Inc.]
November 18, 1998
Mark Zimmerman
V.P. and General Manager
Oncogene Research Products
84 Rogers Street
Cambridge, MA
Dear Mark:
This letter agreement shall supplement the Employment Agreement between CN
Biosciences, Inc. (the "Company") and you dated November 18, 1998 (the
"Employment Agreement").
As consideration for the promises and agreements made by you in the
Employment Agreement, and your agreement to remain in employment with the
Company through the Effective Date (as defined in the Employment Agreement),
as soon as practicable after the Effective Date, the Company will make a
lump sum payment to you, less applicable withholdings, of $50,000 if you are
still in the employ of the Company on the Effective Date.
Please sign your acceptance of this letter agreement by signing below and
returning a copy to the undersigned.
Very truly yours,
- -----------------------------
Stelios B. Papadopoulos
Chairman and CEO
Agreed and Accepted this
18th day of November 1998
- --------------------
Mark Zimmerman
<PAGE>
November 18, 1998
CN Biosciences, Inc.
10394 Pacific Center Court
San Diego, CA 92121
Gentlemen,
Reference is made to that certain Agreement and Plan of Merger dated
November 18, 1998 (the "Merger Agreement") by and among our affiliate, EM
Industries, Inc., its subsidiary, EM Acquisition Corp., and CN Biosciences,
Inc., which has been reviewed by Merck KGaA. For purposes of this letter,
capitalized terms used herein shall have the meanings set forth in the Merger
Agreement, unless otherwise indicated herein.
Merck KGaA hereby undertakes to ensure that EM Industries, Inc. shall have
sufficient funds committed and available promptly to satisfy the financial
obligations of EM Industries, Inc. and EM Acquisition Corp., pursuant to
Article I of the Merger Agreement, in respect of the acceptance for payment and
purchase by EM Acquisition Corp. of the Shares in accordance with the terms
thereof and the consummation of the Merger, up to a maximum amount of
$160,000,000.
By this letter Merck KGaA has not assumed, and shall not be bound by, any
other obligations of EM Industries, Inc. or of EM Acquisition Corp. under the
Merger Agreement or otherwise.
Very truly yours,
Merck KGaA
/s/ H.J. Langmann
