<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 2000
REGISTRATION NO.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INVITROGEN CORPORATION
(Name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2836 33-0373077
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
</TABLE>
1600 FARADAY AVENUE
CARLSBAD, CALIFORNIA 92008
(760) 603-7200
(Address, including zip code, and telephone number including area code, of
Registrant's Principal Executive Offices)
JAMES R. GLYNN
1600 FARADAY AVENUE
CARLSBAD, CALIFORNIA 92008
(760) 603-7200
(Name, address, including zip code,and telephone number including area code, of
agent for service)
------------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C> <C>
Cameron Jay Rains, Esq. David A. Katz, Esq. J. Michael Schell, Esq.
Jeffrey T. Baglio, Esq. Mark Gordon, Esq. Margaret L. Wolff, Esq.
Gray Cary Ware & Freidenrich LLP Wachtell Lipton Rosen & Katz Skadden, Arps, Slate, Meagher & Flom LLP
4365 Executive Drive, Suite 1600 51 West 52nd Street Four Times Square
San Diego, California 92121-2189 New York, New York 10019 New York, New York 10036
(858) 677-1400 (212) 403-1000 (212) 735-3000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AND ALL OTHER
CONDITIONS UNDER THE MERGER AGREEMENTS (DESCRIBED IN THE JOINT PROXY STATEMENT
AND PROSPECTUS HEREIN) ARE SATISFIED OR WAIVED.
------------------------------
If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction 9, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to
Rule 464(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(3) REGISTRATION FEE(4)
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 24,462,916 $56.375 $1,379,096,889.50 $28,020.58
</TABLE>
(1) The number of shares to be registered pursuant to this Registration
Statement is based on the maximum number of shares of Invitrogen Common
Stock issuable to stockholders of Life Technologies, Inc. ("Life
Technologies") and Dexter Corporation ("Dexter") in the Mergers.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(1) and 457(c) of the Securities Act of 1933, as amended (the
"Securities Act"), based on the average high and low prices of Life
Technologies Common Stock on August 11, 2000, as reported on
over-the-counter bulletin board and based on the average high and low prices
of Dexter Common Stock on August 11, 2000, as reported on the New York Stock
Exchange.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) of the Securities Act, based on the product of
the estimated maximum number of shares of Life Technologies Common Stock and
Dexter Common Stock to be acquired in the Mergers multiplied by the proposed
maximum offering price per share calculated as described in (2) above.
(4) Calculated by multiplying 0.000264 by the proposed maximum aggregate
offering price. $336,061 of such amount is offset pursuant to
Rule 457(b) by fees previously paid.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
[LOGO]
YOUR VOTE ON THE PROPOSED TRANSACTIONS IS VERY IMPORTANT!
To the Stockholders of Invitrogen Corporation:
Invitrogen Corporation has agreed to merge with each of Life
Technologies, Inc., and Dexter Corporation which holds 75 percent of Life
Technologies. If the mergers are approved by the stockholders of the three
companies Dexter and Life Technologies will simultaneously merge into
Invitrogen.
In the Life Technologies merger, each outstanding share of Life Technologies
common stock will be converted into $60.00 in cash or Invitrogen common stock or
both. In the Dexter merger, each outstanding share of Dexter common stock will
be converted into $62.50 in cash or Invitrogen common stock or both.
In order to complete the mergers, each company must obtain the approval of
its stockholders. We believe that the mergers will benefit Invitrogen's
stockholders, and we ask for your support in voting for the merger proposal and
the other proposals described in the accompanying joint proxy statement and
prospectus at the Invitrogen special meeting. The special meeting of Invitrogen
stockholders will be held at our offices in Carlsbad, CA, on Thursday,
September 14, 2000, at 9:00 a.m., local time.
Your board of directors has unanimously approved the mergers with Life
Technologies and Dexter and recommends that Invitrogen stockholders vote for the
merger proposal and the other proposals described in the attached materials.
Your vote is important, regardless of the number of shares you own. PLEASE
VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE
SPECIAL MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE AND RETURN THE ENCLOSED
PROXY CARD. YOU ALSO MAY CAST YOUR VOTE IN PERSON AT THE SPECIAL MEETING.
Sincerely,
/s/ Lyle C. Turner
Lyle C. Turner
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE COMMON STOCK TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT AND PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT AND
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This joint proxy statement and prospectus is dated August 14, 2000, and is
first being mailed to stockholders on or about August 15, 2000.
<PAGE>
NOTICE OF SPECIAL MEETING OF INVITROGEN STOCKHOLDERS
SEPTEMBER 14, 2000
Carlsbad, California
August 14, 2000
A special meeting of stockholders of Invitrogen Corporation will be held at
1600 Faraday Ave., Carlsbad, CA 92008, on Thursday, September 14, 2000, at 9:00
a.m., local time, for the following purposes:
1. To consider and vote on a proposal to approve and adopt each of the
Agreement and Plan of Merger, dated as of July 7, 2000, between
Invitrogen and Life Technologies, and the Agreement and Plan of Merger,
dated as of July 7, 2000, between Invitrogen and Dexter Corporation. We
have included copies of the Life Technologies merger agreement and the
Dexter merger agreement as Annexes A and B to the attached joint proxy
statement and prospectus.
2. To consider and vote on a proposal to amend Invitrogen Corporation's
Restated Certificate of Incorporation to increase the authorized capital
stock to 131,405,884 shares, consisting of 6,405,884 shares of perferred
stock and 125,000,000 shares of common stock.
3. To consider and vote on a proposal to increase by 3,000,000 the number
of shares Invitrogen may issue under Invitrogen's 1997 Stock Option Plan
to 8,485,479 shares.
4. To consider and vote on a proposal to increase by 200,000 the number of
shares of Invitrogen common stock that Invitrogen may issue under
Invitrogen's 1998 Employee Stock Purchase Plan to 550,000 shares.
5. To transact such other business as properly may come before the
Invitrogen special meeting or any adjournment or postponement of the
meeting.
Only stockholders of record at the close of business on August 10, 2000 will
be entitled to vote at the Invitrogen special meeting. We will make available a
list of stockholders entitled to vote at the special meeting during ordinary
business hours at Invitrogen's offices at 1600 Faraday Avenue, Carlsbad,
California 92008 for a period of at least 10 days prior to the special meeting
for examination by any Invitrogen stockholder entitled to vote at the special
meeting for any purpose germane to the special meeting. To vote your shares,
please complete and return the enclosed proxy card. You also may cast your vote
in person at the Invitrogen special meeting. Please vote promptly whether or not
you expect to attend the Invitrogen special meeting.
By order of the Board of Directors,
/s/ Warner R. Broaddus
Warner R. Broaddus
SECRETARY
PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON
THE ENCLOSED PROXY CARD.
<PAGE>
[LOGO]
YOUR VOTE ON THE PROPOSED MERGER IS VERY IMPORTANT!
To the Stockholders of Dexter Corporation:
Invitrogen Corporation has agreed to merge with each of Dexter Corporation
and Life Technologies, Inc., Dexter's 75 percent owned subsidiary. If the
mergers are approved by the stockholders of the three companies Dexter and Life
Technologies will simultaneously merge into Invitrogen.
In the Dexter merger, each outstanding share of Dexter common stock will be
converted into $62.50 in cash or Invitrogen common stock or both. In the Life
Technologies merger, each outstanding share of Life Technologies common stock
will be converted into $60.00 in cash or Invitrogen common stock or both.
In order to complete the mergers, each company must obtain the approval of
its stockholders. We believe that the Dexter merger will benefit our
stockholders, and we ask for your support in voting for the merger proposal
described in the accompanying joint proxy statement and prospectus at the Dexter
special meeting. The special meeting of Dexter stockholders will be held at The
University Club, One West 54th Street, New York, New York 10019, on Thursday,
September 14, 2000, at 11:30 a.m., local time.
Your board of directors has unanimously approved the merger with Invitrogen
and recommends that Dexter stockholders vote for the merger proposal described
in the attached materials.
Your vote is important, regardless of the number of shares you own. PLEASE
VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE
SPECIAL MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE AND RETURN THE ENCLOSED
PROXY CARD. YOU ALSO MAY CAST YOUR VOTE IN PERSON AT THE SPECIAL MEETING.
Very truly yours,
/s/ K. Grahame Walker
K. Grahame Walker
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE COMMON STOCK TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT AND PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT AND
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This joint proxy statement and prospectus is dated August 14, 2000, and is
first being mailed to stockholders on or about August 15, 2000.
<PAGE>
NOTICE OF SPECIAL MEETING OF DEXTER STOCKHOLDERS
SEPTEMBER 14, 2000
Windsor Locks, Connecticut
August 14, 2000
A special meeting of stockholders of Dexter Corporation will be held at The
University Club, One West 54th Street, New York, New York 10019, on Thursday,
September 14, 2000, at 11:30 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger dated as of July 7, 2000 between Dexter Corporation
and Invitrogen Corporation. We have attached a copy of the Dexter merger
agreement as Annex B to the attached joint proxy statement and
prospectus.
2. To transact such other business as properly may come before the Dexter
special meeting or any adjournment of postponement of the meeting.
Only stockholders of record at the close of business on August 14, 2000 will
be entitled to vote at the Dexter special meeting. To vote your shares, please
complete and return the enclosed proxy card. You also may cast your vote in
person at the Dexter special meeting. Please vote promptly whether or not you
expect to attend the Dexter special meeting.
By the order of the Board of Directors
/s/ Bruce H. Beatt
Bruce H. Beatt
SECRETARY
PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON
THE ENCLOSED PROXY CARD.
<PAGE>
[LOGO]
YOUR VOTE ON THE PROPOSED MERGER IS VERY IMPORTANT!
To the Stockholders of Life Technologies, Inc.:
Invitrogen Corporation has agreed to merge with Life Technologies, Inc. and
with Dexter Corporation, Life Technologies' 75 percent stockholder. If the
mergers are approved by the stockholders of the three companies, Dexter and Life
Technologies will simultaneously merge into Invitrogen.
In the Life Technologies merger, each outstanding share of Life Technologies
common stock not held by Dexter will be converted into $60.00 in cash or
Invitrogen stock or both. In the Dexter merger, each outstanding share of Dexter
common stock will be converted into $62.50 in cash or Invitrogen stock or both.
In order to complete the mergers, each company must obtain the approval of
its stockholders. We believe that the mergers will benefit Life Technologies'
stockholders, and we ask for your support in voting for the merger proposal
described in the accompanying joint proxy statement and prospectus at the Life
Technologies special meeting. The special meeting of Life Technologies
stockholders will be held at The University Club, One West 54th Street, New
York, New York 10019, on Thursday, September 14, 2000, at Noon, local time.
Based upon, among other things, the unanimous recommendation of the special
committee of directors of Life Technologies who are not affiliated with Dexter,
your board of directors has, by unanimous vote of those directors present,
approved the merger with Invitrogen and recommends that Life Technologies
stockholders vote for the merger proposal described in the attached materials.
Dexter Corporation, which owns approximately 75% of Life Technologies
outstanding common stock, has agreed to vote its Life Technologies shares in
favor of the merger. As a consequence, approval of the merger at the special
meeting is assured.
Your vote is important, regardless of the number of shares you own. PLEASE
VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE
SPECIAL MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE AND RETURN THE ENCLOSED
PROXY CARD. YOU ALSO MAY CAST YOUR VOTE IN PERSON AT THE SPECIAL MEETING.
Very truly yours,
/s/ J. Stark Thompson
J. Stark Thompson
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE COMMON STOCK TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT AND PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT AND
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This joint proxy statement and prospectus is dated August 14, 2000, and is
first being mailed to stockholders on or about August 15, 2000.
<PAGE>
NOTICE OF SPECIAL MEETING OF LIFE TECHNOLOGIES STOCKHOLDERS
SEPTEMBER 14, 2000
Rockville, Maryland
August 14, 2000
A special meeting of stockholders of Life Technologies Inc., will be held at
The University Club, One West 54th Street, New York, New York 10019 on Thursday,
September 14, 2000, at Noon, local time, for the following purposes:
1. To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of July 7, 2000, between Life
Technologies, Inc. and Invitrogen Corporation. We have included a copy of
the Life Technologies merger agreement as Annex A to the attached joint
proxy statement and prospectus.
2. To transact such other business as properly may come before the Life
Technologies special meeting or any adjournment or postponement of the
meeting.
Only stockholders of record at the close of business on July 20, 2000 will
be entitled to vote at the Life Technologies special meeting. We will make
available a list of stockholders entitled to vote at the special meeting during
ordinary business hours at Life Technologies' offices at 9800 Medical Center
Drive, Rockville, Maryland 20850 for a period of 10 days prior to the special
meeting for examination by any Life Technologies stockholder entitled to vote at
the special meeting for any purpose germane to the special meeting. To vote your
shares, please complete and return the enclosed proxy card. You also may cast
your vote in person at the Life Technologies special meeting. Please vote
promptly whether or not you expect to attend the Life Technologies special
meeting.
By order of the Board of Directors,
/s/ C. Eric Winzer
C. Eric Winzer
SECRETARY
PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON
THE ENCLOSED PROXY CARD.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY..................................................... 5
The Companies............................................. 5
Vote Required to Approve the Proposals.................... 6
The Mergers............................................... 7
Our Reasons for the Mergers............................... 8
Our Recommendations to Stockholders....................... 8
Opinions of Financial Advisors............................ 9
Board of Directors and Management of Invitrogen Following
the Mergers............................................. 9
Additional Interests of Our Executive Officers and Boards
of Directors as a Result of the Mergers................. 10
Conditions to the Mergers................................. 10
Restrictions on Alternative Transactions.................. 11
Termination of the Merger Agreements...................... 11
Termination Fees.......................................... 11
Regulatory Matters........................................ 12
Material United States Federal Income Tax Consequences of
the Mergers............................................. 12
Accounting Treatment...................................... 12
Appraisal Rights.......................................... 13
Comparative Per Share Market Price Information............ 13
FINANCIAL SUMMARY........................................... 14
Summary of Selected Historical and Unaudited Pro Forma
Combined Financial Information.......................... 14
Unaudited Selected Pro Forma Combined Financial
Information............................................. 16
Comparative Per Share Information......................... 17
RISK FACTORS................................................ 18
Stockholders who make a cash election may receive a form
of consideration different from what they elect......... 18
Value of Invitrogen common stock to be received in the
mergers may fluctuate; all holders may not receive the
same value.............................................. 18
Following the mergers, we may need to obtain additional
financing to support ongoing operations................. 19
Failure to successfully integrate Life Technologies into
our operations could reduce
Failure to manage growth could impair our business........ 19
Reduction in research and development budgets and
government funding may affect sales..................... 20
Failure to license new technologies could impair our new
product development..................................... 21
Loss of licenses could hurt our performance............... 21
Invitrogen's market share depends on new product
introductions and acceptance............................ 21
Loss of key personnel could hurt our business............. 22
Competition in the life sciences research market could
reduce sales............................................ 22
Distributors may force us to use more expensive marketing
and distribution channels............................... 23
Invitrogen relies on third party manufacturers to
manufacture some of our products and components......... 23
International unrest or foreign currency fluctuations
could adversely affect our results...................... 23
Inability to protect our technologies could affect our
ability to compete...................................... 24
Disclosure of trade secrets could aid our competitors..... 24
Intellectual property or other litigation could harm our
business................................................ 24
The market price of Invitrogen stock could be volatile,
which may impair your investment........................ 25
Our anti-takeover defense provisions may deter potential
acquirors and may depress Invitrogen's stock price...... 26
Accidents related to hazardous materials could adversely
affect our business..................................... 26
</TABLE>
<PAGE>
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Potential product liability claims could affect our
earnings and financial condition........................ 26
Members of the management and board of directors of
Invitrogen, Life Technologies and Dexter may have
interests in the mergers that differ from the interests
of their stockholders................................... 26
Absence of dividends could reduce Invitrogen's
attractiveness to investors............................. 27
There are other risks related to Life Technologies' and
Dexter's ongoing operations............................. 27
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 28
THE INVITROGEN SPECIAL MEETING.............................. 29
When and where the Invitrogen special meeting will be
held.................................................... 29
What Will be Voted Upon................................... 29
Only Invitrogen Stockholders of Record as of August 10,
2000 Are Entitled to Vote............................... 29
Majority of Outstanding Shares Must be Represented For a
Vote to be Taken........................................ 29
Vote Required for Approval................................ 29
Voting Your Shares and Changing Your Vote................. 30
How Proxies Are Counted................................... 30
Confidential Voting....................................... 30
Cost of Solicitation...................................... 30
THE LIFE TECHNOLOGIES SPECIAL MEETING....................... 31
When and Where the Life Technologies Special Meeting Will
be Held................................................. 31
What Will be Voted Upon................................... 31
Only Life Technologies Common Stockholders of Record as of
July 20, 2000 Are Entitled to Vote...................... 31
Majority of Outstanding Shares Must be Represented For a
Vote to be Taken........................................ 31
Vote Required for Approval................................ 31
Voting Your Shares and Changing Your Vote................. 32
How Proxies Are Counted................................... 32
Cost of Solicitation...................................... 32
THE DEXTER SPECIAL MEETING.................................. 33
When and Where the Dexter Special Meeting Will be Held.... 33
What Will be Voted Upon................................... 33
Only Dexter Common Stockholders of Record as of August 14,
2000 Are Entitled to Vote............................... 33
Majority of Outstanding Shares Must be Represented For a
Vote to be Taken........................................ 33
Vote Required for Approval................................ 33
Voting Your Shares and Changing Your Vote................. 33
How Proxies Are Counted................................... 34
Cost of Solicitation...................................... 34
THE MERGERS................................................. 35
The Companies............................................. 35
Background of the Mergers................................. 36
Reasons for the Mergers and Recommendations of the
Boards.................................................. 42
Opinion of Invitrogen's Financial Advisor................. 49
Opinion of Financial Advisor to the Life Technologies
Special Committee....................................... 53
Opinion of Dexter's Financial Advisor..................... 59
Accounting Treatment...................................... 66
Material United States Federal Income Tax Consequences of
the Mergers............................................. 67
Certain Litigation........................................ 71
</TABLE>
ii
<PAGE>
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<S> <C>
Regulatory Matters........................................ 72
Federal Securities Laws Consequences; Stock Transfer
Restriction Agreements.................................. 73
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND
INFORMATION............................................... 74
INVITROGEN UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ 76
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................. 83
Dexter Severance Agreements............................... 83
Dexter Compensation and Benefit Plans..................... 85
Life Technologies......................................... 86
Indemnification and Insurance............................. 89
THE MERGER AGREEMENTS....................................... 90
Life Technologies Merger Agreement........................ 90
Dexter Merger Agreement................................... 100
APPRAISAL RIGHTS OF STOCKHOLDERS............................ 112
Life Technologies Stockholders' Appraisal Rights.......... 112
Dexter Stockholders' Appraisal Rights..................... 113
OWNERSHIP OF COMMON STOCK................................... 116
Beneficial Ownership of Invitrogen Common Stock........... 116
Beneficial Ownership of Life Technologies Stock........... 117
Beneficial Ownership of Dexter Stock...................... 121
DESCRIPTION OF INVITROGEN CAPITAL STOCK..................... 123
Authorized Capital Stock.................................. 123
Invitrogen Common Stock................................... 123
Invitrogen Preferred Stock................................ 123
Transfer Agent and Registrar.............................. 123
COMPARISON OF STOCKHOLDERS' RIGHTS.......................... 124
Comparison of Charter and By-law Provisions............... 124
Comparison of Stockholders Rights under the Connecticut
Law and the Delaware Law................................ 128
ADDITIONAL MATTERS FOR CONSIDERATION OF INVITROGEN
STOCKHOLDERS.............................................. 133
Amendment to Invitrogen's Certificate of Incorporation.... 133
Amendment of 1997 Stock Option Plan....................... 133
Amendment of the 1998 Employee Stock Purchase Plan........ 138
EXPERTS..................................................... 142
LEGAL MATTERS............................................... 142
WHERE YOU CAN FIND MORE INFORMATION......................... 143
INDEX TO FINANCIAL STATEMENTS............................... F-1
</TABLE>
iii
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<S> <C>
</TABLE>
<TABLE>
<S> <C> <C> <C>
ANNEX A -- Agreement and Plan of Merger, dated as of July 7, 2000
between Invitrogen Corporation and Life Technologies,
Inc....................................................... A-1
ANNEX B -- Agreement and Plan of Merger, dated as of July 7, 2000
between Invitrogen Corporation and Dexter Corporation..... B-1
ANNEX C -- Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation............................................... C-1
ANNEX D -- Opinion of Credit Suisse First Boston Corporation........... D-1
ANNEX E -- Opinion of Lehman Brothers Inc.............................. E-1
ANNEX F -- Delaware General Corporation Law--Section 262--Appraisal
Rights.................................................... F-1
ANNEX G -- Connecticut Business Corporation Act--Sections 33-855
through 33-872--Dissenters' Rights........................ G-1
ANNEX H -- Amendment to Article IV of the Restated Certificate of
Incorporation of Invitrogen Corporation................... H-1
ANNEX I -- 1997 Stock Option Plan of Invitrogen Corporation............ I-1
ANNEX J -- 1998 Employee Stock Purchase Plan of Invitrogen
Corporation............................................... J-1
</TABLE>
Echo-TM- is a trademark of Invitrogen. TOPO-Registered Trademark- and TA
Cloning-Registered Trademark- are Invitrogen trademarks which have been
registered with the United States Patent and Trademark Office. The Invitrogen
logo and Invitrogenomics-TM- are trademarks of Invitrogen for which registration
applications have been filed with the United States Patent and Trademark Office.
Gateway-TM- is a trademark of Life Technologies, Inc.
iv
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGERS
AND THE SPECIAL MEETINGS
Q: WHY ARE THE COMPANIES PROPOSING THE MERGERS?
A: The simultaneous mergers of each of Life Technologies and Dexter into
Invitrogen creates a leading company in life sciences and genomics research
tools with annual revenues in excess of $500 million and approximately
$100 million in operating cash flow. Invitrogen will be a premier products
provider for molecular biology research, particularly gene cloning, gene
expression, and gene analysis--key techniques in deciphering the human
genome, the first draft of which was recently completed.
In addition, the mergers represent the final step in Dexter's previously
announced program to maximize stockholder value in the short-term.
Q: WHAT WILL A STOCKHOLDER RECEIVE WHEN THE MERGERS OCCUR?
A: HOLDERS OF LIFE TECHNOLOGIES COMMON STOCK
A Life Technologies stockholder will have the choice to elect to receive in
exchange for each of their Life Technologies shares one of the following:
(1) $60.00 in cash, which will be prorated if necessary so that Invitrogen
will not pay more than approximately $105 million in cash in the Life
Technologies merger;
(2) $16.80 in cash and a number of shares of Invitrogen common stock
equivalent in value to $43.20 determined by a formula set forth in the
Life Technologies merger agreement; or
(3) A number of shares of Invitrogen common stock equivalent in value to
$60.00 (provided that the average price of Invitrogen common stock
during the applicable pricing period is within the range of $60.00 to
$80.00) determined by a formula set forth in the Life Technologies
merger agreement.
HOLDERS OF DEXTER COMMON STOCK
A Dexter stockholder will have the choice to elect to receive in exchange
for each of their Dexter shares one of the following:
(1) $62.50 in cash, which will be prorated if necessary so that Invitrogen
will not pay more than approximately $410 million in cash in the Dexter
merger;
(2) $17.50 in cash and a number of shares of Invitrogen common stock
equivalent in value to $45 determined by a formula set forth in the
Dexter merger agreement; or
(3) A number of shares of Invitrogen common stock equivalent in value to
$62.50 (provided that the average price of Invitrogen common stock
during the applicable pricing period is within the range of $60.00 to
$80.00) determined by a formula set forth in the Dexter merger
agreement.
An election to receive only cash is called a "cash election;" an election to
receive all stock is called a "stock election;" and an election to receive a
combination of cash and stock is called a "standard election." Stockholders
who do not make an election and who are not dissenting stockholders, will be
deemed to have made a standard election.
Q: IF I ELECT TO RECEIVE ONLY STOCK OR A COMBINATION OF CASH AND STOCK, HOW MANY
SHARES OF INVITROGEN COMMON STOCK WILL I RECEIVE IN THE MERGER?
A: HOLDERS OF LIFE TECHNOLOGIES COMMON STOCK
The exchange ratio for determining the number of shares of Invitrogen common
stock you will receive in the Life Technologies merger will be based on the
average closing price of Invitrogen common stock during the 20 consecutive
trading days ending on the third trading day prior to the Life Technologies
special meeting. However, if the average trading price of Invitrogen common
stock during that period is $80 or more, then the exchange ratio will be
fixed at 0.75 of an Invitrogen share for each Life Technologies share. If
the average trading
<PAGE>
price during the 20 trading day period is $60 or less, then the exchange
ratio will be fixed at 1.0 Invitrogen share for each Life Technologies
share. As a result of the $60 to $80 "collar" the value of the consideration
you receive in the Life Technologies merger may be more or less depending on
the average trading price of Invitrogen common stock. For example, the table
below shows the value of the per share merger consideration a Life
Technologies stockholder making a stock election would receive at various
prices for Invitrogen common stock:
<TABLE>
<CAPTION>
AVERAGE PRICE OF IMPLIED VALUE
INVITROGEN OF MERGER
COMMON STOCK EXCHANGE RATIO CONSIDERATION
---------------- -------------- -------------
<S> <C> <C>
90.00$...... .75 $67.50
85.00$...... .75 $63.75
80.00$...... .75 $60.00
70.00$...... .8571 $60.00
65.00$...... .9231 $60.00
60.00$...... 1.00 $60.00
55.00$...... 1.00 $55.00
50.00$...... 1.00 $50.00
</TABLE>
The closing price of Invitrogen common stock on August 11, 2000 was $63.69.
Stockholders are encouraged to obtain current price information regarding
the price of Invitrogen common stock.
HOLDERS OF DEXTER COMMON STOCK
The exchange ratio for determining the number of shares of Invitrogen common
stock you will receive in the Dexter merger will be based on the average
closing price of Invitrogen common stock during the 20 consecutive trading
days ending on the third trading day prior to the Dexter special meeting.
However, if the average trading price of Invitrogen common stock during that
period is $80 or more, then the exchange ratio will be fixed at 0.7813 of an
Invitrogen share for each Dexter share. If the average trading price during
the 20 trading day period is $60 or less, then the exchange ratio will be
fixed at 1.0417 Invitrogen shares for each Dexter share. As a result of the
$60 to $80 "collar" the value of the consideration you receive in the Dexter
merger may be more or less depending on the average trading price of
Invitrogen common stock. For example, the table below shows the value of the
per share merger consideration a Dexter stockholder making a stock election
would receive at various prices for Invitrogen stock:
<TABLE>
<CAPTION>
AVERAGE PRICE OF IMPLIED VALUE
INVITROGEN OF MERGER
COMMON STOCK EXCHANGE RATIO CONSIDERATION
---------------- -------------- -------------
<S> <C> <C>
90.00$...... .7813 $70.32
85.00$...... .7813 $66.41
80.00$...... .7813 $62.50
70.00$...... .8923 $62.50
65.00$...... .9615 $62.50
60.00$...... 1.0417 $62.50
55.00$...... 1.0417 $57.94
50.00$...... 1.0417 $52.09
</TABLE>
The closing price of Invitrogen common stock on August 11, 2000 was $63.69.
Stockholders are encouraged to obtain current price information regarding
the price of Invitrogen common stock.
Q: WILL THE FINAL EXCHANGE RATIO BE ANNOUNCED PRIOR TO THE SPECIAL MEETINGS?
A: Yes. The companies intend to issue a press release announcing the final
exchange ratio promptly after it is determined.
Q: IF I ELECT TO RECEIVE ALL OF THE CONSIDERATION OFFERED IN THE MERGER IN CASH,
WILL I BE ASSURED OF RECEIVING ONLY CASH?
A: No. In each of the mergers, Invitrogen will pay no more than 28 percent of
the aggregate consideration in cash. Approximately $105 million in cash will
be available to be paid to Life Technologies stockholders in the Life
Technologies merger and approximately $410 million in cash will be available
to be paid to Dexter stockholders in the Dexter merger. The amount of cash
to be paid to Life Technologies stockholders will be prorated such that Life
Technologies stockholders who elect to receive cash are assured of receiving
at least $16.80 in cash per Life Technologies share. The amount of cash to
be paid to Dexter stockholders will be prorated such that Dexter
stockholders who elect to receive
2
<PAGE>
cash are assured of receiving at least $17.50 in cash per Dexter share.
Q: IF I ELECT TO RECEIVE ALL OF THE CONSIDERATION OFFERED IN THE MERGER IN
INVITROGEN COMMON STOCK, WILL I BE ASSURED OF RECEIVING ONLY INVITROGEN
COMMON STOCK?
A: Yes. Life Technologies and Dexter stockholders who make a stock election or a
standard election in the Life Technologies merger or the Dexter merger in
Invitrogen common stock are assured of receiving Invitrogen common stock
regardless of the number of stockholders electing to receive the merger
consideration in common stock.
Q: WHEN DO THE COMPANIES EXPECT TO COMPLETE THE MERGERS?
A: We are working to complete the mergers as quickly as possible. In addition
to obtaining the approvals of our stockholders, we must satisfy the
specified waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976. We expect to complete the mergers in the fall of 2000.
Q: WHAT ARE THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGERS?
A: In general, for United States federal income tax purposes: (1) stockholders
of Dexter or Life Technologies who have exchanged all of their Dexter common
stock or Life Technologies common stock solely for cash in the Dexter merger
or the Life Technologies merger will recognize gain or loss in an amount
equal to the difference between the cash received and that stockholder's
adjusted tax basis in the shares surrendered, (2) stockholders of Dexter or
Life Technologies who have exchanged all of their Dexter common stock or
Life Technologies common stock solely for Invitrogen common stock in the
Dexter merger or the Life Technologies merger will not recognize any gain or
loss as a result of the exchange, and (3) stockholders of Dexter or Life
Technologies who receive a combination of cash and Invitrogen common stock
in the Dexter merger or the Life Technologies merger will not recognize any
loss but will recognize gain, if any, on the shares so exchanged to the
extent of any cash received. DEXTER STOCKHOLDERS AND LIFE TECHNOLOGIES
STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS FOR A FULL UNDERSTANDING OF
THE TAX CONSEQUENCES TO THEM OF THE MERGERS.
Q: DO STOCKHOLDERS HAVE APPRAISAL RIGHTS?
A: Under applicable law, appraisal rights are available to the holders of Life
Technologies and Dexter common stock in connection with the mergers.
Stockholders wishing to exercise appraisal rights will have the right to
receive an appraisal of the value of their shares in connection with the
mergers. Invitrogen stockholders do not have appraisal rights in connection
with the mergers.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE LIFE TECHNOLOGIES MERGER?
A: For the Life Technologies merger to occur the merger must be approved by
(1) the holders of at least 67 percent of the issued and outstanding shares
of Life Technologies common stock entitled to vote at the Life Technologies
special meeting and (2) the holders of at least a majority of the issued and
outstanding shares of Invitrogen common stock entitled to vote at the
Invitrogen special meeting. Dexter, which owns approximately 75 percent of
the outstanding shares of common stock of Life Technologies has agreed with
Invitrogen in the Dexter merger agreement that it will vote its shares of
Life Technologies in favor of the Life Technologies merger. As a result,
approval of the Life Technologies merger is assured.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE DEXTER MERGER?
A: For the Dexter merger to occur the merger must be approved by (1) the
holders of at least two-thirds of the issued and outstanding shares of
Dexter common stock entitled to vote at the Dexter special meeting and
(2) the holders of at least a majority of the issued and outstanding shares
of Invitrogen common stock entitled to vote at the Invitrogen special
meeting.
3
<PAGE>
Q: WHAT EFFECT WILL THE MERGERS HAVE ON THE PREVIOUSLY ANNOUNCED SALES BY DEXTER
OF ITS WHOLLY OWNED BUSINESSES?
A: The mergers will not affect the previously announced sale by Dexter of its
nonwovens business to Ahlstrom Paper Group Oy or its sale of its electronic
materials, adhesives and polymer systems businesses to Loctite Corporation
or the sale of its coatings business to Akzo Nobel Coatings Inc. However,
the consummation of the sales to Ahlstrom Paper Group Oy and Loctite
Corporation are conditions to Invitrogen's obligation to consummate the
mergers. The consummation of the sale of Dexter's coatings business to Akzo
Nobel is not a condition to the completion of the mergers.
Q: WHEN AND WHERE ARE THE SPECIAL MEETINGS?
A: THE INVITROGEN SPECIAL MEETING
The special meeting of Invitrogen stockholders will be held on Thursday,
September 14, 2000, at 9:00 a.m., local time, at 1600 Faraday Ave.,
Carlsbad, California 92008.
THE LIFE TECHNOLOGIES SPECIAL MEETING
The special meeting of Life Technologies stockholders will be held on
Thursday, September 14, 2000 at Noon, local time, at The University Club,
One West 54th Street, New York, New York 10019.
THE DEXTER SPECIAL MEETING
The special meeting of Dexter stockholders will be held on Thursday,
September 14, 2000 at 11:30 a.m., local time, at The University Club, One
West 54th Street, New York, New York 10019.
Q: WHO CAN VOTE AT THE SPECIAL MEETINGS?
A: THE INVITROGEN SPECIAL MEETING
Only holders of record of Invitrogen common stock as of the close of
business on August 10, 2000 will be entitled to notice of and to vote at the
Invitrogen special meeting.
THE LIFE TECHNOLOGIES SPECIAL MEETING
Only holders of record of Life Technologies common stock as of the close of
business on July 20, 2000 will be entitled to notice of and to vote at the
Life Technologies special meeting.
THE DEXTER SPECIAL MEETING
Only holders of record of Dexter common stock as of the close of business on
August 14, 2000 will be entitled to notice of and to vote at the Dexter
special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. Just send in a written revocation or a later dated, signed proxy card
before the special meetings or simply attend the special meeting and vote in
person.
Q: WHAT DO I NEED TO DO NOW?
A: PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE, SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE APPROPRIATE SPECIAL MEETING. You may vote by signing your
proxy card and mailing it in the enclosed return envelope, or you may vote
in person at the special meetings.
Q: WHAT DO I NEED TO DO NOW?
A: PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE, SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE APPROPRIATE SPECIAL MEETING. You may vote by signing your
proxy card and mailing it in the enclosed return envelope, or you may vote
in person at the special meetings.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
A: Stockholders of Invitrogen who have questions about the proposals described
in this joint proxy statement and prospectus may call Beacon Hill Partners,
Inc. at 800-775-3001.
Stockholders of Life Technologies or Dexter who have questions about the
proposals described in this joint proxy statement and prospectus may call
MacKenzie Partners, Inc. at 800-322-2885.
4
<PAGE>
SUMMARY
THIS SECTION SUMMARIZES PARTICULAR SELECTED INFORMATION ABOUT THE MERGERS
FROM THIS JOINT PROXY STATEMENT AND PROSPECTUS. TO UNDERSTAND THE MERGERS FULLY,
WE STRONGLY ENCOURAGE YOU TO READ CAREFULLY THIS ENTIRE JOINT PROXY STATEMENT
AND PROSPECTUS AND THE DOCUMENTS WHICH WE HAVE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. WE HAVE INCLUDED A COPY OF THE LIFE TECHNOLOGIES MERGER
AGREEMENT AND THE DEXTER MERGER AGREEMENT IN THIS JOINT PROXY STATEMENT AND
PROSPECTUS AS ANNEX A AND ANNEX B, RESPECTIVELY. FOR INFORMATION ON HOW TO
OBTAIN THE DOCUMENTS THAT WE HAVE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 143.
IN ADDITION TO THE OTHER INFORMATION INCLUDED OR INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT AND PROSPECTUS (INCLUDING THE MATTERS ADDRESSED IN
"CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS"), YOU SHOULD
CONSIDER THE FOLLOWING IN DETERMINING WHETHER TO VOTE IN FAVOR OF THE MERGERS.
THE COMPANIES
(See Page 35)
INVITROGEN CORPORATION
1600 Faraday Ave.
Carlsbad, California 92008
760-603-7200
Invitrogen Corporation, a Delaware corporation founded in 1987, develops,
manufactures and markets research tools in kit form and provides research
services to corporate, academic and government entities. Invitrogen's research
kits simplify and improve gene cloning, gene expression and gene analysis
techniques as well as other molecular biology activities. Our customers use
these techniques and activities to study how a cell is regulated by its genetic
material, known as functional genomics, and to search for drugs that can treat
diseases. Invitrogen believes its products allow researchers to perform these
activities more accurately, efficiently and with greater reproducibility
compared to conventional research methods. Invitrogen is headquartered in
Carlsbad, California and also has operations in Huntsville, Alabama, Groningen,
Netherlands, and Heidelberg, Germany.
For additional information about Invitrogen and its business, see "The
Mergers--The Companies--Invitrogen Corporation" and "Where You Can Find More
Information."
LIFE TECHNOLOGIES, INC.
9800 Medical Center Drive
Rockville, Maryland 20850
301-610-8000
Life Technologies, Inc., a Delaware corporation originally incorporated in
Ohio in 1915 and re-incorporated in Delaware in 1986, develops, manufactures and
supplies products used in life sciences research and commercial manufacture of
genetically engineered products. Life Technologies' products include sera, other
cell growth media, biochemicals and enzymes and other biological products
necessary for recombinant DNA procedures. These and related products and
services provided by Life Technologies are used in cellular biochemistry and
molecular biology research and in the production of genetically engineered
pharmaceuticals such as interferons, interleukins and tissue plasminogen
activator.
Life Technologies' products are sold to customers consisting of laboratories
generally associated with universities, medical research centers, and government
institutions as well as biotechnology, pharmaceutical, energy, agricultural and
chemical companies. Life Technologies sells its products principally through its
own direct sales organization which is supplemented by a network of
distributors.
For additional information about Life Technologies and its business, see
"The Mergers--The Companies--Life Technologies, Inc." and "Where You Can Find
More Information."
5
<PAGE>
DEXTER CORPORATION
One Elm Street
Windsor Locks, Connecticut 06096
860-292-7675
Dexter Corporation, a Connecticut corporation founded in 1767, is a
specialty materials company principally serving the worldwide aerospace,
electronics, food packaging and medical markets with products based on
proprietary technologies. Dexter currently has three operating segments: Life
Sciences, Nonwovens and Specialty Polymers.
On June 20, 2000, Dexter signed definitive agreements to sell its electronic
materials, adhesives and polymer systems businesses to Loctite Corporation (a
member of the Henkel Group) for $400 million in cash and its nonwoven materials
business to Ahlstrom Paper Group Oy for $275 million in cash. Completion of
these assets sales is a condition to Invitrogen's obligation to effect the
mergers. On July 28, 2000, Dexter signed a definitive agreement to sell its
coatings business to Akzo Nobel Coatings, Inc. Completion of the sale of
Dexter's coatings business is not a condition to Invitrogen's obligation to
effect the mergers.
For additional information about Dexter and its business, see "The
Mergers--The Companies--Dexter Corporation" and "Where You Can Find More
Information."
VOTE REQUIRED TO APPROVE THE PROPOSALS
(See Pages 29, 31 and 33)
INVITROGEN STOCKHOLDERS
Invitrogen stockholders will vote on:
- A proposal to approve and adopt the Life Technologies merger agreement and
the Dexter merger agreement and to approve the Life Technologies merger
and the Dexter merger. Approval of this proposal requires the affirmative
vote of the holders of at least a majority of all shares of Invitrogen
common stock that are outstanding and entitled to vote at the Invitrogen
special meeting.
- A proposal to approve and adopt an amendment to Invitrogen's Restated
Certificate of Incorporation to increase the number of shares of capital
stock Invitrogen is authorized to issue to 131,405,884 consisting of
6,405,884 shares of preferred stock and 125,000,000 shares of common
stock. Approval of this proposal requires the affirmative vote of the
holders of at least a majority of all shares of Invitrogen common stock
that are outstanding and entitled to vote at the Invitrogen special
meeting. We have included a copy of the amendment to Invitrogen's Restated
Certificate of Incorporation as Annex H to this joint proxy statement and
prospectus.
- A proposal to increase by 3,000,000 the number of shares of Invitrogen
common stock that Invitrogen may issue under Invitrogen's 1997 Stock
Option Plan to 8,485,479 shares. Approval of this proposal requires the
affirmative vote of the holders of a majority of the votes cast at the
Invitrogen special meeting. We have included a copy of Invitrogen's 1997
Stock Option Plan as Annex I to this joint proxy statement and prospectus.
- A proposal to increase by 200,000 the number of shares of Invitrogen
common stock that Invitrogen may issue under Invitrogen's 1998 Employee
Stock Purchase Plan to 550,000 shares. Approval of this proposal requires
the affirmative vote of the holders of a majority of the votes cast at the
Invitrogen special meeting. We have included a copy of Invitrogen's 1998
Employee Stock Purchase Plan as Annex J to this joint proxy statement and
prospectus.
Invitrogen directors and executive officers as a group own and are entitled
to vote approximately 18.4% of the outstanding shares of Invitrogen common
stock. Each of the directors and executive officers of Invitrogen that is
entitled to vote at the Invitrogen special meeting has indicated that he or she
intends to vote his or her shares in favor of the proposals outlined above.
6
<PAGE>
LIFE TECHNOLOGIES STOCKHOLDERS
Life Technologies stockholders will vote on a proposal to approve and adopt
the Life Technologies merger agreement and to approve the Life Technologies
merger. Approval of this proposal requires the affirmative vote of the holders
of at least 67 percent of all shares of Life Technologies common stock that are
outstanding and entitled to vote at the Life Technologies special meeting. Life
Technologies has instituted an action in the Chancery Court in the State of
Delaware, seeking a declaratory judgment that the vote required to approve the
Life Technologies merger is as described in the immediately preceding sentence.
See "The Mergers--Certain Litigation."
Dexter, the owner of approximately 75% of the outstanding shares of common
stock of Life Technologies, has agreed with Invitrogen in the Dexter merger
agreement that it will vote its shares in favor of the Life Technologies merger
proposal. As a result, approval of the Life Technologies merger is assured.
Life Technologies directors and executive officers as a group own and are
entitled to vote less than 1% of the outstanding shares of Life Technologies
common stock. Each of the directors and executive officers of Life Technologies
that is entitled to vote at the Life Technologies special meeting has indicated
that he or she intends to vote their shares in favor of the Life Technologies
merger proposal outlined above.
DEXTER STOCKHOLDERS
Dexter stockholders will vote on a proposal to approve and adopt the Dexter
merger agreement and to approve the Dexter merger. Approval of this proposal
requires the affirmative vote of the holders of at least two-thirds of all
shares of Dexter common stock that are outstanding and entitled to vote at the
Dexter special meeting.
Dexter directors and executive officers as a group own and are entitled to
vote approximately 2.4% of the outstanding shares of Dexter common stock. Each
of the directors and executive officers of Dexter that is entitled to vote at
the Dexter special meeting has indicated that he or she intends to vote his or
her shares in favor of the Dexter merger proposal outlined above.
THE MERGERS
(See Page 35)
THE LIFE TECHNOLOGIES MERGER
The Life Technologies merger agreement provides for Life Technologies to be
merged with Invitrogen. If the Life Technologies merger is approved by the Life
Technologies and Invitrogen stockholders and the Dexter merger is approved by
the Dexter and Invitrogen stockholders and the other conditions to the Life
Technologies merger are satisfied or waived, Life Technologies will be merged
with and into Invitrogen simultaneously with the Dexter merger and Invitrogen
will continue as the surviving company. After the Life Technologies merger, Life
Technologies will cease to exist.
As a result of the Life Technologies merger, each share of Life Technologies
common stock issued and outstanding immediately prior to the Life Technologies
merger will be converted into the right to elect to receive in exchange for any
one of the following:
(1) $60.00 in cash, which will be prorated so that Invitrogen will not pay
more than approximately $105 million in cash in the Life Technologies merger.
(2) $16.80 in cash and a number of shares of Invitrogen common stock
equivalent in value to $43.20 determined by a formula set forth in the Life
Technologies merger agreement.
(3) A number of shares of Invitrogen common stock equivalent in value to
$60.00 (provided that the average price of Invitrogen common stock during the
applicable pricing period is within the range of $60.00 to $80.00) determined by
a formula set forth in the Life Technologies merger agreement.
We refer to the consideration payable in the Life Technologies merger as the
"Life Technologies merger consideration." We encourage you to read the Life
Technologies
7
<PAGE>
merger agreement carefully because it is the legal document that governs the
merger of Invitrogen and Life Technologies.
THE DEXTER MERGER
The Dexter merger agreement provides for Dexter to be merged with
Invitrogen. If the Dexter merger is approved by the Dexter and Invitrogen
stockholders and the Life Technologies merger is approved by the Life
Technologies and Invitrogen stockholders and the other conditions to the Dexter
merger are satisfied or waived, Dexter will be merged with and into Invitrogen
simultaneously with the Life Technologies merger, and Invitrogen shall continue
as the surviving company. After the Dexter merger, Dexter will cease to exist.
As a result of the Dexter merger, each share of Dexter common stock issued
and outstanding immediately prior to the Dexter merger will be converted into
the right to elect to receive in exchange for any one of the following:
(1) $62.50 in cash, which will be prorated so that Invitrogen will not pay
more than approximately $410 million in cash in the Dexter merger.
(2) $17.50 in cash and a number of shares of Invitrogen common stock
equivalent in value to $45 determined by a formula set forth in the Dexter
merger agreement.
(3) A number of shares of Invitrogen common stock equivalent in value to
$62.50 (provided that the average price of Invitrogen common stock during the
applicable pricing period is within the range of $60.00 to $80.00) determined by
a formula set forth in the Dexter merger agreement.
We encourage you to read the Dexter merger agreement carefully because it is
the legal document that governs the merger of Invitrogen and Dexter.
OUR REASONS FOR THE MERGERS
(See Page 42)
We believe that the merger of Life Technologies into Invitrogen will combine
the resources of Invitrogen and Life Technologies and enable the surviving
corporation to be a stronger competitor in the life sciences and genomics
industries. We believe that the Life Technologies merger will create significant
opportunities to enhance stockholder value. We believe the Life Technologies
merger will, among other things:
- create a company with annual revenues in excess of $500 million and
approximately $100 million in operating cash flow;
- bring together a complementary blend of products, assets and capabilities
and enhance our growth opportunities; and
- make Invitrogen a premier products provider for molecular biology
research, particularly gene cloning, gene expression, and gene
analysis--key techniques in deciphering the human genome.
In addition, Dexter believes that when considered together with the
previously announced sales of Dexter's nonwovens business and its electronic
materials, adhesives and polymer systems businesses, the mergers constitute the
final step in Dexter's program to maximize value for Dexter stockholders in the
short-term.
OUR RECOMMENDATIONS TO STOCKHOLDERS
(See Page 42)
TO INVITROGEN STOCKHOLDERS:
The Invitrogen Board of Directors believes that each of the Life
Technologies merger and the Dexter merger is in your best interest and
recommends that Invitrogen stockholders vote FOR each of the merger proposals,
the proposal to amend Invitrogen's certificate of incorporation to increase the
number of shares of capital stock Invitrogen is authorized to issue, the
proposal to increase the number of shares of common stock that may be issued
under Invitrogen's 1997 Stock Option Plan and under Invitrogen's 1998 Employee
Stock Purchase Plan.
TO LIFE TECHNOLOGIES STOCKHOLDERS:
Based upon, among other things, the recommendation of the special committee
of
8
<PAGE>
directors of Life Technologies who are unaffiliated with Dexter, the Life
Technologies Board of Directors unanimously approved and adopted the Life
Technologies merger agreement and recommends that Life Technologies stockholders
vote FOR the Life Technologies merger proposal.
TO DEXTER STOCKHOLDERS:
The Dexter Board of Directors believes that the Dexter merger is in your
best interest and recommends that Dexter stockholders vote FOR the Dexter merger
proposal.
OPINIONS OF FINANCIAL ADVISORS
(See Pages 49, 53 and 59)
In connection with the mergers, the boards of directors of Invitrogen and
Dexter and the Life Technologies special committee each received an opinion from
its respective financial advisors. These opinions are addressed to the Boards of
Directors or special committee and do not constitute recommendations to any
stockholder as to the form of consideration to be elected in the mergers or any
other matters relating to the mergers.
Invitrogen received a written opinion dated July 8, 2000 from its financial
advisor Donaldson, Lufkin & Jenrette Securities Corporation, substantially to
the effect that, as of July 7, 2000 and based upon and subject to the matters
set forth in the opinion, the merger consideration to be paid by Invitrogen in
the Life Technologies merger and the Dexter merger, taken together, was fair to
Invitrogen from a financial point of view. We have included this opinion in this
joint proxy statement and prospectus as Annex C. INVITROGEN URGES ITS
STOCKHOLDERS TO READ THE OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION IN ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN.
The special committee of the Board of Directors of Life Technologies
received a written opinion dated July 7, 2000 from Credit Suisse First Boston as
to the fairness, from a financial point of view, of the consideration to be
received in the Life Technologies merger by the holders of Life Technologies
common stock, other than Dexter and its subsidiaries, officers and directors. We
have included this opinion in this joint proxy statement and prospectus as Annex
D. LIFE TECHNOLOGIES ENCOURAGES ITS STOCKHOLDERS TO READ THIS OPINION CAREFULLY
IN ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN.
The Dexter board of directors received a written opinion dated July 7, 2000
from its financial advisor, Lehman Brothers Inc., substantially to the effect
that, as of that date and based on and subject to the matters described in
Lehman Brothers' opinion, from a financial point of view, the consideration to
be received in the Dexter merger by the stockholders of Dexter was fair to those
stockholders. The full text of Lehman Brothers' written opinion, dated July 7,
2000, is attached to this joint proxy statement and prospectus as Annex E.
DEXTER ENCOURAGES ITS STOCKHOLDERS TO READ THIS OPINION CAREFULLY IN ITS
ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN.
BOARD OF DIRECTORS AND MANAGEMENT OF INVITROGEN FOLLOWING THE MERGERS
(See Page 83)
The Life Technologies merger agreement provides that two directors of Life
Technologies, J. Stark Thompson, Ph.D., the president and chief executive
officer of Life Technologies and Thomas H. Adams, Ph.D., will join the board of
directors of Invitrogen effective at the effective time of the Life Technologies
merger.
After the Life Technologies merger, Dr. Thompson will continue as the
president and chief executive officer of Life Technologies' operations, and he
will be appointed to a senior executive management position with Invitrogen.
Otherwise, the executive officers of Invitrogen immediately following the
mergers will be the same as those immediately prior to the mergers.
9
<PAGE>
ADDITIONAL INTERESTS OF OUR EXECUTIVE OFFICERS AND BOARDS OF DIRECTORS AS A
RESULT OF THE MERGERS
(See Page 83)
In addition to their interests as stockholders, the directors and executive
officers of Life Technologies and Dexter have interests in the mergers that are
different from, or in addition to, your interests. These interests exist because
of rights they may have under individual severance agreements and compensation
and benefit plans.
In addition, Invitrogen will indemnify the officers and directors of Life
Technologies and Dexter for events occurring prior to, at, or after the
effective time of the mergers.
The members of the Life Technologies and Dexter boards of directors and the
Life Technologies special committee knew about these additional interests, and
considered them when they approved the mergers.
CONDITIONS TO THE MERGERS
(See Pages 98 and 109)
CONDITIONS TO THE LIFE TECHNOLOGIES MERGER
Among other things, completion of the Life Technologies merger requires:
- approval of the Life Technologies merger by the Life Technologies and
Invitrogen stockholders;
- all of the conditions to the effectiveness of the Dexter merger agreement
being satisfied in accordance with the terms of the Dexter merger
agreement and both mergers being effective simultaneously;
- absence of any law or injunction preventing the Life Technologies merger;
- expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976;
- receipt of legal opinions from Life Technologies' and Invitrogen's
respective counsel stating that the Life Technologies merger will qualify
as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code; and
- absence of breaches of representations and warranties contained in the
Life Technologies merger agreement which have or are reasonably expected
to have a material adverse effect on the representing party.
Other than the conditions pertaining to stockholder approval, the
satisfaction of the conditions to the Dexter merger agreement, the
Hart-Scott-Rodino waiting period, and the legality of the Life Technologies
merger, Invitrogen and Life Technologies could elect to waive conditions to
their own performance and complete the Life Technologies merger. However,
Invitrogen and Life Technologies will not waive the condition relating to the
receipt of the tax opinions from counsel after the Life Technologies
stockholders and the Invitrogen stockholders approve the Life Technologies
merger unless further stockholder approval is obtained with appropriate
disclosure.
CONDITIONS TO THE DEXTER MERGER
Among other things, completion of the Dexter merger requires:
- approval of the Dexter merger by the Dexter and Invitrogen stockholders;
- all of the conditions to the effectiveness of the Life Technologies merger
agreement being satisfied in accordance with the terms of the Life
Technologies merger agreement and both mergers being effective
simultaneously;
- absence of any law or injunction preventing the Dexter merger;
- expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976;
- completion of the sale of Dexter's electronic materials, adhesives and
polymer systems businesses to Loctite Corporation and completion of the
sale of Dexter's nonwovens business to Ahlstrom Paper Group Oy;
10
<PAGE>
- receipt of legal opinions from Dexter's and Invitrogen's respective
counsel stating that the Dexter merger will qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code; and
- absence of breaches of representations and warranties contained in the
Dexter merger agreement which have or are reasonably expected to have a
material adverse effect on the representing party.
Other than the conditions pertaining to stockholder approval, the
satisfaction of the conditions to the Life Technologies merger agreement, the
Hart-Scott-Rodino waiting period, and the legality of the Dexter merger,
Invitrogen and Dexter could elect to waive conditions to their own performance
and complete the Dexter merger. However, Invitrogen and Dexter will not waive
the condition relating to the receipt of the tax opinions from counsel after the
Dexter stockholders and the Invitrogen stockholders approve the Dexter merger
unless further stockholder approval is obtained after appropriate disclosure.
RESTRICTIONS ON ALTERNATIVE TRANSACTIONS
(See Page 106)
The Dexter merger agreement limits the ability of Dexter or any of its
subsidiaries (including Life Technologies) to initiate, solicit or encourage
discussions with any third party about business combination transactions as
alternatives to the Dexter merger; PROVIDED, HOWEVER, Dexter may, in response to
an alternative proposal that Dexter concludes in good faith would provide
greater aggregate value to Dexter's stockholders, participate in discussions or
negotiations.
TERMINATION OF THE MERGER AGREEMENTS
(See Pages 99 and 110)
We may agree to terminate either merger agreement at any time prior to the
effective time of the mergers, whether before or after obtaining stockholders'
approval from our respective stockholders under specified circumstances.
We may terminate either merger agreement:
- if the mergers are not completed by October 31, 2000, except that we will
extend this deadline date to not later than December 31, 2000 in order to
permit expiration of the waiting period under the Hart-Scott-Rodino Act so
long as neither of Dexter's asset sale agreements with Loctite or Ahlstrom
has been terminated;
- if a court order or other government action prohibits either merger;
- if Dexter, Life Technologies or Invitrogen fails to obtain stockholder
approval required by law to be given by their respective stockholders;
- if either the Dexter merger or the Life Technologies merger is terminated
in accordance with its terms;
- if one of the parties materially breaches any of its representations,
warranties or obligations under the respective merger agreements such
breach makes it impossible for the non-breaching party to satisfy a
condition to its obligations; or
- if the deadline date of the merger agreements is extended beyond
October 31, 2000, at any time after the tenth business day after the
termination of either the asset purchase agreement between Dexter and
Loctite or the asset purchase agreement between Dexter and Ahlstrom.
In addition, Dexter may terminate the Dexter merger agreement in order to
enter into a transaction with a third party which the Dexter board of directors
determines provides greater aggregate value to Dexter's stockholders.
TERMINATION FEES
(See Page 111)
The Dexter merger agreement requires Dexter to pay to Invitrogen a
termination fee of $65 million if the merger agreement terminates due to
Dexter's public announcement of an alternate acquisition proposal or if Dexter's
stockholders do not approve the Dexter merger
11
<PAGE>
and Dexter consummated a sale of all or substantially all of its assets within
12 months.
The Life Technologies merger agreement does not provide for any termination
fees.
REGULATORY MATTERS
(See Page 73)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, we cannot
complete the mergers until we have furnished certain information and materials
to the Antitrust Division of the Department of Justice and the Federal Trade
Commission and a required waiting period has ended.
As with any U.S. merger, the Department of Justice and the Federal Trade
Commission have the authority to challenge the mergers on antitrust grounds
before or after the mergers are completed.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS
(See Page 67)
No ruling has been or will be sought from the Internal Revenue Service on
the United States federal income tax consequences of the mergers. Consummation
of the Dexter merger is conditioned upon (1) receipt by Dexter of an opinion
from its counsel, Skadden, Arps, Slate, Meagher & Flom LLP, to the effect that
the Dexter merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code and (2) receipt by Invitrogen of an opinion from its
counsel, Gray Cary Ware & Freidenrich LLP, to the effect that the Dexter merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code. Consummation of the Life Technologies merger is conditioned upon
(1) receipt by Life Technologies of an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, to the effect that the Life Technologies merger will qualify
as a reorganization within the meaning of Section 368(a) of the Code and
(2) receipt by Invitrogen of an opinion from its counsel, Gray Cary Ware &
Freidenrich LLP, to the effect that the Life Technologies merger will qualify as
a reorganization within the meaning of Section 368(a) of the Code. The
conditions in the Dexter merger agreement and the Life Technologies merger
agreement related to those opinions are not waivable after receipt of
stockholder approval unless further stockholder approval is received with
appropriate disclosure.
In general, assuming the mergers qualify as reorganizations within the
meaning of Section 368(a) and subject to the assumptions and qualifications set
forth under the heading "The Mergers--Material United States Federal Income Tax
Consequences of the Mergers," (1) stockholders of Dexter or Life Technologies
who have exchanged all of their Dexter common stock or Life Technologies common
stock solely for cash in the Dexter merger or the Life Technologies merger will
recognize gain or loss in an amount equal to the difference between the cash
received and that stockholder's adjusted tax basis in the shares surrendered,
(2) stockholders of Dexter or Life Technologies who exchanged all of their
Dexter common stock or Life Technologies common stock solely for Invitrogen
common stock in the Dexter merger or the Life Technologies merger will not
recognize any gain or loss as a result of the exchange, and (3) stockholders of
Dexter or Life Technologies who receive a combination of cash and Invitrogen
common stock in the Dexter merger or the Life Technologies merger will not
recognize any loss but will recognize gain, if any, on the shares so exchanged
to the extent of any cash received. See "The Mergers--Material United States
Federal Income Tax Consequences of the Mergers." TAX MATTERS ARE VERY
COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGERS TO STOCKHOLDERS WILL DEPEND
ON THEIR INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES TO THEM OF THE MERGER.
ACCOUNTING TREATMENT
(See Page 66)
The mergers will be accounted for using the purchase method of accounting as
such term is used under U.S. generally accepted accounting principles. The
purchase method accounts for a merger as an acquisition of one company by
another. See "Pro Forma Condensed Combined
12
<PAGE>
Financial Information" and "The Mergers--Accounting Treatment."
APPRAISAL RIGHTS
(See Page 112)
Under the law of Delaware, where Invitrogen is incorporated, holders of
Invitrogen common stock do not have the right to receive an appraisal of the
value of their shares of Invitrogen common stock in connection with either of
the mergers.
Under the law of Delaware, where Life Technologies is incorporated, holders
of Life Technologies common stock who comply with the applicable requirements of
Delaware law will have the right to receive an appraisal of the value of their
shares in connection with the Life Technologies merger. We have included a copy
of Delaware General Business Law--Section 262--Appraisal Rights as Annex F to
this joint proxy statement and prospectus.
Under the law of Connecticut, where Dexter is incorporated, holders of
Dexter common stock who comply with the applicable requirements of Connecticut
law will have the right to receive an appraisal of the value of their Dexter
shares in connection with the Dexter merger. We have included a copy of
Connecticut Business Corporation Act--Sections 33-855 through
33-872--Dissenter's Rights as Annex G to this joint proxy statement and
prospectus.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
(See Page 74)
Invitrogen common stock is traded on the Nasdaq National Market System under
the symbol "IVGN." Life Technologies common stock is traded on the
over-the-counter bulletin board under the symbol "LTEK.OB." Dexter common stock
is traded on the New York Stock Exchange under the symbol "DEX."
Set forth below are the closing stock prices of Invitrogen common stock,
Life Technologies common stock and Dexter common stock as listed on July 7,
2000, the last full trading day before the public announcement of the merger,
and on August 11, 2000.
<TABLE>
<CAPTION>
LIFE
INVITROGEN TECHNOLOGIES DEXTER
COMMON COMMON COMMON
STOCK STOCK STOCK
(NASDAQ) (OTC) (NYSE)
---------- ------------ --------
<S> <C> <C> <C>
July 7, 2000......... $77.13 $49.00 $48.00
August 11, 2000...... $63.69 $54.50 $57.50
</TABLE>
13
<PAGE>
FINANCIAL SUMMARY
SUMMARY OF SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION
We are providing the following selected historical financial information to
help you in analyzing the financial aspects of the mergers. This information is
only a summary and you should read it in conjunction with Invitrogen's, Life
Technologies' and Dexter's historical financial statements (and related notes)
contained in the reports that have been filed with the Securities and Exchange
Commission. See "Where You Can Find More Information."
INVITROGEN--SELECTED HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AT OR FOR THE
SIX MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................. $ 54,983 $45,243 $ 92,945 $70,593 $ 55,341 $ 44,606 $33,705
Net income........................... 2,958 4,271 9,236 4,977 2,910 2,661 2,034
Net income (loss) applicable to
common shares...................... 2,958 5,019(1) 9,984(1) 3,873 (12,740)(2) 2,490 1,924
Cash, cash equivalents and short-term
investments........................ 273,841 38,758 102,238 6,559 9,333 1,959 878
Total assets......................... 346,431 84,275 156,776 45,407 34,257 22,422 18,292
Long-term obligations, less current
portion............................ 2,782 7,538 7,324 8,095 5,807 5,838 6,060
Non-voting redeemable common stock of
Invitrogen B.V..................... -- -- -- 1,599 1,295 1,306 1,143
Convertible preferred stock.......... -- -- -- 16,141 15,242 -- --
5.5% Convertible subordinated notes 172,500 -- -- -- -- -- --
Total stockholders' equity........... 155,704 61,014 130,665 7,413 3,259 8,552 5,507
Earnings (loss) per share:
Basic................................ $ 0.13 $ 0.28 $ 0.52 $ 0.25 $ (0.86) $ 0.18 $ 0.13
Diluted.............................. $ 0.12 $ 0.24 $ 0.46 $ 0.22 $ (0.86) $ 0.16 $ 0.13
</TABLE>
------------------------
(1) 1999 includes a $1.0 million credit to stockholders' equity for an
adjustment to the beneficial conversion feature related to convertible
preferred stock.
(2) 1997 includes a $15 million charge to stockholders' equity for an adjustment
to the beneficial conversion features related to convertible preferred
stock.
14
<PAGE>
LIFE TECHNOLOGIES--SELECTED HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues..................................... $219,921 $200,295 $409,609 $364,206 $332,808 $310,339 $272,299
Research and development expenses............ 13,150 11,933 23,836 21,880 21,281 19,084 15,871
Provision for contract settlement............ -- -- 3,870 -- -- -- --
Merger related expenses...................... 889 -- -- -- -- -- --
Stockholder acquisition expenses............. -- -- 5,335 -- -- --
Gain on product line disposal................ -- -- -- -- -- 2,569 --
Operating income............................. 33,027 32,181 56,441 50,509 50,934 46,101 34,152
Net income................................... 21,146 20,248 38,277 31,303 32,235 28,700 22,277
Additions to property, plant and equipment... 7,311 19,085 29,170 18,024 23,386 42,151 11,159
Average shares outstanding:
Basic...................................... 25,037 24,946 24,954 23,687 23,171 22,881 22,601
Diluted.................................... 25,257 25,014 25,040 24,204 23,945 23,504 22,929
Cash and cash equivalents.................... 67,072 42,494 51,489 56,047 19,076 15,326 23,201
Working capital.............................. 191,660 156,767 171,760 160,403 100,927 84,196 96,761
Total assets................................. 416,685 375,828 402,971 353,587 280,274 253,931 208,744
Long-term debt............................... 3,198 3,833 3,699 -- 4,564 4,668 1,451
Stockholders' equity......................... 327,020 290,119 310,095 276,108 208,724 182,919 153,925
Per share.................................. $ 13.05 $ 11.63 $ 12.40 $ 11.07 $ 8.94 $ 7.97 $ 6.76
Shares outstanding........................... 25,065 24,947 25,004 24,941 23,351 22,951 22,773
Net income per share:
Basic...................................... $ 0.84 $ 0.81 $ 1.53 $ 1.32 $ 1.39 $ 1.25 $ 0.99
Diluted.................................... $ 0.84 $ 0.81 $ 1.53 $ 1.29 $ 1.35 $ 1.22 $ 0.97
Cash dividend declared per share............. $ -- $ 0.10 $ 0.10 $ 0.20 $ 0.18 $ 0.15 1/3 $ 0.13 1/3
</TABLE>
DEXTER--SELECTED HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................................. $530,007 $535,989 $1,041,673 $1,168,037 $1,147,055 $1,100,185 $1,088,905
Gross profit............................... 209,302 206,046 405,849 426,749 411,688 379,205 346,699
Marketing and administrative expenses...... 125,894 126,395 251,244 246,911 238,401 223,848 206,708
Research and development expenses.......... 25,021 26,179 49,711 56,656 54,021 51,504 49,375
Interest expense........................... 11,252 11,086 20,910 18,210 20,192 20,500 20,931
Income before taxes........................ 54,595 138,270 181,178 86,547 111,085 98,252 79,824
Income before minority interests........... 36,033 88,962 119,573 46,400 71,094 63,372 51,487
Net income................................. 29,827 82,579 107,499 31,704 56,427 48,722 40,578
Net Income per share--Diluted.............. $ 1.29 $ 3.58 $ 4.67 $ 1.35 $ 2.41 $ 2.03 $ 1.66
Cash dividends declared per share.......... $ 0.52 $ 0.52 $ 1.04 $ 1.02 $ 0.96 $ 0.88 $ 0.88
</TABLE>
15
<PAGE>
UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
We have presented below unaudited selected pro forma combined financial data
that reflect both the Life Technologies merger and the Dexter merger using the
purchase method of accounting. For a more detailed description of the purchase
method of accounting, see "The Mergers--Accounting Treatment." The pro forma
adjustments are preliminary and based on management's estimates of the fair
value of the assets acquired and liabilities assumed. Consequently, the amounts
reflected in the unaudited selected pro forma combined financial information are
subject to change, and the final amounts may differ substantially. In addition,
the managements of Invitrogen, Life Technologies and Dexter are in the process
of assessing and formulating their integration plans to capture synergies which
are expected to result in employee separations, elimination of duplicative
facilities, employee relocations and other restructuring actions. The final
result of these plans could result in material revisions to the estimated
liabilities reflected in the accompanying unaudited selected pro forma combined
financial information.
The unaudited selected pro forma combined income statement data for the
six-month period ended June 30, 2000 and for the year ended December 31, 1999
gives effect to the mergers as if they were completed on January 1, 1999. The
unaudited selected pro forma combined balance sheet data as of June 30, 2000
gives effect to the mergers as if they were completed on that date. The
Invitrogen unaudited pro forma combined financial information has been adjusted
to exclude the operating results of Dexter's electronic materials, adhesives and
polymer systems; nonwoven materials; and coatings businesses due to their
expected sales.
<TABLE>
<CAPTION>
AT OR FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 2000 DECEMBER 31, 1999
------------------------ ------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
Revenues................................................ $ 274,689 $502,007
Net loss................................................ (41,470) (75,613)
Net loss applicable to common shares.................... (41,470) (74,865)
Loss per share:
Basic................................................. $ (0.98) $ (1.95)
Diluted............................................... $ (0.98) $ (1.95)
Cash, cash equivalents and short-term investments....... 122,968
Total assets............................................ 1,863,642
Long-term obligations, less current portion............. 5,638
5.5% Convertible subordinated notes 172,500
Total stockholders' equity.............................. 1,465,197
</TABLE>
16
<PAGE>
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per share information for our respective
companies on a historical and equivalent combined pro forma basis. You should
read the comparative per share information below in conjunction with the
selected historical financial data on pages 14 and 15 and the unaudited pro
forma condensed combined financial statements appearing on pages F-2 through
F-64 of this joint proxy statement and prospectus. The equivalent pro forma per
share data for Life Technologies and Dexter stockholders has been determined
assuming an exchange ratio of 1.00 and 1.0417, respectively.
<TABLE>
<CAPTION>
AT OR FOR THE SIX AT OR FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
INVITROGEN--HISTORICAL
Earnings per common share:
Basic..................................................... $ 0.13 $ 0.52
Diluted................................................... $ 0.12 $ 0.46
Cash dividends declared per share........................... $ -- $ --
Book value per share at period end.......................... $ 6.58 $ 5.82
LIFE TECHNOLOGIES--HISTORICAL
Earnings per common share:
Basic..................................................... $ 0.84 $ 1.53
Diluted................................................... $ 0.84 $ 1.53
Cash dividends declared per share........................... $ -- $ 0.10
Book value per share at period end.......................... $13.05 $12.40
DEXTER--HISTORICAL
Earnings per common share:
Basic..................................................... $ 1.30 $ 4.71
Diluted................................................... $ 1.29 $ 4.67
Cash dividends declared per share........................... $ 0.52 $ 1.04
Book value per share at period end.......................... $20.69 $20.29
INVITROGEN--PRO FORMA
Earnings (loss) per common share:
Basic..................................................... $(0.98) $(1.95)
Diluted................................................... $(0.98) $(1.95)
Cash dividends declared per share........................... $ -- $ 0.12
Book value per share at period end.......................... $34.29 --
EQUIVALENT PRO FORMA PER SHARE FOR LIFE TECHNOLOGIES
STOCKHOLDERS (STOCK ELECTION)
Earnings (loss) per common share:
Basic..................................................... $(0.98) $(1.95)
Diluted................................................... $(0.98) $(1.95)
Cash dividends declared per share........................... $ -- $ 0.10
Book value per share at period end.......................... $34.29 --
EQUIVALENT PRO FORMA PER SHARE FOR DEXTER STOCKHOLDERS
(STOCK ELECTION)
Earnings (loss) per common share:
Basic..................................................... $(1.02) $(2.03)
Diluted................................................... $(1.02) $(2.03)
Cash dividends declared per share........................... $ 0.54 $ 1.08
Book value per share at period end.......................... $35.72 --
</TABLE>
17
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION INCLUDED OR INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT AND PROSPECTUS (INCLUDING THE MATTERS ADDRESSED IN
"CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS"), YOU SHOULD
CONSIDER THE FOLLOWING IN DETERMINING WHETHER TO VOTE IN FAVOR OF THE MERGERS.
IN THIS "RISK FACTORS" SECTION, THE TERMS "WE," "OUR," "US" AND SIMILAR TERMS
REFER TO INVITROGEN EITHER BEFORE OR AFTER THE MERGERS.
The operations of Invitrogen after the mergers will be subject to a number
of risks and hazards, some inherent to the life sciences industry, which may
materially and adversely affect Invitrogen's financial condition or results of
operations. The following list outlines some, but not all, of these risks and
hazards.
STOCKHOLDERS WHO MAKE A CASH ELECTION MAY RECEIVE A FORM OF CONSIDERATION
DIFFERENT FROM WHAT THEY ELECT.
Because of possible proration, holders of Dexter common stock and Life
Technologies common stock who make cash elections may not receive the entire
amount of the merger consideration in cash. If a holder elects all cash and the
available cash is oversubscribed, then the holder will receive a portion of the
merger consideration in Invitrogen common stock.
VALUE OF INVITROGEN COMMON STOCK TO BE RECEIVED IN THE MERGERS MAY FLUCTUATE;
ALL HOLDERS MAY NOT RECEIVE THE SAME VALUE.
Upon consummation of the mergers, all outstanding shares of Dexter common
stock and Life Technologies common stock will be converted into cash, Invitrogen
common stock or a combination of cash and Invitrogen common stock. Because cash
elections will be prorated if necessary so that Invitrogen will not issue more
than $410 million in cash for the Dexter merger and $105 million for the Life
Technologies merger, it is likely that all stockholders will receive some
Invitrogen common stock in the merger. If the average closing price of
Invitrogen common stock during the pricing period (the 20-trading day period
ending on the third day prior to the Dexter stockholder meeting) is less than
$60, the exchange ratio of Invitrogen shares for Dexter shares (assuming a stock
election) will be fixed at 1.0417 and the exchange ratio of Invitrogen shares
for Life Technologies shares (assuming a stock election) will be fixed at 1.0.
If the average closing price of Invitrogen during the pricing period is more
than $80, the Invitrogen/Dexter exchange ratio will be fixed at 0.7813, and the
Invitrogen/Life Technologies exchange ratio will be fixed at 0.75. In either of
those circumstances, because it is likely that all stockholders will receive
some Invitrogen common stock, it would be likely that stockholders would receive
more than $62.50 for Dexter shares and $60.00 for Life Technologies share if the
ratios become fixed at 0.7813 and 0.75, respectively, and for similar reasons
they would likely receive less than $62.50 and $60.00, respectively, if the
ratios become fixed at 1.0417 and 1.0, respectively. In either of those
circumstances, since the total value received would depend upon exactly what
portion of the merger consideration consisted of Invitrogen common stock, it is
likely that stockholders of Dexter and Life Technologies, respectively, would be
receiving consideration of different values depending upon whether they had made
a stock election, a cash election or a standard election and upon precisely what
the cash proration factor is for cash elections, if any.
The mergers are likely to occur at a date later than the date of the
stockholder meetings and there can be no assurance that the market price of
Invitrogen common stock on the date of the stockholders' meetings will reflect
the market price of Invitrogen affected by various factors including those we
discuss under "Cautionary Statement Concerning Forward-Looking Statements." For
historical and current market prices of Invitrogen, Life Technologies and Dexter
common stock, see "Comparative Per Share Market Price and Dividend Information."
18
<PAGE>
FOLLOWING THE MERGERS, WE MAY NEED TO OBTAIN ADDITIONAL FINANCING TO SUPPORT
ONGOING OPERATIONS.
In order to consummate the mergers, we will deplete our cash reserves. In
order to support ongoing operations, we may need to raise additional funds. Such
funds may not be available on favorable terms or at all. If we are unable to
raise additional funds we may be required to scale back operations which could
adversely impact our business.
FAILURE TO SUCCESSFULLY INTEGRATE LIFE TECHNOLOGIES INTO OUR OPERATIONS COULD
REDUCE THE SURVIVING CORPORATION'S PROFITABILITY.
Invitrogen signed the merger agreement with Life Technologies on July 7,
2000. Our integration of the operations of Life Technologies will require
significant efforts from each company, including the coordination of research
and development and sales and marketing efforts. Invitrogen may find it
difficult to integrate the operations of these acquired companies. Personnel may
leave or be terminated because of the mergers. Such employee terminations or
resignations or facility closures may require us to make severance or other
payments and may result in related litigation.
Life Technologies' headquarters is located in Rockville, Maryland with other
U.S. operations in Frederick, Maryland and Grand Island, New York, while
Invitrogen's U.S. headquarters and the bulk of Invitrogen's other operations are
located in Carlsbad, California. This physical separation of facilities could
make it difficult for us to communicate effectively with, manage and integrate
Life Technologies' staff and operations with the rest of Invitrogen. Such
difficulties could significantly hurt our operations and consequently our
financial results.
Invitrogen's management may have its attention diverted while trying to
integrate Life Technologies. Such diversion of management's attention or
difficulties in the transition process could have a material adverse impact on
us. If we are not able to successfully integrate the operations of Life
Technologies, our expectations of future results of operations may not be met.
Factors which will determine the success of the mergers include:
- changes in the favorable market reaction to Invitrogen's and Life
Technologies' significant products;
- competitive factors, including technological advances attained by
competitors and patents granted to, or contested by competitors, which
would result in their ability to compete against us more effectively;
- the ability of the combined company to increase sales of both companies'
products; and
- the ability of the combined company to operate efficiently and achieve
cost savings.
Even if the companies are able to integrate operations, there can be no
assurance that synergies will be achieved. The failure to achieve synergies
could have a material adverse effect on the business results of operations and
financial condition of the combined company.
FAILURE TO MANAGE GROWTH COULD IMPAIR INVITROGEN'S BUSINESS.
Invitrogen's business has grown rapidly. Our net revenues increased from
$55.3 million in 1997 to $92.9 million in 1999. During that same period we
significantly expanded our operations in the United States and in Europe. The
number of our employees has increased from approximately 272 at December 31,
1996 to approximately 713 at July 31, 2000. Following the proposed mergers, the
combined companies will have approximately 2,800 employees and approximately
$502 million in pro forma 1999 revenues.
19
<PAGE>
It is very difficult to manage this rapid growth, and our future success
depends on our ability to implement:
- research and product development;
- sales and marketing programs;
- customer support programs;
- operational and financial control systems; and
- recruiting and training of new personnel.
Invitrogen's ability to offer successfully products and services and
implement our business plan in a rapidly evolving market requires an effective
planning and management process. We expect that we will need to continue to
improve our financial and managerial controls, reporting systems and procedures,
and to expand and train our workforce worldwide.
Invitrogen has developed a high-throughput gene cloning and expression
system by scaling up our TOPO TA Cloning technology. We are commercializing this
technology under the name Invitrogenomics. Our future business growth depends in
part on the success of our Invitrogenomics products and services. In order to
succeed in this business we may need to hire additional senior managers.
Moreover, operation of Invitrogenomics may present unfamiliar management
challenges that we might not successfully address. We may not be able to locate
or hire the necessary managers or successfully address the potentially
unfamiliar management issues that may occur in Invitrogenomics or other areas of
our business.
Invitrogen's mergers with Life Technologies and Dexter will require
additional investments in operations, product research and development,
administration and sales and marketing which are significant expenses. Failure
to manage successfully and coordinate the growth of the combined company could
adversely impact our revenue and profits.
REDUCTION IN RESEARCH AND DEVELOPMENT BUDGETS AND GOVERNMENT FUNDING MAY AFFECT
SALES.
Our customers include researchers at pharmaceutical and biotechnology
companies, academic institutions and government and private laboratories.
Fluctuations in the research and development budgets of these researchers and
their organizations could have a significant effect on the demand for our
products. Research and development budgets fluctuate due to changes in available
resources, spending priorities and institutional budgetary policies. Our
business could be seriously damaged by any significant decrease in life sciences
research and development expenditures by pharmaceutical and biotechnology
companies, academic institutions or government and private laboratories.
In recent years, the United States pharmaceutical industry has undergone
substantial downsizing and consolidation. Further mergers or corporate
consolidations in the pharmaceutical industry could cause us to lose existing
customers and potential future customers, which could have a material adverse
effect on our business, financial condition and results of operations.
A significant portion of our sales have been to researchers, universities,
government laboratories and private foundations whose funding is dependent upon
grants from government agencies such as the U.S. National Institutes of Health
(NIH) and similar domestic and international agencies. Also, a portion of our
direct revenues comes from NIH Small Business Innovation Research grant funds.
Although the level of research funding has increased during the past several
years, we cannot assure you that this trend will continue. Government funding of
research and development is subject to the political process, which is
inherently fluid and unpredictable. Our revenues may be adversely affected if
our customers delay purchases as a result of uncertainties surrounding the
approval of government budget proposals. Also, government proposals to reduce or
eliminate budgetary deficits have sometimes
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included reduced allocations to the NIH and other government agencies that fund
research and development activities. A reduction in government funding for the
NIH or other government research agencies could seriously damage our business.
Our customers generally receive funds from approved grants at particular
times of the year, as determined by the federal government. In the past, grants
have been frozen for extended periods or have otherwise become unavailable to
various institutions without advance notice. The timing of the receipt of grant
funds affects the timing of purchase decisions by our customers and, as a
result, can cause fluctuations in our sales and operating results.
FAILURE TO LICENSE NEW TECHNOLOGIES COULD IMPAIR OUR NEW PRODUCT DEVELOPMENT.
Our business model of providing products to researchers working on a variety
of genetic projects requires us to develop a wide spectrum of products. To
generate broad product lines it is advantageous to sometimes license
technologies from the scientific community at large rather than depending
exclusively on our own employees. As a result, we believe our ability to
in-license new technologies from third parties is and will continue to be
critical to our ability to offer new products. More than 40% of our current
revenues are from products manufactured or sold under licenses from third
parties.
From time to time we are notified or become aware of patents held by third
parties which are related to technologies we are selling or may sell in the
future. After a review of these patents, we may decide to obtain a license for
these technologies from such third parties. We are currently in the process of
negotiating several such licenses and expect that we will also negotiate these
types of licenses in the future. There can be no assurances that we will be able
to negotiate such licenses on favorable terms, or at all.
Our ability to gain access to technologies needed for new products and
services depends in part on our ability to convince inventors that we can
successfully commercialize their inventions. We cannot assure you that we will
be able to continue to identify new technologies developed by others. Even if we
are able to identify new technologies of interest, we may not be able to
negotiate a license on favorable terms, or at all.
LOSS OF LICENSES COULD HURT OUR PERFORMANCE.
Some of our licenses do not run for the length of the underlying patent. We
may not be able to renew our existing licenses on favorable terms, or at all. If
we lose the rights to a patented technology, we may need to stop selling certain
of our products, redesign our products or lose a competitive advantage.
Potential competitors could in-license technologies that we fail to license and
potentially erode our market share for certain products.
Our licenses typically subject us to various commercialization, sublicensing
and other obligations. If we fail to comply with these requirements we could
lose important rights under a license, such as the right to exclusivity in a
certain market. In some cases, we could also lose all rights under a license. In
addition, certain rights granted under the license could be lost for reasons out
of our control. For example, the licensor could lose patent protection for a
number of reasons, including invalidity of the licensed patent. We typically do
not receive significant indemnification from a licensor against third party
claims of intellectual property infringement.
INVITROGEN'S MARKET SHARE DEPENDS ON NEW PRODUCT INTRODUCTIONS AND ACCEPTANCE.
The market for our products and services is only about fifteen years old.
Rapid technological change and frequent new product introductions are typical
for the market. For example, prepackaged kits to perform research in particular
cell lines and already-isolated genetic material are only now coming into
widespread use among researchers. Our future success will depend in part on
continuous,
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timely development and introduction of new products that address evolving market
requirements. We believe successful new product introductions provide a
significant competitive advantage because customers make an investment of time
in selecting and learning to use a new product, and are reluctant to switch
thereafter. To the extent we fail to introduce new and innovative products, we
may lose market share to our competitors, which will be difficult or impossible
to regain. An inability, for technological or other reasons, to develop
successfully and introduce new products could reduce our growth rate or damage
our business.
Invitrogen has made a substantial investment in developing the technology
underlying Invitrogenomics products and services. The products portion of
Invitrogenomics was launched commercially in 1998, and has not achieved
significant revenues. We cannot be sure that Invitrogenomics will achieve any
commercial success or that revenues will equal or exceed the cost of our
investment.
In the past Invitrogen has experienced, and is likely to experience in the
future, delays in the development and introduction of products. We cannot assure
you that we will keep pace with the rapid rate of change in life sciences
research, or that our new products will adequately meet the requirements of the
marketplace or achieve market acceptance. Some of the factors affecting market
acceptance of new products include:
- availability, quality and price relative to competitive products;
- the timing of introduction of the product relative to competitive
products;
- scientists' opinion of the product's utility;
- citation of the product in published research; and
- general trends in life sciences research.
The expenses or losses associated with unsuccessful product development
activities or lack of market acceptance of our new products could materially
adversely affect our business, operating results and financial condition.
LOSS OF KEY PERSONNEL COULD HURT OUR BUSINESS.
Invitrogen's products and services are highly technical in nature. In
general only highly qualified and trained scientists have the necessary skills
to develop and market our products and provide our services. We face intense
competition for these professionals from our competitors and our customers,
marketing partners and companies throughout our industry. Any failure on our
part to hire, train and retain a sufficient number of qualified professionals
would seriously damage our business. We do not generally enter into employment
agreements requiring these employees to continue in our employment for any
period of time.
COMPETITION IN THE LIFE SCIENCES RESEARCH MARKET COULD REDUCE SALES.
The markets for our products are very competitive and price sensitive. Many
other life science research product suppliers have greater financial,
operational, sales and marketing resources, and more experience in research and
development than we do. These and other companies may have developed or could in
the future develop new technologies that compete with our products or even
render our products obsolete. If a competitor develops superior technology or
cost-effective alternatives to our kits and other products, our business,
operating results and financial condition could be materially adversely
affected.
The market for our electrophoresis products is also subject to specific
competitive risks. This market is highly price competitive. Our competitors have
in the past and may in the future compete by
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lowering prices on certain products. In certain cases, we may respond by
lowering our prices which would reduce revenues and profits. Conversely, failure
to anticipate and respond to price competition may hurt our market share.
Invitrogen believes that customers in its markets display a significant
amount of loyalty to their initial supplier of a particular product. Therefore,
it may be difficult to generate sales to customers who have purchased products
from competitors. To the extent we are unable to be the first to develop and
supply new products, our competitive position will suffer.
DISTRIBUTORS MAY FORCE US TO USE MORE EXPENSIVE MARKETING AND DISTRIBUTION
CHANNELS.
Certain of our customers have developed purchasing initiatives to reduce the
number of vendors from which they purchase in order to lower their supply costs.
In some cases these accounts have established agreements with large
distributors, which include discounts and the distributors' direct involvement
with the purchasing process. These activities may force us to supply the large
distributors with our products at a discount to reach those customers. For
similar reasons many larger customers, including the U.S. government, have
requested and may in the future request, special pricing arrangements, including
blanket purchase agreements. These agreements may limit our pricing flexibility,
especially with respect to our electrophoresis products, which could adversely
impact our business, financial condition and results of operations. Currently,
we do not have the capability to accept and process orders through our website.
Accordingly, we may implement sales through Internet vendors. Internet sales
through third parties may negatively impact our gross margins as the commission
paid on Internet sales would be an additional cost not incurred through the use
of non-Internet vendors.
INVITROGEN RELIES ON THIRD PARTY MANUFACTURERS TO MANUFACTURE SOME OF OUR
PRODUCTS AND COMPONENTS.
Invitrogen relies on third party manufacturers to supply many of our raw
materials, product components and, in some cases, entire products. In
particular, we purchase all of the cassettes used in our pre-cast
electrophoresis gels from a single third party manufacturer. Also, we recently
contracted with an outside vendor for the production of our PowerEase instrument
products. Manufacturing problems may occur with these and other outside sources.
If such problems occur, there can be no assurance that we will be able to
manufacture our products profitably or on time.
INTERNATIONAL UNREST OR FOREIGN CURRENCY FLUCTUATIONS COULD ADVERSELY AFFECT OUR
RESULTS.
Including subsidiaries and distributors, our products are currently marketed
in more than 30 countries throughout the world. Our international revenues,
which include revenues from our Netherlands and Germany subsidiaries and export
sales, represented 31% of our product revenues in 1999 and 1998, and 27% in
1997. We expect that international revenues will continue to account for a
significant percentage of our revenues for the foreseeable future, in part
because we intend to expand our international operations.
There are a number of risks arising from our international business,
including:
- general economic and political conditions in the markets in which we
operate, including fluctuations in significant currency exchange rates;
- potential increased costs associated with overlapping tax structures;
- potential trade restrictions and exchange controls;
- more limited protection for intellectual property rights in some
countries;
- difficulties and costs associated with staffing and managing foreign
operations;
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- uncertain effects of the movement in Europe to a unified currency;
- slower growth in the European market until the unified currency is fully
adopted;
- unexpected changes in regulatory requirements;
- the difficulties of compliance with a wide variety of foreign laws and
regulations;
- longer accounts receivable cycles in certain foreign countries; and
- import and export licensing requirements.
A significant portion of our business is conducted in currencies other than
the U.S. dollar, which is our reporting currency. We recognize foreign currency
gains or losses arising from our operations in the period incurred. As a result,
currency fluctuations among the U.S. dollar and the currencies in which we do
business have caused and will continue to cause foreign currency transaction
gains and losses. We cannot predict the effects of exchange rate fluctuations
upon our future operating results because of the number of currencies involved,
the variability of currency exposures and the potential volatility of currency
exchange rates. We engage in foreign exchange hedging transactions to manage our
foreign currency exposure, but we cannot assure you that our strategies will
adequately protect our operating results from the effects of exchange rate
fluctuations.
The Asia/Pacific region in the past has experienced unstable economic
conditions and significant devaluation in its currencies. The economic situation
in the region may result in slower payments of outstanding receivable balances.
To date, this region has not represented a significant portion of our revenues.
However, to the extent the Asia/Pacific region becomes increasingly important,
or to the extent the factors affecting the region begin to affect other
geographic locations, our business could be damaged.
INABILITY TO PROTECT INVITROGEN'S TECHNOLOGIES COULD AFFECT OUR ABILITY TO
COMPETE.
Invitrogen's success depends to a significant degree upon our ability to
develop proprietary products and technologies. However, we cannot assure you
that patents will be granted on any of our patent applications. We also cannot
assure you that the scope of any of our issued patents will be sufficiently
broad to offer meaningful protection. We only have patents issued in selected
countries. Therefore, third parties can make, use and sell products covered by
our patents in any country in which we do not have patent protection. In
addition, our issued patents or patents we license could be successfully
challenged, invalidated or circumvented so that our patent rights would not
create an effective competitive barrier. The right to use our products is given
to our customers under label licenses that are for research purposes only. These
licenses could be contested and we cannot assure you that we would either be
aware of an unauthorized use or be able to enforce the restrictions in a
cost-effective manner.
DISCLOSURE OF TRADE SECRETS COULD AID OUR COMPETITORS.
Invitrogen attempts to protect our trade secrets by entering into
confidentiality agreements with third parties, our employees and consultants.
However, these agreements can be breached and, if they are, there may not be an
adequate remedy available to us. If our trade secrets become known we may lose
our competitive position.
INTELLECTUAL PROPERTY OR OTHER LITIGATION COULD HARM OUR BUSINESS.
Litigation regarding patents and other intellectual property rights is
extensive in the biotechnology industry. We are aware that patents have been
applied for and, in some cases, issued to others claiming technologies which are
closely related to ours. As a result, and in part due to the ambiguities and
evolving nature of intellectual property law, we periodically receive notices of
potential infringement of
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patents held by others. Although we have to date successfully resolved these
types of claims, we may not be able to do so in the future.
In the event of an intellectual property dispute we may be forced to
litigate. Such litigation could involve proceedings declared by the U.S. Patent
and Trademark Office or the International Trade Commission, as well as
proceedings brought by affected third parties or by Life Technologies or
Invitrogen. Intellectual property litigation can be extremely expensive, and
such expense, as well as the consequences should we not prevail, could seriously
harm our business.
If a third party claimed an intellectual property right to technology we
use, we might need to discontinue an important product or product line, alter
our products and processes, pay license fees or cease certain activities.
Although we might under these circumstances attempt to obtain a license to such
intellectual property, we may not be able to do so on favorable terms, or at
all.
In addition to intellectual property litigation, other substantial, complex
or extended litigation could result in large expenditures by us and distraction
of our management. For example, lawsuits by employees, stockholders,
collaborators or distributors could be very costly and substantially disrupt our
business. Disputes from time to time with such companies or individuals are not
uncommon and we cannot assure you that we will always be able to resolve them
out of court.
THE MARKET PRICE OF INVITROGEN STOCK COULD BE VOLATILE, WHICH MAY IMPAIR YOUR
INVESTMENT.
The market price of Invitrogen common stock has been subject to volatility
and, in the future, the market price of Invitrogen's common stock may fluctuate
substantially due to a variety of factors, including:
- quarterly fluctuations in our operating and earnings per share results;
- technological innovations or new product introductions by us or our
competitors;
- economic conditions;
- disputes concerning patents or proprietary rights;
- changes in earnings estimates by market research analysts;
- sales of common stock by existing holders;
- loss of key personnel; and
- securities class action or other litigation.
The market price for Invitrogen common stock may also be affected by our
ability to meet analysts' expectations. Any failure to meet such expectations,
even slightly, could have an adverse effect on the market price of Invitrogen
common stock. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
prices of securities issued by many companies for reasons unrelated to the
operating performance of these companies. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against that company. If similar
litigation were instituted against us, it could result in substantial costs and
a diversion of our management's attention and resources, which could have an
adverse effect on our business, results of operations and financial condition.
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OUR ANTI-TAKEOVER DEFENSE PROVISIONS MAY DETER POTENTIAL ACQUIRORS AND MAY
DEPRESS INVITROGEN'S STOCK PRICE.
Certain provisions of our certificate of incorporation, bylaws and Delaware
law could be used by our incumbent management to make it substantially more
difficult for a third party to acquire control of Invitrogen. These provisions
include the following:
- we may issue preferred stock with rights senior to those of our common
stock;
- we have a classified board of directors;
- our by-laws prohibit action by written consent by stockholders; and
- we require advance notice for nomination of directors and for stockholder
proposals.
These provisions could discourage potential takeover attempts and could
adversely affect the market price of Invitrogen common stock.
ACCIDENTS RELATED TO HAZARDOUS MATERIALS COULD ADVERSELY AFFECT OUR BUSINESS.
Portions of our operations require the controlled use of hazardous and
radioactive materials. Although we believe our safety procedures comply with the
standards prescribed by federal, state and local regulations, the risk of
accidental contamination of property or injury to individuals from these
materials cannot be completely eliminated. In the event of such an accident, we
could be liable for any damages that result, which could seriously damage our
business. Additionally, any accident could partially or completely shut down our
research and manufacturing facilities and operations.
We generate waste that must be transported to approved landfills. The
transportation and disposal of such waste meets applicable state and federal
guidelines. However, the disposal of such waste puts the company at risk for
environmental liability if, in the future, the landfills leak and are proved to
have damaged the environment.
Furthermore, in acquiring Dexter, we are assuming Dexter's environmental
liabilities. While we believe that Dexter has adequately reserved and/or has
insurance for the cost of such liabilities, we anticipate purchasing additional
insurance to safeguard the Invitrogen's assets. However, unexpected costs could
exceed stated reserves and insurance. This may require us to allocate additional
funds and other resources to address Dexter's environmental liabilities.
POTENTIAL PRODUCT LIABILITY CLAIMS COULD AFFECT OUR EARNINGS AND FINANCIAL
CONDITION.
We face a potential risk of liability claims based on our products or
services. We carry product liability insurance coverage which is limited in
scope and amount but which we believe to be adequate. We cannot assure you,
however, that we will be able to maintain this insurance at reasonable cost and
on reasonable terms. We also cannot assure you that this insurance will be
adequate to protect us against a product liability claim, should one arise.
MEMBERS OF THE MANAGEMENT AND BOARD OF DIRECTORS OF INVITROGEN, LIFE
TECHNOLOGIES AND DEXTER MAY HAVE INTERESTS IN THE MERGERS THAT DIFFER FROM THE
INTERESTS OF THEIR STOCKHOLDERS.
Certain members of Invitrogen's, Life Technologies' and Dexter's management
and boards of directors have interests in the mergers that may be different from
the interests of Invitrogen, Life Technologies and Dexter stockholders. The
mergers will give rise to entitlements and benefits for some members of
management and the boards of directors of Invitrogen, Life Technologies and
Dexter. See "Interests of Certain Persons in the Merger."
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ABSENCE OF DIVIDENDS COULD REDUCE INVITROGEN'S ATTRACTIVENESS TO INVESTORS.
Some investors favor companies that pay dividends, particularly in market
downturns. We have never declared or paid any cash dividends on our common
stock. We currently intend to retain any future earnings for funding growth and,
therefore, we do not currently anticipate paying cash dividends on our common
stock in the foreseeable future.
THERE ARE OTHER RISKS RELATED TO LIFE TECHNOLOGIES' AND DEXTER'S ONGOING
OPERATIONS.
There are additional risks related to the ongoing operation of Life
Technologies and Dexter that differ in some respects from the risks we have
faced previously. These risks include:
- changes in pricing or availability of fetal bovine serum;
- the possibility of adverse rulings by or adverse developments in
negotiations with the government;
- litigation risks;
- potential environmental liabilities; and
- other risks detailed in the filings by Dexter and Life Technologies with
the Securities and Exchange Commission.
We can not assure you that we will be able to manage these risks in such a
manner as will not adversely affect our business.
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CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
In this document (and in documents that are incorporated by reference), we
have made forward-looking statements. These statements are based on our
estimates and assumptions and are subject to a number of risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of each of our companies (see
the following captions: "Summary," "The Mergers--Reasons for the Mergers and
Recommendations of the Boards," "--Opinion of Invitrogen's Financial Advisor"
and "--Opinion of Financial Advisor to the Life Technologies Special Committee"
and "--Opinion of Dexter's Financial Advisor"). Forward-looking statements also
include those preceded or followed by the words "anticipates," "believes,"
"estimates," "expects," "hopes," "targets" or similar expressions. For each of
these statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
The future results of Invitrogen could be affected by subsequent events and
could differ materially from those expressed in the forward-looking statements.
If future events and actual performance differ from our assumptions, our actual
results could vary significantly from the performance projected in the
forward-looking statements.
You should understand that the following important factors, along with those
discussed elsewhere in this joint proxy statement and prospectus and in the
documents which we incorporate by reference, could affect the future results of
Invitrogen and could cause those results to differ materially from those
expressed in the forward-looking statements:
- The risks and other factors described under the caption "Risk Factors" in
this joint proxy statement and prospectus;
- General economic and business conditions;
- Industry trends;
- Our assumptions about customer acceptance, overall market penetration and
competition from providers of alternative products and services;
- Our actual funding requirements; and
- Availability, terms and development of capital.
Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
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THE INVITROGEN SPECIAL MEETING
This joint proxy statement and prospectus is being furnished in connection
with the solicitation of proxies from the holders of Invitrogen common stock by
the Invitrogen board of directors relating to the Life Technologies merger
proposal, the Dexter merger proposal and other matters to be voted upon at the
Invitrogen special meeting and at any adjournment or postponement of the
meeting. This joint proxy statement and prospectus is also a prospectus for
shares of Invitrogen common stock to be issued in the Life Technologies merger
and the Dexter merger. We mailed this joint proxy statement and prospectus to
stockholders beginning August 15, 2000. You should read this joint proxy
statement and prospectus carefully before voting your shares.
WHEN AND WHERE THE INVITROGEN SPECIAL MEETING WILL BE HELD.
The Invitrogen special meeting will be held at 1600 Faraday Ave., Carlsbad,
California 92008, on Thursday, September 14, 2000 starting at 9:00 a.m., local
time.
WHAT WILL BE VOTED UPON
At the Invitrogen special meeting, you will be asked to consider and vote
upon the following items:
- to approve and adopt each of the Agreement and Plan of Merger dated as of
July 7, 2000 between Invitrogen Corporation and Life Technologies, and the
Agreement and Plan of Merger dated as of July 7, 2000 between Invitrogen
Corporation and Dexter Corporation and to approve the Life Technologies
merger and the Dexter merger and the other transactions described in the
respective merger agreements;
- to consider and vote on a proposal to amend Invitrogen Corporation's
Restated Certificate of Incorporation to increase the authorized capital
stock to 131,405,884 consisting of 6,405,884 shares of preferred stock and
125,000,000 shares of common stock;
- to consider and vote on a proposal to increase by 3,000,000 the number of
shares Invitrogen may issue under Invitrogen's 1997 Stock Option Plan to
8,485,479;
- to consider and vote on a proposal to increase by 200,000 the number of
shares of Invitrogen common stock that Invitrogen may issue under
Invitrogen's 1998 Employee Stock Purchase Plan to 550,000; and
- such other business as properly may come before the Invitrogen special
meeting, or any adjournment or postponement of the meeting.
ONLY INVITROGEN STOCKHOLDERS OF RECORD AS OF AUGUST 10, 2000 ARE ENTITLED TO
VOTE
Invitrogen stockholders who hold their shares of record as of the close of
business on August 10, 2000 are entitled to notice of and to vote at the
Invitrogen special meeting. On the record date, there were approximately
23.7 million shares of Invitrogen common stock outstanding and entitled to vote
at the Invitrogen special meeting.
MAJORITY OF OUTSTANDING SHARES MUST BE REPRESENTED FOR A VOTE TO BE TAKEN
In order to have a quorum, a majority of the shares of Invitrogen common
stock that are outstanding and entitled to vote at the Invitrogen special
meeting must be represented in person or by proxy. If a quorum is not present, a
majority of shares that are represented may adjourn or postpone the Invitrogen
special meeting.
VOTE REQUIRED FOR APPROVAL
The proposal relating to the Life Technologies merger and the Dexter merger
and the proposal to amend Invitrogen's certificate of incorporation to increase
the number of shares of common stock Invitrogen may issue must be approved by
the affirmative vote of at least a majority of the shares of the issued and
outstanding shares of Invitrogen common stock that are voted at the Invitrogen
special
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meeting. The proposals to approve the amendment to increase the number of shares
of Invitrogen common stock which may be issued under Invitrogen's 1997 Stock
Option Plan and its 1998 Employee Stock Purchase Plan must be approved by the
holders of a majority of the votes cast at the Invitrogen special meeting. Each
share of Invitrogen common stock is entitled to cast one vote. As of the
Invitrogen record date, Invitrogen directors and executive officers owned and
were entitled to vote about 4.3 million shares (or about 18.4%) of Invitrogen
common stock.
VOTING YOUR SHARES AND CHANGING YOUR VOTE BY REVOKING YOUR PROXY
VOTING YOUR SHARES
The Invitrogen Board of Directors is soliciting proxies from the Invitrogen
stockholders. This will give you the opportunity to vote at the Invitrogen
special meeting. When you deliver a valid proxy, the shares represented by that
proxy will be voted in accordance with your instructions.
To grant your proxy by mail, please complete your proxy card, sign, date and
return it in the enclosed envelope. To be valid, a returned proxy card must be
signed and dated. If you attend the Invitrogen special meeting in person, you
may vote your shares by completing a ballot at the meeting.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
You may revoke your proxy at any time before the polls close at the
Invitrogen special meeting. You may revoke your proxy by delivering notice in
writing to the Secretary of Invitrogen, granting a later-dated proxy or
appearing in person at the Invitrogen special meeting. You will not revoke your
proxy by simply attending the Invitrogen special meeting unless you complete a
ballot.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted as recommended by the Invitrogen Board of Directors. A valid proxy also
gives the individuals named as proxies authority to vote in their discretion
when voting the shares on any other matters that are properly presented for
action at the Invitrogen special meeting. A properly executed proxy marked
"ABSTAIN" will not be voted. However, it may be counted to determine whether
there is a quorum present at the Invitrogen special meeting. Broker non-votes
(I.E., shares held by brokers or nominees which are represented at a meeting but
with respect to which the broker or nominee is not empowered to vote on a
particular proposal) will be counted for purposes of determining whether there
is a quorum at the Invitrogen special meeting. Abstentions and broker non-votes
will not be counted as votes cast FOR or AGAINST the Dexter and Life
Technologies merger proposals.
CONFIDENTIAL VOTING
Invitrogen keeps all proxies, ballots and tabulations that identify the vote
of individual stockholders confidential if a stockholder elects on the proxy to
have such vote kept confidential, except as necessary to meet legal
requirements, in a contested proxy solicitation or where stockholders submit
consents with their proxies.
COST OF SOLICITATION
Invitrogen will pay the cost of soliciting Invitrogen proxies. However,
Invitrogen, Life Technologies and Dexter will share equally the cost of printing
this joint proxy statement and prospectus. In addition to solicitation by mail,
telephone or other means, Invitrogen will make arrangements with brokerage
houses and other custodians, nominees and fiduciaries to send proxy material to
beneficial owners. Invitrogen will, upon request, reimburse these institutions
for their reasonable expenses. Invitrogen has retained, for a fee of $15,000
plus expenses, Beacon Hill Partners, Inc. to aid in the solicitation of proxies
and to verify certain records related to the solicitation.
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THE LIFE TECHNOLOGIES SPECIAL MEETING
This joint proxy statement and prospectus is being furnished in connection
with the solicitation of proxies from the holders of Life Technologies common
stock by the Life Technologies board of directors relating to the Life
Technologies merger proposal and other matters to be voted upon at the Life
Technologies special meeting and at any adjournment or postponement of the
meeting. This joint proxy statement and prospectus is also a prospectus for
shares of Invitrogen common stock to be issued in the Life Technologies merger.
Life Technologies mailed this joint proxy statement and prospectus to
stockholders beginning August 15, 2000. You should read this joint proxy
statement and prospectus carefully before voting your shares.
WHEN AND WHERE THE LIFE TECHNOLOGIES SPECIAL MEETING WILL BE HELD
The Life Technologies special meeting will be held at The University Club,
One West 54th Street, New York, New York 10019, on Thursday, September 14, 2000,
starting at 12:00 noon, local time.
WHAT WILL BE VOTED UPON
At the Life Technologies special meeting, you will be asked to consider and
vote upon the following items:
- to consider and vote on a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of July 7, 2000, between Life Technologies and
Invitrogen Corporation; and
- such other business as properly may come before the Life Technologies
special meeting, or any adjournment or postponement of the meeting.
ONLY LIFE TECHNOLOGIES COMMON STOCKHOLDERS OF RECORD AS OF JULY 20, 2000 ARE
ENTITLED TO VOTE
Life Technologies common stockholders who hold their shares of record as of
the close of business on July 20, 2000, are entitled to notice of and to vote at
the Life Technologies special meeting. On the record date, there were
approximately 25 million shares of Life Technologies common stock outstanding
and entitled to vote at the Life Technologies special meeting.
MAJORITY OF OUTSTANDING SHARES MUST BE REPRESENTED FOR A VOTE TO BE TAKEN
In order to have a quorum, a majority of Life Technologies common stock that
are outstanding and entitled to vote at the Life Technologies special meeting
must be represented in person or by proxy. If a quorum is not present, a
majority of shares that are represented may adjourn or postpone the Life
Technologies special meeting.
VOTE REQUIRED FOR APPROVAL
The Life Technologies merger proposal must be approved by the affirmative
vote of at least 67% of the shares of common stock that are outstanding and
entitled to vote at the Life Technologies special meeting. Each share of Life
Technologies common stock is entitled to cast one vote. As of the Life
Technologies record date, Life Technologies directors and executive officers
owned and were entitled to vote 8,985 shares of Life Technologies common stock
which is less than 1% of the outstanding Life Technologies shares. Dexter owns
approximately 75% of the outstanding Life Technologies shares and has agreed to
vote all of those shares in favor of the approval and adoption of the Life
Technologies merger agreement. As a result, the approval of the Life
Technologies merger is assured. Life Technologies has instituted an action in
the Chancery Court in the State of Delaware seeking a declaratory judgment that
the vote required to approve the Life Technologies merger is as described in the
first sentence of this paragraph. See "The Mergers--Certain Litigation."
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VOTING YOUR SHARES AND CHANGING YOUR VOTE BY REVOKING YOUR PROXY
VOTING YOUR SHARES
The Life Technologies board of directors is soliciting proxies from the Life
Technologies stockholders. This will give you the opportunity to vote at the
Life Technologies special meeting. When you deliver a valid proxy, the shares
represented by that proxy will be voted in accordance with your instructions. If
you do not vote by proxy or attend the Life Technologies special meeting and
vote in person, it will have the same effect as voting against the Life
Technologies merger proposal.
To grant your proxy by mail, please complete your proxy card, sign, date and
return it in the enclosed envelope. To be valid, a returned proxy card must be
signed and dated. If you attend the Life Technologies special meeting in person,
you may vote your shares by completing a ballot at the meeting.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
You may revoke your proxy at any time before the polls close at the Life
Technologies special meeting. You may revoke your proxy by delivering notice in
writing to the Secretary of Life Technologies, granting a later-dated proxy or
appearing in person at the Life Technologies special meeting. You will not
revoke your proxy by simply attending the Life Technologies special meeting
unless you complete a ballot.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted as recommended by the Life Technologies board of directors. A valid proxy
also gives the individuals named as proxies authority to vote in their
discretion when voting the shares on any other matters that are properly
presented for action at the Life Technologies special meeting. A properly
executed proxy marked "ABSTAIN" will not be voted. However, it may be counted to
determine whether there is a quorum present at the Life Technologies special
meeting. Accordingly, since the affirmative vote of 67 percent of the shares
outstanding and entitled to vote at the Life Technologies special meeting is
required to approve the Life Technologies merger proposal, a proxy marked
"ABSTAIN" will have the effect of a vote against this proposal. Broker non-votes
(I.E., shares held by brokers or nominees which are represented at a meeting but
with respect to which the broker or nominee is not empowered to vote on a
particular proposal) will be counted for purposes of determining whether there
is a quorum at the Life Technologies special meeting.
COST OF SOLICITATION
Life Technologies will pay the cost of soliciting Life Technologies proxies.
However, Dexter, Life Technologies and Invitrogen will share equally the cost of
printing this joint proxy statement and prospectus. In addition to solicitation
by mail, telephone or other means, Life Technologies will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to send proxy
material to beneficial owners. Life Technologies will, upon request, reimburse
these institutions for their reasonable expenses. MacKenzie Partners will aid in
the solicitation of proxies and will verify certain records related to the
solicitation.
LIFE TECHNOLOGIES STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
WITH THE PROXY CARDS. SOON AFTER THE MERGERS ARE COMPLETED, IF YOU ELECT TO
RECEIVE INVITROGEN SHARES AND/OR CASH AS PART OF YOUR CONSIDERATION FOR THE YOUR
LIFE TECHNOLOGIES SHARES, YOU WILL RECEIVE WRITTEN INSTRUCTIONS ON HOW TO
EXCHANGE YOUR LIFE TECHNOLOGIES STOCK CERTIFICATES FOR SHARES OF INVITROGEN
AND/OR CASH.
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THE DEXTER SPECIAL MEETING
This joint proxy statement and prospectus is being furnished in connection
with the solicitation of proxies from the holders of Dexter common stock by the
Dexter board of directors relating to the Dexter merger proposal and other
matters to be voted upon at the Dexter special meeting and at any adjournment or
postponement of the meeting. This joint proxy statement and prospectus is also a
prospectus for shares of Invitrogen common stock to be issued in the Dexter
merger. Dexter mailed this joint proxy statement and prospectus to stockholders
beginning August 15, 2000. You should read this joint proxy statement and
prospectus carefully before voting your shares.
WHEN AND WHERE THE DEXTER SPECIAL MEETING WILL BE HELD
The Dexter special meeting will be held at The University Club, One West
54th Street, New York, New York 10019, on September 14, 2000, starting at 11:30
a.m., local time.
WHAT WILL BE VOTED UPON
At the Dexter special meeting, you will be asked to consider and vote upon
the following items:
- to consider and vote upon a proposal to approve and adopt an Agreement and
Plan of Merger dated as of July 7, 2000, between Dexter Corporation and
Invitrogen Corporation and to approve the merger with Invitrogen and the
other transactions described in the Dexter merger agreement; and
- such other matters as properly may come before the Dexter special meeting
or any adjournment or postponement of the meeting.
ONLY DEXTER COMMON STOCKHOLDERS OF RECORD AS OF AUGUST 14, 2000 ARE ENTITLED TO
VOTE
Dexter common stockholders who hold their shares of record as of the close
of business on August 14, 2000, are entitled to notice of and to vote at the
Dexter special meeting. On the record date, there were approximately 23 million
shares of Dexter common stock outstanding and entitled to vote at the Dexter
special meeting.
MAJORITY OF OUTSTANDING SHARES MUST BE REPRESENTED FOR A VOTE TO BE TAKEN
In order to have a quorum, a majority of Dexter common stock that are
outstanding and entitled to vote at the Dexter special meeting must be
represented in person or by proxy. If a quorum is not present, a majority of
shares that are represented may adjourn or postpone the Dexter special meeting.
VOTE REQUIRED FOR APPROVAL
The Dexter merger proposal must be approved by the affirmative vote of the
holders of at least two-thirds of Dexter common stock that are outstanding and
entitled to vote at the Dexter special meeting. Each share of Dexter common
stock is entitled to cast one vote. As of the Dexter record date, Dexter
directors and executive officers owned and were entitled to vote 559,803 shares
(or 2.4%) of Dexter common stock.
VOTING YOUR SHARES AND CHANGING YOUR VOTE BY REVOKING YOUR PROXY
VOTING YOUR SHARES
The Dexter board of directors is soliciting proxies from the Dexter
stockholders. This will give you the opportunity to vote at the Dexter special
meeting. When you deliver a valid proxy, the shares represented by that proxy
will be voted in accordance with your instructions. If you do not vote by
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proxy or attend the Dexter special meeting and vote in person, it will have the
same effect as voting against the Dexter merger proposal.
To grant your proxy by mail, please complete your proxy card, sign, date and
return it in the enclosed envelope. To be valid, a returned proxy card must be
signed and dated. If you attend the Dexter special meeting in person, you may
vote your shares by completing a ballot at the meeting.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
You may revoke your proxy at any time before the polls close at the Dexter
special meeting. You may revoke your proxy by delivering notice in writing to
the Secretary of Dexter, granting a later-dated proxy or appearing in person at
the Dexter special meeting. You will not revoke your proxy by simply attending
the Dexter special meeting unless you complete a ballot.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted as recommended by the Dexter board of directors. A valid proxy also gives
the individuals named as proxies authority to vote in their discretion when
voting the shares on any other matters that are properly presented for action at
the Dexter special meeting. A properly executed proxy marked "ABSTAIN" will not
be voted. However, it may be counted to determine whether there is a quorum
present at the Dexter special meeting. Accordingly, since the affirmative vote
of two-thirds of the shares outstanding and entitled to vote at the Dexter
special meeting is required to approve the Dexter merger proposal, a proxy
marked "ABSTAIN" will have the effect of a vote against this proposal. Broker
non-votes (I.E., shares held by brokers or nominees which are represented at a
meeting but with respect to which the broker or nominee is not empowered to vote
on a particular proposal) will be counted for purposes of determining whether
there is a quorum at the Dexter special meeting. The New York Stock Exchange
rules do not permit brokers and nominees to vote the shares that they hold
beneficially either for or against the Dexter proposal without specific
instructions from the person who beneficially owns those shares. Therefore, if
your shares are held by a broker or other nominee and you do not give them
instructions on how to vote your shares, this will have the same effect as
voting against the Dexter merger proposal.
COST OF SOLICITATION
Dexter will pay the cost of soliciting Dexter proxies. However, Dexter, Life
Technologies and Invitrogen will share equally the cost of printing this joint
proxy statement and prospectus. In addition to solicitation by mail, telephone
or other means, Dexter will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial
owners. Dexter will, upon request, reimburse these institutions for their
reasonable expenses. Dexter has retained MacKenzie Partners to aid in the
solicitation of proxies and will verify certain records related to the
solicitation.
DEXTER STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES WITH THE
PROXY CARDS. SOON AFTER THE MERGERS ARE COMPLETED, IF YOU SO ELECT TO RECEIVE
INVITROGEN SHARES AND/OR CASH AS PART OF YOUR CONSIDERATION FOR YOUR DEXTER
SHARES, YOU WILL RECEIVE WRITTEN INSTRUCTIONS ON HOW TO EXCHANGE YOUR DEXTER
STOCK CERTIFICATES FOR SHARES OF INVITROGEN AND/OR CASH.
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THE MERGERS
THE COMPANIES
INVITROGEN CORPORATION
Invitrogen Corporation, a Delaware corporation founded in 1987, develops,
manufactures and markets research tools in kit form and provides research
services to corporate, academic and government entities. Invitrogen's research
kits simplify and improve gene cloning, gene expression and gene analysis
techniques as well as other molecular biology activities. Our customers use
these techniques and activities to study how a cell is regulated by its genetic
material, known as functional genomics, and to search for drugs that can treat
diseases. Invitrogen believes its products allow researchers to perform these
activities more accurately, efficiently and with greater reproducibility
compared to conventional research methods. Invitrogen is headquartered in
Carlsbad, California and also has operations in Huntsville, Alabama, Groningen,
Netherlands, and Heidelberg, Germany.
Invitrogen has its principal executive offices at 1600 Faraday Ave.,
Carlsbad, California (telephone number 760-603-7200).
LIFE TECHNOLOGIES, INC.
Life Technologies, Inc., a Delaware corporation, originally incorporated in
Ohio in 1915, re-incorporated in Delaware in 1986, develops, manufactures and
supplies more than 10,000 products used in life sciences research and commercial
manufacture of genetically engineered products. Life Technologies' products
include sera, other cell growth media, biochemicals and enzymes and other
biological products necessary for recombinant DNA procedures. These and related
products and services provided by Life Technologies are used in cellular
biochemistry and molecular biology research and in the production of genetically
engineered pharmaceuticals such as interferons, interleukins and tissue
plasminogen activator.
Life Technologies' products are sold to more than 20,000 customers
consisting of laboratories generally associated with universities, medical
research centers and government institutions as well as biotechnology,
pharmaceutical, energy, agricultural and chemical companies. Life Technologies
sells its products principally through its own direct sales organization which
is supplemented by a network of distributors.
Life Technologies has its principal executive offices at 9800 Medical Center
Drive, Rockville, Maryland (telephone number 301-610-8000).
DEXTER CORPORATION
Dexter Corporation, a Connecticut corporation founded in 1767, is a
specialty materials company principally serving the worldwide aerospace,
electronics, food packaging and medial markets with products based on
proprietary technologies. Dexter has three operating segments: Life Sciences,
Nonwovens and Specialty Polymers.
On June 20, 2000 Dexter signed binding, definitive agreements to sell its
electronic materials, adhesives and polymer systems businesses to Loctite
Corporation (a member of the Henkel Group) for $400 million in cash and its
nonwoven materials business to Ahlstrom Paper Group Oy for $275 million in cash.
Completion of these assets sales is a condition to the closing of the Invitrogen
mergers. On July 28, 2000 Dexter signed a binding definitive agreement to sell
its coatings business to Akzo Nobel Coatings Inc. Completion of this asset sale
is not a condition to the closing of the mergers.
Dexter has its principal executive offices at One Elm Street, Windsor Locks,
Connecticut (telephone number 860-292-7675).
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BACKGROUND OF THE MERGERS
In mid-December 1999, International Specialty Products Inc., hereafter
referred to as ISP, began a unilateral, unsolicited effort to acquire control of
Dexter. On December 14, 1999, ISP sent a letter to Dexter proposing to acquire
Dexter for $45 per share in cash, subject to execution of a mutually acceptable
definitive acquisition agreement. ISP's proposal stated that ISP would be
willing to pay more if Dexter were to provide ISP with information that
justified an increased price. Following careful consideration of ISP's $45 per
share proposal with its financial and legal advisors, on December 23, 1999, the
Dexter Board of Directors unanimously concluded that ISP's proposal was both
inadequate and contrary to the best interests of the stockholders of Dexter.
Accordingly, the Dexter Board rejected ISP's proposal.
On January 19, 2000, Dexter wrote a letter to Life Technologies with copies
to each member of ISP's 13D Group which included ISP. Dexter's letter stated
that: "We propose a merger with Life Technologies, Inc. for the purpose of
making Life Technologies a wholly owned subsidiary of Dexter. In the merger
Dexter will pay every stockholder $49.00 in cash for each of their LTI shares."
ISP rejected Dexter's proposal, and, accordingly, Life Technologies took no
action with respect to Dexter's proposal.
On January 27, 2000, ISP announced its intention to present a series of
proposals at Dexter's 2000 Annual Meeting (including a slate of 3 nominees to
replace Dexter's nominees for election to the Board, proposals to increase the
size of Dexter's Board and additional nominees to fill the vacancies, and
proposals with respect to Dexter's rights plan) and to solicit proxies in favor
of its proposals.
Following a special meeting of the Dexter Board of Directors on February 8,
2000, Dexter offered both ISP and its financial advisor, Chase Securities Inc.,
the opportunity to review confidential business information for the purpose of
determining whether ISP would be willing to increase its $45 per share proposal
to acquire Dexter.
Shortly thereafter, representatives of Lehman Brothers Inc., Dexter's
financial advisor, contacted Invitrogen to discuss the possibility of
Invitrogen's making a bid to acquire all of Dexter on a preemptive basis. In the
course of the discussion, Invitrogen indicated that it was primarily interested
in Dexter's life sciences assets, specifically Dexter's 75% ownership interest
in Life Technologies, and that it had itself identified Life Technologies as an
attractive growth initiative and had already begun to consider how a business
combination could proceed in light of its desire not to acquire Dexter's
chemical assets.
Dexter subsequently entered into confidentiality agreements with ISP and
Invitrogen to permit those entities to commence due diligence investigations of
Dexter and Life Technologies. On February 26, 2000, Dexter's management made a
presentation regarding Dexter's businesses to representatives of Invitrogen and
representatives of Donaldson, Lufkin & Jenrette Securities Corporation (referred
to in this joint proxy statement and prospectus as DLJ), Invitrogen's financial
advisor. DLJ indicated that Invitrogen had preliminarily identified a possible
partner to assist it with making a joint bid which would provide for the
partner's simultaneous acquisition of Dexter's wholly owned chemical assets.
On February 28, 2000, the Dexter Board of Directors authorized management,
together with its financial advisor, Lehman Brothers, to explore all strategic
alternatives available to Dexter to maximize stockholder value in the
short-term, including a merger or sale of the company, a financial restructuring
or a spin-off or sale of one or more of Dexter's businesses. As part of this
process, representatives of Lehman Brothers contacted numerous third parties who
might be potentially interested in acquiring the entire company or one or more
of its constituent businesses.
Shortly after Dexter's February 28 announcement, Lehman Brothers provided
Invitrogen and numerous other potential interested parties that entered into
confidentiality agreements with Dexter various due diligence materials to enable
them to make preliminary indications of interest. Invitrogen
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and the other parties interested in participating in Dexter's sale process were
advised by Lehman Brothers that preliminary indications of interest were to be
submitted on March 24, 2000 and that indications of interest for the purchase of
Dexter as a whole would be given preference to those contemplating the purchase
of one more or more of Dexter's businesses.
On March 23, 2000, after the close of business, ISP delivered a letter to
Dexter stating the following:
"Based upon our evaluation to date, ISP's Board has authorized an
increase in the price of ISP's cash merger proposal to $50 per
share. If we receive the proper cooperation from Dexter in
connection with the balance of the due diligence process and
Dexter can demonstrate that the value of the Company would justify
a higher price, we would consider increasing this price as well.
"You should know that ISP has, on this date, executed a commitment
letter in which Chase has committed to raise all the financing
necessary for the acquisition, a copy of which I have attached.
You should note that Chase's commitment for $1.825 billion
contains provision for a tender facility so that Dexter
stockholders can receive cash payments promptly."
On March 24, 2000, Dexter received several indications of interest in
acquiring the entire company, including an indication of interest from
Invitrogen. Dexter also received multiple indications of interest in Dexter's
constituent businesses. In light of the strong indications of interest in
acquiring all of Dexter, Dexter's Board of Directors determined that Dexter
should devote its resources and attention to those bids in the first instance.
During the course of the next six weeks, Dexter and its advisors worked with
each of the prospective bidders for the whole company to develop definitive
acquisition proposals for Dexter as well as the outstanding public minority
shares of Life Technologies on mutually acceptable terms and conditions. Except
for ISP, these bidders were principally life sciences-oriented companies that
were interested in a tax-free stock merger transaction. The decline in the
public equity markets in the weeks following March 24, 2000 adversely affected
the trading prices of the bidders' equity securities and, accordingly, the value
of the consideration they had offered. Principally as a result of this
development, on May 17, 2000, Dexter announced, among other things, that its
Board of Directors had authorized management to pursue the sale of Dexter's
wholly owned businesses--nonwoven materials, electronic materials and adhesive
and coating systems. Shortly thereafter, Lehman Brothers re-contacted those
bidders for Dexter's wholly owned businesses that had submitted the strongest
indications of interest.
In mid-April representatives of Dexter and its counsel met with the four
directors of Life Technologies not affiliated with Dexter. Generally, the
purpose of these meetings was to brief the unaffiliated Life Technologies
directors concerning the process in which Dexter was engaged and possible
alternative implications it might have for Life Technologies and its minority
stockholders. In the course of those discussions, the unaffiliated Life
Technologies directors inquired about and expressed an interest in retaining
Wachtell, Lipton, Rosen & Katz, the former counsel for Life Technologies' 1998
special committee, to represent the unaffiliated Life Technologies directors
individually. The representatives of Dexter and its counsel agreed this would be
an appropriate course of action. Accordingly, Life Technologies retained that
counsel to represent the unaffiliated Life Technologies directors individually.
During the time from mid-May to mid-June, the prospective bidders for
Dexter's wholly owned businesses conducted comprehensive due diligence
investigations, including meetings with management representatives. In addition,
during the first week of June, counsel to Dexter circulated forms of asset
acquisition agreements to the prospective purchasers. Each interested party was
requested to submit its final bid prior to the close of business on June 9,
2000. The requested bid was to include proposed
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changes to the form of asset acquisition agreement that had previously been
distributed to all prospective purchasers.
On June 10, 2000, the Dexter Board of Directors met telephonically with
members of management and its financial and legal advisors to review and
consider the bids received the prior evening. The Dexter Board authorized
management and its advisors to proceed as promptly as practicable to negotiate
definitive acquisition agreements for the sale of Dexter's wholly owned
businesses. The Board initially selected five different parties to participate
in such negotiations.
During the week of June 12, 2000 a representative of Lehman Brothers
received an inquiry from a representative of one of the parties that had
previously expressed an interest in acquiring all of Dexter in a "pooling of
interests" transaction but had not submitted a proposal at the time they had
been due. The representative said that his client (of which he was a Board
member) had a renewed interest in attempting to structure a transaction that
would be acceptable both to Dexter and to ISP and that the representative
believed that a transaction in which Dexter stockholders would receive $48 in
shares of the third party and Life Technologies stockholders would receive $50
in shares of the third party was both possible and likely to be acceptable to
ISP. After consultation with Dexter and its legal advisor, Lehman Brothers
informed the party that Dexter was willing to waive the other party's
confidentiality agreement obligations (as well as ISP's confidentiality
agreement obligations) to permit ISP and the other party to structure a joint
proposal to Dexter. However, no proposal was made.
On or about June 19, 2000 the same third party representative renewed
contact with Lehman Brothers and reiterated his belief that a transaction could
be developed that would be acceptable to ISP, of which he said he was confident.
As part of this contact, the third party representative suggested that his
client would be willing to pursue a "pooling" transaction in which Dexter
stockholders would receive $50 in shares of the third party and Life
Technologies stockholders would receive $55 in shares of the third party. Once
again the representative was informed that Dexter would welcome a joint proposal
from his client and ISP and that it would waive any limitations in their
confidentiality agreements necessary to facilitate discussions leading to such a
proposal. No proposal was ever communicated to Dexter. Mr. Heyman subsequently
testified under oath that he had had a number of conversations with the
representative of the third party exploring that third party's willingness to
make a proposal to acquire Dexter in a "pooling" transaction.
Between June 13, 2000 and June 19, 2000, representatives of the potential
acquirors of Dexter's wholly owned businesses and their respective legal and
financial advisors completed their remaining due diligence investigation and
negotiated the terms of definitive acquisition agreements with representatives
of Dexter and its legal and financial advisors. Included among the prospective
acquirors of Dexter's wholly owned businesses were Loctite Corporation (a member
of the Henkel Group) which expressed interest primarily in acquiring Dexter's
electronic materials, adhesives and polymer systems businesses and Ahlstrom
Paper Group Oy which expressed interest in acquiring Dexter's nonwovens
business.
On June 18, 2000, the Dexter Board met with its legal and financial advisors
to review the status of negotiations with the various prospective purchasers of
Dexter's wholly owned businesses, including Loctite and Ahlstrom. At that
meeting, Lehman Brothers reviewed with the Dexter Board the financial terms of
the transactions currently being negotiated, and Dexter's legal advisors
summarized the terms of the agreements that were under negotiation.
On June 19, 2000, the Dexter Board met telephonically. Dexter's legal
advisors updated the Board on the status of negotiations with the various
potential buyers, including Loctite and Ahlstrom. In addition, Lehman Brothers
delivered its oral opinion, which was later confirmed in writing, to the effect
that, from a financial point of view and subject to the matters discussed in its
opinion, the consideration to be received by Dexter in the proposed nonwovens
asset sale to Ahlstrom was fair to Dexter. Lehman Brothers also delivered its
oral opinion, which was later confirmed in writing, to the
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effect that, from a financial point of view and subject to the matters discussed
in its opinion, the consideration to be received by Dexter in the proposed sale
of the assets of Dexter's electronic materials, adhesives and polymer systems
businesses to Loctite was fair to Dexter. The Dexter Board of Directors then
authorized the nonwovens asset sale and the electronic materials, adhesives and
polymer systems asset sale subject to the satisfactory finalization of
definitive asset purchase agreements.
During the evening of June 19, 2000, and the following day, representatives
of Dexter and Ahlstrom and their respective legal advisors finalized the terms
of a definitive asset purchase agreement relating to the sale of Dexter's
nonwovens business. Also during that period, representatives of Dexter and
Loctite and their respective legal advisors finalized the terms of a definitive
asset purchase agreement relating to the sale of Dexter's electronic materials,
adhesives and polymer systems businesses.
On June 20, 2000, ISP announced its intention to commence a $45 per share
all cash tender offer for all shares of Dexter common stock not owned by ISP.
The Dexter Board of Directors reconvened late in the afternoon on June 20.
Dexter's legal advisors reviewed with the members of the Board the terms of the
acquisition agreements for the sale of the nonwoven materials business and the
electronic materials, adhesives and polymer systems businesses. In addition,
Lehman Brothers reconfirmed its opinions with respect to the fairness of the
proposed sales. Shortly thereafter, Dexter and Ahlstrom executed and delivered
the nonwovens asset purchase agreement and Dexter and Loctite executed and
delivered the electronic materials, adhesives and polymer systems asset purchase
agreement. Dexter issued a press release announcing the transactions in the
evening on June 20, 2000. At the same time, Dexter announced the postponement of
its annual meeting of stockholders for two weeks, from June 30, 2000 to
July 14, 2000, to allow adequate time for the dissemination of information and
evaluation of the proposed asset purchase sales by Dexter's stockholders before
being asked to vote for directors.
On June 22, 2000, at a regularly scheduled meeting of the Dexter Board of
Directors, the Board discussed with management and their legal and financial
advisors the next steps necessary to complete their program to maximize value in
the short-term. The Board of Directors authorized management and Lehman Brothers
to continue to pursue a possible transaction involving a sale of Dexter's
remaining wholly owned business, the Company's coatings business, and a merger
transaction involving Life Technologies.
On June 24, 2000, representatives of DLJ contacted representatives of Lehman
Brothers to discuss a possible transaction involving Dexter and indicated that
Invitrogen intended to submit a written indication of interest to Dexter in the
near future.
On June 26, 2000, Invitrogen sent to the Dexter Board a confidential written
proposal indicating Invitrogen's interest in entering into a transaction with
Dexter pursuant to which Invitrogen would acquire all of the outstanding equity
interest of Dexter in a merger transaction for a purchase price of $62.50 per
share in cash and Invitrogen common stock. Invitrogen further indicated its
desire to commence immediate negotiations of an agreement with Life Technologies
that would "provide a complete solution to Dexter, Life Technologies and their
respective stockholders." The letter also stated that Invitrogen intended to use
cash proceeds from Dexter's asset sales and Invitrogen cash balances "to provide
a significant cash component to stockholders of Dexter and Life Technologies."
Finally, the letter stated Invitrogen's intention to conduct due diligence in
parallel with the contract negotiations, which it said would include a business
update on Life Technologies, a review of the asset sale agreements that Dexter
had recently announced and confirmatory legal and financial due diligence.
Dexter promptly provided details of Invitrogen's proposal to counsel for the
unaffiliated Life Technologies directors.
On June 29, 2000, representatives of Invitrogen and Dexter and their
respective financial and legal advisors met to discuss the terms of a
transaction in which Invitrogen would acquire the entire equity
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interest in Dexter and Life Technologies and to permit Invitrogen to complete
its due diligence investigation.
As of June 30, 2000, the Board of Directors of Life Technologies, acting by
written consent, constituted a special committee of the Life Technologies Board
of Directors consisting of directors not affiliated with Dexter (all of the
unaffiliated Life Technologies directors) to consider a possible transaction
involving Life Technologies. The members of the special committee are Thomas H.
Adams, Ph. D. (Chairman), R. Barry Gettins, Ph. D., Joseph C. Stokes, Jr. and J.
Stark Thompson, Ph.D. The special committee was authorized to retain legal and
financial advisors to assist it in connection with its consideration of a
possible transaction, and the special committee promptly retained Wachtell,
Lipton, Rosen & Katz as its legal advisor (which firm had previously been
retained to advise the four directors individually) and, after contacting
several investment banks, retained Credit Suisse First Boston Corporation as its
financial advisor. The special committee selected Wachtell Lipton in part
because Wachtell Lipton had represented a special committee (of which Dr. Adams
was the chairman) of the Life Technologies board that was constituted in 1998
for the purpose of considering Dexter's 1998 offer to purchase all of the
outstanding Life Technologies shares that it did not then own at a price of
$37.00 per share, and because Wachtell Lipton had been advising these directors
in their individual capacities for several months.
From June 30, 2000 until July 7, 2000, representatives of Invitrogen and
Dexter and their respective legal advisors negotiated the terms of the proposed
Dexter merger agreement and representatives of Invitrogen, Dexter and the Life
Technologies special committee and their respective legal advisors negotiated
the terms of the proposed Life Technologies merger agreement. During this
period, at the special committee's request, Invitrogen agreed to change the form
of consideration available to Life Technologies stockholders from all stock to a
mixture of stock and cash in the aggregate proportion of 72% to 28%. The special
committee also sought to increase the amount of consideration to be paid in the
merger to Life Technologies' stockholders, but Invitrogen declined to increase
its $60 per share offer.
From July 3, 2000 through July 6, 2000 Invitrogen, Dexter and their
respective legal and financial advisors conducted due diligence investigations
of each other, and the respective managements of each company made business and
financial presentations to the management of the other. Also during this period,
Invitrogen, Life Technologies, the Life Technologies special committee and their
respective legal and financial advisors conducted reciprocal due diligence
investigations of Invitrogen and Life Technologies, and on July 5, 2000, the
management of each of Invitrogen and Life Technologies made business and
financial presentations to the management of the other. Two members of the Life
Technologies special committee, Drs. Thompson and Adams, attended the
Invitrogen/Life Technologies management presentations on July 5, 2000 and
participated in the due diligence investigations.
During the period from June 30, 2000 through July 5, 2000 the special
committee's legal advisors provided frequent updates on the progress of
discussions and negotiations to the individual members of the special committee.
On July 6, 2000, the Life Technologies special committee met telephonically to
receive an update from its advisors and from Drs. Adams and Thompson, who had
participated in the previous day's due diligence sessions. At this meeting, the
special committee's legal advisors discussed with the special committee the
legal issues surrounding the existence and purpose of the special committee, as
well as the committee members' responsibilities under applicable law. Drs. Adams
and Thompson informed the other members of the special committee of the results
of the previous day's management presentations, and Dr. Thompson discussed Life
Technologies' recent operating performance and reviewed the history of Life
Technologies' relationship with Dexter and the impact of this relationship on
Life Technologies' operations and performance. Next, the special committee's
legal advisors explained that as a result of several days of negotiations among
the parties, the parties were close to agreement on all terms of the proposed
merger agreement. The legal representatives then summarized and explained in
detail the proposed terms of the Life Technologies merger agreement and
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the material terms of the Dexter merger agreement. Also at this meeting, the
special committee's financial advisor discussed various financial aspects of the
proposed transaction, including the proposed consideration of $60 per Life
Technologies share, the allocation of that consideration between cash and shares
of Invitrogen common stock and the "collar" mechanism.
Negotiations among Invitrogen's, Dexter's and the Life Technologies special
committee's legal advisors over the final terms of the transaction continued
through the night of July 6, 2000 and into the morning of July 7, 2000.
On the morning of July 7, 2000, the Board of Directors of Invitrogen met and
reviewed the terms of the proposed merger agreements. DLJ rendered its fairness
opinion, which was subsequently confirmed in writing, to the effect that, as of
that date and based on and subject to the matters described in its opinion, the
consideration to be paid by Invitrogen in the mergers, taken together, was fair
from a financial point of view to Invitrogen. At that meeting, the Invitrogen
Board unanimously approved the Dexter merger and the Life Technologies merger
and recommended that Invitrogen's stockholders approve and adopt the Dexter
merger agreement and the Life Technologies merger agreement.
Also that morning, the Board of Directors of Dexter met to discuss the
status of negotiations between Dexter and Invitrogen. At that meeting, Lehman
Brothers made a financial presentation and Dexter's legal advisors reviewed the
current terms of the proposed acquisition agreement and discussed with the Board
its fiduciary obligations. The Dexter board then adjourned its meeting until
later in the afternoon.
In the afternoon on July 7, 2000, the Life Technologies special committee
met with its legal and financial advisors to review the terms of the Life
Technologies merger. The special committee's legal advisors provided an update
on the discussion that had occurred since the previous afternoon. Dr. Thompson
discussed the business and strategic rationales, from management's perspective,
for the proposed transaction. Representatives of Credit Suisse First Boston, the
special committee's financial advisor, discussed financial aspects of the
proposed Life Technologies merger, after which Credit Suisse First Boston
rendered to the special committee its opinion to the effect that, as of that
date and based on and subject to the matters described in its opinion, the
consideration to be received in the Life Technologies merger by holders of Life
Technologies common stock was fair, from a financial point of view, to such
holders (other than Dexter and its subsidiaries, officers and directors).
Following further discussion, the Life Technologies special committee
unanimously recommended that the Life Technologies Board of Directors approve
the Life Technologies merger agreement. Following the meeting of the special
committee, the Board of Directors of Life Technologies met and received the
report and recommendation of the Life Technologies special committee. Based
upon, among other things, the report and recommendation of the special
committee, the Life Technologies Board of Directors, by unanimous vote of the
seven directors present, approved the Life Technologies merger agreement and
recommended that Life Technologies' stockholders approve and adopt the Life
Technologies merger agreement.
Following the meeting of the Life Technologies Board of Directors, the
meeting of the Dexter Board was reconvened. Management of Dexter and its legal
advisors reviewed the terms of the acquisition agreement, and Lehman Brothers
delivered its written fairness opinion to the effect that from a financial point
of view, as of that date and based on and subject to the matters described in
its opinion, the consideration to be received by Dexter stockholders was fair
from a financial point of view to such holders.
Thereafter, on July 7, 2000, Invitrogen and Life Technologies executed the
Life Technologies merger agreement and, following execution and delivery of the
Life Technologies merger agreement, Invitrogen and Dexter executed the Dexter
merger agreement.
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During the morning of July 9, 2000, representatives of DLJ and Invitrogen
advised Samuel J. Heyman, Chairman of the Board of ISP, that Invitrogen had
entered into the merger agreements. Mr. Heyman requested a meeting that
afternoon which would make available to ISP representatives of Invitrogen,
Dexter and Life Technologies who could brief ISP concerning the financial and
legal terms of the transactions and their various legal features, such as
stockholder voting requirements and the like. During the afternoon, Mr. Heyman
and other representatives of ISP and ISP's legal and financial advisors met with
representatives of Invitrogen, Dexter and their respective financial and legal
advisors, as well as a representative of the Life Technologies special
committee's legal advisor, to discuss the terms and conditions of both the
Dexter and the Life Technologies merger agreements. Following a discussion of
the economic terms of the two transactions and of Invitrogen's plans for
achieving stockholder value from the combination, Mr. Heyman indicated his
belief that there appeared to be a "good strategic fit between Invitrogen and
Life Technologies." Mr. Heyman said that he preferred to have a larger cash
component in the consideration and a wider collar than was provided in the
merger agreements. Despite these preferences, Mr. Heyman stated that he intended
to reserve judgment on the transaction until the stockholder meeting and ISP's
general counsel and a representative of its legal advisor informed counsel for
Dexter and the Life Technologies special committee that ISP would terminate its
tender offer, withdraw all its stockholder proposals and cease pursuit of its
proxy contest and that, because of the conditions in ISP's tender offer, it was
necessary to have Dexter's concurrence with the termination of the tender offer,
which Dexter afforded to ISP.
In the late afternoon of July 9, 2000, Invitrogen and Life Technologies
issued a joint press release and Dexter issued a separate press release, each of
which announced the signing of the Life Technologies and Dexter merger
agreements.
REASONS FOR THE MERGERS AND RECOMMENDATIONS OF THE BOARDS
REASONS FOR THE INVITROGEN/LIFE TECHNOLOGIES MERGER
Invitrogen and Life Technologies believe that the combination of Invitrogen
and Life Technologies will create a leader in molecular biology research and
services and that the combined company will be uniquely positioned to service
the rapidly developing life sciences and genomics research market. In
particular, the senior managements and the boards of directors of each company
believe the following are key specific reasons that the merger will be
beneficial to Invitrogen and Life Technologies and in the best interest of their
respective stockholders:
CREATE A MORE DIVERSIFIED PORTFOLIO BY COMBINING TECHNOLOGIES FOR GENE
CLONING AND GENE EXPRESSION. Together, Invitrogen and Life Technologies will
have substantial growth opportunities by offering a comprehensive product line
in gene cloning, expression and analysis. For example, the combination of
Invitrogen's TOPO TA Cloning and Echo cloning technology, Life Technologies'
cDNA and GATEWAY cloning technology, and the industry's broadest line of
expression vectors will form an integrated operating system for gene cloning and
expression. This system will also provide a highly desirable platform for
high-throughput gene expression and analysis. Through this product offering, we
will not only be able to enhance our leadership position in the high growth gene
cloning and expression market, but also be able to cross sell a wide range of
molecular biology products and services into our combined customer base.
CREATE SUBSTANTIAL OPERATING SYNERGIES AND NEW BUSINESS
OPPORTUNITIES. Invitrogen and Life Technologies believe that integrating our
worldwide distribution and marketing infrastructure, which will include over 300
sales professionals and over 60 technical support representatives, will create a
significant advantage in serving Invitrogen's and Life Technologies' customers.
Invitrogen and Life Technologies believe that the addition of Life Technologies'
global manufacturing network, with facilities in North America, Europe, New
Zealand and Japan will provide significant advantages in
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delivering product to our customers, rapidly introducing new products and
supporting Invitrogen's growing product line.
INVITROGEN BOARD OF DIRECTORS' REASONS AND CONSIDERATION AND APPROVAL OF THE
TRANSACTION
INFORMATION AND FACTORS CONSIDERED BY THE INVITROGEN BOARD OF
DIRECTORS. The Invitrogen board of directors, in connection with its approval
of the mergers, its determination that the mergers are fair to and in the best
interest of Invitrogen's stockholders and its recommendation that stockholders
adopt the merger agreements, consulted with its legal advisors, including its
general counsel and representatives of Gray Cary Ware & Freidenrich LLP, outside
counsel on the transaction, regarding the duties of the members of the board, as
well as with members of management and its financial advisor. The Invitrogen
board also considered the following material information and factors in reaching
its determination to approve the mergers, to conclude that the mergers are fair
to and in the best interest of Invitrogen's stockholders, and to recommend that
stockholders adopt the merger agreements:
- the reasons described under "--Invitrogen Board of Directors' Reasons and
Consideration and Approval of the Transaction;"
- the exchange ratios being used in the merger and the expected continuing
55% ownership interest in the combined company by Invitrogen's
stockholders;
- presentations by senior members of Invitrogen's management regarding the
strategic advantages of acquiring Life Technologies, operational aspects
of the transaction and the results of management's operational and legal
due diligence review;
- Invitrogen management's view of the financial condition, results of
operations and businesses of Invitrogen and Life Technologies before and
after giving effect to the merger based on management's due diligence and
publicly available earnings estimates;
- the strategic fit of Invitrogen and Life Technologies, including the
belief that the merger has the potential to enhance stockholder value
through the numerous growth opportunities and synergies resulting from
combining the two companies' complementary strengths and assets, including
cross-promotions and operating efficiencies;
- the analyses and presentation of Donaldson Lufkin & Jenrette on the
financial aspects of the proposed merger, and their written opinion to the
effect that, as of July 7, 2000, and based on and subject to the various
considerations set forth in its opinion, the aggregate consideration to be
paid by Invitrogen in the Life Technologies merger and the Dexter merger
was fair from a financial point of view to Invitrogen;
- the terms and conditions of the merger agreements; the conditions to
consummate the mergers, including the contingent sale of Dexter's non-Life
Technologies related businesses; the circumstances under which the merger
agreement could be terminated and the size and impact of the termination
fees associated with a termination; as well as the advice of Invitrogen's
financial and legal advisors that these provisions were reasonable in the
context of the transaction;
- the corporate governance arrangements established for the transaction,
including the board composition and designation of key senior management
which are designed to promote the continuity of management from Invitrogen
and Life Technologies and smooth integration of the businesses;
- the fact that the mergers likely will be completed, including the
likelihood that the mergers will receive the necessary regulatory
approvals;
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- the accounting treatment of the transaction as a "purchase" transaction,
including the goodwill that will be recorded on the financial statements
of Invitrogen; and
- the interests of the officers and directors of Invitrogen and Life
Technologies in the merger, including the matters described under
"--Interests of Certain Invitrogen Directors and Executive Officers in the
Merger," and the impact on Invitrogen's stockholders, customers and
employees.
The Invitrogen board also considered the potential adverse consequences of
other factors on the proposed merger including:
- the challenges of combining the businesses, assets and workforces of two
major companies and the risks of not achieving the expected operating
efficiencies or growth;
- the risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
merger; and
- the risk that the mergers will not be consummated.
This discussion of the information and factors considered by the Invitrogen
board is not intended to be exhaustive, but includes the material factors
considered. The Invitrogen board did not assign particular weight or rank to the
factors it considered in approving the merger. In considering the factors
described above, individual members of the Invitrogen board may have given
different weight to various ones. The Invitrogen board considered all these
factors as a whole, and overall considered them to be favorable to and to
support its determination.
RECOMMENDATION OF THE LIFE TECHNOLOGIES SPECIAL COMMITTEE AND BOARD OF
DIRECTORS; FAIRNESS OF THE MERGER
RECOMMENDATION OF THE LIFE TECHNOLOGIES SPECIAL COMMITTEE. The special
committee (consisting of four directors not affiliated with Dexter) unanimously
has determined that the terms of the Life Technologies merger are advisable,
fair to and in the best interests of Life Technologies stockholders other than
Dexter, its subsidiaries, officers and directors, and has recommended that the
Life Technologies board approve the Life Technologies merger agreement and
recommend the approval and adoption of the Life Technologies merger agreement to
the stockholders of Life Technologies. The Life Technologies board, by unanimous
vote of the seven directors present, has determined that the terms of the Life
Technologies merger are advisable, fair to and in the best interests of Life
Technologies stockholders and has approved and adopted the Life Technologies
merger agreement.
In the course of reaching its decision to recommend that the Life
Technologies board approve the Life Technologies merger agreement and recommend
its approval to Life Technologies stockholders, the special committee consulted
with Life Technologies' management and with independent legal and financial
advisors, and considered the following material factors:
- The reasons described above under "--Reasons for the Invitrogen/Life
Technologies Merger;"
- The financial terms of the transaction, including the ability of
stockholders to elect to receive the merger consideration in the form of
cash, stock of Invitrogen, or a combination of cash and stock, subject to
proration to preserve the overall 72% - 28% stock/cash mix, and the
assurance that stockholders making the "standard election" will receive at
least $16.80 in cash together with shares of Invitrogen common stock
intended to be worth $43.20 per share;
- That Life Technologies' stockholders will be entitled to elect to receive
the consideration payable to them in the merger solely in cash or solely
in stock of Invitrogen, subject to proration to preserve the overall
72% - 28% stock/cash mix;
- That the funds necessary to pay the cash portion of the consideration
payable in both the Dexter merger and the Life Technologies merger will be
internally generated by Dexter, Life
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Technologies and Invitrogen and, accordingly, neither transaction is
subject to a financing condition;
- The existence of the "collar" that ensures that if the average trading
price per share of Invitrogen common stock as determined in accordance
with the Life Technologies merger agreement is $60 or less, the exchange
ratio for determining the stock portion of the consideration payable in
the Life Technologies merger will be fixed at 1.0 (although this mechanism
also provides that if the average trading price of Invitrogen stock is $80
or more, the exchange ratio for determining the stock portion of the
consideration payable in the Life Technologies merger will be fixed at
0.75);
- Presentations by senior members of Life Technologies' management regarding
the strategic advantages of merging Life Technologies with Invitrogen and
certain operational aspects of the transaction, including the belief that
the merger has the potential to enhance stockholder value through the
numerous growth opportunities resulting from combining the two companies'
complementary strengths and assets, including cross-promotions and
operational efficiencies;
- Life Technologies' management's view of the financial condition,
operations and businesses of Invitrogen and Life Technologies;
- The uncertainty and instability for Life Technologies' business and
operations created by ISP's actions in connection with its unilateral
attempt to seize control of Dexter, Life Technologies' majority
stockholder, including its proxy contest, litigation and announced
intention to commence a $45 per share cash tender offer for all Dexter
shares, subject to financing and numerous other conditions;
- The fact that if the Life Technologies merger is completed, Dexter will no
longer be the controlling stockholder of Life Technologies;
- The fact that, during the course of Dexter's solicitation of indications
of interest in acquiring all or part of Dexter, including Life
Technologies, Dexter did not receive any indication of interest in
acquiring Life Technologies at value ranges meeting or exceeding the value
offered by Invitrogen;
- The fact that the special committee negotiated certain terms of the merger
agreement directly with Invitrogen, including that such negotiations
resulted in improvements to the terms of the Life Technologies merger,
including:
- changing the form of consideration from all stock to a mixture of stock
and cash in the aggregate proportion of 72% to 28%;
- reciprocal representations and warranties between Invitrogen and Life
Technologies;
- certain operating restrictions on Invitrogen during the pendency of the
merger;
- the right of the special committee to approve or veto any proposed
amendments to the merger agreement; and
- assurances that Drs. Adams and Thompson would join the Invitrogen board
of directors and that Dr. Thompson would continue to be the chief
executive officer of Invitrogen's Life Technologies division, which the
special committee believed would contribute to a smooth and stable
integration of the two companies' business and to the management and
operation of the Life Technologies business within Invitrogen during
the period following the merger, which the special committee viewed as
directly benefitting Life Technologies' public stockholders who would
become stockholders of Invitrogen if the merger is completed;
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- The financial presentation of Credit Suisse First Boston, including its
opinion dated July 7, 2000 as to the fairness, from a financial point of
view, of the Life Technologies merger consideration to the holders of Life
Technologies common stock (other than Dexter and its subsidiaries,
officers and directors), as described below under the caption "Opinion of
Financial Advisor to the Life Technologies Special Committee;"
- The corporate governance arrangements established for the transaction,
including the board composition and designation of key senior management,
which are designed to promote the continuity of management from each
company and smooth integration of the businesses, which the special
committee viewed as directly benefitting Life Technologies' public
stockholders who would become stockholders of Invitrogen if the merger is
completed;
- The fact that there are relatively few conditions to the completion of the
merger which, the special committee believes, increases the likelihood
that the merger will be completed; and
- That the Life Technologies merger is expected to qualify as a
reorganization for purposes of the Internal Revenue Code and that the
portion of the merger consideration received in the form of Invitrogen
common stock should not be taxable to Life Technologies' stockholders for
U.S. income tax purposes.
The Life Technologies special committee also considered the potential
adverse consequences of other factors on the proposed merger including:
- The fact that the Dexter merger is conditioned upon and will occur
simultaneously with the Life Technologies merger, as well as the fact that
this condition may not be waived; the fact that the Dexter merger must be
approved by the affirmative vote of the holders of at least two-thirds of
the issued and outstanding shares of Dexter common stock; and the fact
that Invitrogen's obligation to consummate the Dexter merger is
conditioned upon the consummation of Dexter's previously announced sale of
its nonwovens business to Ahlstrom Paper Group Oy and the sale of its
electronic materials, adhesives and polymer systems businesses to Loctite
Corporation.
- The challenges of combining the businesses, assets and workforces of two
major companies and the risks of not achieving the expected operating
efficiencies or growth.
- The fact that the cash portion of the consideration payable in the Life
Technologies merger is limited to approximately $105 million.
- The risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
merger.
- The risk that the merger is not completed.
- The fact that because Dexter, which holds in excess of 75% of Life
Technologies' common stock, has agreed with Invitrogen to vote its Life
Technologies shares in favor of the merger, under the Life Technologies
merger agreement Life Technologies will be unable to engage in any other
acquisition transaction that could be proposed by any third party while
the merger agreement is in effect.
- The fact that Dexter has agreed to vote its Life Technologies shares in
favor of the Life Technologies merger, thereby assuring approval, and the
fact that the Life Technologies merger is not conditioned upon approval of
a majority of Life Technologies stockholders who are not affiliated with
Dexter.
In addition, in considering the proposed merger with Invitrogen, the members
of the special committee were aware of the interests of certain officers and
directors (including committee members) in the transaction, as described under
"--Interests of Certain Persons in the Merger."
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The foregoing discussion of the information and factors considered by the
special committee includes all of the material factors considered by the special
committee in reaching its conclusions and recommendations but is not meant to be
exhaustive. In view of the variety of factors considered in its reaching its
determination, the special committee did not find it practicable to, and did
not, quantify or otherwise assign relative weights to the specific factors
considered in reaching its conclusions and recommendations. In addition,
individual members of the special committee may have given different weights to
different factors.
The Life Technologies board consists of nine directors, four of whom served
on the special committee. At the July 7, 2000 meeting of the Life Technologies
board, the special committee, with its legal and financial advisors
participating, reported to the Life Technologies board on its review of the
merger agreement and the financial terms of the proposed merger and the factors
taken into account by the special committee in reaching its determination to
recommend that the board of directors approve the merger agreement. Accordingly,
the same factors considered by the special committee were taken into account by
the Life Technologies board. In addition, the Life Technologies board considered
the conclusions and recommendations of the special committee and believes that
these factors supported the Life Technologies board's determination to approve
and recommend the merger agreement.
FAIRNESS OF THE MERGER. The Life Technologies board, including the members
of the special committee, also believes that the merger is procedurally fair
because, among other things:
- The special committee consisted of four directors unaffiliated with
Dexter, Life Technologies' majority stockholder, who were appointed to
represent the interests of Life Technologies' stockholders other than
Dexter, its subsidiaries, officers and directors.
- The special committee retained and received advice from independent legal
and financial advisors.
- The special committee negotiated certain terms of the merger agreement
directly with Invitrogen, including that such negotiations resulted in
improvements to the terms of the Life Technologies merger, including those
described above under "--Recommendation of the Life Technologies Special
Committee."
DEXTER BOARD OF DIRECTORS' REASONS AND CONSIDERATION AND APPROVAL OF THE
TRANSACTIONS
THE DEXTER BOARD BELIEVES THAT THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF DEXTER AND ITS STOCKHOLDERS AND RECOMMENDS TO THE STOCKHOLDERS OF
DEXTER THAT THEY VOTE FOR THE PROPOSED MERGER.
The proposed merger enables Dexter to deliver the final installment of its
commitment to maximize value for the benefit of all Dexter's stockholders. In
reaching its decision, the Dexter Board consulted with its financial and legal
advisors, and considered a variety of factors, including the following:
- The fact that over a period of four months Dexter solicited and received
indications of interest from a large number of potential purchasers
interested in acquiring either Dexter as an entirety or one or more of its
wholly-owned constituent businesses in a process designed to maximize
stockholder value in the short-term.
- The opinion of Lehman Brothers that the consideration to be received by
Dexter stockholders pursuant to the Dexter merger agreement is fair, from
a financial point of view, to the Dexter stockholders.
- The fact that under the terms of the Dexter merger agreement, Dexter
stockholders will receive at least $17.50 in cash together with shares of
Invitrogen common stock intended to be worth
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$45.00 per share and that the funds necessary to pay the cash portion will
be internally generated by Dexter and Invitrogen.
- The fact that if the average trading price per share of Invitrogen common
stock as determined in accordance with the Dexter merger agreement is $80
or more, the exchange ratio for determining the stock portion of the
consideration payable in the Dexter merger will be fixed at 0.7813 and if
the average trading price per share of Invitrogen common stock is $60 or
less, the exchange ratio will be fixed at 1.0417.
- That the Dexter merger is expected to qualify as a reorganization for
purposes of the Internal Revenue Code and that, as such (i) a stockholder
of Dexter who exchanges all of such stockholder's Dexter common stock
solely for cash in the Dexter merger will recognize gain or loss in an
amount equal to the difference between the cash received and such
stockholder's adjusted tax basis in the shares surrendered, (ii) a
stockholder of Dexter who exchanges all of such stockholder's Dexter
common stock solely for Invitrogen common stock in the Dexter merger will
not recognize any gain or loss as a result of the exchange, and (iii) a
stockholder of Dexter who receives a combination of cash and Invitrogen
common stock in the Dexter merger as the case may be, will not recognize
any loss but will recognize a gain, if any, on the shares so exchanged to
the extent of any cash received.
- Information concerning the financial performance and condition, prospects,
business operation, credit capacity and asset quality of Dexter and
Invitrogen.
- The fact that the Dexter merger is conditioned upon and will occur
simultaneously with the Life Technologies merger, as well as the fact that
this condition may not be waived.
- The fact that the Dexter merger must be approved by the affirmative vote
of the holders of at least two-thirds of the issued and outstanding shares
of Dexter common stock.
- The fact that Invitrogen's obligation to consummate the Dexter merger is
conditioned upon the consummation of Dexter's previously announced sale of
its nonwovens business to Ahlstrom Paper Group Oy and the sale of its
electronic materials, adhesives and polymer systems businesses to Loctite
Corporation.
- The interests of the directors and executive officers of Dexter in the
Dexter merger as described in "--Interests of Certain Persons in the
Mergers."
- The fact that Invitrogen's obligation to consummate the proposed merger
contemplated by the merger agreement is not subject to any financing
contingencies.
- The long-term as well as the short-term interests of Dexter, as well as
the interests of Dexter's employees, customers, creditors and suppliers.
- The uncertainty and instability for Dexter's business and operations,
employees, customers, suppliers and other important constituencies created
by ISP's actions in connection with its unilateral attempt to seize
control of Dexter, including its proxy contest, litigation and announced a
$45 per share cash tender offer for all Dexter shares, subject to
financing and numerous other conditions.
- The provisions of the Dexter merger agreement that preclude Dexter's
ability to solicit other offers for Dexter or negotiate or exchange
information with potential bidders and the requirement that Dexter pay
Invitrogen a termination fee of $65 million if the Dexter merger were
terminated for a superior proposal.
The foregoing discussion of the information and factors considered by the
Dexter Board is not exhaustive but does include all material factors considered
by the Dexter Board. The Dexter Board did not quantify or attach any particular
relative or specific weight to the various factors it considered in
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reaching its determination that the proposed merger is fair to and in the best
interests of Dexter and its stockholders. Rather, the Dexter Board viewed its
position and recommendation as being based on the totality of the information
presented to and considered by it. In addition, individual members of the Dexter
Board may have given different weights to different factors.
OPINION OF INVITROGEN'S FINANCIAL ADVISOR
Invitrogen asked DLJ, in its role as financial advisor to Invitrogen, to
render an opinion to the Invitrogen Board of Directors as to the fairness, from
a financial point of view, of the consideration to be paid by Invitrogen
pursuant to the Life Technologies merger agreement and the Dexter merger
agreement. On July 7, 2000, DLJ delivered to the Invitrogen Board its opinion,
subsequently confirmed in writing on July 8, 2000, to the effect that, as of
July 7, 2000, based on and subject to the assumptions, limitations and
qualifications set forth in its written opinion, the aggregate consideration (as
defined below) to be paid by Invitrogen in the merger was fair to Invitrogen
from a financial point of view. The full text of DLJ's opinion is attached as
Annex C to this proxy statement/prospectus.
DLJ expressed no opinion as to the price at which Life Technologies or
Dexter common stock or Invitrogen common stock would trade at any time. DLJ's
opinion did not address the relative merits of the merger and other business
strategies considered by the Invitrogen Board nor did it address the Invitrogen
Board's decision to proceed with the merger. DLJ's opinion did not constitute a
recommendation to any Invitrogen stockholder as to how such stockholder should
vote on the merger.
Invitrogen and Life Technologies and Dexter determined the consideration to
be paid by Invitrogen in arm's length negotiations, in which DLJ advised
Invitrogen.
Invitrogen selected DLJ as its financial advisor because DLJ is an
internationally recognized investment banking firm that has substantial
experience providing strategic advisory services. DLJ was not retained as an
advisor or agent to the stockholders of Invitrogen or any other person. As part
of its investment banking business, DLJ is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. Invitrogen
did not impose any restrictions or limitations upon DLJ with respect to the
investigations made or the procedures followed by DLJ in rendering its opinion.
In arriving at its opinion, DLJ:
- Reviewed the drafts dated July 7, 2000 of the merger agreements and
assumed the final form of the merger agreements would not vary in any
respect material to DLJ's analysis;
- Reviewed financial and other information that was publicly available or
furnished to it by Invitrogen, Life Technologies and Dexter, including
information provided during discussions with their respective
managements. Included in the information provided during discussions
with the managements of Invitrogen, Dexter and Life Technologies were
financial projections of Invitrogen, for the period beginning
January 1, 2000 and ending December 31, 2004 prepared by the management
of Invitrogen, financial projections of Life Technologies for the
period beginning January 1, 2000 and ending December 31, 2002 prepared
by the management of Life Technologies and Dexter and financial
projections of Dexter for the period beginning January 1, 2000 and
ending December 31, 2002 prepared by the management of Dexter as
supplemented by projections of estimated annual revenues and earnings
growth rates for Life Technologies for the years ending December 31,
2003 and December 31, 2004 furnished by the management of Life
Technologies and Dexter;
- Compared certain financial and securities data of Invitrogen, Dexter
and Life Technologies with various other companies whose securities are
traded in public markets;
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- Reviewed the historical stock prices and trading volumes of the common
stock of Invitrogen, Dexter and Life Technologies;
- Reviewed prices and premiums paid in certain other business
combinations; and
- Conducted such other financial studies, analyses and investigations as
it deemed appropriate for purposes of rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by Invitrogen, Dexter, Life
Technologies or their respective representatives, or that DLJ otherwise
reviewed. With respect to the financial projections supplied to DLJ, DLJ relied
on representations that the projections were reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of Invitrogen, Dexter and Life Technologies as to the future
operating and financial performance of Invitrogen, Dexter and Life Technologies,
respectively. DLJ expressed no opinion with respect to these projections or the
assumptions upon which they were based. DLJ assumed that the Life Technologies
merger and the Dexter merger would be consummated in accordance with the terms
of the merger agreements, including the consummation of the transactions
contemplated by the Loctite asset purchase agreement and the Ahlstrom asset
purchase agreement. DLJ did not assume responsibility for making any independent
evaluation of the assets or liabilities, or for making any independent
verification of the information DLJ reviewed. DLJ relied as to certain legal
matters on advice of counsel to Invitrogen.
DLJ necessarily based its opinion on economic, market, financial and other
conditions as they existed on, and on the information made available to DLJ as
of, the date of its opinion. DLJ states in its opinion that, although subsequent
developments may affect the conclusions reached in its opinion, DLJ does not
have any obligation to update, revise or reaffirm its opinion.
For purposes of the opinion, the implied cost of Life Technologies to
Invitrogen is referred to herein as the "aggregate consideration." Aggregate
consideration was defined as the equity purchase price of Dexter plus the equity
purchase price of the Life Technologies common stock not owned by Dexter, less
the net cash available at Dexter and Life Technologies after repayment of debt.
DLJ assumed that the net cash available included the estimated net after-tax
proceeds contemplated by the Loctite asset purchase agreement and the Ahlstrom
asset purchase agreement, which are conditions to the consummation of the
mergers, as well as certain other assumptions provided by the managements of
Invitrogen, Dexter and Life Technologies. Based upon this methodology, the
aggregate consideration is estimated to be approximately $1.56 billion.
SUMMARY OF FINANCIAL ANALYSES PERFORMED BY DLJ
The following is a summary of the financial analyses DLJ presented to the
Invitrogen Board on July 7, 2000 in connection with the preparation of DLJ's
opinion. No company or transaction DLJ used in the analyses described below is
directly comparable to Dexter, Life Technologies or Invitrogen or the
contemplated transaction. In addition, mathematical analysis such as determining
the mean or median is not in itself a meaningful method of using selected
company or transaction data. The analyses DLJ performed are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by these analyses.
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PRO FORMA MERGER ANALYSIS. Using assumptions provided by Invitrogen, Dexter
and Life Technologies managements including assumptions regarding the projected
financial performance of Invitrogen and Life Technologies and the assumption of
no operating synergies, DLJ compared the projected cash earnings per share
("cash EPS") of Invitrogen for the projected fiscal years ending December 31,
2000 through December 31, 2004 on a stand-alone basis to the projected pro forma
cash EPS for the projected fiscal years ending December 31, 2000 through
December 31, 2004 of the combined company after the mergers. Cash EPS is
earnings per share before goodwill amortization. The mergers were analyzed at
both the July 6, 2000 closing stock price for Invitrogen and the maximum
exchange ratio on the common stock portion of the aggregate consideration
assuming that the maximum cash consideration portion of the aggregate
consideration was elected by Dexter's and Life Technologies' stockholders. The
analysis indicated that Invitrogen's pro forma cash EPS, on a fully taxed basis,
assuming no operating synergies achievable as a result of the mergers, would be
higher in the fiscal years ending December 31, 2000 through December 31, 2004
than the comparable projections for Invitrogen as a stand-alone company during
the same periods. This analysis did not take into account any restructuring
charges or non-recurring transaction costs related to the transaction, as these
charges will not affect the future operating results of the merged companies.
The actual results achieved by the combined company may vary from projected
results and the variations may be material.
CONTRIBUTION ANALYSIS. DLJ analyzed the relative contributions of
Invitrogen and Life Technologies to the pro forma combined company for the
projected fiscal years ending December 31, 2000 through 2003, based on selected
financial data, assuming no anticipated operating synergies. DLJ analyzed the
respective contributions of each company's projected revenues, gross margin and
earnings before interest, taxes, depreciation and amortization, or EBITDA, for
each of the periods listed above based on estimates provided by the managements
of Invitrogen, Dexter and Life Technologies. For purposes of the contribution
analysis, DLJ has assumed that Dexter's and Life Technologies' stockholders
elected the maximum cash consideration which would be funded, in part, by
approximately $265 million of Invitrogen's cash and the net cash available at
Dexter and Life Technologies after repayment of debt, which would include the
estimated net after-tax proceeds contemplated by the Loctite asset purchase
agreement and the Ahlstrom asset purchase agreement. Based on these assumptions,
Invitrogen stockholders will own between approximately 52% and 58% of the
combined company (not including the conversion of Invitrogen's $172.5 million of
convertible subordinated notes). This compares with Invitrogen's contribution to
the combined company's pro forma results for the periods ending December 31,
2000 through 2003 of between approximately 20% and 34% of revenues, gross margin
and EBITDA.
ANALYSIS OF SELECTED PUBLICLY-TRADED COMPANIES. To provide contextual data
and comparative market information, DLJ compared selected historical share
price, earnings and operating and financial ratios for Life Technologies to the
corresponding data and ratios of a sample, selected in DLJ's subjective
judgment, of other comparable companies whose securities are publicly traded.
DLJ analyzed the market values and trading multiples of selected publicly traded
companies that DLJ believed were reasonably comparable to Life Technologies.
These comparable companies consisted of: Waters Corporation, Millipore
Corporation, PerkinElmer, Inc. Sigma Aldrich Corporation, Cambrex Corporation,
Packard Biosciences, Inc., Charles River Labs International Inc., and Molecular
Devices Corporation. DLJ compared the enterprise values of these companies as
multiples of their latest twelve months revenue, projected revenues for calendar
year 2000, latest twelve months earnings before interest, taxes, depreciation
and amortization, or LTM EBITDA, and projected earnings per share for the
calendar years 2000 and 2001. The enterprise value of a company is equal to the
value of its fully-diluted common equity plus debt and the liquidation value of
outstanding preferred stock, if any, minus cash and the value of certain other
assets, including minority interests in other entities. LTM means the last
twelve-month period for which financial data for the company at issue has been
reported. Projections for Life Technologies were based upon estimates provided
to DLJ by the managements of Life Technologies and Dexter. Projections for the
comparable companies were based upon publicly
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available Wall Street research reports. All multiples were based on closing
stock prices on July 6, 2000. This analysis implied an enterprise value between
approximately $1.45 billion and $1.75 billion for Life Technologies.
No company used in the "Analysis of Selected Publicly-Traded Companies" as a
comparison is identical to Life Technologies. Accordingly, an analysis of the
results of the foregoing is not entirely mathematical; rather, it involves
complex considerations and judgments concerning differences in financial and
operating characteristics and other factors that could affect the public trading
or other values of the comparable companies or the business segment, to which
they are being compared.
PREMIUMS PAID ANALYSIS. DLJ determined the premium over the common stock
trading prices for one day, one week and four weeks prior to the announcement
date in all merger and acquisition transactions of U.S. public companies ranging
from $1.5 to $2.0 billion in size announced between January 1, 1999 and
June 30, 2000 (approximately 40 transactions). DLJ obtained the premiums for
these transactions from Securities Data Company. DLJ analyzed the average
premiums in these transactions for one day prior, one week prior and four weeks
prior to the public announcement of the respective transaction, and applied the
average premiums to the Dexter and Life Technologies closing share prices one
day prior, one week prior and four weeks prior to the public announcement of
ISP's December 14, 1999 proposal to acquire Dexter to calculate the implied
enterprise value of Life Technologies. This analysis implied an enterprise value
between approximately $1.3 billion and $1.5 billion for Life Technologies.
DISCOUNTED CASH FLOW ANALYSIS. DLJ performed a discounted cash flow
analysis of the projected cash flows of Life Technologies for the fiscal years
ending December 31, 2000 through December 31, 2004, using projections and
assumptions provided by the management of Life Technologies. Specifically, DLJ
performed its analysis using the five year estimates for Life Technologies'
unlevered free cash flows. Unlevered free cash flows were calculated as the
projected after-tax operating earnings of Life Technologies, plus projected
depreciation, amortization, and other projected non-cash items, plus (or minus)
net changes in working capital, minus projected capital expenditures. DLJ
selected, in its subjective judgment, a range of terminal multiples of 16.0x to
20.0x projected EBITDA for 2004 and discount rates ranging from 15% to 17%,
based on estimates relating to the comparable companies' weighted average costs
of capital. The terminal exit multiple represents an estimate of the value of
Life Technologies' earnings stream at the end of the five year period. This
analysis implied an enterprise value between approximately $1.5 billion and
$1.7 billion for Life Technologies.
The summary set forth above does not purport to be a complete description of
the analyses performed by DLJ but describes the material elements of the
presentation that DLJ made to the Invitrogen Board on July 7, 2000 in connection
with the preparation of DLJ's fairness opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. DLJ conducted each of the analyses in order
to provide a different perspective on the transaction and to add to the total
mix of information available. DLJ did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to fairness from a financial point of view. Rather, in reaching its
conclusion, DLJ considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of all analyses taken as
a whole. DLJ did not place any particular reliance or weight on any individual
analysis, but instead concluded that its analyses, taken as a whole, supported
its determination. Accordingly, notwithstanding the separate factors summarized
above, DLJ has indicated to Invitrogen that it believes that its analyses must
be considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying its opinion. The
analyses DLJ performed are not necessarily
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indicative of actual values or future results, which may be significantly more
or less favorable than suggested by these analyses.
ENGAGEMENT LETTER
Pursuant to the terms of an engagement agreement dated July 3, 2000,
Invitrogen has agreed to pay DLJ for its services in connection with the Life
Technologies merger and the Dexter merger an aggregate financial advisory fee of
$12.5 million, including a fee of $2.5 million for rendering its fairness
opinion to the Invitrogen Board. In addition, Invitrogen agreed to reimburse
DLJ, upon DLJ's request from time to time, for all out-of-pocket expenses
(including the reasonable fees and expenses of counsel) DLJ incurred in
connection with its engagement thereunder and to indemnify DLJ and certain
related persons against certain liabilities in connection with its engagement,
including liabilities under U.S. federal securities laws.
OTHER RELATIONSHIPS
DLJ has advised Invitrogen that, in the ordinary course of business, DLJ and
its affiliates may actively trade or hold the securities of Invitrogen, Dexter
and Life Technologies for their own account or for the account of customers and,
accordingly, may at any time hold a long or short position in these securities.
DLJ has performed investment banking and other services for Invitrogen in the
past and has been compensated for such services. Most recently, DLJ served as
lead-manager of Invitrogen's $172.5 million Convertible Subordinated Note
offering in February 2000, as lead-manager of Invitrogen's $147.5 million
follow-on offering in October 1999 and as lead-manager of Invitrogen's
$60.4 million initial public offering of common stock in February 1999. DLJ has
also performed investment banking and other services for Dexter in the past and
has been compensated for such services. Most recently, DLJ served as financial
advisor in the $33 million sale of Dexter's printed wiring board business in
November 1999. DLJ has also performed investment banking and other services for
Life Technologies in the past and has been compensated for such services.
OPINION OF FINANCIAL ADVISOR TO THE LIFE TECHNOLOGIES SPECIAL COMMITTEE
The Life Technologies special committee engaged Credit Suisse First Boston
to evaluate the fairness, from a financial point of view, of the consideration
to be received in the Life Technologies merger by the holders of Life
Technologies common stock, other than Dexter and its subsidiaries, officers and
directors. The Life Technologies special committee selected Credit Suisse First
Boston based on Credit Suisse First Boston's experience, expertise and
reputation. Credit Suisse First Boston is an internationally recognized
investment banking firm and is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes.
On July 7, 2000, at a meeting of the Life Technologies special committee
held to evaluate the Life Technologies merger, Credit Suisse First Boston
rendered to the special committee its written opinion to the effect that, as of
that date and based on and subject to the matters described in its opinion, the
Life Technologies merger consideration was fair, from a financial point of view,
to the holders of Life Technologies common stock, other than Dexter and its
subsidiaries, officers and directors.
THE FULL TEXT OF CREDIT SUISSE FIRST BOSTON'S WRITTEN OPINION DATED JULY 7,
2000 TO THE LIFE TECHNOLOGIES SPECIAL COMMITTEE, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS ANNEX D AND IS INCORPORATED INTO THIS DOCUMENT BY
REFERENCE. HOLDERS OF LIFE TECHNOLOGIES COMMON STOCK ARE URGED TO READ THIS
OPINION CAREFULLY IN ITS ENTIRETY. CREDIT SUISSE FIRST BOSTON'S OPINION IS
ADDRESSED TO THE LIFE TECHNOLOGIES SPECIAL COMMITTEE AND RELATES ONLY TO THE
FAIRNESS OF THE LIFE TECHNOLOGIES MERGER CONSIDERATION FROM A
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FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT OF THE PROPOSED LIFE
TECHNOLOGIES MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY STOCKHOLDER AS TO THE FORM OF LIFE TECHNOLOGIES MERGER
CONSIDERATION TO BE ELECTED OR ANY OTHER MATTERS RELATING TO THE LIFE
TECHNOLOGIES MERGER. THE SUMMARY OF CREDIT SUISSE FIRST BOSTON'S OPINION IN THIS
DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION.
In arriving at its opinion, Credit Suisse First Boston reviewed the Life
Technologies merger agreement and related documents, as well as publicly
available business and financial information relating to Life Technologies and
Invitrogen. Credit Suisse First Boston also reviewed other information relating
to Life Technologies and Invitrogen, including financial forecasts, which Life
Technologies and Invitrogen provided to and discussed with Credit Suisse First
Boston, and met with Life Technologies' and Invitrogen's managements to discuss
Life Technologies' and Invitrogen's businesses and prospects.
Credit Suisse First Boston also considered financial and stock market data
of Life Technologies and Invitrogen and compared those data with similar data
for other publicly held companies in businesses similar to Life Technologies and
Invitrogen and considered, to the extent publicly available, the financial terms
of other business combinations and transactions recently effected. Credit Suisse
First Boston also considered other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed
relevant.
In connection with its review, Credit Suisse First Boston did not assume any
responsibility for independent verification of any of the information that was
provided to or otherwise reviewed by it and relied on that information being
complete and accurate in all material respects. With respect to financial
forecasts, Credit Suisse First Boston was advised, and assumed, that the
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of Life Technologies' and Invitrogen's
managements as to the future financial performance of Life Technologies and
Invitrogen. In addition, Credit Suisse First Boston relied, without independent
verification, on the assessments of Life Technologies' and Invitrogen's
managements as to Life Technologies' and Invitrogen's existing and future
technology and products and the risks associated with their technology and
products. Credit Suisse First Boston also assumed, with Life Technologies'
consent, that the Life Technologies merger will be treated as a tax-free
reorganization for federal income tax purposes.
Credit Suisse First Boston was not requested to, and did not, make an
independent evaluation or appraisal of Life Technologies' or Invitrogen's assets
or liabilities, contingent or otherwise, and was not furnished with any
evaluations or appraisals. Representatives of Life Technologies advised Credit
Suisse First Boston that, concurrently with the consummation of the Life
Technologies merger, Invitrogen intended to consummate the Dexter merger. Credit
Suisse First Boston was not requested to, and its opinion does not, address any
aspects or implications of the Dexter merger. Credit Suisse First Boston's
opinion was necessarily based on information available to, and financial,
economic, market and other conditions as they existed and could be evaluated by,
Credit Suisse First Boston on the date of its opinion. Credit Suisse First
Boston did not express any opinion as to what the value of Invitrogen common
stock actually would be when issued in the merger or the prices at which
Invitrogen common stock would trade after the Life Technologies merger.
The Life Technologies special committee retained Credit Suisse First Boston
solely for purposes of rendering an opinion. Accordingly, Credit Suisse First
Boston was not requested to, and it did not, solicit third party indications of
interest in the possible acquisition of all or a part of Life Technologies.
Credit Suisse First Boston was advised, however, by representatives of Dexter
that, in connection with Dexter's public announcement of its plans to explore
alternatives to maximize stockholder value, including the possible sale of
assets, Dexter solicited indications of interest from, and held discussions
with, third parties regarding the possible acquisition of all or a part of
Dexter, including Life Technologies.
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Although Credit Suisse First Boston evaluated the merger consideration from
a financial point of view, Credit Suisse First Boston was not requested to, and
did not, recommend the specific consideration payable in the Life Technologies
merger, which consideration was determined between Life Technologies and
Invitrogen. The special committee imposed no other limitations on Credit Suisse
First Boston with respect to the investigations made or procedures followed in
rendering its opinion.
In preparing its opinion to the Life Technologies special committee, Credit
Suisse First Boston performed a variety of financial and comparative analyses,
including those described below. The summary of Credit Suisse First Boston's
analyses described below is not a complete description of the analyses
underlying Credit Suisse First Boston's opinion. The preparation of a fairness
opinion is a complex analytical process involving various determinations as to
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore, a
fairness opinion is not readily susceptible to summary description. In arriving
at its opinion, Credit Suisse First Boston made qualitative judgments as to the
significance and relevance of each analysis and factor that it considered.
Accordingly, Credit Suisse First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors or
focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.
In its analyses, Credit Suisse First Boston considered industry performance,
regulatory, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Life Technologies and
Invitrogen. No company, transaction or business used in Credit Suisse First
Boston's analyses as a comparison is identical to Life Technologies or
Invitrogen or the proposed Life Technologies merger, and an evaluation of the
results of those analyses is not entirely mathematical. Rather, the analyses
involve complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
analyzed.
The estimates contained in Credit Suisse First Boston's analyses and the
ranges of valuations resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by the analyses. In
addition, analyses relating to the value of businesses or securities do not
necessarily purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Credit Suisse First
Boston's analyses and estimates are inherently subject to substantial
uncertainty.
Credit Suisse First Boston's opinion and financial analyses were only one of
many factors considered by the Life Technologies special committee in its
evaluation of the proposed Life Technologies merger and should not be viewed as
determinative of the views of the Life Technologies special committee, Board of
Directors or management with respect to the Life Technologies merger or the Life
Technologies merger consideration.
The following is a summary of the material financial analyses underlying
Credit Suisse First Boston's opinion dated July 7, 2000 delivered to the Life
Technologies special committee in connection with the Life Technologies merger.
THE FINANCIAL ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR
FORMAT. IN ORDER TO FULLY UNDERSTAND CREDIT SUISSE FIRST BOSTON'S FINANCIAL
ANALYSES, THE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE
TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES.
CONSIDERING THE DATA IN THE TABLES BELOW WITHOUT CONSIDERING THE FULL NARRATIVE
DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING THE METHODOLOGIES AND
ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A MISLEADING OR INCOMPLETE
VIEW OF CREDIT SUISSE FIRST BOSTON'S FINANCIAL ANALYSES.
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INTRODUCTION
Credit Suisse First Boston performed a "Discounted Cash Flow Analysis,"
"Selected Companies Analysis" and "Selected Transactions Analysis" for each of
Life Technologies and Invitrogen as described below in order to derive implied
aggregate per share equity value reference ranges for Life Technologies and
Invitrogen. Credit Suisse First Boston compared the implied aggregate per share
equity value reference range for Life Technologies against the Life Technologies
merger consideration based on the closing price of Invitrogen common stock on
July 6, 2000. Credit Suisse First Boston compared the implied aggregate per
share equity value reference range for Invitrogen against the closing price of
Invitrogen common stock on July 6, 2000.
LIFE TECHNOLOGIES
DISCOUNTED CASH FLOW ANALYSIS. Credit Suisse First Boston estimated the
present value of the stand-alone, unlevered, after-tax free cash flows that Life
Technologies could produce over calendar years 2001 through 2006. Credit Suisse
First Boston performed its analysis based on two scenarios, a management case
and an adjusted management case. The management case was based on internal
estimates of Life Technologies' management provided by and discussed with Life
Technologies' management and reflected separately the estimated financial
results of Life Technologies' existing operations and current research and
development pipeline. The adjusted management case was based on adjustments to
the management case discussed with Life Technologies' management to reflect,
among other things, the potential for lower revenue growth and operating
margins.
Credit Suisse First Boston calculated a range of estimated terminal values
for Life Technologies by multiplying Life Technologies' estimated calendar year
2006 net income and earnings before interest, taxes, depreciation and
amortization, commonly referred to as EBITDA, by various multiples. With respect
to Life Technologies' existing operations, Credit Suisse First Boston applied
net income multiples ranging from 20.0x to 22.0x under the management case and
18.0x to 20.0x under the adjusted management case and EBITDA multiples ranging
from 12.0x to 14.0x under the management case and 11.0x to 12.0x under the
adjusted management case. With respect to Life Technologies' current research
and development pipeline, Credit Suisse First Boston applied net income
multiples ranging from 45.0x to 50.0x and EBITDA multiples ranging from 28.0x to
30.0x. Credit Suisse First Boston then discounted to present value the estimated
after-tax free cash flows and terminal values of Life Technologies using
discount rates of 11.0% to 15.0% for Life Technologies' existing operations and
22.0% to 28.0% for Life Technologies' current research and development pipeline
under both the management case and the adjusted management case.
This analysis indicated an implied enterprise value reference range for Life
Technologies of approximately $1.1 billion to $1.7 billion based on the
management case and approximately $850 million to $1.1 billion based on the
adjusted management case.
SELECTED COMPANIES ANALYSIS. Credit Suisse First Boston compared financial,
operating and stock market data of Life Technologies to corresponding data of
the following lower-growth publicly traded companies in the biotechnology
industry:
- Sigma--Aldrich Corporation
- Beckman Coulter, Inc.
- Cambrex Corporation
- Diagnostic Products Corporation
- Bio-Rad Laboratories, Inc.
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Credit Suisse First Boston reviewed enterprise values, calculated as equity
value, plus total debt, preferred stock and minority interest, less cash, as a
multiple of latest 12 months revenue and EBITDA. Credit Suisse First Boston also
reviewed equity values as multiples of estimated calendar year 2000 net income.
Credit Suisse First Boston then applied a range of selected multiples derived
from the selected companies of latest 12 months revenue and EBITDA and estimated
calendar year 2000 net income to corresponding financial data of Life
Technologies. All multiples were based on closing stock prices on July 6, 2000.
Estimated financial data for Life Technologies were based on the management case
and estimated financial data for the selected companies were based on publicly
available research analysts' estimates and public filings of the selected
companies. This analysis indicated an implied enterprise value reference range
for Life Technologies of approximately $800 million to $1.25 billion.
SELECTED TRANSACTIONS ANALYSIS. Credit Suisse First Boston analyzed the
implied transaction multiples paid or proposed to be paid in the following
selected merger and acquisition transactions in the biotechnology industry:
<TABLE>
<CAPTION>
ACQUIROR TARGET
------------------------------------- ---------------------------------
<S> <C>
- Qiagen N.V. Rapigene Inc.
- Invitrogen Research Genetics, Inc.
- E.I. du Pont de Nemours and Company Combichem, Inc.
- Affymetrix, Inc. Genetic Microsystems, Inc.
- Invitrogen NOVEX
- PerkinElmer Corporation NEN Life Sciences, Inc.
- Becton Dickinson & Company Clontech Laboratories, Inc.
- Amersham Pharmacia Biotech Inc. Molecular Dynamics, Inc.
- Dexter Life Technologies
- Incyte Pharmaceuticals, Inc. Synteni, Inc.
- Cambrex Corporation Biowhittaker, Inc.
- PerkinElmer Corporation PerSeptive Biosystems, Inc.
- Amersham Life Science Pharmacia Biotech AB
- Agouron Pharmaceuticals, Inc. Alanex Corporation
- Thermo Instrument Systems Inc. Life Sciences International plc
</TABLE>
Credit Suisse First Boston compared enterprise values in the selected
transactions as multiples of latest 12 months revenue and EBITDA. Credit Suisse
First Boston also reviewed equity values as a multiple of latest 12 months net
income. All multiples were based on financial information available at the time
of the relevant transaction. Credit Suisse First Boston then applied a range of
selected multiples derived from the selected transactions of latest 12 months
revenue, EBITDA and net income to corresponding financial data of Life
Technologies. This analysis indicated an implied enterprise value reference
range for Life Technologies of approximately $1.1 billion to $1.9 billion.
AGGREGATE REFERENCE RANGE. Based on the valuation methodologies described
above, Credit Suisse First Boston derived the following aggregate per share
equity value reference range for Life Technologies, as compared to the Life
Technologies merger consideration based on the closing price of Invitrogen
common stock on July 6, 2000:
<TABLE>
<CAPTION>
AGGREGATE PER SHARE EQUITY LIFE TECHNOLOGIES MERGER CONSIDERATION BASED ON
REFERENCE RANGE FOR LIFE TECHNOLOGIES INVITROGEN CLOSING STOCK PRICE ON JULY 6, 2000
------------------------------------- -----------------------------------------------
<S> <C>
$46.22 to $65.49 per share $60.00 per share
</TABLE>
INVITROGEN
DISCOUNTED CASH FLOW ANALYSIS. Credit Suisse First Boston estimated the
present value of the stand-alone, unlevered, after-tax free cash flows that
Invitrogen could produce over calendar years 2001 through 2006. Credit Suisse
First Boston performed its analysis based on two scenarios, a management
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case and a street case. The management case was based on internal estimates of
Invitrogen's management provided by and discussed with Invitrogen's management
and the street case was based on publicly available research analysts'
estimates.
Credit Suisse First Boston calculated a range of estimated terminal values
for Invitrogen by multiplying Invitrogen's estimated calendar year 2006 net
income and EBITDA by net income multiples ranging from 40.0x to 55.0x and EBITDA
multiples ranging from 26.0x to 32.0x under both the management case and the
street case. Credit Suisse First Boston then discounted to present value the
estimated after-tax free cash flows and terminal values of Invitrogen using
discount rates of 12.0% to 16.0% under both the management case and the street
case.
This analysis indicated an implied enterprise value reference range for
Invitrogen of approximately $1.75 billion to $2.1 billion based on the
management case and approximately $1.6 billion to $2.0 billion based on the
street case.
SELECTED COMPANIES ANALYSIS. Credit Suisse First Boston compared financial,
operating and stock market data of Invitrogen to corresponding data of the
following higher-growth publicly traded companies in the biotechnology industry:
- PE Biosystems (a tracking stock of PE Corporation)
- Waters Corporation
- Qiagen N.V.
- Affymetrix, Inc.
- Techne Corporation
- Enzo Biochem, Inc.
- Aurora Biosciences Corporation
- Caliper Technologies Corp.
- Nanogen, Inc.
Credit Suisse First Boston reviewed enterprise values as a multiple of
latest 12 months revenue and EBITDA. Credit Suisse First Boston also reviewed
equity values as multiples of estimated calendar year 2000 net income. Credit
Suisse First Boston then applied a range of selected multiples derived from the
selected companies of latest 12 months revenue and EBITDA and estimated calendar
year 2000 net income to corresponding financial data of Invitrogen. All
multiples were based on closing stock prices on July 6, 2000. Estimated
financial data for Invitrogen and the selected companies were based on publicly
available research analysts' estimates and public filings of the selected
companies. This analysis indicated an implied enterprise value reference range
for Invitrogen of approximately $1.75 billion to $1.9 billion.
SELECTED TRANSACTIONS ANALYSIS. Credit Suisse First Boston also performed a
selected transactions analysis for Invitrogen in which Credit Suisse First
Boston applied to the latest 12 months revenue of Invitrogen a range of selected
multiples of latest 12 months revenue derived from the selected transactions in
the biotechnology industry which it reviewed for Life Technologies. All
multiples were based on financial information available at the time of the
relevant transaction. This analysis indicated an implied enterprise value
reference range for Invitrogen of approximately $1.45 billion to $2.25 billion.
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AGGREGATE REFERENCE RANGE. Based on the valuation methodologies described
above, Credit Suisse First Boston derived the following aggregate per share
equity value reference range for Invitrogen, as compared to the closing price of
Invitrogen common stock on July 6, 2000:
<TABLE>
<CAPTION>
AGGREGATE PER SHARE EQUITY CLOSING STOCK PRICE OF INVITROGEN
REFERENCE RANGE FOR INVITROGEN COMMON STOCK ON JULY 6, 2000
------------------------------ ---------------------------------
<S> <C>
$64.49 to $83.10 per share $73.50 per share
</TABLE>
OTHER FACTORS
In the course of preparing its opinion, Credit Suisse First Boston also
reviewed and considered other information and data, including:
- the trading characteristics of Life Technologies common stock and
Invitrogen common stock and the exchange ratios implied by the closing
prices of Life Technologies common stock and Invitrogen common stock over
various periods prior to July 3, 2000;
- the potential pro forma impact of the Life Technologies merger on
Invitrogen's earnings per share both before and after taking into account
goodwill amortization;
- the implied per share prices of Life Technologies common stock based on
the average implied premiums paid in selected merger and acquisition
transactions involving the sale of minority holdings over the period 1998
to 2000; and
- the financial terms of the Dexter merger.
MISCELLANEOUS
Life Technologies has agreed to pay Credit Suisse First Boston upon delivery
of its opinion a fee of $1.5 million. Life Technologies also has agreed to
reimburse Credit Suisse First Boston for its reasonable out-of-pocket expenses,
including fees and expenses of legal counsel and any other advisor retained by
Credit Suisse First Boston, and to indemnify Credit Suisse First Boston and
related parties against liabilities, including liabilities under the federal
securities laws, arising out of its engagement. In the ordinary course of
business, Credit Suisse First Boston and its affiliates may actively trade the
debt and equity securities of Life Technologies, Invitrogen and Dexter for their
own accounts and for the accounts of customers and, accordingly, may at any time
hold long or short positions in those securities.
OPINION OF DEXTER'S FINANCIAL ADVISOR
On July 7, 2000, Lehman Brothers delivered its opinion to the Dexter Board
of Directors, to the effect that, as of such date, and, based upon and subject
to certain matters stated therein, the consideration to be received by the
holders of Dexter common stock pursuant to the Dexter merger was fair from a
financial point of view to such holders.
THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS, DATED JULY 7, 2000,
IS INCLUDED AS ANNEX E TO THIS DOCUMENT. DEXTER STOCKHOLDERS SHOULD READ THIS
OPINION FOR A DISCUSSION OF THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND
LIMITATIONS UPON THE REVIEW UNDERTAKEN BY LEHMAN BROTHERS IN RENDERING ITS
OPINION. THE FOLLOWING IS A SUMMARY OF LEHMAN BROTHERS' OPINION AND THE
METHODOLOGY LEHMAN BROTHERS USED TO RENDER ITS FAIRNESS OPINION.
LEHMAN BROTHERS' ADVISORY SERVICES AND OPINION WERE PROVIDED FOR THE USE AND
BENEFIT OF THE DEXTER BOARD OF DIRECTORS IN CONNECTION WITH ITS CONSIDERATION OF
THE DEXTER MERGER. THE LEHMAN BROTHERS OPINION IS NOT INTENDED TO BE AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF DEXTER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE DEXTER MERGER AND WHETHER SUCH
STOCKHOLDER SHOULD ELECT TO RECEIVE THE STOCK ELECTION, THE CASH ELECTION OR THE
STANDARD ELECTION. LEHMAN BROTHERS WAS NOT REQUESTED TO OPINE AS TO, AND ITS
OPINION DOES NOT IN ANY MANNER ADDRESS, DEXTER'S UNDERLYING BUSINESS DECISION TO
PROCEED WITH OR EFFECT THE DEXTER MERGER.
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In arriving at its opinion, Lehman Brothers reviewed and analyzed:
- the Dexter merger agreement and the specific terms of the Dexter merger;
- the Life Technologies merger agreement and the specific terms of the Life
Technologies merger;
- publicly available information concerning Dexter, Life Technologies and
Invitrogen that Lehman Brothers believed to be relevant to its analysis;
- financial and operating information with respect to the business,
operations and prospects of Dexter and Life Technologies furnished to
Lehman Brothers by Dexter, including, without limitation, certain
projections of future financial performance of Dexter and Life
Technologies prepared by management of Dexter and Life Technologies,
respectively;
- financial and operating information with respect to the business,
operations and prospects of Invitrogen furnished to Lehman Brothers by
Invitrogen, including, without limitation, certain projections of future
financial performance of Invitrogen prepared by management of Invitrogen;
- a comparison of the historical financial results and present financial
condition of Life Technologies and Invitrogen with those of other
companies that Lehman Brothers deemed relevant;
- a trading history of the common shares of Life Technologies and Invitrogen
and a comparison of that trading history with those of other companies
that Lehman Brothers deemed relevant;
- the pro forma impact of the Dexter merger, including strategic benefits
expected by the management of Dexter to result from a combination of the
businesses of Dexter and Invitrogen;
- the relative contributions of Dexter and Invitrogen to the combined
company following the consummation of the Dexter merger;
- a comparison of the financial terms of the Dexter merger with the
financial terms of certain other recent transactions that Lehman Brothers
deemed relevant;
- the terms and conditions of the recently announced sale of Dexter's
electronic materials, adhesives and polymer systems businesses;
- the terms and conditions of the recently announced sale of Dexter's
nonwoven materials business; and
- efforts to solicit potential buyers of Dexter and Dexter's interest in
Life Technologies.
In addition, Lehman Brothers had discussions with the managements of Dexter,
Life Technologies and Invitrogen concerning their respective businesses,
operations, assets, financial conditions and prospects and undertook such other
studies, analyses and investigations as it deemed appropriate.
In arriving at its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it
without assuming any responsibility for independent verification of such
information and further relied upon the assurances of the managements of Dexter
and Invitrogen that they were not aware of any facts or circumstances that would
make such information inaccurate or misleading. With respect to the financial
projections of Dexter, Life Technologies and Invitrogen, upon advice of the
companies, Lehman Brothers assumed that such projections had been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the managements of the Dexter, Life Technologies and Invitrogen, as
the case may be, as to the future financial performance of Dexter, Life
Technologies and Invitrogen and that Dexter, Life Technologies and Invitrogen
would perform substantially in accordance with such projections. In arriving at
its opinion, Lehman Brothers did not conduct a physical inspection of the
properties and facilities of Dexter, Life Technologies or Invitrogen and did not
make or obtain any
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evaluations or appraisals of the assets or liabilities of Dexter, Life
Technologies or Invitrogen. Lehman Brothers' opinion was based upon market,
economic and other conditions as they existed on, and could be evaluated as of,
the date of its opinion letter.
In connection with rendering its opinion, Lehman Brothers performed certain
financial, comparative and other analyses as described below. The preparation of
a fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial and comparative analysis and the application
of those methods to the particular circumstances, and, therefore, such an
opinion is not readily susceptible to summary description. Furthermore, in
arriving at its fairness opinion, Lehman Brothers did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, Lehman Brothers believes that its analyses must be
considered as a whole and that considering any portion of such analyses and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the opinion. In
its analyses, Lehman Brothers made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of Dexter, Life Technologies or Invitrogen. Any
estimates contained in the analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than as set forth therein. In addition, analyses relating
to the value of businesses do not purport to be appraisals or to reflect the
prices at which businesses actually may be sold.
VALUATION ANALYSIS
Lehman Brothers prepared a valuation of Dexter. In determining its
valuation, Lehman Brothers used the following methodologies:
- comparable company trading analysis (without acquisition premium);
- comparable company trading analysis (with acquisition premium);
- discounted cash flow analysis; and
- comparable transaction analysis.
Each of the methodologies was used to generate a reference value range for
the common stock of Dexter.
The various valuation methodologies noted above and the implied values
derived therefrom are included in the following table. This table should be read
together with the more detailed descriptions set forth below. The table alone
does not constitute a complete description of the financial and comparative
analyses. In particular, in applying the various valuation methodologies to the
particular business, operations and prospects of Dexter and the particular
circumstances of the Dexter merger, Lehman Brothers made qualitative judgments
as to the significance and relevance of each analysis and factor. In addition,
Lehman Brothers made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of Dexter, Life Technologies or Invitrogen. Accordingly, the
methodologies and the values derived therefrom, as set forth in the table, must
be considered as a whole and in the context of the narrative description of the
financial analyses, including the assumptions underlying these analyses.
Considering the implied values without considering the narrative description of
the financial analyses,
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including the assumptions underlying these analyses, could create a misleading
or incomplete view of the process underlying, and conclusions represented by,
Lehman Brothers' opinion.
<TABLE>
<CAPTION>
IMPLIED VALUE PER SHARE
SUMMARY DESCRIPTION OF OF
VALUATION METHODOLOGY VALUATION METHODOLOGY DEXTER COMMON STOCK
--------------------- ---------------------------------- -----------------------
<S> <C> <C>
COMPARABLE COMPANY TRADING Market valuation benchmark based $ 48.00 - $55.00
ANALYSIS WITHOUT PREMIUM on the common stock trading
multiples of selected comparable
companies, assuming no
acquisition premium
COMPARABLE COMPANY TRADING Market valuation benchmark based $ 61.00 - $70.00
ANALYSIS WITH PREMIUM on the common stock trading
multiples of selected comparable
companies, assuming 34.3% (1
week prior) and 41.1% (one month
prior) acquisition premiums
DISCOUNTED CASH FLOW ANALYSIS Net present valuation of $ 50.00 - $56.00
management projections of
projected after-tax unlevered
free cash flows based on
Dexter's financial projections
using selected discount rates
COMPARABLE TRANSACTION ANALYSIS Market valuation benchmark based $ 48.00 - $61.00
on consideration paid in
selected comparable transactions
</TABLE>
COMPARABLE COMPANY TRADING ANALYSIS WITHOUT PREMIUM. The comparable company
trading analysis without premium provides a market valuation benchmark based on
the common stock trading multiples of selected comparable companies. For this
analysis, Lehman Brothers reviewed the public stock market trading multiples for
selected companies that Lehman Brothers deemed comparable to Dexter, whose
principal business, after giving effect to the sale of its electronic materials,
adhesives and specialty polymer systems businesses and its nonwoven materials
business, is its approximate 75% interest in Life Technologies. These companies
were:
- Bio-Rad Laboratories, Inc.;
- Cambrex Corporation;
- Dionex Corporation;
- Invitrogen Corporation;
- Millipore Corporation;
- PE Corporation--PE Biosystems Group;
- Qiagen N.V.;
- Sigma-Aldrich Corporation;
- Techne Corporation; and
- Waters Corporation.
Using publicly available information, Lehman Brothers calculated and
analyzed the common equity market value as a multiple of certain projected
financial criteria (such as net income and the ratio of the price/earnings ratio
to the projected long-term earnings per share growth rate, which is referred to
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as the PEG ratio) and the net market capitalization, which means common equity
market value plus the net debt plus preferred equity at liquidation value plus
minority interests at book value, as a multiple of certain projected financial
criteria (such as revenues and earnings before interest, taxes, depreciation and
amortization, which is referred to as EBITDA) as of June 30, 2000. Net income
and the long-term earnings per share growth rates for the selected companies
were based on research analysts' estimates published by IBES, a service
reporting equity analyst estimates.
This analysis indicated that:
- market value as a multiple of projected 2001 net income for the comparable
companies ranged from approximately 14.1x to 187.1x, with a mean of
approximately 25.4x and median of approximately 19.9x (excluding
Invitrogen, PE Corporation--PE Biosystems, Qiagen and Techne), compared to
approximately 18.7x for Life Technologies;
- the estimated 2001 PEG ratio for the comparable companies ranged from
approximately 0.87x to 4.56x, with a mean of approximately 2.30x and
median of approximately 2.55x, compared to approximately 1.25x for Life
Technologies;
- net market capitalization as a multiple of projected 2000 revenues for the
comparable companies ranged from approximately 0.71x to 34.92x, with a
mean of approximately 4.03x and median of approximately 2.81x (excluding
Invitrogen, PE Corporation--PE Biosystems, Qiagen and Techne), compared to
approximately 2.58x for Life Technologies; and
- net market capitalization as a multiple of projected 2000 EBITDA for the
comparable companies ranged from approximately 4.8x to 138.8x, with a mean
of approximately 15.0x and median of approximately 10.0x (excluding
Invitrogen, PE Corporation--PE Biosystems, Qiagen and Techne), compared to
approximately 12.3x for Life Technologies.
Based upon this analysis, the implied values per share of Life Technologies
common stock ranged from approximately $44.00 to approximately $53.00. Based
upon this range of implied values per share of Life Technologies common stock,
after subtracting Dexter's net liabilities of $237 million and adding estimated
after-tax divestiture proceeds of $577.8 million from assets other than Dexter's
approximate 75% interest in Life Technologies, this methodology yielded
valuations for Dexter common stock that imply a value range of approximately
$48.00 to approximately $55.00 per share of Dexter common stock.
Because of the inherent differences between the businesses, operations,
financial conditions and prospects of Dexter and the businesses, operations,
financial conditions and prospects of the companies included in the comparable
company group, Lehman Brothers believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of the analysis, and
accordingly, also made qualitative judgments concerning differences between the
financial and operating characteristics of Dexter and companies in the
comparable company group that would affect the public trading values of Dexter
and such comparable companies.
COMPARABLE COMPANY TRADING ANALYSIS WITH PREMIUM. The comparable company
trading analysis with premium provides a market valuation benchmark based on the
common stock trading multiples of selected comparable companies and illustrative
acquisition premiums. To derive illustrative acquisition premiums, Lehman
Brothers reviewed the purchase price premium to share price for selected
completed domestic acquisition transactions exceeding $250 million from
January 1, 1998 to July 3, 2000 in which the acquirer's pro forma ownership was
greater than 50 percent.
The median purchase price premiums resulting from this analysis were:
- 34.3% purchase price premium to the share price one week prior to
announcement of the transaction; and
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- 41.1% purchase price premium to the share price one month prior to
announcement of the transaction.
Lehman Brothers applied these median premiums to the range of implied values
per share of Life Technologies common stock derived from the analysis described
above in the section entitled "Comparable Company Trading Analysis without
Premium." Based upon this analysis, the implied values per share of Life
Technologies common stock ranged from approximately $61.00 to approximately
$73.00. Based upon this range of implied values per share of Life Technologies
common stock, after subtracting Dexter's net liabilities and adding estimated
after-tax divestiture proceeds as described above, this methodology yielded
valuations for Dexter common stock that imply a value range of approximately
$61.00 to approximately $70.00 per share of Dexter common stock.
Because of the inherent differences between the businesses, operations,
financial conditions and prospects of Dexter and the businesses, operations,
financial conditions and prospects of the companies included in the comparable
company group, Lehman Brothers believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of the analysis, and
accordingly, also made qualitative judgments concerning differences between the
financial and operating characteristics of Dexter and companies in the
comparable company group that would affect the public trading values of Dexter
and such comparable companies.
DISCOUNTED CASH FLOW ANALYSIS. The discounted cash flow analysis provides a
net present valuation of management projections of the projected after-tax
unlevered free cash flows based upon financial projections for Life
Technologies. Utilizing such financial forecasts, Lehman Brothers calculated a
range of present values for Life Technologies using a range of after-tax
discount rates from 11% to 13% and a terminal value based upon a range of
multiples of estimated 2004 EBITDA from 10.0x to 12.0x. Based upon the midpoint
of the discount rates and the range of the terminal values, the implied values
per share of Life Technologies common stock ranged from approximately $47.00 to
approximately $55.00. Based upon this range of implied values per share of Life
Technologies common stock, after subtracting Dexter's net liabilities and adding
estimated after-tax divestiture proceeds as described above, this methodology
yielded valuations for Dexter common stock that imply a value range of
approximately $50.00 to approximately $56.00 per share of Dexter common stock.
COMPARABLE TRANSACTION ANALYSIS. The comparable transaction analysis
provides a market benchmark based on the consideration paid in selected
comparable transactions. For this analysis, Lehman Brothers reviewed publicly
available information to determine the purchase prices and multiples paid in
certain transactions that were publicly announced between January 21, 1997 and
June 30, 2000 involving target companies that were similar to Dexter's
approximate 75% interest in Life Technologies in terms of business mix, product
portfolio, and/or markets served. These transactions and the months in which
they were announced were:
- Celgene Corporation's acquisition of Signal Pharmaceuticals, Inc.
(June 2000);
- Qiagen N.V.'s acquisition of Operon Technologies, Inc. (June 2000);
- PerkinElmer, Inc.'s acquisition of NEN Life Sciences (June 2000);
- E. I. du Pont de Nemours and Company's acquisition of CombiChem, Inc.
(October 1999);
- Amersham Pharmacia Biotech Inc.'s acquisition of Molecular Dynamics, Inc.
(August 1998);
- Incyte Pharmaceuticals, Inc.'s acquisition of Synteni, Inc.
(December 1997);
- The Perkin-Elmer Corporation's acquisition of PerSeptive Biosystems, Inc.
(August 1997);
- Cambrex Corporation's acquisition of BioWhittaker, Inc. (August 1997);
- Amersham International's acquisition of Nycomed ASA (July 1997);
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- Agouron Pharmaceuticals, Inc.'s acquisition of Alanex Corporation
(April 1997); and
- Thermo Instrument Systems Inc.'s acquisition of Life Sciences
International PLC (January 1997).
Lehman Brothers calculated the transaction value of the relevant
transactions (calculated as the consideration offered for the common equity and
short- and long-term debt, and subtracting its cash and cash equivalents), and
applied it to certain historical financial criteria (including revenues, EBITDA
and EBIT) of the acquired business for the last twelve months period.
The analysis indicated that:
- the transaction value as a multiple of last twelve months revenues ranged
from approximately 1.20x to 6.73x, with a mean of approximately 3.95x and
a median of approximately 3.54x;
- the transaction value as a multiple of last twelve months EBITDA for the
comparable transactions ranged from approximately 7.9x to 32.6x, with a
mean of approximately 10.4x and a median of approximately 10.7x (excluding
Amersham Pharmacia Biotech's acquisition of Molecular Dynamics); and
- the transaction value as a multiple of last twelve months EBIT for the
comparable transactions ranged from approximately 9.5x to 54.0x, with a
mean of approximately 15.1x and a median of approximately 16.8x (excluding
Amersham Pharmacia Biotech's acquisition of Molecular Dynamics).
Based upon a multiple range of 2.5x to 3.5x last twelve months revenues, the
implied values per share of Life Technologies common stock ranged from
approximately $44.00 to approximately $61.00. Based upon this range of implied
values per share of Life Technologies common stock, after subtracting Dexter's
net liabilities and adding estimated after-tax divestiture proceeds as described
above, this methodology yielded valuations for Dexter common stock that imply a
value range of approximately $48.00 to approximately $61.00 per share of Dexter
common stock.
Because the market conditions, rationale and circumstances surrounding each
of the transactions analyzed were specific to each transaction and because of
the inherent differences between the businesses, operations and prospects of
Dexter and the acquired businesses analyzed, Lehman Brothers believed that it
was inappropriate to, and therefore did not, rely solely on the quantitative
results of the analysis and, accordingly, also made qualitative judgments
concerning differences between the characteristics of these transactions and the
Dexter merger that would affect the acquisition values of Dexter and such
acquired companies.
STOCK TRADING ANALYSIS. Lehman Brothers reviewed the daily closing prices
and trading volume of Dexter common stock for the period from June 30, 1997 to
December 13, 1999. Lehman Brother then calculated that the implied value of
$62.50 per share of Dexter common stock offered by Invitrogen represented:
- a 43.7% premium to the highest closing price of Dexter common stock for
this period;
- a 163.2% premium to the lowest closing price of Dexter common stock for
this period; and
- a 92.0% premium to the closing price of Dexter common stock on
December 13, 1999, the day prior to the offer by International Specialty
Products Inc. to acquire Dexter for $45.00 per share of Dexter common
stock.
COMPARABLE COMPANY TRADING MULTIPLES ANALYSIS. Using publicly available
information regarding the selected publicly-traded companies listed in the
section above entitled "Comparable Company Trading Analysis without Premium,"
Lehman Brothers analyzed the relationship between the ratio of the market value
of the common stock of Invitrogen and each other comparable company to the
projected 2000 revenues and the forecasted five-year earnings growth rates for
Invitrogen and such
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other comparable companies. Lehman Brothers also analyzed the hypothetical pro
forma impact of the merger. For this hypothetical analysis, Lehman Brothers
analyzed the projected blended five-year earnings growth rate of the combined
company at illustrative per share trading prices of $60.00, $80.00, and $100.00,
and compared the ratio of the market value of the common stock implied by each
illustrative trading price to the projected 2000 revenues of the combined
company with the corresponding ratios for the group of comparable companies.
COLLAR ANALYSIS. Lehman Brothers reviewed with the Dexter Board of
Directors the collar mechanism under the Dexter merger agreement with respect to
the number of shares of Invitrogen common stock to be issued based upon the
trading prices of Invitrogen common stock during the measurement period prior to
the date of the Dexter stockholders meeting. Lehman Brothers observed that,
because of the asymmetrical structure of the collar mechanism relative to the
closing price per share of Invitrogen common stock on July 6, 2000, meaning that
the closing price per share of Invitrogen common stock on that date was greater
than the midpoint of the collar mechanism, this structure provided downside
price protection to Dexter stockholders and therefore had theoretical positive
value on an options pricing basis.
Lehman Brothers is an internationally recognized investment banking firm
engaged in, among other things, the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive bids, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. The Dexter
Board of Directors selected Lehman Brothers because of its expertise, reputation
and familiarity with Dexter and Life Technologies and because its investment
banking professionals have substantial experience in transactions comparable to
the Dexter merger.
As compensation for its services in connection with the Dexter merger and
Dexter's short-term stockholder maximization efforts, Dexter has agreed to pay
Lehman Brothers a fee of approximately $12.1 million, a portion of which is
contingent upon the consummation of the Dexter merger and against which certain
other fees payable for other services performed by Lehman Brothers for Dexter
will be credited. In addition, Dexter has agreed to reimburse Lehman Brothers
for reasonable out-of-pocket expenses incurred in connection with the Dexter
merger and to indemnify Lehman Brothers for certain liabilities that may arise
out of its engagement by Dexter and the rendering of the Lehman Brothers
opinion. Lehman Brothers has performed various financial advisory and investment
banking services for Dexter in the past (including the pending sale of Dexter's
electronic materials, adhesives and polymer systems businesses to Loctite
Corporation, the pending sale of Dexter's nonwoven materials business to
Ahlstrom Paper Group Oy and the pending sale of the coatings business to Akzo
Nobel Coatings Inc.) and has received customary fees for such services. In the
ordinary course of its business, Lehman Brothers may actively trade in the debt
and equity securities of Dexter and Invitrogen for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
ACCOUNTING TREATMENT
The mergers will be accounted for using the purchase method of accounting
for financial accounting purposes in accordance with U.S. generally accepted
accounting principles. The purchase method accounts for a merger as an
acquisition of one company by another, and Invitrogen will be deemed the
acquiring company principally because the common stockholders of Life
Technologies and Dexter will have their shares converted into cash and
Invitrogen shares. Purchase accounting requires that the purchase price and
costs of the acquisition be allocated to all of the assets acquired and
liabilities assumed, based on their relative fair values. This allocation will
be made based upon valuations and other studies that have not yet been
finalized. Accordingly, the purchase accounting adjustments made in connection
with the development of the pro forma combined financial information appearing
elsewhere in the joint proxy statement and prospectus are preliminary and have
been made
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solely for purposes of developing such pro forma combined financial information.
As the purchase price exceeds the fair value of the purchased companies' net
assets, the excess cost will be amortized to expense. Earnings or losses of the
purchased companies will be included in the buyer's financial statements from
the consummation date of the acquisition. See "Pro Forma Condensed Combined
Financial Information."
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS
The following discussion summarizes the anticipated material United States
federal income tax consequences of the Life Technologies merger to holders of
Life Technologies common stock and of the Dexter merger to the holders of Dexter
common stock. This discussion assumes that shares of Life Technologies common
stock and Dexter common stock are held as capital assets and does not address
all of the United States federal income tax consequences that may be relevant to
particular stockholders in light of their individual circumstances or to
stockholders that are subject to special rules, such as:
- financial institutions,
- mutual funds,
- tax-exempt organizations,
- insurance companies,
- dealers in securities or foreign currencies,
- traders in securities who elect to apply a mark-to-market method of
accounting,
- foreign stockholders
- stockholders that hold such shares as a hedge against currency risk or as
part of a straddle, constructive sale or conversion transaction or
- stockholders who acquired their shares upon the exercise of employee stock
options or otherwise as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is for general information only and is based upon the Internal Revenue Code,
laws, regulations, rulings and decisions in effect as of the date of this proxy
statement, all of which are subject to change, possibly with retroactive effect.
Tax consequences under state, local and foreign laws are not addressed herein.
THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGERS. THUS, LIFE
TECHNOLOGIES AND DEXTER STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGERS, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL,
AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX
LAWS.
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IN GENERAL
It is a condition to the consummation of the Life Technologies merger that
(i) Life Technologies receive an opinion from Skadden, Arps, Slate, Meagher &
Flom LLP, dated as of the effective date of the Life Technologies merger, to the
effect that the Life Technologies merger will qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code and (ii) Invitrogen
receive an opinion from Gray, Cary, Ware & Freidenrich LLP, special counsel to
Invitrogen, dated as of the effective date of the Life Technologies merger, to
the effect that the Life Technologies merger will qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code. It is a
condition to the consummation of the Dexter merger that (i) Dexter receive an
opinion from Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to
Dexter, dated as of the effective date of the Dexter merger, to the effect that
the Dexter merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code and (ii) Invitrogen receive an
opinion from Gray, Cary, Ware & Freidenrich LLP, special counsel to Invitrogen,
dated as of the effective date of the Dexter merger, to the effect that the
Dexter merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. These conditions relating to the
tax opinions may not be waived by Life Technologies or Invitrogen or by Dexter
or Invitrogen, as the case may be, after receipt of stockholder approval unless
further stockholder approval is obtained with appropriate disclosure. The
opinions will be based on customary assumptions and customary representations
made by, among others, Life Technologies and Invitrogen or Dexter and
Invitrogen, as the case may be. An opinion of counsel represents counsel's best
legal judgment and is not binding on the Internal Revenue Service or any court.
No ruling has been, or will be, sought from the Internal Revenue Service as to
the United States federal income tax consequences of the mergers.
In general, assuming the respective mergers qualify as reorganizations
within the meaning of Section 368(a) of the Internal Revenue Code and subject to
the assumptions and qualifications set forth herein, (i) a stockholder of Life
Technologies or Dexter, as the case may be, who has exchanged all of such
stockholder's Life Technologies common stock or Dexter common stock solely for
cash in the Life Technologies merger or the Dexter merger, as the case may be,
will recognize gain or loss in an amount equal to the difference between the
cash received and such stockholder's adjusted tax basis in the shares
surrendered, (ii) a stockholder of Life Technologies or Dexter, as the case may
be, who has exchanged all of such stockholder's Life Technologies common stock
or Dexter common stock solely for Invitrogen common stock in the Life
Technologies merger or the Dexter merger, as the case may be, will not recognize
any gain or loss as a result of the exchange, and (iii) a stockholder of Life
Technologies or Dexter, as the case may be, who receives a combination of cash
and Invitrogen common stock in the Life Technologies merger or the Dexter
merger, as the case may be, will not recognize any loss but will recognize gain,
if any, on the shares so exchanged to the extent of any cash received. Any such
recognized gain will be treated as capital gain unless the receipt of the cash
has the effect of the distribution of a dividend for United States federal
income tax purposes under the Hypothetical Redemption Analysis discussed below,
in which case such gain will be treated as ordinary dividend income to the
extent of such stockholder's ratable share of accumulated earnings and profits.
For individual taxpayers, long-term capital gains are generally subject to tax
at a maximum United States federal income tax rate of 20%, while ordinary
dividend income is generally subject to tax at a maximum United States federal
income tax rate of 39.6%.
LIFE TECHNOLOGIES MERGER
CASH ELECTION WITH RESPECT TO ALL SHARES HELD--NO PRORATION. If the cash
exchanged by Invitrogen in the Life Technologies merger is not prorated, a Life
Technologies stockholder who makes the cash election with respect to all of his
or her shares actually owned will recognize capital gain or loss equal to the
difference between the amount of cash received and such stockholder's aggregate
adjusted tax basis in the shares of Life Technologies common stock surrendered
in exchange therefor. The gain or loss will be long-term capital gain or loss
if, as of the date of the exchange, the holding period for such
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<PAGE>
shares is more than one year. If the cash exchanged in the Life Technologies
merger is prorated, see "Standard Election, Mixed Elections and Other Cases"
below.
STOCK ELECTION WITH RESPECT TO ALL SHARES HELD. A stockholder of Life
Technologies who makes a stock election with respect to all of his or her shares
actually owned will not recognize any gain or loss upon such exchange. Such
stockholder may recognize gain or loss, however, to the extent cash is received
in lieu of a fractional share of Invitrogen common stock, as discussed below.
The aggregate adjusted tax basis of the shares of Invitrogen common stock
received in the merger will be equal to the aggregate adjusted tax basis of the
Life Technologies common stock surrendered in exchange therefor, and the holding
period of the Invitrogen common stock will include the holding period of the
shares of Life Technologies common stock surrendered in exchange therefor.
STANDARD ELECTION, MIXED ELECTIONS AND OTHER CASES. A stockholder of Life
Technologies who makes a standard election or who is otherwise not described
above and who receives a combination of cash and shares of Invitrogen common
stock in the merger will not recognize any loss but will recognize gain, if any,
on the Life Technologies common stock surrendered in exchange therefor to the
extent of any cash received. Any such recognized gain will be treated as capital
gain unless the receipt of the cash has the effect of the distribution of a
dividend for United States federal income tax purposes under the Hypothetical
Redemption Analysis discussed below, in which case such gain will be treated as
ordinary dividend income to the extent of such stockholder's ratable share of
accumulated earnings and profits. Any capital gain will be long-term capital
gain if, as of the date of the exchange, the holding period for such shares is
greater than one year.
The aggregate adjusted tax basis of the shares of Invitrogen common stock
received in the merger will be equal to the aggregate tax basis of the Life
Technologies common stock surrendered in exchange therefor, decreased by the
cash received and increased by the amount of gain recognized, if any. The
holding period of Invitrogen common stock will include the holding period of the
shares of Life Technologies common stock surrendered in exchange therefor.
CASH RECEIVED IN LIEU OF A FRACTIONAL INTEREST OF INVITROGEN COMMON
STOCK. Cash received in lieu of a fractional share of Invitrogen common stock
will be treated as received in redemption of such fractional interest and gain
or loss will be recognized, measured by the difference between the amount of
cash received and the portion of the basis of the shares of Life Technologies
common stock allocable to such fractional interest. Such gain or loss will be
long-term capital gain or loss if, as of the date of the exchange, the holding
period for such shares is greater than one year.
DEXTER MERGER
CASH ELECTION WITH RESPECT TO ALL SHARES HELD--NO PRORATION. If the cash
exchanged by Invitrogen in the Dexter merger is not prorated, a Dexter
stockholder who makes the cash election with respect to all of his or her shares
actually owned will recognize capital gain or loss equal to the difference
between the amount of cash received and such stockholder's aggregate adjusted
tax basis in the shares of Dexter common stock surrendered in exchange therefor.
The gain or loss will be long-term capital gain or loss if, as of the date of
the exchange, the holding period for such shares is more than one year. If the
cash exchanged by Invitrogen in the Dexter merger is prorated, see "Standard
Election, Mixed Elections and Other Cases" below.
STOCK ELECTION WITH RESPECT TO ALL SHARES HELD. A stockholder of Dexter who
makes a stock election with respect to all of his or her shares actually owned
will not recognize any gain or loss upon such exchange. Such stockholder may
recognize gain or loss, however, to the extent cash is received in lieu of a
fractional share of Invitrogen common stock, as discussed below. The aggregate
adjusted tax basis of the shares of Invitrogen common stock received in the
merger will be equal to the aggregate adjusted tax basis of the Dexter common
stock surrendered in exchange therefor, and the holding period of the Invitrogen
common stock will include the holding period of the shares of Dexter common
stock surrendered in exchange therefor.
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<PAGE>
STANDARD ELECTION, MIXED ELECTIONS AND OTHER CASES. A stockholder of Dexter
who makes a standard election or who is otherwise not described above and who
receives a combination of cash and shares of Invitrogen common stock in the
merger will not recognize any loss but will recognize gain, if any, on the
Dexter common stock surrendered in exchange therefor to the extent of any cash
received. Any such recognized gain will be treated as capital gain unless the
receipt of the cash has the effect of the distribution of a dividend for United
States federal income tax purposes under the Hypothetical Redemption Analysis
discussed below, in which case such gain will be treated as ordinary dividend
income to the extent of such stockholder's ratable share of accumulated earnings
and profits. Any capital gain will be long-term capital gain if, as of the date
of the exchange, the holding period for such shares is greater than one year.
The aggregate adjusted tax basis of the shares of Invitrogen common stock
received in the merger will be equal to the aggregate tax basis of the Dexter
common stock surrendered in exchange therefor, decreased by the cash received
and increased by the amount of gain recognized, if any. The holding period of
Invitrogen common stock will include the holding period of the shares of Dexter
common stock surrendered in exchange therefor.
CASH RECEIVED IN LIEU OF A FRACTIONAL INTEREST OF INVITROGEN COMMON
STOCK. Cash received in lieu of a fractional share of Invitrogen common stock
will be treated as received in redemption of such fractional interest and gain
or loss will be recognized, measured by the difference between the amount of
cash received and the portion of the basis of the shares of Dexter common stock
allocable to such fractional interest. Such gain or loss will be long-term
capital gain or loss if, as of the date of the exchange, the holding period for
such shares is greater than one year.
HYPOTHETICAL REDEMPTION ANALYSIS
For any Life Technologies stockholder or Dexter stockholder described above
under the respective headings "Standard Election, Mixed Elections and Other
Cases," the characterization of any gain recognized on the receipt of cash
pursuant to the mergers as a capital gain or as ordinary dividend income will
depend on whether or not the receipt of such cash has the effect of a
distribution of a dividend under Sections 302 and 356(a)(2) of the Internal
Revenue Code (the "Hypothetical Redemption Analysis"). Under the Hypothetical
Redemption Analysis, a stockholder of Life Technologies or Dexter will be
treated as if the portion of the shares of Life Technologies common stock or
Dexter common stock, as the case may be, exchanged for cash in the Life
Technologies merger or the Dexter merger, as the case may be, had been instead
exchanged for shares of Invitrogen common stock (the "Hypothetical Shares"),
followed immediately by a redemption of the Hypothetical Shares by Invitrogen
for cash. Under the principles of Section 302 of the Code, a stockholder of Life
Technologies or Dexter will recognize capital gain rather than ordinary dividend
income with respect to the cash received if the hypothetical redemption is
(i) in complete redemption of all of the stock of Invitrogen owned by such
stockholder, (ii) "not essentially equivalent to a dividend" with respect to
such stockholder or (iii) "substantially disproportionate" with respect to such
stockholder. In applying the foregoing Section 302 tests, the constructive
ownership rules of Section 318 of the Internal Revenue Code apply in comparing
the stockholder's ownership interest in Invitrogen both immediately after the
merger (but before the hypothetical redemption) and after the hypothetical
redemption. Under these constructive ownership rules, a stockholder is deemed to
own shares of Invitrogen common stock that are actually owned (and in some cases
constructively owned) by certain related individuals and entities, and also is
deemed to own shares of Invitrogen common stock that may be acquired by such
stockholder or such related individuals or entities by exercising an option,
including an employee stock option. Moreover, the Section 302 tests are applied
after taking into account any related transactions undertaken by a stockholder
pursuant to a single, integrated plan. Thus, dispositions or acquisitions by a
holder of shares of Invitrogen before or after the mergers which are part of
such holder's plan with respect to his or her ownership level of Invitrogen
stock following the mergers may be taken into account in applying the principles
of Section 302 to such stockholder.
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In order for the receipt of cash pursuant to the Life Technologies merger or
the Dexter merger, as the case may be, to be treated as "not essentially
equivalent to a dividend" with respect to any particular Life Technologies
stockholder or Dexter stockholder, it must result in a "meaningful reduction" in
such stockholder's percentage ownership of the stock of the Invitrogen. This
determination requires that a stockholder compare his or her percentage
ownership in Invitrogen (including stock owned constructively and
hypothetically) before the hypothetical redemption with his or her percentage
ownership in Invitrogen (including stock owned constructively) after the
hypothetical redemption. In this regard, the Internal Revenue Service has
indicated in published rulings that any reduction in the percentage interest of
a public company stockholder whose relative stock interest is minimal (an
interest of less than 1% of the outstanding Invitrogen common stock should
satisfy this requirement) and who exercises no control over corporate affairs
should constitute such a meaningful reduction in such stockholder's interest.
In addition, a stockholder's reduction in his or her percentage ownership of
Invitrogen stock as a result of receiving cash pursuant to the Life Technologies
merger or the Dexter merger, as the case may be, may be "substantially
disproportionate," so that the receipt of cash by such stockholder will result
in capital gain or loss, if such stockholder owns less than 50% of the total
voting power of the Invitrogen common stock and the percentage of the voting
power and value of the Invitrogen common stock actually and constructively owned
by such stockholder immediately after the hypothetical redemption is less than
80% of both the voting power and the value of the Invitrogen common stock
actually, constructively or hypothetically owned by such stockholder immediately
before the hypothetical redemption.
CERTAIN LITIGATION
ISP ACTION
On January 27, 2000, ISP commenced a lawsuit against Dexter and certain
members of Dexter's Board of Directors in the United States District Court for
the District of Connecticut entitled INTERNATIONAL SPECIALTY PRODUCTS INC. AND
ISP INVESTMENTS INC. V. DEXTER CORPORATION, ET AL., Civil Action No. 3:00 CV 157
(JBA). ISP's second amended complaint alleges, among other things, that
Article X of Dexter's Bylaws (insofar as it may provide for a two-thirds
supermajority vote of the stockholders to amend the bylaws) violates
Section 33-807 of the Connecticut Business Corporation Act and is therefore
invalid; that Dexter's poison pill violates Section 33-665 of the Connecticut
Business Corporation Act and is therefore invalid; that stockholders have the
right to vote on the Nominee Election Proposals, Stockholder Rights Proposals
and Voting Rights Proposals, as such terms are defined therein, at the 2000
Annual Meeting; that Dexter is prohibited from postponing its 2000 annual
meeting of stockholders beyond June 30, 2000; that the sale of any of Dexter's
core businesses would constitute the sale of all or substantially all of
Dexter's assets pursuant to Section 33-831 of the Connecticut Business
Corporation Act and therefore require approval of Dexter's stockholders; and
that the directors have breached their fiduciary obligations to Dexter and its
stockholders. The complaint requests declaratory and injunctive relief as well
as money damages.
On March 10, 2000, Dexter filed a motion for summary judgment to dismiss
Count III of the complaint, in which ISP seeks a judicial determination that
Dexter's Bylaws can lawfully be amended to increase the total number of
directorships from 10 to 17 and to elect seven additional nominees to fill the
seven newly created seats. On May 30, 2000, the Court issued an opinion granting
Dexter's motion for summary judgment and dismissing Count III of the Complaint,
on the grounds that ISP's Nominee Election Proposals violate (i) the terms of
Dexter's certificate of incorporation, which provides that "the number of
directorships within each class shall...be determined by the Board"; and
(ii) Section 33-740(a) of the Connecticut Business Corporation Act, which
provides that each class of directors on a classified board such as Dexter's
"contain approximately the same percentage of the total, as near as may be." On
June 14, 2000, the Court entered an order directing the entry of final judgment
dismissing Count III of the complaint. On June 29, 2000, ISP filed an amended
notice of appeal to the United States Court of Appeals for the Second Circuit
from the June 15, 2000 Partial
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Judgment entered in the action, the Court's May 30, 2000 Memorandum of Decision
and Order dismissing Count III of the complaint, and the Ruling and Final
Judgment entered pursuant to Federal Rule 54(b) on June 14, 2000. Dexter
believes that the appeal is moot in view of ISP's abandonment of its proposals
to elect ISP nominees to Dexter's board of directors.
On June 27, 2000, ISP filed a motion for a preliminary injunction seeking to
enjoin the consummation of the transactions contemplated by Dexter's asset
purchase agreement with Loctite Corporation unless and until the transaction is
approved by a vote of two-thirds of Dexter's shares of common stock. In the
papers submitted to the Court in support of its motion, ISP initially claimed
that the Loctite transaction, Dexter's asset purchase agreement with Ahlstrom
Paper Group Oy and any transaction involving Dexter's Life Technologies shares
constituted a sale of substantially all of Dexter's assets and thus the Loctite
transaction must be approved by a vote of two-thirds of the outstanding shares
of Dexter common stock pursuant to Section 33-831 of the Connecticut Business
Corporation Act. In the alternative, ISP argued that the Loctite and Ahlstrom
transactions, together with any sale of Dexter's coatings business, represented
a sale of substantially all of Dexter's assets. Since the announcement of the
merger of Dexter with and into Invitrogen on July 9, 2000, ISP now contends that
the Loctite transaction, in conjunction with the Ahlstrom transaction and the
merger of Dexter with and into Invitrogen, constitutes a sale of substantially
all of Dexter's assets and thus all three transactions must be approved by a
two-thirds vote of the outstanding shares of Dexter common stock pursuant to
CBCA Section 33-831. ISP's "alternative" argument that the Loctite and Ahlstrom
transactions (together with any sale of Dexter's coatings business) constitute a
sale of substantially all of Dexter's assets has been abandoned. On July 18,
2000, the Court held a hearing on ISP's motion. On July 26, 2000, the Court
issued an opinion denying ISP's motion for a preliminary injunction, concluding
that on the evidence presented at the hearing, the Loctite sale does not require
shareholder approval under CBCA Section 33-831. The Court found that the
Invitrogen merger, the Ahlstrom sale and the Loctite sale are not sufficiently
interrelated to require a shareholder vote and ISP had therefore failed to
demonstrate a likelihood of success on the merits of its claim. At the time this
joint proxy statement and prospectus was being mailed, ISP has not filed any
notice of appeal from the Court's decision, which it has a right to do any time
before August 26, 2000.
Dexter and its general counsel continue to believe that ISP's lawsuit is
without merit and Dexter intends to defend vigorously against it.
DELAWARE ACTION ON BEHALF OF LIFE TECHNOLOGIES
On July 10, 2000, Dexter and Life Technologies filed a Complaint for
Declaratory and Injunctive Relief in the Delaware Court of Chancery entitled
LIFE TECHNOLOGIES, INC. V. INTERNATIONAL SPECIALTY PRODUCTS INC. AND ISP
INVESTMENTS INC., Civil Action No. 18141-NC. The complaint seeks an order
declaring that the Life Technologies merger agreement must be approved by an
affirmative vote of 67% of the outstanding shares of Life Technologies, rather
than 80% of the outstanding shares of Life Technologies for either of two
separate and independent reasons under the terms of Life Technologies'
certificate of incorporation: (i) 75% of Life Technologies' directors voted to
approve the Life Technologies merger agreement and a majority of the Life
Technologies directors who so voted are "continuing directors" under Life
Technologies' certificate of incorporation; and (ii) Invitrogen is not a
"related person" or an "affiliate" or "associate" of a related person of Life
Technologies within the meaning of Life Technologies' certificate of
incorporation. The complaint also seeks an order enjoining defendants from
bringing any action in any other court concerning application of the super
majority vote requirement. Defendants must respond to the complaint by July 31,
2000. To date, Dexter has not received notice that the defendants have responded
to the complaint.
REGULATORY MATTERS
U.S. ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the related rules of the Federal Trade Commission, we cannot complete
the mergers until notifications have been given, certain information has been
furnished to the FTC and the Antitrust Division of the United
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States Department of Justice and specified waiting period requirements have been
satisfied. We filed notification and report forms under the HSR Act with the FTC
and the Antitrust Division on July 25, 2000. If the FTC believes that the
mergers would violate the federal antitrust laws by substantially lessening
competition in any line of commerce affecting U.S. consumers, it has the
authority to challenge the mergers by seeking a federal court order temporarily
enjoining the transactions pending conclusion of administrative hearings. The
FTC may also proceed with an administrative hearing if the injunction is denied,
and if the mergers are found to be anticompetitive, challenge the mergers after
the fact. We can give no assurance that a challenge to the mergers will not be
made or, if such a challenge is made, that it would be unsuccessful. Expiration
of the HSR Act waiting period is a condition to each of the mergers.
OTHER LAWS. Invitrogen, Life Technologies and Dexter conduct operations in
a number of jurisdictions where other regulatory filings or approvals may be
required or advisable in connection with the completion of the mergers.
Invitrogen, Life Technologies and Dexter currently are in the process of
reviewing whether other filings or approvals may be required or desirable in
these other jurisdictions. We recognize that some of these filings may not be
completed before the completion of the mergers, and that some of these
approvals, which are not as a matter of practice required to be obtained prior
to effectiveness of the mergers, may not be obtained prior to the closing.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTION AGREEMENTS
This joint proxy statement and prospectus does not cover any resales of the
Invitrogen common stock to be received by the stockholders of either Life
Technologies or Dexter upon completion of the mergers, and no person is
authorized to make any use of this joint proxy statement and prospectus in
connection with any such resale.
All shares of Invitrogen common stock received by Dexter stockholders in the
Dexter merger will be freely transferable, except that shares of Invitrogen
common stock received by persons who are deemed to be "affiliates" of Dexter
under the Securities Act of 1933 at the time of the Dexter special meeting may
be resold by them only in transactions permitted by Rule 145 under the
Securities Act of 1933 or as otherwise permitted under the Securities Act of
1933. Persons who may be deemed to be affiliates of Dexter for such purposes
generally include individuals or entities that control, are controlled by or are
under common control with Dexter and include directors and executive officers of
Dexter. The Dexter merger agreement requires Dexter to use its reasonable best
efforts to cause each of such affiliates to execute a written agreement to the
effect that such persons will not offer, sell or otherwise dispose of any of the
shares of Invitrogen common stock issued to them in the Dexter merger in
violation of the Securities Act of 1933 or the related Securities and Exchange
Commission rules.
All shares of Invitrogen common stock received by Life Technologies
stockholders in the Life Technologies merger will be freely transferable, except
that shares of Invitrogen common stock received by persons who are deemed to be
"affiliates" of Life Technologies under the Securities Act of 1933 at the time
of the Life Technologies special meeting may be resold by them only in
transactions permitted by Rule 145 under the Securities Act of 1933 or as
otherwise permitted under the Securities Act of 1933. Persons who may be deemed
to be affiliates of Life Technologies for such purposes generally include
individuals or entities that control, are controlled by or are under common
control with Life Technologies and include directors and executive officers of
Life Technologies. The Life Technologies merger agreement requires Life
Technologies to use its reasonable best efforts to cause each of such affiliates
to execute a written agreement to the effect that such persons will not offer,
sell or otherwise dispose of any of the shares of Invitrogen common stock issued
to them in the Life Technologies merger in violation of the Securities Act of
1933 or the related Securities and Exchange Commission rules.
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COMPARATIVE PER SHARE MARKET PRICE
AND DIVIDEND INFORMATION
We are providing you with the high and low sale prices of Invitrogen common
stock, Life Technologies common stock and Dexter common stock as reported for
each calendar quarter during the past three years for Life Technologies and
Dexter and since its initial public offering in February of 1999 for Invitrogen.
We are also providing you with information regarding dividends declared by
Dexter and Life Technologies during those periods. Invitrogen has never declared
or paid any cash dividends on its common stock and does not anticipate paying
cash dividends in the foreseeable future.
Invitrogen common stock is listed on the Nasdaq as "IVGN," Life Technologies
is listed on the over-the-counter bulletin board as "LTEK.OB" and Dexter common
stock is listed on the New York Stock Exchange as "DEX."
<TABLE>
<CAPTION>
LIFE TECHNOLOGIES
COMMON STOCK DEXTER COMMON STOCK
------------------------------------- -------------------------------------
MARKET PRICE CASH MARKET PRICE CASH
------------------------- DIVIDENDS ------------------------- DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
1998
First Quarter.................................... $38 1/2 $30 $0.05 $43 3/8 $37 1/2 $0.24
Second Quarter................................... 39 1/2 30 3/4 0.05 42 15/16 31 9/16 0.26
Third Quarter.................................... 39 3/8 30 1/2 0.05 33 5/16 23 7/8 0.26
Fourth Quarter................................... 40 29 3/8 0.05 32 7/8 23 1/2 0.26
1999
First Quarter.................................... $40 3/4 $34 $0.05 $32 3/4 $26 3/8 $0.26
Second Quarter................................... 38 1/2 34 1/2 0.05 42 3/8 31 1/2 0.26
Third Quarter.................................... 41 36 1/8 -- 41 9/16 33 1/2 0.26
Fourth Quarter................................... 43 38 -- 42 1/4 32 3/8 0.26
2000
First Quarter.................................... $53 $41 -- $54 5/16 $34 $0.26
Second Quarter................................... 55 48 -- 56 1/4 41 1/4 0.26
Third Quarter (through August 11, 2000).......... 56 49 -- 57 5/8 47 7/16 --
</TABLE>
<TABLE>
<CAPTION>
INVITROGEN
COMMON STOCK
MARKET PRICE
-------------------------------
HIGH LOW
-------------- --------------
<S> <C> <C>
1999
First Quarter............................................... $ 15 1/2 $ 12
Second Quarter.............................................. 26 12 7/8
Third Quarter............................................... 35 1/8 23 3/8
Fourth Quarter.............................................. 67 3/8 23 1/4
2000
First Quarter............................................... $ 99 1/2 $ 43 5/8
Second Quarter.............................................. 78 3/4 36
Third Quarter (through August 11, 2000)..................... 75 1/4 55 1/8
</TABLE>
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The following table sets forth the closing price of Invitrogen, Life
Technologies and Dexter as reported as of (i) July 7, 2000 (the last full
trading day prior to the public announcement of the proposed mergers) and
(ii) August 11, 2000 (the last full trading day prior to the date we filed with
the Securities and Exchange Commission the registration statement of which this
joint proxy statement and prospectus is a part):
<TABLE>
<CAPTION>
INVITROGEN LIFE TECHNOLOGIES DEXTER
COMMON STOCK COMMON STOCK COMMON STOCK
------------ ----------------- ------------
<S> <C> <C> <C>
July 7, 2000....................................... $77.13 $49.00 $48.00
August 11, 2000.................................... $63.69 $54.50 $57.50
</TABLE>
We urge you to obtain current market quotations before voting your shares.
Because the exchange ratios vary in the merger agreements, the market value of
the shares of Invitrogen that holders of Dexter common stock and Life
Technologies common stock will have the right to acquire when the mergers become
effective may vary significantly from the market value of the shares of
Invitrogen common stock that holders of Dexter common stock and Life
Technologies common stock would receive if the mergers were consummated on the
date of this joint proxy statement and prospectus.
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INVITROGEN UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
We have presented below unaudited pro forma combined financial statements
that reflect the mergers using the purchase method of accounting. For a more
detailed description of the purchase method of accounting, see "The
Mergers--Accounting Treatment." The pro forma adjustments are preliminary and
based on management's estimates of the fair value of the assets acquired and
liabilities assumed and have been prepared to illustrate the estimated effect of
the mergers. Consequently, the amounts reflected in the unaudited pro forma
combined financial statements are subject to change, and the final amounts may
differ substantially. In addition, the managements of Invitrogen, Life
Technologies and Dexter are in the process of assessing and formulating their
integration plans, which are expected to include employee separations,
elimination of duplicative facilities, employee relocations and other
restructuring actions. The final result of these plans could result in material
revisions to the estimated liabilities reflected in the accompanying unaudited
pro forma combined financial statements.
The unaudited pro forma condensed combined income statements for the
six-month period ended June 30, 2000 and for the year ended December 31, 1999
give effect to the mergers as if they were completed on January 1, 1999. The
unaudited pro forma combined balance sheet as of June 30, 2000 gives effect to
the mergers as if they were completed on that date. The unaudited pro forma
combined financial statements also assume the sale of Dexter's electronic
materials, adhesives and polymer systems, nonwoven materials and coatings
businesses prior to the completion of the mergers. The results of operations of
these specific businesses have been excluded from the pro forma financial
information. The pro forma condensed combined financial statements should be
read in conjunction with the separate historical consolidated financial
statements and the notes thereto contained in the Annual and Interim Financial
Statements of Invitrogen, Life Technologies, and Dexter included in and/or
incorporated by reference in this joint proxy statement and prospectus.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the merger had occurred as of the date or during the
periods presented nor is it necessarily indicative of future operating results
or financial positions.
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INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AFTER GIVING EFFECT TO THE MERGERS
JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ELIMINATE
HISTORICAL HISTORICAL BUSINESSES PRO FORMA PRO FORMA
INVITROGEN DEXTER TO BE SOLD ADJUSTMENTS COMBINED
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents and short term investments.... $273,841 $ 113,418 $ 253,204 $ (517,495)(a) $ 122,968
Accounts and notes receivable........................... 13,950 191,396 (99,556) (19)(f) 105,771
Inventories............................................. 8,229 168,536 (85,615) -- 91,150
Deferred income taxes................................... 9,020 23,708 (185) -- 32,543
Prepaid expenses and other current assets............... 3,928 16,626 (9,734) -- 10,820
-------- ---------- --------- ---------- ----------
Total current assets.................................. 308,968 513,684 58,114 (517,514) 363,252
Property, plant and equipment, net........................ 25,831 325,063 (196,458) -- 154,436
Intangible assets, net.................................... 5,403 122,853 (21,693) -- 106,563
Excess cost over net assets of businesses acquired, net... 122 134,147 (37,201) 1,088,043)(a) 1,185,111
Other assets.............................................. 6,107 57,243 (9,070) -- 54,280
-------- ---------- --------- ---------- ----------
Total assets.............................................. $346,431 $1,152,990 $(206,308) $ 570,529 $1,863,642
======== ========== ========= ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt......................................... $ 420 $ 14,026 $ (10,188) $ -- $ 4,258
Current portion of long-term obligations................ 743 20,573 (20,230) -- 1,086
Accounts payable........................................ 4,038 68,165 (46,886) (19)(f) 25,298
Accrued expenses........................................ 10,244 80,445 (38,941) (36,428)(a) 88,176
Accrued taxes payable................................... -- 30,422 (5,540) -- 24,882
Dividends payable....................................... -- 5,956 -- -- 5,956
-------- ---------- --------- ---------- ----------
Total current liabilities............................. 15,445 219,587 (121,785) 36,409 149,656
-------- ---------- --------- ---------- ----------
Long-term obligations, less current maturities............ 2,782 271,282 (268,426) -- 5,638
Deferred items............................................ -- 39,009 (428) -- 38,581
Deferred income taxes..................................... -- 51,864 (34,460) -- 17,404
Environmental reserves.................................... -- 11,183 (1,073) -- 10,110
5.5% Convertible subordinated notes due March 1, 2007..... 172,500 -- -- -- 172,500
Minority interests........................................ -- 86,068 -- (81,512)(a) 4,556
Stockholders' equity:
Common stock and additional paid-in-capital............. 144,256 40,502 -- 1,275,432 (a,b) 1,460,190
Deferred compensation................................... (513) -- -- (6,441)(a) (6,954)
Accumulated other comprehensive loss.................... (698) (30,438) 20,078 10,360 (b) (698)
Treasury stock.......................................... -- (55,812) -- 55,812 (b) --
Retained earnings....................................... 12,659 519,745 199,786 (719,531)(b) 12,659
-------- ---------- --------- ---------- ----------
Total stockholders' equity............................ 155,704 473,997 219,864 615,632 1,465,197
-------- ---------- --------- ---------- ----------
Total liabilities and stockholders' equity............ $346,431 $1,152,990 $(206,308) $ 570,529 $1,863,642
======== ========== ========= ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
77
<PAGE>
INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
AFTER GIVING EFFECT TO THE MERGERS
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ELIMINATE
HISTORICAL HISTORICAL BUSINESSES PRO FORMA PRO FORMA
INVITROGEN DEXTER TO BE SOLD ADJUSTMENTS COMBINED
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues.................................. $54,983 $530,007 $(311,101) $ 800 (f,h) $274,689
Cost of revenues.......................... 17,985 316,900 (217,537) (91)(f) 117,257
------- -------- --------- -------- --------
Gross margin............................ 36,998 213,107 (93,564) 891 157,432
Operating expenses:
Sales and marketing..................... 10,291 77,069 (25,928) -- 61,432
General and administrative.............. 6,996 48,825 (16,371) -- 39,450
Research and development................ 7,333 25,021 (11,871) (123)(f) 20,360
Amortization of deferred compensation... 90 -- -- 1,248 (c) 1,338
Goodwill amortization................... 16 3,805 (1,033) 55,444 (d) 58,232
Merger related costs.................... 6,580 -- -- -- 6,580
------- -------- --------- -------- --------
Total operating expenses.............. 31,306 154,720 (55,203) 56,569 187,392
Income (loss) from operations......... 5,692 58,387 (38,361) (55,678) (29,960)
Other income (expense):
Gain on divestiture of product lines.... -- 7,002 (7,002) -- --
Unsolicited merger proposal and proxy
contest costs......................... -- (5,112) 5,112 -- --
Interest and other income and expense,
net................................... 2,465 (5,682) 20,842 (17,632)(g,h) (7)
------- -------- --------- -------- --------
Income (loss) before provision for income
taxes................................... 8,157 54,595 (19,409) (73,310) (29,967)
Provision for income taxes................ 5,199 18,562 (6,600) (6,521)(c,g) 10,640
------- -------- --------- -------- --------
NET INCOME (LOSS) BEFORE MINORITY
INTERESTS............................... 2,958 36,033 (12,809) (66,789) (40,607)
Minority interests........................ -- 6,206 142 (5,485)(e) 863
------- -------- --------- -------- --------
NET INCOME (LOSS)......................... 2,958 29,827 (12,951) (61,304) (41,470)
Less: Preferred stock dividends........... -- -- -- -- --
Accretion of non-voting redeemable
common stock........................ -- -- -- -- --
Adjustment to beneficial conversion
feature related to convertible
preferred stock..................... -- -- -- -- --
------- -------- --------- -------- --------
Income (loss) available to common
stockholders............................ $ 2,958 $ 29,827 $ (12,951) $(61,304) $(41,470)
======= ======== ========= ======== ========
Earnings (loss) per share:
Basic................................... $ 0.13 $ 1.30 $ (0.98)
======= ======== ========
Diluted................................. $ 0.12 $ 1.29 $ (0.98)
======= ======== ========
Weighted average shares used in per share
calculation:
Basic................................... 23,275 22,858 42,330 (h)
Diluted................................. 25,365 23,095 42,330 (h)
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
78
<PAGE>
INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
AFTER GIVING EFFECT TO THE MERGERS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ELIMINATE
HISTORICAL HISTORICAL BUSINESSES PRO FORMA PRO FORMA
INVITROGEN DEXTER TO BE SOLD ADJUSTMENTS COMBINED
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................... $92,945 $1,041,673 $(634,474) $ 1,863 (f,h) $502,007
Cost of revenues........................... 32,983 628,437 (442,881) (65)(f) 218,474
------- ---------- --------- --------- --------
Gross margin............................. 59,962 413,236 (191,593) 1,928 283,533
Operating expenses:
Sales and marketing...................... 16,244 151,777 (55,483) -- 112,538
General and administrative............... 11,872 99,467 (37,569) -- 73,770
Research and development................. 14,792 49,711 (25,875) (482)(f) 38,146
Amortization of deferred compensation.... 323 -- -- 3,808 (c) 4,131
Provision for contract settlement........ -- 3,870 -- -- 3,870
Charge for restructuring businesses...... -- 2,430 (2,430) -- --
Goodwill amortization.................... 31 7,387 (2,743) 111,112 (d) 115,787
Merger related costs..................... 3,895 -- -- -- 3,895
------- ---------- --------- --------- --------
Total operating expenses............... 47,157 314,642 (124,100) 114,438 352,137
------- ---------- --------- --------- --------
Income (loss) from operations.......... 12,805 98,594 (67,493) (112,510) (68,604)
------- ---------- --------- --------- --------
Other income (expense):
Gain on divestiture of product lines..... -- 95,011 (95,011) -- --
Interest and other income and expense,
net.................................... 1,210 (12,427) 45,738 (25,295)(g,h) 9,226
------- ---------- --------- --------- --------
Income (loss) before provision for income
taxes.................................... 14,015 181,178 (116,766) (137,805) (59,378)
Provision for income taxes................. 4,779 61,605 (41,480) (9,743)(c,g) 15,161
------- ---------- --------- --------- --------
NET INCOME (LOSS) BEFORE MINORITY
INTERESTS................................ 9,236 119,573 (75,286) (128,062) (74,539)
Minority interests......................... -- 12,074 (66) (10,934)(e) 1,074
------- ---------- --------- --------- --------
NET INCOME (LOSS).......................... 9,236 107,499 (75,220) (117,128) (75,613)
Less: Preferred stock dividends............ (163) -- -- -- (163)
Accretion of non-voting redeemable
common stock......................... (74) -- -- -- (74)
Adjustment to beneficial conversion
feature related to convertible
preferred stock...................... 985 -- -- -- 985
------- ---------- --------- --------- --------
Income (loss) available to common
stockholders............................. $ 9,984 $ 107,499 $ (75,220) $(117,128) $(74,865)
======= ========== ========= ========= ========
Earnings (loss) per share:
Basic.................................... $ 0.52 $ 4.71 $ (1.95)
======= ========== ========
Diluted.................................. $ 0.46 $ 4.67 $ (1.95)
======= ========== ========
Weighted average shares used in per share
calculation:
Basic.................................... 19,268 22,842 38,324 (h)
Diluted.................................. 21,828 23,002 38,324 (h)
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
79
<PAGE>
INVITROGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined financial statements of
Invitrogen have been prepared using the purchase method of accounting based on
the historical financial statements of Invitrogen, Life Technologies and Dexter
for the six months ended June 30, 2000 and for the year ended December 31, 1999.
The unaudited pro forma combined balance sheet has been prepared as if the
mergers had been consummated at June 30, 2000 and the unaudited pro forma
combined statements of income assume consummation of the mergers on January 1,
1999. The unaudited pro forma combined financial statements also assume the sale
of Dexter's electronic materials, adhesives and polymer systems, nonwoven
materials and coatings businesses prior to the completion of the mergers as well
as the pay down of associated debt and the related decrease in interest expense
and income from the investment of the net proceeds received from the respective
sales. The results of operations of these specific businesses have been excluded
from the pro forma financial information.
Certain costs associated with the restructuring of existing Invitrogen
operations and costs necessary to integrate the businesses of Invitrogen and
Life Technologies that are expected to benefit future operations are estimated
to range from $10 million to $20 million. These estimated costs will be expensed
as restructuring costs after the completion of the mergers and after management
has completed and approved the restructuring plans and associated costs. Dexter
also anticipates incurring an estimated $11 million in prepayment penalties
associated with the prepayment of existing debt. This expense will be recorded
by Dexter upon the prepayment of the debt which is expected to occur prior to
the completion of the mergers. These estimates have not been included in the
unaudited pro forma financial statements since they are nonrecurring expenses.
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
(A) PURCHASE PRICE
The estimated purchase price of the mergers was based on the estimated
cash and stock to be paid to Life Technologies and Dexter stockholders
upon consummation of the mergers and estimated direct transaction costs
to be incurred by Invitrogen. The calculation of the estimated cash and
stock to be paid assumed the "standard election" combination of cash and
stock, an Invitrogen common stock equivalent of 0.8592 for Life
Technologies shares and 0.8950 for Dexter shares (based on the average
closing price of Invitrogen common stock for 20 consecutive trading days
prior the public announcement of the mergers) and an assumed fair value
of Invitrogen common stock of $68.683 upon consummation of the mergers
(based on the closing price of Invitrogen common stock 5 days prior to
and 5 days after the public announcement of the mergers). The estimated
direct costs of the transaction to be incurred by Invitrogen include
advisory fees for investment bankers, attorneys, accountants, filing and
80
<PAGE>
INVITROGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS (CONTINUED)
printing fees and certain restructuring costs. The estimates below are
subject to change and the final amounts may differ substantially.
<TABLE>
<S> <C>
Cash........................................................ $ 517,495,000
Common stock and additional paid-in-capital................. 1,308,800,000
Estimated fair value of stock options assumed............... 7,134,000
Estimated direct costs...................................... 36,428,000
--------------
Estimated purchase price.................................... $1,869,857,000
==============
</TABLE>
<TABLE>
<S> <C>
The allocation of the above purchase price is estimated to be as follows:
Fair value of net assets acquired........................... $ 678,427,000
Deferred compensation....................................... 6,441,000
Intangible assets........................................... 1,184,989,000
--------------
$1,869,857,000
==============
</TABLE>
The allocation of the excess cost over net assets acquired is preliminary
and is pending completion of the valuation of the assets acquired.
(B) INTERCOMPANY INVESTMENT
Reflects the elimination of the investment in Life Technologies and
Dexter by Invitrogen.
(C) DEFERRED COMPENSATION
Reflects the estimated amortization of deferred compensation to be
recorded subsequent to the completion of the merger as a result of the
issuance of Invitrogen stock options in exchange for Life Technologies'
outstanding stock options at an exchange ratio of 0.8592. The deferred
compensation is amortized over the remaining vesting period of the newly
issued stock options which ranges from one to three years.
(D) GOODWILL AMORTIZATION
Reflects the estimated amortization of goodwill over a 10-year blended
rate which is preliminary and may change significantly upon completion of
the valuation of the assets acquired.
(E) MINORITY INTEREST
Reflects the elimination of minority interest of Dexter that would be
purchased upon approval of the merger by the minority interest
stockholders and completion of the merger.
(F) INTERCOMPANY TRANSACTIONS
Reflects the elimination of intercompany transactions and balances.
(G) INTEREST INCOME
Reflects the estimated reduction in interest income from cash used to
purchase Dexter and Life Technologies shares and cash used for merger
expenses.
81
<PAGE>
INVITROGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS (CONTINUED)
(H) REVENUE RECLASSIFICATION
Reclassifies royalty revenue for Life Technologies from other income to
revenues to be consistent with Invitrogen's classification of royalty
revenue.
(I) EARNINGS PER SHARE
Reflects the issuance of an estimated 19,055,666 shares of Invitrogen
common stock for the common stock of Dexter and Life Technologies based
on the assumptions discussed in a) above.
82
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The executive officers of Dexter and Life Technologies and the members of
the Dexter and Life Technologies boards of directors have interests in the
mergers that are different from, or in addition to, the interests of
stockholders generally. Several executive officers of Dexter and Life
Technologies, including some officers who are also directors, have employment or
severance agreements and are or may become entitled to specific benefits under
employee benefit plans as a result of the mergers. Each of the
employee-directors of Dexter and Life Technologies may be entitled to receive
compensation if the mergers are completed. The Dexter and Life Technologies
boards of directors were aware of and discussed these potentially conflicting
interests when they approved the mergers.
DEXTER SEVERANCE AGREEMENTS
Each of Dexter's executive officers is a party to a severance agreement
which provides certain benefits upon a qualifying termination of employment
after a change in control of Dexter. The consummation of the Dexter merger will
constitute a change in control of Dexter under the severance agreements. An
executive officer will be provided with the benefits under his or her severance
agreement if within 395 days after a change in control (the "severance period")
the executive officer's employment is involuntary terminated (for reasons other
than death, permanent disability, attainment of the age of 65 or cause), or if
the executive officer terminates his or her employment for good reason. In
addition, an executive officer will also be entitled to benefits under the
severance agreement if he or she terminates employment for any reason within the
thirty-day period immediately preceding the expiration of the severance period.
Upon a qualifying termination of employment, each executive officer will be
entitled to a lump sum cash severance payment equal to 200% of the sum of
(i) his or her base salary at the time of the qualifying termination and
(ii) the highest annual incentive compensation paid to the executive officer in
the three full years immediately prior to the change in control. Upon a
qualifying termination after a change of control, Messrs. Walker, Gordon, J.
Thompson and Beatt and Ms. Burdett, the named executive officers of Dexter,
would be entitled to an approximate lump sum cash severance payment of
$2,543,000, $873,000, $750,000, $693,000 and $947,000, respectively.
The severance agreements also entitle each executive officer to two years of
employee welfare benefits continuation and two years of additional credit for
retirement plan purposes. Executive officers are also entitled to receive
additional payments, if necessary, to reimburse them for (i) any legal expenses,
plus interest thereon, incurred in enforcing or defending the severance
agreement, and (ii) any excise tax liability imposed under section 4999 of the
Internal Revenue Code.
In general, section 4999 of the Internal Revenue Code imposes an excise tax
on the recipient of any "excess parachute payment" equal to 20% of such payment.
A "parachute payment" is any payment that is contingent on a change in control.
Excess parachute payments consist of the excess of parachute payments over an
individual's average taxable compensation received from his or her employer
during the five taxable years (or entire period of employment if less) preceding
the year in which the change in control occurs (the "base amount"). The Internal
Revenue Code provides a "safe harbor" from the excise tax if an employee does
not receive parachute payments with a value in excess of 2.99 times the
employee's base amount.
STOCK OPTIONS
Each executive officer's severance agreement also provides that upon a
change in control of Dexter, and without regard to the termination of the
employment of the executive officer, all outstanding and unexercised options
theretofore granted to the executive officer by Dexter shall become immediately
exercisable in full.
83
<PAGE>
The following table sets forth, with respect to each named executive officer
and the eight other Dexter executive officers as a group, (i) the number of
shares of Dexter common stock subject to options held by such persons that will
become exercisable as a result of the merger and (ii) the weighted average
exercise price for such options.
<TABLE>
<CAPTION>
OPTIONS
WHICH WEIGHTED
BECOME AVERAGE
EXERCISABLE EXERCISE PRICE
----------- --------------
<S> <C> <C>
K. Grahame Walker.................................. 113,001 $46.34
Kathleen Burdett................................... 34,501 46.55
David G. Gordon.................................... 45,000 48.98
John D. Thompson................................... 18,667 46.97
Bruce H. Beatt..................................... 18,668 46.97
Other Executive Officers as a Group................ 110,303 47.54
</TABLE>
RESTRICTED STOCK
Each executive officer's severance agreement also provides that upon a
change in control of Dexter, and without regard to the termination of the
employment of the executive officer, restrictions on all outstanding restricted
stock theretofore granted to the executive officer by Dexter shall lapse. The
number of shares of restricted stock where restrictions will lapse upon changing
control are as follows:
<TABLE>
<CAPTION>
SHARES OF
RESTRICTED STOCK
----------------
<S> <C>
K. Grahame Walker........................................... 38,622
Kathleen Burdett............................................ 16,607
David G. Gordon............................................. 8,120
John D. Thompson............................................ 11,274
Bruce H. Beatt.............................................. 10,450
Other Executive Officers as a Group......................... 38,588
</TABLE>
Notwithstanding the foregoing, the most recent restricted stock grant made
to each of the executive officers does not provide for all restrictions to lapse
upon a change in control. Rather, each executive officer is entitled to receive
a lump sum payment in respect of such restricted stock upon the earlier to occur
of (i) the first anniversary of the change in control if the executive has
remained continuously employed by Dexter or a Dexter affiliate, (ii) the date
restrictions would have otherwise lapsed, or (iii) the date on which the
executive officer's employment terminates under circumstances entitling him or
her to severance benefits under the severance agreement.
The number of restricted stock subject to the foregoing are as follows:
<TABLE>
<CAPTION>
SHARES OF
RESTRICTED STOCK
----------------
<S> <C>
K. Grahame Walker........................................... 9,600
Kathleen Burdett............................................ 4,500
David G. Gordon............................................. 7,000
John D. Thompson............................................ 3,500
Bruce H. Beatt.............................................. 3,500
Other Executive Officers as a Group......................... 18,200
</TABLE>
84
<PAGE>
DEXTER COMPENSATION AND BENEFIT PLANS
EXECUTIVE INCENTIVE COMPENSATION PLAN
Each of Dexter's executive officers, other than the Chief Executive Officer,
K. Grahame Walker, participates in Dexter's executive incentive compensation
plan. Under the executive incentive compensation plan participants are eligible
to receive an annual cash bonus based upon personal performance and corporate
and/or business unit financial performance. Upon a change in control, which will
be triggered under the executive incentive compensation plan by the consummation
of the merger, the executive incentive compensation plan provides that a
terminated participant's award will be calculated for the period up to the
participant's termination of employment.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Dexter has an executive supplemental pension plan in which each of the
executive officers is eligible to participate. The executive supplemental
pension plan provides for a normal retirement pension that commences upon the
first day of the month coincident with or next following an executive
supplemental pension plan participant's 65th birthday. An executive supplemental
pension plan participant may request an early payment of his or her pension, in
which case the pension will be reduced by an early retirement factor. After a
change in control, the reduction attributable to the early retirement factor for
participants who have attained age 55 with 10 or more years of service is
reduced (i.e., the pension payable is increased). The consummation of the merger
will constitute a change in control under the executive supplemental retirement
plan.
Currently, only three executive officers, Messrs. Walker, Benham and
McClelland, have attained age 55 with ten or more years of service and would be
entitled to an enhanced early executive retirement supplemental plan as a result
of the application of the post-change in control early retirement factor. It is
not expected that by the time the merger is consummated that any of the other
executive officer's will have attained or will be credited with having attained
age 55 with ten or more years of service.
THE 1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
Dexter maintains the 1996 non-employee directors' stock plan. Under the
non-employee director stock plan, a non-employee director may elect to receive
shares of Dexter common stock in lieu of all or a portion of the cash retainer
he or she is to receive in respect of board service. Such election must be made
in advance of the calendar year in respect of which the retainer is to be paid.
The non-employee director stock plan provides that a non-employee director may
elect to convert shares of Dexter common stock otherwise issuable under the
non-employee director stock plan to restricted stock. The restrictions upon such
stock will lapse upon the non-employee director's death, disability, retirement,
or approved termination of service and also upon a change in control. The
consummation of the merger will constitute a change in control under the
non-employee director stock plan. If a non-employee director ceases to be a
director while holding restricted stock, and such cessation is for any reason
other than as described above, the restricted stock is forfeited. The number of
shares of
85
<PAGE>
restricted stock held by each non-employee director pursuant to an election made
under the non-employee director stock plan is shown below.
<TABLE>
<CAPTION>
SHARES OF
RESTRICTED STOCK
----------------
<S> <C>
Charles H. Curl............................................. 2,451
Peter G. Kelly.............................................. 1,791
Jean-Francois Saglio........................................ 0
Henrietta Holsman Fore...................................... 361
Bernard M. Fox.............................................. 1,955
George M. Whitesides........................................ 736
Robert M. Furek............................................. 2,451
Martha Clark Goss........................................... 0
Edgar G. Hotard............................................. 1,754
</TABLE>
LIFE TECHNOLOGIES
CHANGE IN CONTROL AGREEMENTS
GENERAL. Each of Life Technologies' executive officers is a party to an
agreement which provides certain benefits upon a qualifying termination of
employment after a change of control of Life Technologies or Dexter. The
consummation of the Life Technologies merger will constitute a change of control
of Life Technologies under such agreements. An executive officer will be
provided with certain benefits under his or her change-in-control agreement if
within 24 months after a change in control the executive officer's employment is
involuntary terminated (for reasons other than disability or cause) or if the
executive officer terminates his or her employment for good reason.
Upon a qualifying termination of employment after a change in control, each
executive officer would be entitled to a lump sum cash severance payment equal
to 200% or 150% (depending on the executive officer's salary grade) of the sum
of (i) his or her annual base salary at the time of the qualifying termination
and (ii) the higher of (A) the average annualized bonus paid to the executive
officer in the three fiscal years immediately prior to the change in control or
the targeted annual bonus payable to the executive pursuant to the company's
incentive compensation plan for the fiscal year in which the date of termination
occurs (assuming 100% achievement of the company performance factor and 100%
achievement of the executive's personal performance factor). Upon a qualifying
termination after a change of control, J. Stark Thompson, Ph.D., President and
Chief Executive Officer, Derek Woods, Senior Vice President Research and
Development, Tom Coutts, Vice President, Global Serum Group, Brian Graves,
Senior Vice President & General Manager, U.S. Industrial Bioproducts, and John
Cooper, Senior Vice President & General Manager, Americas Research Products, who
are the named executive officers of Life Technologies, would be entitled to an
approximate lump sum cash severance payment of $1,856,000, $914,500, $852,500,
$806,000 and $771,900, respectively.
The change in control agreements also entitle each executive officer to
receive employee welfare benefits during the two year period following the
change of control and additional credit for retirement plan purposes up to the
end of such period, an amount equal to the company's contribution to the
executive's 401(k) plan that is not vested on the date of termination, and
$25,000 worth of executive outplacement services. Executive officers are also
entitled to receive additional payments, if necessary, to reimburse them for
legal expenses, plus interest thereon, incurred in enforcing their change in
control agreements.
STOCK OPTIONS. Each executive officer's change-in-control agreement also
provides that upon a change in control followed by a qualifying termination of
employment, all outstanding stock options
86
<PAGE>
held by the executive officer pursuant to any Life Technologies stock option
plan shall become immediately vested and exercisable in full.
The following table sets forth, with respect to each named executive officer
and the other Life Technologies executive officers as a group, (i) the number of
shares of Life Technologies common stock subject to options held by such persons
that would become exercisable as a result of the mergers and a qualifying
termination (assuming (i) that the mergers close prior to October 14, 2000 (when
certain options become exercisable irrespective of any change in control) and
(ii) that the executive is subject to a qualifying termination immediately after
such closing) and (ii) the weighted average exercise price for such options.
<TABLE>
<CAPTION>
OPTIONS
WHICH WEIGHTED
WOULD BECOME AVERAGE
EXERCISABLE EXERCISE PRICE
------------ --------------
<S> <C> <C>
J. Stark Thompson.................................. 77,333 $35.72
Derek E. Woods..................................... 23,332 36.06
Thomas M. Coutts................................... 38,333 35.82
Brian D. Graves.................................... 21,666 36.01
John V. Cooper..................................... 31,666 36.11
Other Executive Officers as a Group................ 111,659 36.22
</TABLE>
RETENTION AGREEMENTS
Each of Life Technologies' executive officers except J. Stark Thompson is
party to a retention agreement pursuant to which each such executive officer
would receive a lump sum payment of $50,000 under any of the following
circumstances: (1) the executive officer's employment is terminated without
cause prior to February 28, 2001 and prior to the completion of a "strategic
transaction" (which is defined to include a merger of Dexter or Life
Technologies); (2) a strategic transaction is completed by February 28, 2001,
and the executive officer is not offered comparable employment within 10 days;
(3) the executive officer's employment is terminated without cause within
90 days after a strategic transaction that is completed before February 28,
2001; (4) the executive officer continues as an active employee for 90 days
after a strategic transaction that is completed before February 28, 2001; or
(5) the executive officer remains employed as of February 28, 2001, and no
strategic transaction has been completed by that date. Completion of the Life
Technologies merger would constitute completion of a strategic transaction for
purposes of the retention agreements.
RESTRICTED STOCK
Each executive officer of Life Technologies has received restricted stock
from Dexter pursuant to restricted stock agreements. Under the restricted stock
agreements, upon a change in control (including the Life Technologies merger)
each executive officer is entitled to receive a lump sum payment in respect of
such restricted stock upon the earlier to occur of (i) the first anniversary of
the change in control if the executive has remained continuously employed by
Life Technologies or a Life Technologies affiliate, (ii) the date restrictions
would have otherwise lapsed, or (iii) the date on which the executive officer's
employment terminates under circumstances entitling him or her to severance
benefits under the change-in-control agreement.
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The number of shares of restricted stock held by the named executive
officers and by the other executive officers as a group are as follows:
<TABLE>
<CAPTION>
SHARES OF
RESTRICTED STOCK
----------------
<S> <C>
J. Stark Thompson........................................... 7,500
Derek E. Woods.............................................. 2,500
Thomas M. Coutts............................................ 1,000
Brian D. Graves............................................. 2,500
John V. Cooper.............................................. 5,000
Other Executive Officers as a Group......................... 13,500
</TABLE>
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Life Technologies has an executive supplemental pension plan in which each
of the executive officers (except for Mr. Coutts, who participates in a U.K.
pension plan) is eligible to participate. The executive supplemental pension
plan provides for a normal retirement pension that commences upon the first day
of the month coincident with or next following an executive supplemental pension
plan participant's 65th birthday. An executive supplemental pension plan
participant may request an early payment of his or her pension, in which case
the pension will be reduced by an early retirement factor. After a change in
control, the reduction attributable to the early retirement factor for
participants who have attained age 55 with 10 or more years of service is
reduced (i.e., the pension payable is increased). The consummation of the merger
will constitute a change in control under the executive supplemental retirement
plan.
Currently, only Dr. Thompson, Mr. Graves and one other executive officer
have attained age 55 with ten or more years of service and would be entitled to
an enhanced early executive retirement supplemental plan as a result of the
application of the post-change in control early retirement factor. It is not
expected that by the time the merger is consummated any of the other executive
officers will have attained or will be credited with having attained age 55 with
ten or more years of service.
THE 1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Life Technologies previously maintained a stock option plan for non-employee
directors (its 1996 non-employee directors' stock option plan). Under the plan
the company issued options to non-employee directors in 1996, 1997, and 1998.
Upon a change in control of Life Technologies the plan provides that all
outstanding options granted under the plan shall immediately become exercisable.
The consummation of the merger will constitute a change in control of Life
Technologies under the plan.
The number of unvested options that will become vested as a result of the
merger will depend on whether the merger is consummated before October 1, 2000,
because some of the options will automatically vest on such date even if the
merger has not been consummated by then. The number of unvested options that
will become vested under the plan as a result of the merger that are held by any
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of Life Technologies' non-employee directors are listed below, taking into
account the date of the consummation of the merger, together with the weighted
average exercise price for such options:
<TABLE>
<CAPTION>
ACCELERATED OPTIONS
ACCELERATED OPTIONS IF MERGER CLOSES
IF MERGER CLOSES WEIGHTED AVERAGE OCTOBER 1, 2000 WEIGHTED AVERAGE
DIRECTOR BEFORE OCTOBER 1, 2000 EXERCISE PRICE OR LATER EXERCISE PRICE
-------- ---------------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Thomas H. Adams............ 6,750 $32.79 2,250 $33.25
George M. Whitesides....... 6,750 $34.90 4,500 $35.72
Peter G. Kelly............. 6,750 $34.93 4,500 $35.77
</TABLE>
RELATIONSHIP TO DEXTER
R. Barry Gettins, Ph. D., who is a director of Life Technologies and a
member of the Life Technologies special committee, was an employee of Dexter
(most recently as Senior Vice President, Operations and Technology Development)
until his retirement in 1998. Joseph C. Stokes, Jr., who is a director of Life
Technologies and a member of the Life Technologies special committee, was an
employee of Dexter until 1989, and later of Life Technologies (most recently as
Senior Vice President, Chief Financial Officer and Secretary) until his
retirement in 1999. Each of these individuals may receive pension, retirement or
other benefits from Dexter and/or Life Technologies.
BOARD OF DIRECTORS AND MANAGEMENT OF INVITROGEN FOLLOWING THE MERGERS
The Life Technologies merger agreement provides that two directors of Life
Technologies, J. Stark Thompson, Ph.D., the president and chief executive
officer of Life Technologies and Thomas H. Adams, Ph.D., will join the board of
directors of Invitrogen effective at the effective time of the Life Technologies
merger.
After the Life Technologies merger, Dr. Thompson will continue as the
president and chief executive officer of Life Technologies' operations, and he
will be appointed to a senior executive management position with Invitrogen.
Otherwise, the executive officers of Invitrogen immediately following the
mergers will be the same as those immediately prior to the mergers.
INDEMNIFICATION AND INSURANCE
Invitrogen has agreed to indemnify present and former directors and officers
of Life Technologies and Dexter against any costs or expenses incurred in
connection with any claim, action, suit, proceeding or investigation by reason
of the fact that such individual is or was a director, officer, employee or
agent of Life Technologies or Dexter.
Invitrogen has also agreed that, for six years from the time the mergers
becomes effective, it will maintain in effect Life Technologies' and Dexter's
and their respective subsidiaries' current directors' and officers' liability
insurance policies for those persons who are currently covered by the policies.
However, Invitrogen will not be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by Life Technologies or
Dexter for such insurance. If the annual premiums of such insurance coverage
exceed this amount, Invitrogen only will be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount. Invitrogen
may meet its obligations under this paragraph by covering the relevant persons
under its own insurance policies.
See "Life Technologies Merger Agreement--Indemnification; Directors' and
Officers' Insurance" and "Dexter Merger Agreement--Indemnification; Directors'
and Officers' Insurance."
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THE MERGER AGREEMENTS
WE BELIEVE THIS SUMMARY DESCRIBES THE MATERIAL TERMS OF THE MERGER
AGREEMENTS. HOWEVER, WE RECOMMEND THAT YOU READ CAREFULLY THE COMPLETE
AGREEMENTS FOR THE PRECISE LEGAL TERMS OF THE MERGER AGREEMENTS AND OTHER
INFORMATION THAT MAY BE IMPORTANT TO YOU. THE MERGER AGREEMENTS ARE INCLUDED IN
THIS JOINT PROXY STATEMENT AND PROSPECTUS AS ANNEXES A AND B.
LIFE TECHNOLOGIES MERGER AGREEMENT
FORM OF MERGER
If all the conditions to the merger are satisfied or waived in accordance
with the merger agreement, Life Technologies will merge with and into Invitrogen
Corporation. The merger will become effective when a certificate of merger is
filed with the Delaware Secretary of State.
CONSIDERATION TO BE RECEIVED IN THE MERGER
At the time the merger becomes effective, each Life Technologies stockholder
will have the choice to elect to receive in exchange for each of their Life
Technologies shares one of the following:
1. $60.00 in cash, which will be prorated as follows, (i) the right to
receive an amount in cash equal to $60.00 multiplied by the cash election
proration factor, plus (ii) if the cash election proration factor is less
than 1, a fraction of a share of Invitrogen's common stock equal to the
exchange ratio multiplied by a fraction the numerator of which is $60.00
minus the cash determined above and the denominator of which is $60.00.
The "cash election proration factor" shall mean the lesser of (x) 1.00 or
(y) a fraction (i) the numerator of which is (1) the product of the total
number of shares outstanding multiplied by $16.80 minus (2) $16.80
multiplied by the number of shares for which standard elections have been
made, and (ii) the denominator of which is the product of $60.00
multiplied by the number of shares for which cash elections have been
made, so that Invitrogen will not issue more than $105 million in cash
and in the Life Technologies merger;
2. $16.80 in cash and a number of shares of Invitrogen common stock
equivalent in value to $43.20 determined by multiplying the exchange
ratio by 0.7200; or
3. A number of shares of Invitrogen common stock equivalent in value to
$60.00 determined as follows, the right to receive that fraction of a
share of Invitrogen common stock shall be calculated by dividing
(x) $60.00 by (y) the average bidder trading price, rounded to four
decimal places. The "average bidder trading price" shall mean the average
of the reported closing sales prices per share of Invitrogen common stock
as reported in THE WALL STREET JOURNAL for the 20 consecutive Nasdaq
National Market trading days ending on the third trading day prior to the
date of the Life Technologies stockholders meeting; provided, that if the
quotient exceeds 1.0, then the exchange ratio shall be 1.0, and if the
quotient is less than 0.7500, then the exchange ratio shall be 0.7500.
An election to receive only cash is called a "cash election," an election to
receive all stock is called a "stock election," and an election to receive a
combination of cash and stock is called a "standard election." Stockholders who
do not make an election and who are not dissenting stockholders, will be deemed
to have made a standard election. All shares of Life Technologies common stock
held by Dexter will be cancelled at the effective time of the Life Technologies
merger, and no consideration will be delivered in exchange for such shares.
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EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
EXCHANGE AGENT. Invitrogen shall appoint an exchange agent, prior to the
effective time, under the merger agreement. The exchange agent will exchange
certificates representing shares of Life Technologies common stock for the
consideration to be received in the merger. At the time the merger becomes
effective, Invitrogen will deposit with the exchange agent the consideration to
be received in the merger and the cash for the exchange fund. Soon after the
completion of the merger, the exchange agent will send a letter and election
form to each person who was a Life Technologies stockholder at the time the
merger became effective. The letter will contain instructions on how to
surrender Life Technologies stock certificates to the exchange agent and
receive, depending on the election of the stockholder, Invitrogen common stock,
cash, or a combination of Invitrogen common stock and cash.
DIVIDENDS. Holders of Life Technologies common stock will not be entitled
to receive any dividends or other distributions payable by Invitrogen until they
exchange their Life Technologies stock certificates for shares of Invitrogen
common stock. After they deliver their Life Technologies stock certificates to
the exchange agent, those stockholders will receive, subject to applicable laws,
accumulated dividends and distributions, without interest.
FRACTIONAL SHARES. No fractional shares of Invitrogen common stock will be
issued upon the surrender of certificates representing shares of Life
Technologies common stock. No dividend or other distribution of Invitrogen will
relate to any such fractional shares and no such fractional shares will entitle
the owner thereof to any voting or other rights of a stockholder of Invitrogen.
Holders of Life Technologies common stock otherwise entitled to fractional
shares of Invitrogen will receive a cash payment instead of such fractional
shares. The cash payment will be equal to the product obtained by multiplying
the fractional share interest the stockholder would be entitled to receive by
the average reported closing sales price for a share of Invitrogen common stock
as reported in THE WALL STREET JOURNAL for five consecutive trading days
immediately before the closing date.
ANTIDILUTION ADJUSTMENTS. If, before the merger becomes effective,
Invitrogen makes certain changes to the number of outstanding shares of
Invitrogen common stock or to the number of outstanding securities convertible
or exchangeable into or exercisable for shares of Invitrogen common stock, the
stock election merger consideration and the standard election merger
consideration will be adjusted accordingly. An adjustment will be made if
Invitrogen makes such a change as a result of a reclassification, stock split
(including a reverse split), stock dividend or distribution, recapitalization,
subdivision, or other similar transaction, or if Invitrogen declares or pays any
dividend or distribution (including of rights) other than any regular quarterly
cash dividends.
APPRAISAL RIGHTS. The Life Technologies stockholders who do not vote in
favor of this merger and who comply with all relevant provisions of Section 262
of the Delaware General Business Law possess appraisal rights. If such
stockholder or stockholders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal, their Life Technologies
shares shall be converted into and become exchangeable for the right to receive
the standard election merger consideration. Invitrogen stockholders do not have
appraisal rights in connection with the merger.
WITHHOLDING RIGHTS. Invitrogen shall be entitled to deduct and withhold
from the consideration payable to any person amounts as it is required to deduct
and withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. If Invitrogen withholds amounts, such
amounts shall be treated for all purposes of the merger as having been paid to
the holders.
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REPRESENTATIONS AND WARRANTIES
In the merger agreement Life Technologies and Invitrogen make
representations and warranties to each other about their respective companies
with respect to, among other things:
- their organization, existence, good standing, corporate power,
subsidiaries and similar corporate matters;
- their capitalization;
- their authorization, execution, delivery and performance and the
enforceability of the merger agreement and related matters;
- the absence of defaults or violations under their certificates of
incorporation and bylaws and certain other agreements and laws as a result
of the contemplated transactions;
- filings with the Securities and Exchange Commission and the accuracy and
completeness of the information contained in such filings;
- the absence of undisclosed material liabilities required to be disclosed
under accounting principles generally accepted in the United States;
- the absence of undisclosed material violations of laws or government
orders;
- environmental matters;
- employee benefit matters;
- the absence of certain material changes in their respective businesses
since December 31, 1999;
- this proxy statement and prospectus and the registration statement to be
filed in connection with the issuance of Invitrogen common stock in the
merger, and the accuracy of the information contained herein and therein;
- tax matters;
- intellectual property;
- title and related matter; and
- the receipt of opinions from each company's financial advisors.
In addition, Life Technologies makes representations and warranties in the
merger agreement with respect to:
- equity investments;
- required stockholder approval with respect to the merger;
- legal proceedings;
- material contracts; and
- real property owned by Life Technologies.
Invitrogen also makes additional representations and warranties in the
merger agreement with respect to:
- its ownership of Life Technologies shares, and
- required stockholder approval with respect to the merger and amendment to
Invitrogen certificate of incorporation to authorize additional Invitrogen
common stock.
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All representations of Life Technologies and Invitrogen expire at the time
the merger becomes effective.
COVENANTS IN THE MERGER AGREEMENT
CONDUCT OF BUSINESS BY LIFE TECHNOLOGIES.
Life Technologies has agreed that, until the merger has been completed or
the merger agreement has been terminated, it will not, subject to certain
exceptions, take certain actions without the consent of Invitrogen, unless such
actions are expressly permitted by the merger agreement, and except for certain
pending transactions. Subject to certain exceptions, Life Technologies has
agreed to the following with respect to itself and, where applicable, its
subsidiaries:
- CONDUCT OF OPERATIONS. To conduct its operations according to their
ordinary and usual course of business.
- PRESERVE ORGANIZATIONS. To use its reasonable best efforts to preserve
intact its business organizations and goodwill, keep available the
services of its current officers and other key employees, and preserve its
business relationships.
- DIVIDENDS AND DISTRIBUTIONS. Not to authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of capital
stock other than any dividend or distribution by a wholly owned subsidiary
of Life Technologies to Life Technologies or any of its wholly owned
subsidiaries.
- AMENDMENTS TO PLANS. Not to enter into or amend any severance agreement or
employee benefit plan or increase the compensation or benefits of its
directors, officers, or employees, except as contemplated by law, existing
contracts, plans or policies or in the ordinary course of business.
Changes in the ordinary course of business are permitted only with respect
to Life Technologies employees who are not officers, except for changes
relating to annual bonuses and other incentive awards.
- BUSINESS COMBINATIONS; ASSETS. Not to enter into any business combinations
or acquisitions or dispositions of material amounts of assets or
securities except for this merger.
- GOVERNING DOCUMENTS. Not to propose or adopt any amendments to corporate
charters or bylaws.
- ISSUANCE OF CAPITAL STOCK. Not to issue or authorize the issuance of any
shares of capital stock of any class, except for (1) the issuance of Life
Technologies common stock pursuant to options and grants outstanding on
the date of the merger agreement under existing stock plans or
(2) options and other equity awards granted in the ordinary course of
business consistent with past practice to any new employee hired after
July 7, 2000 but before the closing date or pursuant to formula awards, in
either case under a Life Technologies equity plan.
- CHANGES TO CAPITAL STOCK. Not to reclassify, combine, split, purchase or
redeem any shares of capital stock or purchase or redeem any rights,
warrants or options to acquire any such shares.
- INDEBTEDNESS. Not to incur, assume or prepay any indebtedness or other
liabilities for borrowed money or issue any debt securities, other than
incurrences and repayments of indebtedness under existing credit
facilities and not to assume, guarantee, endorse or otherwise become
liable for the obligations of any other person other than wholly owned
subsidiaries except for guarantees by subsidiaries of the company
permitted under the merger agreement.
- LOANS, ADVANCES, CAPITAL CONTRIBUTIONS. Not to make or forgive any loans,
advances or capital contributions to, or investments, other than advances
to employees in the ordinary course of
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business in accordance with Life Technologies' established policies,
except those to Life Technologies or any wholly owned Life Technologies
subsidiary.
- PROPERTIES AND ASSETS. Not to sell, lease, license or otherwise subject to
any lien or otherwise dispose of any properties or assets (including
securitizations) other than in the ordinary course of business, not to
modify or terminate any material contracts or waive any material rights,
and not to permit insurance coverage to lapse, be cancelled or expire
unless a substantially identical policy is in effect as of the date of
lapse, cancellation or expiration.
- ACCOUNTING METHODS. Not to change accounting methods unless required by
accounting principles generally accepted in the United States.
- TAX ELECTION. Not to make any tax election that is likely to have a
material adverse effect and not to settle or compromise any material tax
liability.
- TAX TREATMENT. Not to take any actions that would prevent the merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
- AGREE TO TAKE ACTIONS. Not to take or agree to take any of the foregoing
actions or take any action which would result in any of the conditions to
the merger set forth in the merger agreement not being satisfied.
INVITROGEN'S INTERIM OPERATIONS.
Invitrogen has agreed that, until the merger has been completed or the
merger agreement has been terminated, it will not take certain actions without
the consent of Life Technologies. Invitrogen will (and will cause its
subsidiaries to) conduct its business in all material respects in the ordinary
course consistent with past practice. Invitrogen will preserve intact its
current business organization, keep the services of key officers and employees
available, maintain all material licenses and authorizations in effect, and
preserve its material business relationships. Any waiver by Life Technologies of
the requirement for Invitrogen's interim operations must be authorized by the
affirmative vote of at least six members of Life Technologies' board of
directors. Invitrogen has also agreed to the following with respect to itself
and, where applicable, its subsidiaries:
- GOVERNING DOCUMENTS. Not to amend its certificate of incorporation,
bylaws, or similar organizational documents.
- CHANGES TO CAPITAL STOCK. Not to amend in any respect the terms of its
capital stock.
- CHANGES TO COMMON STOCK. Not to split, combine, subdivide or reclassify
any shares of its common stock.
- DIVIDENDS AND DISTRIBUTIONS. Not to authorize or pay any dividends on or
make any distribution with respect to its common stock other than regular
quarterly cash dividends or any dividends paid by any subsidiary of
Invitrogen to Invitrogen or to any subsidiary that is wholly owned by
Invitrogen.
- ACCOUNTING METHODS. Not to change accounting methods unless required by
accounting principles generally accepted in the United States.
- NEW LINES OF BUSINESS. Not to enter into any material new line of business
that is not strategically related to its current business or operations.
- INDEBTEDNESS. Not to incur indebtedness outside the ordinary course of
business or for acquisitions other than to consummate the transactions
contemplated by this merger agreement and the Life Technologies merger.
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- BUSINESS COMBINATIONS; ASSETS. Not to enter into any business combination
and not to dispose of assets, securities or ownership interests
representing a material portion of the total assets of Invitrogen and its
subsidiaries taken as a whole.
- TAX TREATMENT. Not to take any actions that would prevent the merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
- AGREE TO TAKE ACTIONS. Not to take or agree to take any of the foregoing
actions or take any action which would result in any of the conditions to
the merger set forth in the merger agreement not being satisfied.
INVESTIGATION. Life Technologies has agreed, subject to legal and
contractual restrictions, until the merger becomes effective or the merger
agreement is terminated, to afford Invitrogen's representatives reasonable
access to its properties, offices, employees, contracts, commitments, books and
records and any documents filed or received by Life Technologies pursuant to
applicable securities laws, and to furnish to Invitrogen any additional
information about its businesses and properties as Invitrogen may reasonably
request. However, Life Technologies will not be required to disclose
competitively sensitive information. Invitrogen will hold all non-public
information provided under the agreement in confidence.
Invitrogen will afford Life Technologies' representatives reasonable access
to its officers, employees, and books and records to the extent reasonably
necessary in connection with preparing this proxy statement. Except as required
by law, Life Technologies will hold all information provided under the merger
agreement in confidence.
STOCKHOLDER APPROVALS AND OTHER COOPERATION.
Life Technologies and Invitrogen have each agreed to call an annual or
special meeting of its stockholders as soon as practicable for considering and
taking action upon the approval of this merger. Life Technologies and Invitrogen
have also agreed to prepare and file with the Securities and Exchange
Commission, as promptly as possible, this document, and, subject to fiduciary
duties, to include in this document the recommendation of their respective
boards of directors that their respective stockholders approve the merger and
the merger agreement and, in the case of Invitrogen, that the Invitrogen
stockholders approve an amendment to the Invitrogen certificate of incorporation
to authorize the shares of common stock necessary to issue the merger
consideration and an increase in the number of shares issuable by Invitrogen
under the Invitrogen option plans.
Invitrogen has agreed to prepare and file the registration statement and use
its reasonable best efforts to have the registration statement declared
effective by the Securities and Exchange Commission as promptly as practicable,
to cause this proxy statement and prospectus to be mailed to Life Technologies
stockholders at the earliest practicable date after the registration statement
is declared effective, to take all actions required under state blue sky or
securities laws in connection with the issuance of shares of Invitrogen common
stock in the merger, and to use its best efforts to cause the shares of
Invitrogen common stock to be issued in the merger to be approved for quotation
on the Nasdaq National Market, subject only to official notice of issuance.
Life Technologies and Invitrogen have agreed to cooperate with one another
in order to lift any injunctions or remove any other impediment to the
consummation of the contemplated transactions and to grant such approvals and
take such actions as are reasonably necessary to eliminate or minimize the
effects of any anti-takeover statutes or regulations which may become applicable
to the merger.
In addition, the merger agreement contains general covenants requiring Life
Technologies and Invitrogen to act in good faith and use commercially reasonable
efforts to do all things necessary, proper or advisable to consummate the
contemplated transactions.
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PUBLIC ANNOUNCEMENTS. Life Technologies and Invitrogen agree not to make
any public announcements with respect to the merger agreement and the
transactions contemplated thereby without first getting each other's approval,
which shall not be unreasonably withheld.
TAX MATTERS. Life Technologies and Invitrogen agree to use all reasonable
efforts to cause the merger to qualify as a reorganization under the Internal
Revenue Code.
ADDITIONAL REPORTS. Each of Life Technologies and Invitrogen shall furnish
to the other copies of all reports filed with the SEC and all financial
materials. All statements in the reports are true and correct in light of the
circumstances under which they were made, and are not misleading. Life
Technologies shall continue to deliver to Invitrogen going forward all other
financial information required under the merger agreement.
AFFILIATES. Life Technologies shall deliver to Invitrogen a list
identifying all persons who are deemed to be "affiliates" of the Company for
purposes of Rule 145 under the Securities Act, and shall notify Invitrogen of
any changes thereafter to the list.
DISCLOSURE SUPPLEMENTS. The parties shall amend their respective disclosure
schedules, if the need arises and shall provide the other party with such
updated schedules.
EMPLOYEE MATTERS
Simultaneously with the merger, each outstanding option granted by Life
Technologies to purchase shares of Life Technologies common stock will be
assumed by Invitrogen and will, as of the merger, constitute an option to
acquire, on the same terms and conditions as applied to the Life Technologies
stock option prior to the merger, the number, rounded down to the nearest whole
number, of shares of Invitrogen common stock determined by multiplying:
- the number of shares of Life Technologies common stock subject to the
option immediately before the effective time by
- the exchange ratio.
The exercise price of each of these options will be at a price per share of
Invitrogen common stock, rounded up to the nearest cent, equal to:
- the per share exercise price for Life Technologies common stock that
otherwise could have been purchased under the Life Technologies stock
option divided by
- the exchange ratio.
For the period through December 31, 2001, Invitrogen has agreed to maintain:
- employee benefit plans, programs, policies and arrangements, wages or
salaries, as applicable, and bonus and other incentive compensation plans,
programs, policies and arrangements for each individual who was an
employee of Life Technologies immediately prior to the effective time of
the merger, which are, in the aggregate, no less favorable than those
provided by Life Technologies immediately prior to the effective time of
the merger; and
- contribution levels and loan provisions under the savings plans of Life
Technologies, in each case, at levels and subject to terms and conditions
which are no less favorable that those provided by Life Technologies
immediately prior to the effective time of the merger.
Invitrogen has agreed that each person who is an employee or former employee
of Life Technologies immediately prior to the effective time of the merger,
hereafter referred to as a Life
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Technologies Employee, will be given credit for all service with Life
Technologies (and service credited by Life Technologies) prior to the effective
time of the merger:
- for all purposes (other than benefit accrual under any defined benefit
pension plan) under all employee benefit plans, programs and arrangements
maintained by or contributed to by Invitrogen in which such Life
Technologies Employees become participants for purposes of eligibility to
participate, vesting and determination of level of benefits; and
- for purposes of calculating the amount of each Life Technologies
Employee's benefits under all severance and vacation pay plans, programs,
policies and arrangements.
Invitrogen has agreed to:
- waive, or cause to be waived, all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Life Technologies Employees under any
welfare benefit plans that such Life Technologies Employees may be
eligible to participate in after the effective time of the merger, except
to the extent such limitations or waiting periods are already in effect
with respect to such employees and have not been satisfied as of the
acquisition under any welfare benefit plan maintained for the Life
Technologies Employees immediately prior to the effective time of the
merger; and
- provide each Life Technologies Employee with credit for any co-payments,
deductibles and other out-of-pocket expenses incurred prior to the
acquisition in satisfying any applicable co-payment, deductible and other
out-of-pocket expense requirements under any welfare plans that such Life
Technologies Employees are eligible to participate in after the effective
time of the merger, as if those deductibles, co-payments and other
out-of-pocket expenses had been incurred under the welfare plans in which
such employees are eligible to participate after the effective time of the
merger.
Without limiting the generality of the foregoing, Invitrogen has agreed to
assume and honor all employment, consulting, termination and severance
agreements to which Life Technologies is a party.
SAVINGS PLANS. Life Technologies has agreed to terminate the Life
Technologies savings plan at the direction of Invitrogen. Invitrogen has agreed
to notify Life Technologies at least three days prior to the closing of any
decision to terminate a savings plan. Upon doing so, Life Technologies has
agreed to provide evidence to Invitrogen that the savings plan shall be
terminated effective as of the day immediately preceding the closing. Invitrogen
has agreed to, consistent with its 401(k) savings plan and applicable law, allow
those who were employees of Life Technologies or a Life Technologies subsidiary
immediately prior to the closing to participate in the Invitrogen savings plan.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
Invitrogen has agreed to indemnify present and former directors and officers
of Life Technologies and its subsidiaries against any costs or expenses incurred
in connection with any claim, action, suit, proceeding or investigation by
reason of the fact that such individual is or was a director, officer, employee
or agent of Life Technologies or its subsidiaries.
Invitrogen has also agreed that, for six years from the time the merger
becomes effective, it will maintain in effect Life Technologies' and its
subsidiaries' current directors' and officers' liability insurance policies for
those persons who are currently covered by the policies. However, Invitrogen
will not be required to expend in any one year an amount in excess of 150% of
the annual premiums currently paid by Life Technologies for such insurance. If
the annual premiums of such insurance coverage exceed this amount, Invitrogen
only will be obligated to obtain a policy with the greatest coverage available
for a cost not exceeding such amount. Invitrogen may meet its obligations under
this paragraph by covering the relevant persons under its own insurance
policies.
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CONDITIONS PRECEDENT TO THE MERGER
The merger agreement contains certain conditions to the parties' obligations
to complete the merger. The parties will not be obligated to complete the merger
unless at or before the time the merger becomes effective:
- STOCKHOLDER APPROVAL. The approval of Life Technologies and Invitrogen
stockholders has been obtained.
- DEXTER MERGER. The conditions to the Dexter merger have been satisfied or
waived in accordance with the terms of the Dexter merger agreement.
- LEGALITY. No statute, rule, regulation, executive order, decree, ruling or
permanent injunction by a governmental entity prohibits the consummation
of the merger substantially contemplated by the merger agreement.
- HSR ACT. Any waiting period under the Hart-Scott-Rodino Act has expired or
been terminated.
- NASDAQ NATIONAL MARKET. The shares of Invitrogen common stock issuable in
the merger are approved for quotation on the Nasdaq National Market,
subject only to official notice of issuance.
- REGISTRATION STATEMENT. The registration statement relating to this joint
proxy statement and prospectus is effective, and no stop order suspending
effectiveness has been issued.
Invitrogen will not be obligated to complete the merger unless:
- TAX OPINION. Invitrogen has received an opinion of Gray Cary Ware &
Freidenrich LLP to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code. This condition may not be waived after the Life Technologies
and Invitrogen stockholders approve the merger proposal unless further
Life Technologies stockholder approval is obtained with appropriate
disclosure.
- REPRESENTATIONS AND WARRANTIES. The representations and warranties of Life
Technologies contained in the merger agreement that are qualified by
materiality are true and correct as of the time the merger becomes
effective (other than those which speak as of a different date, which must
be true and correct as of that date), and the representations and
warranties of Life Technologies that are not so qualified shall be true
and correct in all material respects.
- AGREEMENTS AND COVENANTS. Life Technologies has performed and complied in
all material respects with all agreements and obligations required by the
merger agreement before the time the merger becomes effective.
- CERTIFICATE. Life Technologies has delivered to Invitrogen a certificate
of an officer evidencing compliance with the two preceding clauses.
Life Technologies will not be obligated to complete the merger unless:
- TAX OPINION. Life Technologies has received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code. This condition may not be waived after the Life Technologies
and Invitrogen stockholders approve the merger proposal unless further
Life Technologies stockholder approval is obtained with appropriate
disclosure.
- REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Invitrogen contained in the merger agreement that are qualified by
materiality are true and correct as of the time the merger becomes
effective (other than those which speak as of a different date, which must
be true and correct as of that date) and the representations and
warranties of Invitrogen that are not so qualified shall be true and
correct in all material respects.
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- AGREEMENTS AND COVENANTS. Invitrogen has performed and complied in all
material respects with all agreements and obligations required by the
merger agreement before the time the merger becomes effective.
- CERTIFICATE. Invitrogen has delivered to Life Technologies a certificate
of an officer evidencing compliance with the two preceding clauses.
TERMINATION
The merger agreement may be terminated at any time before the merger becomes
effective, in any of the following circumstances:
- By mutual written consent of Life Technologies and Invitrogen.
- By either Invitrogen or Life Technologies if the merger has not become
effective by October 31, 2000. If on October 31, 2000 the waiting period
under the Hart-Scott-Rodino Act has not expired or been terminated or,
prior to September 15, 2000 the registration statement has not been
declared effective, then such date will be extended to the earlier of:
(i) the later of (a) three business days after the expiration of the
waiting period under the Hart-Scott-Rodino Act or (b) three
business days after the special meeting of Life Technologies'
stockholders; or
(ii) December 31, 2000.
- By either Invitrogen or Life Technologies if a statute, rule, regulation
or executive order has been enacted, entered, promulgated or enforced
prohibiting the consummation of the merger substantially on the terms
contemplated by the merger agreement.
- By either Invitrogen or Life Technologies if a final and non-appealable
order, decree, ruling or injunction has been entered permanently
prohibiting the consummation of the merger substantially on the terms
contemplated by the merger agreement, if the terminating party has used
its reasonable best efforts to remove such order, decree, ruling or
injunction.
- By Invitrogen or Life Technologies if Life Technologies holds the
stockholders meeting and the Life Technologies stockholders vote against
approval of the merger agreement and merger.
- By Invitrogen or Life Technologies if Invitrogen holds the stockholders
meeting and the Invitrogen stockholders vote against approval of the
merger agreement and merger or vote against amendment of Invitrogen's
certificate of incorporation.
- By Invitrogen if there has been a material violation or breach by Life
Technologies of any agreement, representation or warranty contained in the
merger agreement that has rendered the satisfaction of any condition to
the obligations of Invitrogen impossible.
- By Life Technologies if there has been a material violation or breach by
Invitrogen of any agreement, representation or warranty contained in the
merger agreement that has rendered the satisfaction of any condition to
the obligations of Life Technologies impossible.
- By Invitrogen or Life Technologies if the Life Technologies merger
agreement has been terminated in accordance with its terms.
- By Invitrogen or Life Technologies, if the expiration date is extended
beyond October 31, 2000, any time after the tenth business day following
the termination of either the Loctite or Ahlstrom acquisition agreements.
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COSTS AND EXPENSES
Invitrogen and Life Technologies will pay their own costs and expenses in
connection with the merger agreement and the contemplated transactions.
AMENDMENT
At any time before the merger becomes effective, the parties may amend or
supplement any of the terms of the merger agreement in writing (which in the
case of Life Technologies may be taken only upon the recommendation of the Life
Technologies special committee), except that following approval by the Life
Technologies and Invitrogen stockholders, the parties may not change the
consideration Life Technologies stockholders will receive or make any other
change requiring stockholder approval without obtaining such approval.
WAIVER
Any waiver by Life Technologies of the requirement for Invitrogen's interim
operations must be authorized by the affirmative vote of at least six members of
Life Technologies' board of directors. At any time before the merger becomes
effective, the parties may (which in the case of Life Technologies may be taken
only upon the recommendation of the Life Technologies Special Committee), in
writing:
- extend the time for the performance of any of the obligations or other
acts of any other party;
- waive any inaccuracies in the representations and warranties of any other
party; or
- subject to obtaining stockholder approval if necessary as discussed under
"Amendment" above, waive compliance with any of the agreements or
conditions, of any other party contained in the merger agreement, provided
that Life Technologies shall receive authorization from the Special
Committee of the board of directors for any waiver of conditions to Life
Technologies obligations.
DEXTER MERGER AGREEMENT
FORM OF MERGER
If all the conditions to the merger are satisfied or waived in accordance
with the merger agreement, Dexter Corporation, will merge with and into
Invitrogen Corporation. Simultaneous to the Dexter merger, Life Technologies
will merge with and into Invitrogen. As a result of the mergers, Dexter and Life
Technologies will cease to exist. Invitrogen will be the sole surviving company.
The merger will become effective when a certificate of merger is filed with the
Delaware Secretary of State and with the Connecticut Secretary of State.
CONSIDERATION TO BE RECEIVED IN THE MERGER
At the time the merger becomes effective, each Dexter stockholder will have
the choice to elect to receive in exchange for each of their Dexter shares one
of the following:
1. $62.50 in cash, which will be prorated as follows, (i) the right to
receive an amount in cash equal to $62.50 multiplied by the cash election
proration factor, plus (ii) if the cash election proration factor is less
than 1, a fraction of a share of Invitrogen's common stock equal to the
exchange ratio multiplied by a fraction the numerator of which is $62.50
minus the cash determined above and the denominator of which is $62.50.
The "cash election proration factor" shall mean the lesser of (x) 1.00 or
(y) a fraction (i) the numerator of which is (1) the product of the total
number of shares outstanding multiplied by $17.50 minus (2) $17.50
multiplied by the number of shares for which standard elections have been
made, and (ii) the denominator of which is the product of $62.50
multiplied by the number of shares for which
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cash elections have been made, so that Invitrogen will not issue more
than $410 million in cash in the Dexter merger;
2. $17.50 in cash and a number of shares of Invitrogen common stock
equivalent in value to $45 determined by multiplying the exchange ratio
by 0.7200; or
3. A number of shares of Invitrogen common stock equivalent in value to
$62.50 determined as follows, the right to receive that fraction of a
share of Invitrogen common stock shall be calculated by dividing
(x) $62.50 by (y) the average bidder trading price, rounded to four
decimal places. The "average bidder trading price" shall mean the average
of the reported closing sales prices per share of Invitrogen common stock
as reported in THE WALL STREET JOURNAL for the 20 consecutive Nasdaq
National Market trading days ending on the third trading day prior to the
date of the Dexter stockholders meeting; provided, that if the quotient
exceeds 1.0417, then the exchange ratio shall be 1.0417, and if the
quotient is less than 0.7813, then the exchange ratio shall be 0.7813.
An election to receive only cash is called a "cash election," an election to
receive all stock is called a "stock election," and an election to receive a
combination of cash and stock is called a "standard election." Stockholders who
do not make an election and who are not dissenting stockholders, will be deemed
to have made a standard election.
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
EXCHANGE AGENT. Invitrogen shall appoint an exchange agent, prior to the
effective time, under the merger agreement. The exchange agent will exchange
certificates representing shares of Dexter common stock for the consideration to
be received in the merger. At the time the merger becomes effective, Invitrogen
will deposit with the exchange agent the consideration to be received in the
merger and the cash for the exchange fund. Soon after the completion of the
merger, the exchange agent will send a letter and election form to each person
who was a Dexter stockholder at the time the merger became effective. The letter
will contain instructions on how to surrender Dexter stock certificates to the
exchange agent and receive, depending on the election of the stockholder,
Invitrogen common stock, cash, or a combination of Invitrogen common stock and
cash.
DIVIDENDS. Holders of Dexter common stock will not be entitled to receive
any dividends or other distributions payable by Invitrogen until they exchange
their Dexter stock certificates for shares of Invitrogen common stock. After
they deliver their Dexter stock certificates to the exchange agent, those
stockholders will receive, subject to applicable laws, accumulated dividends and
distributions, without interest.
FRACTIONAL SHARES. No fractional shares of Invitrogen common stock will be
issued upon the surrender of certificates representing shares of Dexter common
stock. No dividend or other distribution of Invitrogen will relate to any such
fractional shares and no such fractional shares will entitle the owner thereof
to any voting or other rights of a stockholder of Invitrogen.
Holders of Dexter common stock otherwise entitled to fractional shares of
Invitrogen common stock will receive a cash payment instead of such fractional
shares. The cash payment will be equal to the product obtained by multiplying
the fractional share interest the stockholder would be entitled by the average
reported closing sales price for a share of Invitrogen common stock as reported
in THE WALL STREET JOURNAL for five consecutive trading days immediately before
the closing date.
ANTIDILUTION ADJUSTMENTS. If, before the merger becomes effective,
Invitrogen makes certain changes to the number of outstanding shares of
Invitrogen common stock or to the number of outstanding securities convertible
or exchangeable into or exercisable for shares of Invitrogen common stock, the
stock election merger consideration and the standard election merger
consideration will be
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adjusted accordingly. An adjustment will be made if Invitrogen makes such a
change as a result of a reclassification, stock split (including a reverse
split), stock dividend or distribution, recapitalization, subdivision, or other
similar transaction, or if Invitrogen declares or pays any dividend or
distribution (including of rights) other than any regular quarterly cash
dividends.
APPRAISAL RIGHTS. The Dexter stockholders who do not vote in favor of this
merger and who comply with all relevant provisions of Section 33-861 of the
Connecticut Business Corporation Act possess appraisal rights. If such
stockholder or stockholders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal, their Dexter shares
shall be converted into and become exchangeable for the right to receive the
standard election merger consideration. Invitrogen stockholders do not have
appraisal rights in connection with the merger.
WITHHOLDING RIGHTS. Invitrogen shall be entitled to deduct and withhold
from the consideration payable to any person amounts as it is required to deduct
and withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. If Invitrogen withholds amounts, such
amounts shall be treated for all purposes of the merger as having been paid to
the holders of shares in respect of which Invitrogen made such deduction and
withholding.
REPRESENTATIONS AND WARRANTIES
In the merger agreement Dexter and Invitrogen make representations and
warranties to each other about their respective companies with respect to, among
other things:
- their organization, existence, good standing, corporate power,
subsidiaries and similar corporate matters;
- their capitalization;
- their authorization, execution, delivery and performance and the
enforceability of the merger agreement and related matters;
- the absence of defaults or violations under their certificates of
incorporation and bylaws and certain other agreements and laws as a result
of the contemplated transactions;
- filings with the Securities and Exchange Commission and the accuracy and
completeness of the information contained in such filings;
- the absence of undisclosed material liabilities required to be disclosed
under accounting principles generally accepted in the United States;
- the absence of undisclosed material violations of laws or government
orders;
- environmental matters;
- employee benefit matters;
- the absence of certain material changes in their respective businesses
since December 31, 1999;
- this proxy statement and prospectus and the registration statement to be
filed in connection with the issuance of Invitrogen common stock in the
merger, and the accuracy of the information contained herein and therein;
- tax matters; and
- the receipt of opinions from each company's financial advisors.
In addition, Dexter makes representations and warranties in the merger
agreement with respect to:
- equity investments;
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- required stockholder approval with respect to the merger;
- amendment of its stockholder rights plan so that the stockholder rights
plan will not apply to the merger;
- the Loctite acquisition agreement and the Ahlstrom acquisition agreement;
- environmental matters and applicable insurance;
- legal proceedings;
- material contracts; and
- real property owned by Dexter.
Invitrogen also makes additional representations and warranties in the
merger agreement with respect to:
- its ownership of Dexter or Life Technologies shares; and
- required stockholder approval with respect to the merger and amendment to
Invitrogen certificate of incorporation to authorize additional Invitrogen
common stock.
All representations of Dexter and Invitrogen expire at the time the merger
becomes effective.
COVENANTS IN THE MERGER AGREEMENT
CONDUCT OF BUSINESS BY DEXTER.
Dexter has agreed that, until the merger has been completed or the merger
agreement has been terminated, it will not, subject to certain exceptions, take
certain actions without the consent of Invitrogen, unless such actions are
expressly permitted by the merger agreement, and except for certain pending
transactions. Subject to certain exceptions, Dexter has agreed to the following
with respect to itself and, where applicable, its subsidiaries:
- CONDUCT OF OPERATIONS. To conduct its operations according to their
ordinary and usual course of business.
- PRESERVE ORGANIZATIONS. To use its reasonable best efforts to preserve
intact its business organizations and goodwill, keep available the
services of its current officers and other key employees, and preserve its
business relationships.
- DIVIDENDS AND DISTRIBUTIONS. Not to authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of capital
stock other than regular quarterly cash dividends or any dividend or
distribution by a wholly owned subsidiary of Dexter to Dexter or any of
its wholly owned subsidiaries.
- AMENDMENTS TO PLANS. Not to enter into or amend any severance agreement or
employee benefit plan or increase the compensation or benefits of its
directors, officers, or employees, except as contemplated by law, existing
contracts, plans or policies or in the ordinary course of business.
Changes in the ordinary course of business are permitted only with respect
to Dexter employees who are not officers, except for changes relating to
annual bonuses and other incentive awards.
- BUSINESS COMBINATIONS; ASSETS. Not to enter into any agreements in
connection with any merger, consolidation, business combination or
disposition of material amounts of assets or securities except for this
merger and the Life Technologies merger.
- GOVERNING DOCUMENTS. Not to propose or adopt any amendments to corporate
charters or bylaws.
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- ISSUANCE OF CAPITAL STOCK. Not to issue or authorize the issuance of any
shares of capital stock of any class, except for (1) the issuance of
Dexter or Life Technologies common stock pursuant to options and grants
outstanding on the date of the merger agreement under existing stock plans
or (2) options and other equity awards granted in the ordinary course of
business consistent with past practice to any new employee hired after
July 7, 2000 but before the closing date or pursuant to formula awards, in
either case under a Dexter or Life Technologies equity plan.
- CHANGES TO CAPITAL STOCK. Not to reclassify, combine, split, purchase or
redeem any shares of capital stock or purchase or redeem any rights,
warrants or options to acquire any such shares.
- INDEBTEDNESS. Not to incur, assume or prepay any indebtedness or other
liabilities for borrowed money or issue any debt securities, other than
incurrences and repayments of indebtedness under existing credit
facilities and not to assume, guarantee, endorse or otherwise become
liable for the obligations of any other person other than wholly owned
subsidiaries except for guarantees by subsidiaries of the company
permitted under the merger agreement.
- LOANS, ADVANCES, CAPITAL CONTRIBUTIONS. Not to make or forgive any loans,
advances or capital contributions to, or investments, other than advances
to employees in the ordinary course of business in accordance with
Dexter's established policies, except those to Dexter or any wholly owned
Dexter subsidiary.
- PROPERTIES AND ASSETS. Not to sell, lease, license or otherwise subject to
any lien or otherwise dispose of any properties or assets (including
securitizations) other than in the ordinary course of business, not to
modify or terminate any material contracts or waive any material rights,
and not to permit insurance coverage to lapse, be cancelled or expire
unless a substantially identical policy is in effect as of the date of
lapse, cancellation or expiration.
- ACCOUNTING METHODS. Not to change accounting methods unless required by
accounting principles generally accepted in the United States.
- TAX ELECTION. Not to make any tax election that is likely to have a
material adverse effect and not to settle or compromise any material tax
liability.
- ASSET SALES. Not to, without the prior consent of Invitrogen, amend or
modify the Loctite or Ahlstrom acquisition agreements;
- TAX TREATMENT. Not to take any actions that would prevent the merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
- AGREE TO TAKE ACTIONS. Not to take or agree to take any of the foregoing
actions or take any action which would result in any of the conditions to
the merger set forth in the merger agreement not being satisfied.
INVITROGEN'S INTERIM OPERATIONS.
Invitrogen has agreed that, until the merger has been completed or the
merger agreement has been terminated, it will not take certain actions without
the consent of Dexter. Invitrogen will (and will cause its subsidiaries to)
conduct its business in all material respects in the ordinary course consistent
with past practice. Invitrogen will preserve intact its current business
organization, keep the services of key officers and employees available,
maintain all material licenses and authorizations in effect, and preserve its
material business relationships. Invitrogen has also agreed to the following
with respect to itself and, where applicable, its subsidiaries:
- GOVERNING DOCUMENTS. Not to amend its certificate of incorporation,
bylaws, or similar organizational documents.
- CHANGES TO CAPITAL STOCK. Not to amend in any respect the terms of its
capital stock.
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- CHANGES TO COMMON STOCK. Not to split, combine, subdivide or reclassify
any shares of its common stock.
- DIVIDENDS AND DISTRIBUTIONS. Not to authorize or pay any dividends on or
make any distribution with respect to its common stock other than regular
quarterly cash dividends or any dividends paid by any subsidiary of
Invitrogen to Invitrogen or to any subsidiary that is wholly owned by
Invitrogen.
- ACCOUNTING METHODS. Not to change accounting methods unless required by
accounting principles generally accepted in the United States.
- NEW LINES OF BUSINESS. Not to enter into any material new line of business
that is not strategically related to its current business or operations.
- INDEBTEDNESS. Not to incur indebtedness outside the ordinary course of
business or for acquisitions other than to consummate the transactions
contemplated by this merger agreement and the Life Technologies merger.
- BUSINESS COMBINATIONS; ASSETS. Not to enter into any business combination
and not to dispose of assets, securities or ownership interests
representing a material portion of the total assets of Invitrogen and its
subsidiaries taken as a whole.
- TAX TREATMENT. Not to take any actions that would prevent the merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
- AGREE TO TAKE ACTIONS. Not to take or agree to take any of the foregoing
actions or take any action which would result in any of the conditions to
the merger set forth in the merger agreement not being satisfied.
INVESTIGATION.
Dexter has agreed, subject to legal and contractual restrictions, until the
merger becomes effective or the merger agreement is terminated, to afford
Invitrogen's representatives reasonable access to its properties, offices,
employees, contracts, commitments, books and records and any documents filed or
received by Dexter pursuant to applicable securities laws, and to furnish to
Invitrogen any additional information about its businesses and properties as
Invitrogen may reasonably request. However, Dexter will not be required to
disclose competitively sensitive information. Invitrogen will hold all
non-public information provided under the agreement in confidence.
Invitrogen will afford Dexter's representatives reasonable access to its
officers, employees, and books and records to the extent reasonably necessary in
connection with preparing this proxy statement. Except as required by law,
Dexter will hold all information provided under the merger agreement in
confidence.
STOCKHOLDER APPROVALS AND OTHER COOPERATION.
Dexter and Invitrogen have each agreed to call an annual or special meeting
of its stockholders as soon as practicable for considering and taking action
upon the approval of this merger. Dexter and Invitrogen have also agreed to
prepare and file with the Securities and Exchange Commission, as promptly as
possible, this document, and, subject to fiduciary duties, to include in this
document the recommendation of their respective boards of directors that their
respective stockholders approve the merger and the merger agreement and, in the
case of Invitrogen, that the Invitrogen stockholders approve an amendment to the
Invitrogen certificate of incorporation to authorize the shares of common stock
necessary to issue the merger consideration.
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Invitrogen has agreed to prepare and file the registration statement and use
its reasonable best efforts to have the registration statement declared
effective by the Securities and Exchange Commission as promptly as practicable,
to cause this proxy statement and prospectus to be mailed to Dexter stockholders
at the earliest practicable date after the registration statement is declared
effective, to take all actions required under state blue sky or securities laws
in connection with the issuance of shares of Invitrogen common stock in the
merger, and to use its best efforts to cause the shares of Invitrogen common
stock to be issued in the merger to be approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
Dexter and Invitrogen have agreed to cooperate with one another in order to
lift any injunctions or remove any other impediment to the consummation of the
contemplated transactions and to grant such approvals and take such actions as
are reasonably necessary to eliminate or minimize the effects of any
anti-takeover statutes or regulations which may become applicable to the merger.
In addition, the merger agreement contains general covenants requiring
Dexter and Invitrogen to act in good faith and use commercially reasonable
efforts to do all things necessary, proper or advisable to consummate the
contemplated transactions.
PUBLIC ANNOUNCEMENTS. Dexter and Invitrogen agree not to make any public
announcements with respect to the merger agreement and the transactions
contemplated thereby without first getting each other's approval.
TAX MATTERS. Dexter and Invitrogen agree to use all reasonable efforts to
cause the merger to qualify as a reorganization under the Internal Revenue Code.
LIFE TECHNOLOGIES STOCK. Dexter has agreed to vote all of the shares of
Life Technologies common stock owned by it in favor of the approval and adoption
of the Life Technologies merger agreement.
ADDITIONAL REPORTS. Each of Dexter and Invitrogen shall furnish to the
other copies of all reports filed with the SEC and all financial materials. All
statements in the reports are true and correct in light of the circumstances
under which they were made, and are not misleading. Dexter shall continue to
deliver to Invitrogen going forward all other financial information required
under the merger agreement.
AFFILIATES. Dexter shall deliver to Invitrogen a list identifying all
persons who are deemed to be "affiliates" of the Company for purposes of
Rule 145 under the Securities Act, and shall notify Invitrogen of any changes
thereafter to the list.
DISCLOSURE SUPPLEMENTS. The parties shall amend their respective disclosure
schedules, if the need arises and shall provide the other party with such
updated schedules.
NO SOLICITATION
Dexter has agreed that neither it nor any of its directors, officers,
employees or any representatives retained by it will, directly or indirectly
through another person:
- solicit, initiate, encourage, or otherwise knowingly facilitate any
inquiries (whether by furnishing information or otherwise) or the making
of any acquisition proposal, or
- participate in any discussions or negotiations regarding an acquisition
proposal.
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However, in response to an unsolicited bona fide written acquisition
proposal that the Dexter board of directors concludes in good faith would
provide greater aggregate value to the Dexter stockholders, thus concluding the
acquisition proposal is a superior proposal, after providing reasonable advance
notice to Invitrogen, Dexter's board of directors may, or may authorize Dexter
representatives to:
- furnish information with respect to Dexter and its subsidiaries to any
person making the superior proposal, and
- participate in discussions or negotiations regarding the superior
proposal.
Except as provided in the next two paragraphs, neither Dexter's board of
directors nor any committees of such board will do any of the following:
- withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Invitrogen, the recommendation by the board of directors or any
committee, of the merger or the merger agreement,
- approve or recommend, or propose publicly to approve or recommend, any
acquisition proposal, or
- cause Dexter to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any
acquisition proposal.
However, Dexter's board of directors or any committee of such board may
withdraw its recommendation of the merger agreement if it determines in good
faith, based on advice of legal and financial advisors, that its failure to do
so would be a breach of its fiduciary duties under applicable law.
Additionally, in response to a superior proposal, Dexter may:
- withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Invitrogen, the recommendation by the board of directors or any
committee, of the merger or the merger agreement,
- approve or recommend, or propose publicly to approve or recommend, any
superior proposal, or
- terminate this merger agreement and concurrently with or after termination
enter into any acquisition agreement with respect to any superior proposal
but only after the fifth business day following Invitrogen's receipt of
written notice advising Invitrogen that Dexter's board of directors is
prepared to accept a superior proposal, and attaching the most current
version of any such proposal or any draft of an acquisition agreement.
The merger agreement does not prohibit Dexter from taking and disclosing to
its stockholders a position contemplated by Rule 14e-2 under the Securities
Exchange Act or from making any disclosure to the Dexter stockholders required
by applicable law.
EMPLOYEE MATTERS
Dexter has agreed to take all actions as shall be reasonably necessary to:
- cause each outstanding stock option to purchase shares of Dexter common
stock granted under any stock option or compensation plan or arrangement
of Dexter or its subsidiaries to become fully vested and exercisable
immediately prior to the effective time of the merger; and
- cause all employee stock options that are outstanding immediately prior to
the effective date of the merger to be cancelled.
In exchange for the cancellation of each employee stock option, the holder
shall be entitled to receive, as of the merger, a cash payment and a number of
shares of Invitrogen common stock. The cash payment each option holder will
receive is determined by multiplying 0.28 by each of the number
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of shares of Dexter common stock subject to the option and "option value
spread". The option value spread is the excess, if any, of:
- the sum of $17.50 and the product of (A) 0.72 and (B) the product of
(x) the exchange ratio multiplied by (y) the average bidder trading price
(as defined above under the caption "Consideration to be Received in the
Merger") over
- the per share exercise for Dexter common stock that otherwise could have
been purchased under the Dexter stock option.
The number of shares of Invitrogen common stock each option holder will
receive is determined by multiplying 0.72 by each of the number of shares of
Dexter common stock subject to the option and:
- the quotient obtained by dividing (A) the option value spread (as defined
above) by (B) the average bidder trading price.
The foregoing payment will be reduced by any income tax or employment tax
withholding required under the Internal Revenue Code and the number of shares of
Invitrogen common stock to be received will be rounded to the nearest full
share.
Following the merger, and to the extent not provided for in an acquisition
agreement that Dexter is a party to as of the effective time of the merger, or
any agreement entered into after the merger by Dexter and/or Invitrogen with any
purchaser of Dexter's coating business or any other assets of Dexter, Invitrogen
will, or will cause an Invitrogen subsidiary to:
- provide to the former Dexter employees whose employment terminated prior
to the effective time of the merger post-retirement welfare benefits
substantially equivalent to those provided by Dexter immediately prior to
the effective time of the merger;
- continue an arrangement pursuant to which such post-retirement welfare
benefits shall be provided upon any termination of employment with
Invitrogen or its subsidiaries, to those employees who elect to receive
such benefits and who immediately prior to the effective time of the
merger would be eligible for such benefits upon a termination of
employment with Dexter; and
- continue an arrangement pursuant to which such post-retirement welfare
benefits shall be provided to those individuals who are not retirees or
vested eligible employees, and who, as of the effective time of the
merger, had attained the age of 50 and had been credited with at least
five years of service with Dexter, but only if at the time of termination
with Invitrogen or an Invitrogen subsidiary, such employee would have been
eligible to receive such benefits under the Dexter benefit program as in
effect immediately prior to the effective time of the merger and such
employee elects to receive such benefits.
Invitrogen has agreed not to, and not to permit its subsidiaries to,
terminate or modify in any adverse manner the foregoing post-retirement welfare
benefits for the above employees and former employees.
SAVINGS PLANS. Dexter has agreed to terminate the Dexter Corporation 401(k)
Plan and the Employees Savings and Profit Sharing Retirement Income of Dexter at
the direction of Invitrogen and to the extent permissible under any previous
acquisition agreement entered into by Dexter. Invitrogen has agreed to determine
whether any such previous acquisition agreement would affect the proposed
savings plan terminations and to notify Dexter at least three days prior to the
closing of any decision to terminate a savings plan. Upon doing so, Dexter has
agreed to provide evidence to Invitrogen that the savings plan shall be
terminated effective as of the day immediately preceding the closing. Invitrogen
has agreed to, consistent with its 401(k) savings plan and applicable law, allow
those who were employees of Dexter or a Dexter subsidiary immediately prior to
the closing to participate in the Invitrogen savings plan.
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INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
Invitrogen has agreed to indemnify present and former directors and officers
of Dexter and its subsidiaries against any costs or expenses incurred in
connection with any claim, action, suit, proceeding or investigation by reason
of the fact that such individual is or was a director, officer, employee or
agent of Dexter or its subsidiaries.
Invitrogen has also agreed that, for six years from the time the merger
becomes effective, it will maintain in effect Dexter's and its subsidiaries'
current directors' and officers' liability insurance policies for those persons
who are currently covered by the policies. However, Invitrogen will not be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by Dexter for such insurance. If the annual premiums of
such insurance coverage exceed this amount, Invitrogen only will be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount. Invitrogen may meet its obligations under this paragraph by
covering the relevant persons under its own insurance policies.
CONDITIONS PRECEDENT TO THE MERGER
The merger agreement contains certain conditions to the parties' obligations
to complete the merger. The parties will not be obligated to complete the merger
unless at or before the time the merger becomes effective:
- STOCKHOLDER APPROVAL. The approval of Dexter and Invitrogen stockholders
has been obtained.
- LIFE TECHNOLOGIES MERGER. The conditions to the Life Technologies merger
have been satisfied or waived in accordance with the terms of the Life
Technologies merger agreement.
- LEGALITY. No statute, rule, regulation, executive order, decree, ruling or
permanent injunction by a governmental entity prohibits the consummation
of the merger substantially contemplated by the merger agreement.
- HSR ACT. Any waiting period under the Hart-Scott-Rodino Act has expired or
been terminated.
- NASDAQ NATIONAL MARKET. The shares of Invitrogen common stock issuable in
the merger are approved for quotation on the Nasdaq National Market,
subject only to official notice of issuance.
- REGISTRATION STATEMENT. The registration statement relating to this joint
proxy statement and prospectus is effective, and no stop order suspending
effectiveness has been issued.
Invitrogen will not be obligated to complete the merger unless:
- TAX OPINION. Invitrogen has received an opinion of Gray Cary Ware &
Freidenrich LLP to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code. This condition may not be waived after the Dexter and
Invitrogen stockholders approve the merger proposal unless further Dexter
stockholder approval is obtained with appropriate disclosure.
- REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Dexter contained in the merger agreement that are qualified by materiality
are true and correct as of the time the merger becomes effective (other
than those which speak as of a different date, which must be true and
correct as of that date), and the representations and warranties of Dexter
that are not so qualified shall be true and correct in all material
respects.
- AGREEMENTS AND COVENANTS. Dexter has performed and complied in all
material respects with all agreements and obligations required by the
merger agreement before the time the merger becomes effective.
- CERTIFICATE. Dexter has delivered to Invitrogen a certificate of an
officer evidencing compliance with the two preceding clauses.
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- ASSET SALES. The transactions contemplated by the Loctite and Ahlstrom
acquisition agreements have been consummated substantially in accordance
with the terms thereof.
Dexter will not be obligated to complete the merger unless:
- TAX OPINION. Dexter has received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code. This condition may not be waived after the Dexter and
Invitrogen stockholders approve the merger proposal unless further Dexter
stockholder approval is obtained with appropriate disclosure.
- REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Invitrogen contained in the merger agreement that are qualified by
materiality are true and correct as of the time the merger becomes
effective (other than those which speak as of a different date, which must
be true and correct as of that date), and the representations and
warranties of Invitrogen that are not so qualified shall be true and
correct in all material respects.
- AGREEMENTS AND COVENANTS. Invitrogen has performed and complied in all
material respects with all agreements and obligations required by the
merger agreement before the time the merger becomes effective.
- CERTIFICATE. Invitrogen has delivered to Dexter a certificate of an
officer evidencing compliance with the two preceding clauses.
TERMINATION
The merger agreement may be terminated at any time before the merger becomes
effective, in any of the following circumstances:
- By mutual written consent of Dexter and Invitrogen.
- By either Invitrogen or Dexter if the merger has not become effective by
October 31, 2000. If on October 31, 2000 the waiting period under the
Hart-Scott-Rodino Act has not expired or been terminated or, prior to
September 15, 2000, the registration statement has not been declared
effective, then such date will be extended to the earlier of:
(i) the later of (a) three business days after the expiration of the
waiting period under the Hart-Scott-Rodino Act or (b) three
business days after the special meeting of Dexter's stockholders;
or
(ii) December 31, 2000.
- By either Invitrogen or Dexter if a statute, rule, regulation or executive
order has been enacted, entered, promulgated or enforced prohibiting the
consummation of the merger substantially on the terms contemplated by the
merger agreement.
- By either Invitrogen or Dexter if a final and non-appealable order,
decree, ruling or injunction has been entered permanently prohibiting the
consummation of the merger substantially on the terms contemplated by the
merger agreement, if the terminating party has used its reasonable best
efforts to remove such order, decree, ruling or injunction.
- By Dexter in order to accept a superior proposal, so long as Dexter
complies with the covenants described under "No Solicitation" above and
pays the termination fee contemplated by the merger agreement.
- By Invitrogen or Dexter if Dexter holds the stockholders meeting and the
Dexter stockholders vote against approval of the merger agreement and
merger.
- By Invitrogen or Dexter if Invitrogen holds the stockholders meeting and
the Invitrogen stockholders vote against approval of the merger agreement
and merger or vote against amendment of Invitrogen's certificate of
incorporation.
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- By Invitrogen if there has been a material violation or breach by Dexter
of any agreement, representation or warranty contained in the merger
agreement that has rendered the satisfaction of any condition to the
obligations of Invitrogen impossible.
- By Dexter if there has been a material violation or breach by Invitrogen
of any agreement, representation or warranty contained in the merger
agreement that has rendered the satisfaction of any condition to the
obligations of Dexter impossible.
- By Invitrogen or Dexter if the Life Technologies merger agreement has been
terminated in accordance with its terms.
- By Invitrogen or Dexter, if the expiration date is extended beyond
October 31, 2000, any time after the tenth business day following the
termination of either the Loctite or Ahlstrom acquisition agreements.
TERMINATION FEES
Dexter will pay Invitrogen a termination fee of $65 million if:
- Dexter terminates the merger agreement to accept a superior proposal, as
described under "Termination" above, or
- an acquisition proposal for Dexter has been publicly announced and
following such announcement the merger agreement is terminated after
Dexter stockholders fail to approve the merger and, within 12 months of
such termination, a transaction involving a change of control of Dexter or
an asset transaction involving a sale of all or substantially all of the
assets of Dexter and its consolidated subsidiaries is consummated.
COSTS AND EXPENSES
Invitrogen and Dexter will pay their own costs and expenses in connection
with the merger agreement and the contemplated transactions.
AMENDMENT
At any time before the merger becomes effective, the parties may amend or
supplement any of the terms of the merger agreement in writing, except that
following approval by the Dexter and Invitrogen stockholders, the parties may
not change the consideration Dexter stockholders will receive or make any other
change requiring stockholder approval without obtaining such approval.
WAIVER
At any time before the merger becomes effective, any party may, in writing:
- extend the time for the performance of any of the obligations or other
acts of any other party;
- waive any inaccuracies in the representations and warranties of any other
party; or
- subject to obtaining stockholder approval if necessary as discussed under
"Amendment" above, waive compliance with any of the agreements or
conditions of any other party contained in the merger agreement.
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APPRAISAL RIGHTS OF STOCKHOLDERS
Under the law of Delaware, where Invitrogen is incorporated, holders of
Invitrogen common stock do not have the right to receive an appraisal of the
value of their shares of Invitrogen common stock in connection with either of
the mergers.
Under the law of Delaware, where Life Technologies is incorporated, holders
of Life Technologies common stock who comply with the applicable requirements of
Delaware law will have the right to receive an appraisal of the value of their
shares in connection with the Life Technologies merger.
Under the law of Connecticut, where Dexter is incorporated, holders of
Dexter common stock who comply with the applicable requirements of Connecticut
law will have the right to receive an appraisal of the value of their Dexter
shares in connection with the Dexter merger.
LIFE TECHNOLOGIES STOCKHOLDERS' APPRAISAL RIGHTS
Delaware law entitles the holders of record of shares of Life Technologies
stock who follow the procedures specified in Section 262 of the Delaware
corporate law to have their shares appraised by the Delaware Court of Chancery
and to receive the "fair value" of such shares as of the effective time of the
Life Technologies merger as determined by the court in place of the
consideration that the holder would otherwise receive in the Life Technologies
merger. In order to exercise appraisal rights, a stockholder must demand and
perfect the rights in accordance with Section 262 of the Delaware corporate law.
The following is a summary of Section 262 of the Delaware corporate law and is
qualified in its entirety by reference to Section 262 of the Delaware corporate
law, a copy of which is attached hereto as Annex F. Life Technologies
stockholders should carefully review Section 262 of the Delaware corporate law
as well as information discussed below to evaluate their rights to appraisal.
If a holder of Life Technologies common stock elects to exercise the right
to an appraisal under Section 262 of the Delaware corporate law, such
stockholder must:
- file with Life Technologies at its main office in Rockville, Maryland, a
written demand for appraisal of the shares of Life Technologies common
stock held (which demand must identify the stockholder and expressly
request an appraisal) before the vote is taken on the Life Technologies
merger agreement at the special meeting; and
- continuously hold such shares through the effective time of the Life
Technologies merger.
All written demands for appraisal should be addressed to: C. Eric Winzer,
Secretary, Life Technologies, Inc., 9800 Medical Center Drive, Rockville,
Maryland, 20850, before the vote is taken on the merger agreement at the Life
Technologies special meeting, and should be executed by, or on behalf of, the
holder of record. Such demand reasonably must inform Life Technologies of the
identity of the stockholder and that such stockholder is thereby demanding
appraisal of such stockholder's shares.
Within 10 days after the effective time of the Life Technologies merger,
Invitrogen (the surviving company of the Life Technologies merger) will give
written notice of the effective time to each holder of Life Technologies common
stock who has satisfied the requirements of Section 262 of the Delaware
corporate law. Within 120 days after the effective time, Invitrogen or any
dissenting stockholder may file a petition in the court demanding a
determination of the fair value of the shares of Life Technologies common stock
of all dissenting stockholders. Any dissenting stockholder desiring the filing
of such petition is advised to file such petition on a timely basis unless the
dissenting stockholder receives notice that such a petition has been filed by
Life Technologies or another dissenting stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and thereafter will determine the
fair value of the shares of Life Technologies
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common stock held by dissenting stockholders, exclusive of any element of value
arising from the accomplishment or expectation of the Life Technologies merger,
but together with a fair rate of interest, if any, to be paid on the amount
determined to be fair value. In determining such fair value, the court shall
take into account all relevant factors. The court may determine such fair value
to be more than, less than or equal to the consideration that such dissenting
stockholder would otherwise be entitled to receive pursuant to the merger
agreement. If a petition for appraisal is not timely filed, then the right to an
appraisal shall cease. The costs of the appraisal proceeding shall be determined
by the court and taxed against the parties as the court determines to be
equitable under the circumstances. Upon the application of any stockholder, the
court may determine the amount of interest, if any, to be paid upon the value of
the stock of stockholders entitled thereto. Upon application of a stockholder,
the court may order all or a portion of the expenses incurred by any stockholder
in connection with the appraisal proceeding, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, to be charged
pro rata against the value of all shares entitled to appraisal.
After the effective time of the Life Technologies merger, no dissenting
stockholder shall have any rights of a Life Technologies stockholder with
respect to such holder's shares for any purpose, except to receive payment to
which Life Technologies stockholders of record as of a date prior to the
effective time are entitled, if any. If a dissenting stockholder delivers to
Invitrogen a written withdrawal of the demand for an appraisal within 60 days
after the effective time of the Life Technologies merger or thereafter with the
written approval of Invitrogen, or if no petition for appraisal is filed within
120 days after the effective time, then the right of such Dissenting Stockholder
to an appraisal will cease and such dissenting stockholder will be entitled to
receive only the shares of common stock of Invitrogen as provided in the merger
agreement.
The foregoing is only a summary of the applicable provision of the Delaware
General Business Law and is qualified in its entirety by reference to the full
text of such provision, which is included in Annex F.
DEXTER STOCKHOLDERS' APPRAISAL RIGHTS
Connecticut law entitles the holders of record of shares of Dexter common
stock who follow the procedures specified in the Connecticut Business
Corporation Act to be entitled to appraisal rights upon compliance with certain
procedures prescribed by Connecticut law. Holders of Dexter common stock who
would want to invoke their appraisal rights should therefore follow the
procedures described below.
Under sections 33-855 through 33-872 of the Connecticut Business Corporation
Act holders of Dexter's common stock would have a right to dissent from the
Dexter merger and can choose to be paid the fair value of your Dexter shares
once the Dexter merger is completed, provided you follow the procedures outlined
in the statute. The complete text of these sections is included in Annex G to
this joint proxy statement and prospectus.
If you wish to exercise your dissenters' rights of appraisal or to preserve
the right to do so, you should carefully review Annex G and seek the advice of
counsel. If you do not comply with the deadlines and procedures specified in the
Connecticut Business Corporation Act, you may lose your dissenters' rights of
appraisal. To exercise these rights, you must satisfy each of the following
conditions:
- you must not vote in favor of the Dexter merger; and
- you must deliver to the Secretary of Dexter, Bruce H. Beatt, before the
vote on the Dexter merger at the special meeting, a written notice of your
intent to demand payment of the fair value of your shares.
You must deliver the notice of intent even if you submit a proxy or vote
against the merger. Merely voting against, abstaining from voting or failing to
vote in favor of adoption of the merger will
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not constitute a notice of intent to exercise dissenters' rights of appraisal
under the Connecticut Business Corporation Act.
If Dexter stockholders approve the Dexter merger at the special meeting of
Dexter stockholders and you meet the requirements above, then Dexter will send
you, within 10 days of the approval of the Dexter merger, a written dissenters'
notice to be used to demand payment for your shares. The dissenters' notice
must:
- state where the payment demand must be sent and when and where
certificates for certificated shares must be deposited;
- inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
- supply a form for demanding payment that includes the date of the first
announcement to the news media or to stockholders of the terms of the
Dexter merger agreement and require that each stockholder asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
- set a date by which Dexter must receive the payment demand, which may not
be fewer than 30 nor more than 60 days after the written dissenters'
notice is delivered by Dexter; and
- be accompanied by a copy of Sections 33-855 through 33-872 of the
Connecticut Business Corporation Act (these are the sections that discuss
dissenters' rights).
Under Section 33-863(a) of the Connecticut Business Corporation Act, if you
receive a dissenters' notice and wish to exercise your dissenters' rights of
appraisal, you must:
- demand payment for your shares;
- certify that you acquired beneficial ownership of your shares (generally,
the right to vote or enter into an arrangement or agreement for the
purpose of voting your shares, the right to acquire shares and the right
to dispose of shares) before the date of the first announcement to the
news media or to the stockholders of the terms of the asset purchase
agreement as set forth in the dissenters' notice; and
- deposit the certificate or certificates representing your shares in
accordance with the terms of the dissenters' notice.
If you are considering seeking dissenters' rights of appraisal, you should
be aware that the fair value of your shares as determined under the applicable
provisions of the Connecticut Business Corporation Act could be greater than,
the same as or less than the Dexter merger consideration.
After Dexter receives a valid, timely and complete payment demand, or upon
completion of the Dexter merger, Invitrogen, the surviving company, will pay to
each dissenting Dexter stockholder the amount it estimates to be the fair value
of the dissenting stockholder's shares, plus accrued interest, as provided in
Section 33-865(a) of the Connecticut Business Corporation Act. That payment will
be accompanied by:
- Dexter's balance sheet as of the end of a fiscal year ending not more than
16 months before the date of payment, an income statement for that year, a
statement of changes in stockholders' equity for that year and the latest
available interim financial statements, if any;
- a statement of Dexter's estimate of the fair value of the shares;
- an explanation of how the accrued interest was calculated;
- a statement of the stockholders' right to demand payment under
Section 33-868 of the Connecticut Business Corporation Act; and
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- a copy of Sections 33-855 through 33-872 of the Connecticut Business
Corporation Act.
If the Dexter merger does not take place within 60 days after the date set
for demanding payment and depositing certificates representing dissenting
stockholders' shares, Dexter will return the deposited certificates and release
any transfer restrictions that may have been imposed on uncertificated shares.
If the Dexter merger is completed after the return of the deposited shares and
the release of transfer restrictions, Invitrogen will send a new dissenters'
notice and repeat the payment-demand procedure.
Under Section 33-868 of the Connecticut Business Corporation Act, you may
send to Invitrogen your own estimate of the fair value of your shares and the
amount of any interest due, and demand payment of the difference between your
estimate and the amount paid, if any, by Invitrogen in the following cases:
- if you believe that the amount paid by Invitrogen is less than the fair
value of your shares or that the interest due is incorrectly calculated;
- if Invitrogen fails to make payment within 60 days after the date set in
the dissenters' notice for demanding payment (except if the payment is
withheld to holders of shares who acquired the shares after the
announcement of the Dexter merger); or
- if the asset sale is not completed, and Dexter does not return the
deposited certificates or release any transfer restrictions imposed on
uncertificated shares within 60 days after the date set in the dissenters'
notice for demanding payment.
If you do not demand payment of the difference between your estimate of the
fair value of your shares, plus interest, and the amount paid by Invitrogen
within 30 days after Invitrogen made or offered to make that payment, you will
lose your right to demand payment of any such difference.
Under Sections 33-871(a) and (b) of the Connecticut Business Corporation
Act, if your demand for payment of your estimate remains unsettled, Invitrogen
will commence a proceeding within 60 days after receipt of your demand for
payment and petition the Connecticut superior court for the judicial district
where Dexter's principal office is located to determine the fair value of your
shares and accrued interest. If Invitrogen does not timely commence this
proceeding, Invitrogen must pay you the unsettled amount that you demanded.
If this proceeding takes place, Invitrogen will make all dissenting
stockholders whose demands remain unsettled (even if they are not residents of
Connecticut) parties to the proceeding, and all parties will be served with a
copy of the petition. The court may appoint appraisers who will receive evidence
and recommend a decision on the question of fair value. If the court finds that
the amount Invitrogen paid is less than the fair value of a dissenting
stockholder's shares, plus accrued interest, the court will order Invitrogen to
pay the difference to the dissenting stockholder.
The court will determine all costs of the proceeding, including the
reasonable compensation and expenses of court-appointed appraisers. Invitrogen
generally will pay these costs, but the court may order the dissenting
stockholders to pay some of them, in amounts the court finds equitable, if the
court finds that the stockholders acted arbitrarily, vexatiously or not in good
faith in demanding payment.
If you give notice of your intent to demand dissenters' rights for your
shares under the applicable provisions of the Connecticut Business Corporation
Act but fail to return the dissenters' notice or withdraw or lose your right to
demand payment, your shares will be converted into the right to receive the
consideration in the Dexter merger.
The foregoing is only a summary of the applicable provisions of the
Connecticut Business Corporation Act and is qualified in its entirety by
reference to the full text of such provisions, which is included in Annex G.
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OWNERSHIP OF COMMON STOCK
BENEFICIAL OWNERSHIP OF INVITROGEN COMMON STOCK
The following table sets forth information, as of June 30, 2000, with
respect to the beneficial ownership of shares of the common stock of Invitrogen
by (1) each Invitrogen director, (2) each of the executive officers named in the
summary compensation table in Invitrogen's 2000 proxy statement, and (3) all
persons known to Invitrogen to be the beneficial owners of more than five
percent of Invitrogen's outstanding common stock and (4) all executive officers
of Invitrogen as a group. Such beneficial ownership is reported in accordance
with the rules of the Securities and Exchange Commission, under which a person
may be deemed to be the beneficial owner of shares of such common stock if such
person has or shares the power to vote or dispose of such shares or has the
right to acquire beneficial ownership of such shares within 60 days (for
example, through the exercise of an option). Accordingly, the shares shown in
the table as beneficially owned by certain individuals may include shares owned
by certain members of their respective families. Because of such rules, more
than one person may be deemed to be the beneficial owner of the same shares. The
inclusion of the shares shown in the table is not necessarily an admission of
beneficial ownership of those shares by the person indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1) SHARES THAT MAY BE
-------------------- ACQUIRED WITHIN 60 DAYS OF
NUMBER PERCENT JUNE 30, 2000
--------- -------- --------------------------
<S> <C> <C> <C>
Lyle C. Turner...................................... 3,878,285 16.4% --
James R. Hudson, Jr................................. 2,595,600 11.0 3,600
Janus Capital Corporation .......................... 1,578,340 6.7
100 Fillmore Street, Suite 400
Denver, Colorado 80206
TA Associates(2) ................................... 446,663 1.9
Kurt R. Jaggers
TA Associates, Inc.
125 High Street Tower, Suite 2500
Boston, Massachusetts 02110
James R. Glynn...................................... 168,359 * 165,831
David E. McCarty(3)................................. 86,300 * 80,925
Jay M. Short(4)..................................... 67,000 * 42,000
Lewis J. Shuster.................................... 44,998 * 44,998
Donald W. Grimm..................................... 23,000 * 20,000
Bradley G. Lorimier................................. 10,000 * 10,000
All directors and executive officers as a group (8 4,724,605 19.7 363,754
persons)(6).......................................
</TABLE>
------------------------
* Less than 1%.
(1) Percentage of ownership is based on: 23,665,458 shares of Invitrogen common
stock outstanding as of June 30, 2000. Shares of Invitrogen common stock
that an individual or group has the right to acquire within 60 days of
June 30, 2000, pursuant to the exercise of options are deemed to be
outstanding for the purposes of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person shown in the table.
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(2) Includes 291,215 shares held by TA/Advent VIII L.P., 137,103 shares held by
Advent Atlantic and Pacific III, L.P., and 14,624 shares held by TA Venture
Investors L.P., 2,847 shares held by TA Associates VIII, LLC and 874 shares
held by T.A. Associates, Inc. Advent Atlantic and Pacific III, L.P.,
TA/Advent VIII L.P. and TA Associates VII, LLC and Venture Investors L.P.
are part of an affiliated group of investment partnerships referred to
collectively as TA Associates Group. The general partner of TA/Advent VIII,
L.P. is TA Associates VIII LLC. The general partner of Advent Atlantic and
Pacific III, L.P. is TA Associates AAP III Partners. TA Associates, Inc. is
the general partner of TA Associates VIII LLC and the manager of TA
Associates AAP III Partners. In such capacity, TA Associates, Inc. exercises
sole voting and investment power with respect to all of the shares held of
record by the named investment partnerships, with the exception of those
shares held by TA Venture Investors, L.P.; individually, no stockholder,
director or officer of TA Associates, Inc., is deemed to have or share such
voting or investment power. Principals and employees of TA
Associates, Inc., including Mr. Jaggers, a director, comprise the general
partners of TA Venture Investors, L.P. In such capacity, Mr. Jaggers may be
deemed to share voting and investment power with respect to the 15,498
shares held of record by TA Venture Investors, L.P. and TA Associates, Inc.
Mr. Jaggers disclaims beneficial ownership of such shares.
(3) Includes 68 shares held of record by NOVEX's ESOP Trust Fund as to which
Mr. McCarty holds a pecuniary interest.
(4) Includes options to purchase 5,000 shares held of record by Dr. Short's
spouse.
(5) Includes 68 shares held of record by NOVEX's ESOP Trust Fund as to which
Mr. McCarty holds a pecuniary interest. Includes options to purchase 5,000
shares held of record by Dr. Short's spouse.
BENEFICIAL OWNERSHIP OF LIFE TECHNOLOGIES STOCK
The following table sets forth information, as of July 31, 2000, with
respect to the beneficial ownership of shares of the common stock of Life
Technologies by (1) beneficial owners of more than five percent of Life
Technologies' outstanding common stock, (2) each director of Life Technologies,
(3) each of the executive officers named in the summary compensation table in
Life Technologies' 2000 proxy statement, and (4) all directors and executive
officers of Life Technologies as a group. On July 31, 2000, there were
25,067,356 shares of common stock of Life Technologies issued and outstanding.
Beneficial ownership is reported below in accordance with the rules of the SEC,
under which a person may be deemed to be the beneficial owner of shares of such
common stock if such person has or shares the power to vote or dispose of such
shares or has the right to acquire beneficial ownership of such shares within
60 days (for example, through the exercise of an option). Accordingly, the
shares shown in the table as beneficially owned by certain individuals may
include shares owned by certain members of their respective families. Because of
such rules, more than one person may be deemed to be the beneficial owner of the
same shares. The inclusion of the shares shown in the table is not necessarily
an admission of beneficial ownership of those shares by the person indicated.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power of the shares listed.
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<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENTAGE OF
OF COMMON STOCK(1) COMMON STOCK
-------------------- -------------
<S> <C> <C>
Dexter Corporation ...................................... 18,815,447(2) 75.1%
One Elm Street
Windsor Locks, CT 06096
Samuel J. Heyman ........................................ 3,506,270(3)(4)(5) 14.0%
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07470
International Specialty Products Inc. ................... 3,506,270(3)(4)(5) 14.0%
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07470
ISP OPCO Holdings Inc. .................................. 3,384,600(4)(5) 13.5%
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07470
ISP Investments Inc. .................................... 3,384,600(3)(4) 13.5%
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07470
The 13D Group ........................................... 5,420,316(6) 21.6%
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07470
Thomas H. Adams, Ph.D.................................... 14,633(7) *
Bruce H. Beatt........................................... --
Kathleen Burdett......................................... --
R. Barry Gettins, Ph.D................................... --
Peter G. Kelly........................................... 6,750(8) *
Joseph C. Stokes, Jr..................................... 26,666(9) *
J. Stark Thompson, Ph.D.................................. 55,333(10) *
K. Grahame Walker........................................ --
George M. Whitesides, Ph.D............................... 6,900(11) *
John V. Cooper........................................... 27,333(12) *
Thomas M. Coutts......................................... 26,667(13) *
Brian D. Graves.......................................... 7,500(14) *
Derek E. Woods, Ph.D..................................... 29,167(15) *
All directors and executive officers as a group
(24 persons)........................................... 312,479(16) 1.2%
</TABLE>
------------------------
* Less than 1.0%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, based on factors including voting and
investment power with respect to shares. Percentage of beneficial ownership
is based on shares of Life Technologies' common stock outstanding as of
July 31, 2000. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days after July 31, 2000,
are deemed outstanding for the purpose of computing the percentage
ownership of the person holding such options or warrants, but are not
deemed outstanding for computing the percentage ownership of any other
persons.
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<PAGE>
(2) This number of shares excludes 43,940, 80,467, 34,075, 8,541, 276,089 and
3,592 shares of common stock of Dexter beneficially owned by Mr. Beatt,
Ms. Burdett, Dr. Gettins, Mr. Kelly, Mr. Walker and Dr. Whitesides,
respectively, constituting an aggregate of 446,704 shares, or approximately
1.9% of the outstanding shares of Dexter, as of July 31, 2000. The shares
of Dexter beneficially owned by Mr. Beatt, Ms. Burdett, Dr. Gettins and
Mr. Walker include 17,499, 29,833, 23,834 and 136,667 shares, respectively,
which they may acquire within 60 days upon the exercise of stock options.
(3) This information is based on Amendment No. 9 to a Schedule 13D of Life
Technologies dated July 24, 2000, filed with the SEC and Annex VII of the
Preliminary Proxy Statement relating to Dexter Corporation, dated
February 8, 2000, filed with the SEC by International Specialty
Products Inc. ("ISP") and ISP Investments Inc. ("ISP Investments"), which
specified as follows: ISP Investments (directly and through ISP Investments
Grantor Trust) has the sole power to vote, direct the voting of, dispose of
and direct the disposition of 2,932,600 shares of common stock of Life
Technologies. ISP Opco Holdings Inc. ("ISP Opco"), by virtue of its
indirect ownership of all of the outstanding capital stock of ISP
Investments, may be deemed to own beneficially (solely for purposes of
Rule 13d-3) all of the common stock of Life Technologies owned by ISP
Investments. ISP, by virtue of its ownership of all of the outstanding
common stock of ISP Opco, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the common stock of Life Technologies owned by ISP
Investments. Mr. Heyman, by virtue of his beneficial ownership (as defined
in Rule 13d-3) of approximately 76% of the capital stock of ISP, may be
deemed to own beneficially (solely for purposes of Rule 13d-3) the common
stock of Life Technologies owned by ISP Investments.
(4) This information is based on Amendment No. 9 to a Schedule 13D of Life
Technologies dated July 24, 2000, filed with the SEC and Annex VII of the
Preliminary Proxy Statement relating to Dexter Corporation, dated
February 8, 2000, filed with the SEC by ISP and ISP Investments, which
specifies as follows: ISP Ireland has the sole power to vote, direct the
voting of, dispose of and direct the disposition of 452,000 shares of
common stock of Life Technologies. ISP Investments, by virtue of its
indirect ownership of all of the outstanding capital stock of ISP Ireland,
may be deemed to own beneficially (solely for purposes of Rule 13d-3) all
of the common stock of Life Technologies owned by ISP Ireland. ISP Opco, by
virtue of its indirect ownership of all of the outstanding capital stock of
ISP Investments, may be deemed to own beneficially (solely for purposes of
Rule 13d-3) all of the common stock of Life Technologies owned by ISP
Ireland. ISP, by virtue of its ownership of all of the outstanding common
stock of ISP Opco, may be deemed to own beneficially (solely for purposes
of Rule 13d-3) the common stock of Life Technologies owned by ISP Ireland.
Mr. Heyman, by virtue of his beneficial ownership (as defined in
Rule 13d-3) of approximately 76% of the capital stock of ISP, may be deemed
to own beneficially (solely for purposes of Rule 13d-3) the common stock of
Life Technologies owned by ISP Ireland.
(5) This information is based on Amendment No. 9 to a Schedule 13D of Life
Technologies dated July 24, 2000, filed with the SEC and Annex VII of the
Preliminary Proxy Statement relating to Dexter Corporation, dated
February 8, 2000, filed with the SEC by ISP and ISP Investments, which
specifies as follows: ISP has the sole power to vote, direct the voting of,
dispose of and direct the disposition of 121,670 shares of common stock of
Life Technologies. Mr. Heyman, by virtue of his beneficial ownership (as
defined in Rule 13d-3) of approximately 76% of the capital stock of ISP,
may be deemed to own beneficially (solely for purposes of Rule 13d-3) the
common stock of Life Technologies owned by ISP.
(6) This figure is based on information set forth in Exhibit No. 1 to Amendment
No. 9 to a Schedule 13D of Life Technologies dated July 24, 2000, filed
with the SEC, which filing indicates that the following persons are part of
the 13D Group and beneficially own and have sole or
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<PAGE>
shared voting and dispositive power as to the number of shares indicated
next to the person's name in the table below:
<TABLE>
<CAPTION>
SOLE SHARED SOLE SHARED
BENEFICIAL VOTING VOTING DISPOSITIVE DISPOSITIVE
NAME OWNERSHIP POWER POWER POWER POWER
---- ---------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ISP Opco Holdings, Inc.......... 3,384,600 0 3,384,600 0 3,384,600
ISP Investments Inc............. 3,384,600 2,932,600 452,000 2,932,600 452,000
ISP Ireland..................... 452,000 452,000 0 452,000 0
International Specialty Products
Inc........................... 3,506,270 121,670 3,384,600 121,670 3,384,600
Bear, Stearns & Co Inc.......... 435,151 343,151 92,000 343,151 92,000
Frederick R. Adler.............. 714,895 714,895 0 714,895 0
The Cohen Revocable Trust....... 397,100 397,100 0 397,100 0
A. Chang........................ 135,500 135,500 0 135,500 0
York Capital Management, L.P.... 78,700 78,700 0 78,700 0
Dinan Management L.L.C.......... 78,700 0 78,700 0 78,700
JGD Management Corp............. 23,100 23,100 0 23,100 0
York Investment Limited......... 129,600 129,600 0 129,600 0
Dinan Management Corporation.... 129,600 0 129,600 0 129,600
James G. Dinan.................. 231,400 0 231,400 0 231,400
</TABLE>
The foregoing persons are parties to a letter agreement dated December 3,
1999 pursuant to which the parties agreed to extend through September 30,
2000 the provisions of the respective group agreements to which such persons
are parties pursuant to which, among other things, they generally agreed
(i) not to sell or otherwise dispose of any shares of common stock of Life
Technologies unless all of the parties mutually agreed (or, in the case of
Bear, Stearns & Co., Inc., sell shares which would reduce its ownership
below 300,000 shares) and (ii) not to enter into any other contract,
arrangement, understanding or relationship with any other persons with
respect to equity securities of Life Technologies without the written
consent of the other parties.
On July 18, 2000, certain of the parties (other than entities related to
York Investment Limited) entered into a new agreement (the "Additional Group
Agreement") pursuant to which each of the parties thereto agreed (i) for a
period ending on the earlier of (x) the closing date under, or the
termination date of, the merger agreement between Invitrogen and Life
Technologies and (y) December 31, 2000 (such earlier dated being the
"Termination Date"), not to sell or otherwise dispose of any shares unless
each of the other parties mutually agree (or, in the case of Bear, Stearns,
sell shares which would reduce its ownership to below 300,000 shares), (ii)
until the Termination Date, to vote such party's shares only in accordance
with the written instructions of the parties holding at least 80% of the
shares owned or controlled by the parties to the Additional Group Agreement,
(iii) to bear its own costs and expenses incurred in connection with its
ownership of shares, the Additional Group Agreement or any transactions
entered into pursuant to the Additional Group Agreement, provided that any
expenses incurred by a party for the common benefit of all shall be shared
by the parties on a pro rata basis (subject to a maximum of $5,000 of such
pro rata expenses for each party thereto without such party's prior written
consent), (iv) to join with ISP in a Schedule 13D filing and any required
amendments and (v) prior to the Termination Date, not to enter into any
other contract, arrangement, understanding or relationship with any other
person with respect to equity securities of Life Technologies without the
written consent of the other parties.
(7) Consists of 1,133 shares of common stock owned by Dr. Adams and 13,500
shares of common stock which Dr. Adams may acquire upon the exercise of
stock options.
(8) Consists of 6,750 shares of common stock which Mr. Kelly may acquire upon
the exercise of stock options.
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<PAGE>
(9) Consists of 2,006 shares of common stock owned by Mr. Stokes and 24,660
shares of common stock which Mr. Stokes may acquire upon the exercise of
stock options.
(10) Consists of 55,333 shares of common stock Dr. Thompson may acquire upon
the exercise of stock options and 150 shares of common stock owned by
Dr. Thompson's wife, of which Dr. Thompson may be deemed to be the
beneficial owner. Dr. Thompson disclaims beneficial ownership of the 150
shares owned by his wife.
(11) Consists of 150 shares of common stock owned by Dr. Whitesides and 6,750
shares of common stock which Dr. Whitesides may acquire upon the exercise
of stock options.
(12) Consists of 27,333 shares of common stock Mr. Cooper may acquire upon the
exercise of stock options.
(13) Consists of 26,667 shares of common stock Mr. Coutts may acquire upon the
exercise of stock options.
(14) Consists of 7,500 shares of common stock Mr. Graves may acquire upon the
exercise of stock options.
(15) Consists of 29,167 shares of common stock Dr. Woods may acquire upon the
exercise of stock options.
(16) Includes a total of 303,494 shares of common stock the respective
directors and executive officers may acquire upon the exercise of stock
options.
BENEFICIAL OWNERSHIP OF DEXTER STOCK
The following table sets forth information, as of July 31, 2000, with
respect to the beneficial ownership of shares of the common stock of Dexter by
(1) beneficial owners of more than five percent of Dexter common stock,
(2) each director and nominee for director of Dexter, (3) each of the executive
officers named in the summary compensation table in Dexter's 2000 proxy
statement, and (4) all directors, nominees and executive officers of Dexter as a
group. Such beneficial ownership is reported in accordance with the rules of the
SEC, under which a person may be deemed to be the beneficial owner of shares of
such common stock if such person has or shares the power to vote or dispose of
such shares or has the right to acquire beneficial ownership of such shares
within 60 days (for example, through the exercise of an option). Accordingly,
the shares shown in the table as beneficially owned by certain individuals may
include shares owned by certain members of their respective families. Because of
such rules, more than one person may be deemed to be the beneficial
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<PAGE>
owner of the same shares. The inclusion of the shares shown in the table is not
necessarily an admission of beneficial ownership of those shares by the person
indicated.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
OWNED(1) OUTSTANDING(1)
------------ --------------
<S> <C> <C>
STOCKHOLDERS:
ISP OPCO Holdings Inc. and related entities, 1361 Alps Road,
Wayne, New Jersey 07470................................... 2,299,200 9.91%(2)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096.......................... 1,290,000 5.56(3)
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS:
K. Grahame Walker........................................... 276,089 1.19
Kathleen Burdett............................................ 80,467 *
David G. Gordon............................................. 60,009 *
John D. Thompson............................................ 47,527 *
Bruce H. Beatt.............................................. 43,940 *
Charles H. Curl............................................. 4,589 *
Henrietta Holsman Fore...................................... 5,999 *
Bernard M. Fox.............................................. 5,415 *
Robert M. Furek............................................. 4,912 *
Martha Clark Goss........................................... 4,478 *
Edgar G. Hotard............................................. 3,513 *
Peter G. Kelly.............................................. 8,541 *
Jean-Francois Saglio........................................ 3,592 *
George M. Whitesides........................................ 4,580 *
All Directors, Nominees and Executive Officers as a Group
(22 persons).............................................. 729,764 3.15
</TABLE>
------------------------
* Less than 1.0%.
(1) The shares reported above as beneficially owned by the following persons
include vested stock options granted under Dexter's stock option plans. The
shares reported above also include shares of restricted stock issued to the
following persons pursuant to the 1994 Long Term Incentive Plan (the "1994
Plan") and the 1999 Long Term Incentive Plan (the "1999 Plan") as more fully
described above under the heading "Long Term Incentive Plan--Awards in Last
Fiscal Year": K. Grahame Walker--48,222; Kathleen Burdett--21,107; David G.
Gordon--15,120; John D. Thompson--14,774; Bruce H. Beatt--13,950 and "All
Directors, Nominees and Executive Officers as a Group"--169,961. Shares of
restricted stock issued pursuant to the 1994 Plan and the 1999 Plan are
subject to forfeiture, but may be voted by the holders thereof unless and
until forfeited. Percentages of common stock of less than 1% are indicated
by an asterisk.
(2) Share holding as of May 24, 2000, as reported on Amendment No. 13 to the
Schedule 13D filed by such stockholder.
(3) Of the 1,290,000 shares shown in the table as owned by Mary K. Coffin,
990,000 are held by Fleet Bank, N.A., trustee of a trust the beneficiary of
which is Dexter D. Coffin, Jr. Mary K. Coffin is a trustee of this trust and
shares the power to vote and dispose of shares owned by the trust. The power
to vote and dispose of the shares owned by this trust is held by a majority
of its three individual trustees. The remaining shares shown in the table
are held by Mary K. Coffin through a living trust.
As of July 31, 2000, two of Dexter's directors beneficially owned shares of
common stock of Life Technologies. Peter G. Kelly owned 6,750 shares, which
consists of 6,750 shares of common stock which Mr. Kelly may acquire upon the
exercise of the stock options. George M. Whitesides owned 6,900 shares, which
consists of 150 shares of common stock owned by Dr. Whitesides and 6,750 shares
of common stock which Dr. Whitesides may acquire upon the exercise of stock
options. Mr. Kelly and Dr. Whitesides each own less than one percent of the
outstanding common stock of Life Technologies.
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<PAGE>
DESCRIPTION OF INVITROGEN CAPITAL STOCK
THE DESCRIPTION OF CERTAIN TERMS OF THE CAPITAL STOCK OF INVITROGEN TO BE IN
EFFECT AFTER COMPLETION OF THE BUSINESS COMBINATIONS IS NOT MEANT TO BE COMPLETE
AND IS QUALIFIED BY REFERENCE TO THE INVITROGEN CERTIFICATE OF INCORPORATION AND
BY-LAWS WHICH ARE INCORPORATED BY REFERENCE HEREIN TO THIS JOINT PROXY STATEMENT
AND PROSPECTUS.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of Invitrogen consists of 50,000,000 shares of
common stock, par value $0.01 per share, and 6,405,884 shares of preferred
stock, par value $0.01 per share. Stockholders of Invitrogen stock are being
asked to approve an amendment to Invitrogen's Certificate of Incorporation to
increase Invitrogen's capital stock to 131,405,888 shares of which 125,000,000
shares shall be Invitrogen common stock, par value $0.01 per share and 6,405,884
shares shall be Invitrogen preferred stock, par value $0.01 per share.
INVITROGEN COMMON STOCK
Holders of Invitrogen common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Subject
to preferences that may be applicable to any then outstanding preferred stock,
holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the board of directors out of funds legally available
therefor.
In the event of liquidation, dissolution or winding up of Invitrogen,
holders of the common stock and the preferred stock are entitled to share
ratably on an as-converted basis in all assets remaining after payment of
liabilities and the liquidation preference of any then outstanding preferred
stock. The common stock has no preemptive or conversion rights or other
subscription rights, and there are no redemptive or sinking funds provisions
applicable to the common stock. Invitrogen has received full payment for all
outstanding shares of its common stock and cannot require its stockholders to
make further payments on the stock; the common stock to be outstanding upon
completion of this offering will have the same status.
INVITROGEN PREFERRED STOCK
The board of directors has the authority, without further action by the
stockholders, to issue from time to time the preferred stock in one or more
series and to fix the number of shares, designations, preferences, powers, and
relative, participating, optional or other special rights and the qualifications
or restrictions thereof. The preferences, powers, rights and restrictions of
different series of preferred stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions, and purchase funds and other matters. The
issuance of preferred stock could decrease the amount of earnings and assets
available for distribution to holders of common stock or affect adversely the
rights and powers, including voting rights, of the holders of common stock, and
may have the effect of delaying, deferring or preventing a change in control of
Invitrogen.
TRANSFER AGENT AND REGISTRAR
The principal transfer agent and registrar for Invitrogen common stock after
the mergers is Boston EquiServe L.P.
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<PAGE>
COMPARISON OF STOCKHOLDERS' RIGHTS
Invitrogen is incorporated under the laws of the State of Delaware, Life
Technologies is incorporated under the laws of the State of Delaware and Dexter
is incorporated under the laws of the State of Connecticut. In accordance with
the merger agreements, at the date the mergers become effective, the holders of
Dexter common stock and Life Technologies common stock who make the stock
election or standard election in the mergers will each exchange their respective
shares of common stock separately with Invitrogen, and will thereby become
holders of Invitrogen common stock. The rights of Invitrogen stockholders are
and will continue to be governed by Delaware law and the certificate of
incorporation and by-laws of Invitrogen. The following is a comparison of the
material rights of the holders of Dexter common stock, Life Technologies common
stock and Invitrogen common stock.
The certificates of incorporation and the by-laws of Dexter, Life
Technologies and Invitrogen are incorporated by reference in this joint proxy
statement and prospectus. Copies of the Dexter, Life Technologies and Invitrogen
charters and by-laws can be found with each company's respective filing with the
Securities and Exchange Commission. See "Where You Can Find More Information" on
page 143. The following summary is not intended to be complete and is qualified
by reference to Delaware law, Connecticut law and the Invitrogen, Life
Technologies and Dexter charters and by-laws.
COMPARISON OF CHARTER AND BY-LAW PROVISIONS
<TABLE>
PROVISION INVITROGEN LIFE TECHNOLOGIES DEXTER
<S> <C> <C> <C>
BOARD OF DIRECTORS
CLASSIFIED BOARD Divided into three classes Divided into three classes, the Divided into three classes, the
fixed in number, with each number in each not differing by number in each class determined
class serving a staggered three more than one from any other, by the board of directors, with
year term (other than two of with each initial class serving each class serving a staggered
the initial three classes which a staggered term prescribed by three year term.
have served or are serving one the board, and successor
and two years, respectively). classes serving three year
One of these directors is terms.
elected solely by a plurality
of votes of Convertible
Preferred Stock, so long as any
such stock remains outstanding;
control over this directorship
is to remain under the sole
control of the holders of
Convertible Preferred Stock.
REMOVAL OF A director may be removed only A director may be removed only A director may be removed only
DIRECTORS for cause, and only by the for cause, and only by the for cause, and only by the
affirmative vote of the holders affirmative vote of the holders affirmative vote of the holders
of a majority of the of 80% of the outstanding of a majority of the
outstanding voting stock. voting stock. outstanding voting stock.
SIZE OF BOARD Board must consist of not less Board must consist of not less Board does not have to consist
than five and not more than than nine and not more than 15 of a particular number of
nine directors; Board currently directors; Board currently directors, so long as it is
consists of 8 directors. consists of 9 directors. greater than one; Board
currently consists of 10
directors.
STOCKHOLDER
MEETINGS
ANNUAL MEETINGS Held on date fixed by the Held on the first Tuesday after Held on date fixed by the
Board. the last Thursday in April, or Board.
on a different date if the
Board so chooses.
</TABLE>
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<PAGE>
<TABLE>
PROVISION INVITROGEN LIFE TECHNOLOGIES DEXTER
<S> <C> <C> <C>
CALLING A SPECIAL Only the Chairman of the Board, Only the Chairman of the Board, Only the Chief Executive
MEETING the President, or a majority of the President, the Vice Officer, a majority of the
the Board may call a special President, a majority of the Board, or the holders of not
meeting. Board, or the holders of not less than 35 percent of the
less than 30 percent of the voting stock may call a special
voting stock may call a special meeting.
meeting.
QUORUM REQUIREMENTS The representation, in person The representation, in person The representation, in person
or by proxy, of the holders of or by proxy, of the holders of or by proxy, of the holders of
a majority of shares entitled not less than 50% entitled to a majority of shares issued and
to vote at any meeting vote at any meeting constitutes outstanding and entitled to
constitutes a quorum at such a quorum at such meeting. vote at any meeting constitutes
meeting. a quorum at such meeting.
VOTE REQUIRED FOR Stockholder action approving a The certificate of Except as otherwise required by
STOCKHOLDER ACTION merger or consolidation or a incorporation provides that the law, stockholder action on
sale of substantially all of a affirmative vote of the holders matters other than the election
corporation's assets requires of not less than 67% of the of directors requires the
the affirmative vote by the outstanding shares of Life affirmative vote of a majority
holders of a majority of Technologies common stock is of votes cast.
outstanding voting stock; required for the approval of a
stockholder action on other business combination, other
matters generally requires the than a business combination
affirmative vote of a majority with a related person. The
of votes cast, except for the affirmative vote of the holders
election of directors, which of not less than 80% of the
requires a plurality. outstanding shares of Life
Technologies common stock is
required for the approval of
any business combination with a
related person; except that the
67% requirement and not the 80%
requirement will apply if any
of the following conditions
have been met:
- The business combination with
a related person is solely
between Life Technologies and
a wholly owned subsidiary of
Life Technologies;
- Certain conditions set forth
in the certificate of
incorporation relating to,
among other things, the fair
market value of the
consideration to be received
by Life Technologies
stockholders, are satisfied;
or
- A majority of the members of
the Life Technologies board
of directors acting upon such
transaction are continuing
directors, and at least 75%
of the members of the Life
Technologies board of
directors shall have approved
the transaction with the
related person.
</TABLE>
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<PAGE>
<TABLE>
PROVISION INVITROGEN LIFE TECHNOLOGIES DEXTER
<S> <C> <C> <C>
The by-laws provide that
stockholder action approving a
merger or consolidation or a
sale of substantially all of a
corporation's assets requires
the affirmative vote by the
holders of a majority of
outstanding voting stock;
stockholder action on other
matters generally requires the
affirmative vote of a majority
of votes cast.
ACTION BY WRITTEN Stockholder action must be Stockholder action must be Stockholder action must be
CONSENT taken at an annual or special taken at an annual or special taken at an annual or special
meeting and not by written meeting and not by written meeting and not by written
consent. consent, unless such written consent, unless such written
consent is authorized by the consent is authorized by the
holders of outstanding stock holders of all outstanding
having not less than the stock entitled to vote at a
minimum number of votes stockholder meeting.
necessary to take such action
at a stockholder meeting.
ADVANCED NOTICE To bring a matter before an To bring a matter before an To bring a matter before an
REQUIREMENTS FOR annual or special meeting, a annual or special meeting, a annual or special meeting, a
STOCKHOLDER stockholder must give notice to stockholder must give notice to stockholder must give notice to
NOMINATIONS AND the corporation of a proposed the corporation of a proposed the corporation of a proposed
OTHER BUSINESS matter not less than 120 days matter not less than 120 days matter not less than 75 nor
before the date of the before the date of the more than 125 days before the
company's proxy statement company's proxy statement date of the company's proxy
released to stockholders in released to stockholders in statement released to
connection with the previous connection with the previous stockholders in connection with
year's annual meeting. year's annual meeting. (excerpt the previous year's annual
from Delaware Law) meeting; if the meeting is
called more than 75 days before
the anniversary date, then the
proposal must be received
before the end of the 15th
business day before the
meeting.
AMENDMENTS TO
ORGANIZATIONAL
DOCUMENTS
CERTIFICATE OF Certificate may be amended by Certificate may be amended by Certificate of Incorporation
INCORPORATION the affirmative vote of a the affirmative vote of 80% of may be amended by the board of
majority of the outstanding the outstanding shares of directors or by 2/3 of the
voting stock. common stock. stockholders entitled to vote.
Certificate may be amended with
respect to the powers,
preferences or rights of Series
A Junior Participating
Preferred Stock only with an
affirmative vote of two-thirds
of the outstanding shares of
the Series A Junior
Participating Preferred Stock.
Article VII of the Certificate,
dealing with the composition of
the Board, can only be amended
by affirmative vote of 75% of
each class of stock
outstanding.
BYLAWS May be amended with affirmative May be amended with affirmative May be amended with affirmative
vote of 2/3 of the outstanding vote of 67% of the outstanding vote of 2/3 of the outstanding
stock entitled to vote, or by a stock entitled to vote. stock entitled to vote, or by a
vote of at least 2/3 of the vote of the majority of the
directors of the corporation. directors of the corporation.
</TABLE>
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<PAGE>
<TABLE>
PROVISION INVITROGEN LIFE TECHNOLOGIES DEXTER
<S> <C> <C> <C>
Any bylaw adopted by the
stockholders may not be
altered, amended or repealed by
the board of directors if the
amendment so states.
CAPITALIZATION
AUTHORIZED STOCK Common Stock: 50 million shares Common Stock: 50 million shares Common Stock: 100 million
(125 million shares assuming Preferred Stock: one million shares
approval of the proposed shares Preferred Stock: 400,000 shares
charter amendment) Preferred Class I Preferred Stock:
Stock: 6,405,884 shares 500,000 shares
Class II Preferred Stock:
500,000 shares
PREFERRED STOCK The company may issue preferred The Board is authorized to The Board is authorized to
stock from time to time in one issue preferred stock from time issue preferred stock from time
or more series, with terms to to time in one or more series, to time in one or more series,
be fixed by the Board. with terms to be fixed by the with terms to be fixed by the
Board. Board.
RIGHTS AGREEMENTS
TERMS N/A N/A Dexter Corporation has a Rights
Agreement, dated as of
August 23, 1996 and amended
October 4, 1999 and
February 8, 2000; the Rights
Agreement triggers upon the
acquisition by a third party of
11% of Dexter's outstanding
common stock; Board may redeem
rights at any time prior to the
time such an acquisition takes
place.
EXCULPATION AND The certificate of The certificate of The certificate of
INDEMNIFICATION OF incorporation of Invitrogen incorporation of Life incorporation of Dexter
DIRECTORS, OFFICERS provides that no director will Technologies provides that no provides that no director will
AND EMPLOYEES be personally liable for director will be personally be personally liable for
damages for breach of fiduciary liable for damages for breach damages for breach of fiduciary
duty, except in cases in which of fiduciary duty, except in duty, except in cases in which
the director's acts or cases in which the director's the director's acts or
omissions: acts or omissions: omissions:
- breached his or her duty of - breached his or her duty of - involved a knowing and
loyalty to the corporation or loyalty to the corporation or culpable violation of law,
its stockholders, its stockholders, - provided an improper personal
- were not in good faith or - were not in good faith or benefit to the director,
involved intentional involved intentional - were not in good faith and
misconduct or a knowing misconduct or a knowing showed a conscious disregard
violation of law, or violation of law, or toward the corporation,
- provided an improper personal - provided an improper personal - constituted a sustained and
benefit to the director. benefit to the director. unexcused pattern of
The bylaws of Invitrogen The bylaws of Life Technologies inattention to the
provide that the corporation provide that the corporation corporation, or abdication of
will indemnify any director or will indemnify any director or the director's duty thereto,
officer to the fullest extent officer to the fullest extent or
permitted by law if such permitted by law if such - created liability under
director or officer is involved director or officer is involved Section 33-757 of the Stock
in litigation by reason of the in litigation by reason of the Corporation Act of the State
fact that he or she is (or was) fact that he or she is (or was) of Connecticut.
a director or officer, and a director or officer, and
provide in addition that the provide in addition that the
corporation may purchase and corporation may purchase and
maintain insurance on behalf of maintain insurance on behalf of
any person who is (or was) a any person who is (or was) a
director, officer, employee or director, officer, employee or
agent of the corporation agent of the corporation
against any liability asserted against any liability asserted
against him or her and incurred against him or her and incurred
by him or her in any such by him or her in any such
capacity, or arising out of his capacity, or arising out of his
or her status as such. or her status as such.
</TABLE>
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COMPARISON OF STOCKHOLDERS RIGHTS UNDER THE CONNECTICUT LAW AND THE DELAWARE LAW
The rights of stockholders of Dexter are currently governed by the
Connecticut Law, while the rights of stockholders of Invitrogen and Life
Technologies are currently governed by Delaware Law. Upon consummation of the
mergers, those stockholders of Dexter and Life Technologies electing to receive
Invitrogen shares in consideration for their Dexter or Life Technologies will
each become stockholders of Invitrogen and their rights will be governed by the
Delaware Law, which differs in certain material respects from the Connecticut
Law. The following is a summary of certain differences between the Connecticut
Law and the Delaware Law. The identification of specific differences is not
meant to indicate that other differences do not exist. This summary is qualified
in its entirety by reference to the full text of the Delaware General
Corporation Law and the Connecticut Business Corporation Act.
QUORUM AND VOTING REQUIREMENTS. Under the Connecticut Law, in all matters,
other than the election of directors, a quorum exists when a majority of
stockholders entitled to vote are represented. If a quorum exists, a majority of
the votes cast at a meeting of the stockholders present in person or by proxy
and entitled to vote thereon shall be the act of the stockholders, unless the
certificate of incorporation or the Connecticut Law requires a greater number of
votes.
Similarly, the Delaware Law states that, in all matters, other than the
election of directors, a quorum exists when a majority of stockholders entitled
to vote are represented. If a quorum exists, a majority of the votes cast at a
meeting of the stockholders present in person or by proxy and entitled to vote
thereon shall be the act of the stockholders.
REMOVAL OF DIRECTORS. The Connecticut Law provides that stockholders may
remove one or more directors with or without cause unless the certificate of
incorporation provides that directors may be removed only for cause. The
Connecticut Law also enables a corporation or 10% of its stockholders to seek
removal of a director through court action in cases of fraud, dishonesty or
gross abuse of authority or discretion if removal is in the best interest of the
corporation.
Under the Delaware Law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares
entitled to vote at an election of directors, except in certain circumstances
involving a classified board or cumulative voting. The Delaware Law does not
have a corresponding provision entitling a corporation or 10% of its
stockholders to seek removal of a director through court action in cases of
fraud, dishonesty or gross abuse of authority or discretion if removal is in the
best interest of the corporation.
NEWLY-CREATED DIRECTORSHIPS AND VACANCIES. Under the Connecticut Law,
unless the certificate of incorporation provides otherwise, if a vacancy occurs
on the board of directors, including a vacancy resulting from an increase in the
number of directors: (i) the stockholders may fill the vacancy, (ii) the board
of directors may fill the vacancy or (iii) if the directors remaining in office
constitute fewer than a quorum of the board of directors, they may fill the
vacancy by the affirmative vote of a majority of all the directors remaining in
office.
Under the Delaware Law, any vacancies in the board and any newly created
directorships resulting by reason of any increase in the number of directors
elected by all of the stockholders having the right to vote as a single class
may be filled by the board, acting by a majority of the remaining directors then
in office, although less than a quorum, or by a sole remaining director.
AMENDMENT TO CERTIFICATE OF INCORPORATION OR BY-LAWS. Under the Connecticut
Law, a proposed amendment to the certificate of incorporation must be
recommended by the corporation's board, unless the corporation's board
determines that because of conflicts of interest or other special circumstances
it should make no recommendation or that none is required by the Connecticut
Law, followed by, in
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most circumstances, the approval by (i) a majority of the votes entitled to be
cast on the amendment by any voting group with respect to which the amendment
would create dissenters' rights and (ii) a majority of the votes cast by every
other voting group entitled to vote on the amendments, unless a greater vote is
required by law, the certificate of incorporation or the corporation's board. An
amendment to the by-laws that adds, changes or deletes a greater quorum or
voting requirement must meet the same quorum requirement and be adopted by the
same vote required to take action under the quorum and voting requirements then
in effect or proposed to be adopted, whichever is greater.
According to the Delaware Law, an amendment to the certificate of
incorporation may be authorized by the vote of the board, followed by the vote
of the holders of a majority of all outstanding shares entitled to vote thereon
at a meeting of stockholders. Pursuant to the Delaware Law, the by-laws may be
adopted, amended or repealed by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon.
SPECIAL MEETINGS; ACTION WITHOUT MEETING. Under the Connecticut Law,
special meetings of a corporation's stockholders may be called by the
corporation's board or by such other persons as are authorized to do so by the
certificate of incorporation or by-laws or upon a written request and delivery
to the corporate secretary from the holders of at least 10% of the shares
entitled to vote on a particular issue.
Under the Connecticut Law, any action required or permitted to be voted on
by stockholders of a Connecticut corporation may be taken without a meeting and
without a stockholder vote, if (i) there is a unanimous written consent,
(ii) the certificate provides for a number not less than majority required for
action without meeting, and the consent of such number is achieved.
Pursuant to the Delaware Law, special meetings of stockholders may be called
by the corporation's board or by such other persons as are authorized to do so
by the certificate of incorporation or by-laws.
Under the Delaware Law, unless otherwise provided in the certificate of
incorporation, any action required or permitted to be taken by stockholders of a
Delaware corporation may be taken without a meeting and without a stockholder
vote, if a written consent setting forth the action to be taken is signed by the
holders of shares of outstanding stock having the requisite number of votes that
would be necessary to authorize such action at a meeting at which all
stockholders entitled to vote were present.
BUSINESS COMBINATION STATUTES. The Connecticut Law generally prohibits a
Connecticut corporation from engaging in certain business combinations (as
defined by the statute to include certain mergers and consolidations,
dispositions of assets and issuances of securities, as well as certain other
transactions) with an interested stockholder (as defined by the statute
generally to include holders of 10% or more of the outstanding stock of the
corporation of an affiliate thereto) for a period of five years following the
date that such stockholder became an interested stockholder, (i) unless the
business combination or the purchase of stock is approved by the corporation's
board and by a majority of the non-employee directors of which there must be at
least two, prior to the date such stockholder became an interested stockholder
or (ii) unless the interested stockholder was an interested stockholder on
February 1, 1988, unless subsequent to June 7, 1988, such interested stockholder
increased its proportionate share of the voting power of the outstanding voting
stock of the corporation (excluding any increase approved by the corporation's
board before such increase occurs). The Connecticut Law also generally requires
business combinations with an interested stockholder to be approved by the board
of directors and then by the affirmative vote of at least (1) the holders of 80%
of the voting power of the outstanding shares of voting stock and (2) the
holders of 2/3 of such voting power excluding the voting stock held by the
interested stockholder, unless the consideration to be received by the
stockholders of the corporation meets certain price and other requirements set
forth in the statute or unless the board of directors of the corporation has by
resolution determined to exempt business combinations with such interested
stockholder prior to the time that such stockholder became an interested
stockholder.
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Section 203 of the Delaware Law, in general, prohibits a Delaware
corporation from engaging in a business combination (defined as a variety of
transactions, including mergers, as set forth below) with an interested
stockholder (defined generally as a person that is the beneficial owner of 15%
or more of a corporation's outstanding voting stock) for a period of three years
following the date that such person became an interested stockholder unless,
among other things, prior to the date such person became an interested
stockholder, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder or at or subsequent to such time the business
combination is approved by the board of directors and authorized at an annual or
special meeting of stockholders (not by written consent) by the affirmative vote
of a least 2/3 of the outstanding voting stock which is not owned by the
interested stockholder.
STOCKHOLDER VOTE REQUIRED FOR CERTAIN FUNDAMENTAL TRANSACTIONS. Under the
Connecticut Law, the sale of all or substantially all of a corporation's assets
other than in the regular course of business requires the affirmative vote of a
majority of the outstanding shares entitled to vote. Unless the certificate of
incorporation provides otherwise, and except under certain circumstances where
the Connecticut corporation is the surviving corporation, a merger or share
exchange of a Connecticut corporation must be approved by each voting group
entitled to vote separately on the plan by a majority of all of the votes
entitled to be cast thereon by that voting group.
The Delaware Law generally requires that mergers and consolidations, and
sales, leases or exchanges of all or substantially all of a corporation's
property and assets, be approved by a vote of the holders of a majority of the
outstanding stock entitled to vote, unless a corporation's certificate of
incorporation requires a greater-than-majority vote.
DIVIDENDS. Under the Connecticut Law, a corporation may make a distribution
to stockholders, including a dividend or stock repurchase, with respect to their
shares unless, after giving effect to such distribution, (i) the corporation
would not be able to pay its debts as they become due in the usual course of
business or (ii) the corporation's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if the corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
are superior to those receiving the distribution.
Under the Delaware Law, a corporation's board may from time to time declare
and pay dividends out of its capital surplus or out of its net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year.
LIMITATION ON DIRECTORS' LIABILITY. The Connecticut Law authorizes a
corporation to limit the personal liability of a director to the corporation and
its subsidiaries for monetary damages for breach of duty as a director.
The Delaware Law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care.
INTERESTED DIRECTOR TRANSACTIONS. Under the Connecticut Law, no transaction
effected or proposed to be effected by a corporation, its subsidiaries or any
other entity in which the corporation has a controlling interest may be
enjoined, set aside, or give rise to an award of damages or other sanctions
merely because a director of the corporation, or any person with whom or which
he/she has a personal, economic or other association, has an interest in the
transaction which is not a "director's conflicting interest transaction" as
defined in the Connecticut Law. A director's conflicting interest transaction
will not be enjoined, set aside, or give rise to damages or other sanctions if
(i) the transaction received the affirmative vote of a majority, but no fewer
than two, of the disinterested directors on the corporation's board or on a duly
empowered committee of the board who voted on the transaction after adequate
disclosure to them, (ii) the transaction received a majority of the votes
entitled to be cast by the
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holders of all shares, excluding those beneficially owned by the director with
the conflict and/or by any persons related to the director or (iii) the
transaction, judged according to the circumstances at the time of the
commitment, is established to have been fair to the corporation.
Under the Delaware Law, no transaction between a Delaware corporation and
one or more of its directors or an entity in which one or more of its directors
are directors or officers or have a financial interest will be void or voidable
solely for that reason and no such transaction will be void or voidable solely
because the director is present at or participates in the meeting of the board
or committee which authorizes the transaction, if, after the material facts of
the director's interest are disclosed to or known by the board or the committee,
the transaction is (i) is authorized by good faith by the disinterested
directors or a committee of disinterested directors by a vote sufficient for
such purpose, (ii) is approved by a vote of the stockholders after disclosure of
the material facts of the director's interest or (iii) the transaction is fair
to the corporation as of the time it is authorized by the board, committee or
stockholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under the Connecticut Law unless
the certificate of incorporation provides otherwise, a corporation must
indemnify a director, officer, and any other employee or agent of the
corporation who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which he was a party because he is or was a
director, officer or other employee or agent of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
Additionally, a corporation must indemnify the director, officer or other
employee or agent of the corporation made party to a proceeding if (i) he
conducted himself in good faith and (ii) he reasonably believed (A) in the case
of conduct in his official capacity with the corporation, that his conduct was
in its best interests and (B) in all other cases, that his conduct was at least
not opposed to its best interests and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Unless a court orders otherwise, the Connecticut Law prohibits indemnification
(i) in connection with a proceeding by or in the right of the corporation except
for reasonable expenses if it is determined that the director, officer or other
employee or agent has met the relevant standard of conduct or (ii) in connection
with any other proceeding in which he was adjudged liable to the corporation or
in connection with any other proceeding on the basis that an improper personal
benefit was received by him. Indemnification under the Connecticut Law in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable is limited to reasonable expenses incurred in
connection with the proceeding. The indemnification requirements under the
Connecticut Law remain limited by the provision in the Connecticut Law that
requires that such indemnification be authorized in the specific case after a
determination that indemnification is permissible in the circumstances because
the director, officer or other employee or agent has met the standard of conduct
set forth by the Connecticut Law.
Under the Delaware Law, a corporation may generally indemnify its directors,
officers, employees or agents for acts performed in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interest of
the corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe that such person's act was unlawful.
DISSENTERS' RIGHTS OF APPRAISAL. The Connecticut Law provides for
dissenters' rights to obtain payment of the fair value of shares to objecting
corporation stockholders (i) entitled to vote on a merger or share exchange,
(ii) in a short form merger of a subsidiary into its parent corporation,
(iii) on the sale of all or substantially all of the assets of a corporation
other than in the usual or regular course of business (except when done pursuant
to court order or a liquidation plan resulting in distributions to stockholders
within one year after the date of sale), (iv) on an amendment to the certificate
of incorporation that materially and adversely affects rights in respect of
dissenters' shares and (v) in any corporate action taken pursuant to a
stockholder vote to the extent the certificate of incorporation, the by-laws or
a directors' resolution provides that voting or non-voting stockholders are
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entitled to dissent and obtain payment for their shares. Under the Connecticut
Law, the dissenter's right of appraisal and payment under the statute is the
dissenter's exclusive remedy.
The Delaware Law generally entitles a stockholder to exercise appraisal
rights upon a merger or consolidation of the corporation effected pursuant to
the Delaware Law if the holder complies with the requirements of Section 262
thereof. Appraisal rights are available under Section 262 of the Delaware Law if
stockholder approval was required for the merger or consolidation and holders of
shares in the constituent corporation are required by the terms of the merger to
accept consideration other than shares of stock of the surviving corporation,
shares of stock of any corporation listed on a national securities exchange
designated as a national market system security by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 stockholders, or
cash in lieu of fractional shares.
DURATION OF PROXIES. Under the Connecticut Law, a proxy is not to be voted
or acted upon after the expiration of 11 months from the date of such proxy,
unless it specifies the length of time for which it is to continue in force or
limits its use to a particular meeting not yet held. The Connecticut Law
provides that an appointment of a proxy is revocable unless the appointment form
conspicuously states that it is irrevocable and the appointment is coupled with
an interest which includes proxies created for (i) a pledgee, (ii) a person who
has purchased or agreed to purchase the shares, (iii) a creditor of the
corporation who extends credit in consideration of the proxy, (iv) an employee
of the corporation whose employment contract requires the proxy or (v) a person
designated under a voting agreement.
Under the Delaware Law, a proxy is not valid after three years from the date
of such proxy unless the proxy provides for a longer period. A proxy may be made
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally.
LOANS TO OFFICERS. Under the Delaware Law, a corporation may lend money to,
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or its subsidiary, including any officer or employee
who is a director of the corporation, whenever in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit the
corporation.
The Connecticut Law does not have a corresponding provision.
CLASSIFICATION OF THE BOARD OF DIRECTORS. The Connecticut Law permits a
Connecticut corporation to provide for the staggering of the terms of its
directors by dividing the total number of directors into up to five groups, with
each group containing approximately the same percentage of the total, as nearly
as may be.
The Delaware Law permits a Delaware corporation to classify its board of
directors into 1, 2, or 3 classes. The Delaware Law provides that in the case of
a corporation, whose board is classified, stockholders can only remove directors
for cause, unless the certificate of incorporation provides otherwise.
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ADDITIONAL MATTERS FOR CONSIDERATION
OF INVITROGEN STOCKHOLDERS
In addition to consideration of and voting on the issuance of Invitrogen
common stock in connection with the mergers, the Invitrogen stockholders will be
asked to vote upon proposals to (i) amend Invitrogen's Certificate of
Incorporation to increase the authorized capital stock; (ii) to amend
Invitrogen's 1997 Stock Option Plan to increase the number of shares reserved
for issuance under this plan; and (iii) to amend Invitrogen's 1998 Employee
Stock Purchase Plan to increase the number of shares reserved for issuance under
this plan.
AMENDMENT TO INVITROGEN'S CERTIFICATE OF INCORPORATION
As part of the mergers, Invitrogen will be issuing options to Life
Technologies employees under Invitrogen's 1997 Stock Option Plan. Additionally,
Life Technologies employees will be eligible to participate in Invitrogen's 1998
Employee Stock Purchase Plan. In order to be able to increase the shares held in
reserve for these two plans, and in order to issue the amount of shares called
for in the merger agreements, Invitrogen must increase its authorized capital
stock by amending its Certificate of Incorporation.
Invitrogen is requesting that its stockholders approve a proposal to amend
Article IV of Invitrogen's certificate of incorporation to increase Invitrogen's
capital stock to 131,405,888 shares, of which 125,000,000 shall be Invitrogen
common stock, par value $0.01 per share and 6,405,888 shall be Invitrogen
preferred stock, par value $0.01 per share. A copy of the proposed amendment is
attached to this joint proxy statement and prospectus as Annex H.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT
TO ARTICLE IV OF INVITROGEN'S CERTIFICATE OF INCORPORATION.
AMENDMENT OF 1997 STOCK OPTION PLAN
GENERAL
The maximum number of shares of Invitrogen common stock that may be issued
pursuant to options under the 1997 Stock Option Plan is currently 5,485,479, and
as of July 31, 2000, options covering a total of 5,136,220 shares were
outstanding or had been exercised under the plan. Accordingly, only 349,259
shares remain available for new grants. The board of directors has unanimously
approved, subject to approval by the stockholders, an amendment to the plan to
make an additional 3,000,000 shares of Invitrogen common stock available for
issuance under the plan for a total of 8,485,479 shares of Invitrogen common
stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT
OF THE 1997 STOCK OPTION PLAN.
SUMMARY OF 1997 STOCK OPTION PLAN
The following is a summary of the principal features of the plan as in
effect and as proposed to be amended.
PURPOSE AND ELIGIBILITY. The plan is intended to promote the interests of
Invitrogen and its stockholders by using options to purchase shares of common
stock of Invitrogen to attract, retain and motivate its management and other
persons, to encourage and reward their contributions to the performance of
Invitrogen and to align their interests with the interests of Invitrogen
stockholders. The persons eligible to receive awards under the plan include
directors, officers, employees, consultants, and advisors of Invitrogen and its
affiliated entities. Currently, it is estimated that approximately 718
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persons are eligible to receive stock options under the plan, consisting of
approximately five directors, three executive officers and 710 employees.
TYPES OF OPTIONS. The plan enables Invitrogen to grant incentive and
nonqualified stock options. Stock options granted under the plan may be
incentive stock options intended to qualify under the provisions of Section 422
of the Internal Revenue Code or nonqualified stock options that do not so
qualify. The exercise price for each option is determined by the committee at
the date of grant. Options granted under the plan vest, become exercisable, and
terminate as determined by the committee. All options granted under the plan may
be exercised at any time after they vest and before their expiration date,
provided that no option may be exercised more than ten years after its grant or,
in some instances, upon termination of the recipient. The exercise of stock
options under the plan will have the effect of diluting current stockholders to
the extent that the stock options are exercised and therefore converted into
shares of common stock.
SECURITIES SUBJECT TO THE PLAN. No more than 5,485,479 shares of common
stock (8,485,479 shares if this proposal is approved) may be issued pursuant to
or upon exercise of options granted under the plan. The shares available under
the plan may either be authorized and unissued shares or shares reacquired by
Invitrogen through open market purchases or otherwise. Shares of common stock
subject to unexercised options that expire, terminate or are canceled, and
shares of common stock issued under options that are reacquired by Invitrogen
according to the terms of the option under which the shares were issued, will
again become eligible for the grant of further options under the plan. The
number of shares of common stock available under the plan in general, as well as
the number of shares of common stock subject to outstanding options and the
exercise price per share of any options, may be proportionately adjusted to
reflect stock splits, stock dividends and other capital stock transactions.
If Invitrogen is the surviving corporation in any merger or consolidation,
each outstanding option will entitle the recipient to receive the same
consideration received by holders of the same number of shares of Invitrogen
common stock in the merger or consolidation. In the event of a
change-in-control, any then outstanding vested or unvested options will
automatically terminate unless:
- provision is made in writing in connection with such transaction for the
continuance of the plan and for the assumption of any options, or for the
substitution for any options of new options covering the securities of a
successor entity or its affiliate with appropriate adjustments as to the
number and kind of securities and exercise prices, in which event the plan
and such outstanding options will continue or be replaced, as the case may
be; or
- the board will provide in writing for any adjustments it deems appropriate
in the terms and conditions of the then-outstanding options, including
accelerating the vesting of outstanding options and/or providing for the
cancellation of options and their automatic conversion into the right to
receive the securities, cash or other consideration that a holder of the
shares underlying such options would have been entitled to receive upon
consummation of the change-in-control had the shares been issued and
outstanding immediately before the effective date and time of the
change-in-control, net of the appropriate option exercise prices.
If the plan and the options terminate by reason of the occurrence of a
change-in-control without provision for any of the actions described above, then
any recipient holding outstanding options has the right, at a time immediately
before the consummation of the change-in-control designated by the board, to
fully exercise the recipient's options. For purposes of the plan, a
change-in-control includes:
- a reorganization, merger or consolidation after which more than 50% of
voting securities of Invitrogen are not represented by holders of
securities before the reorganization, merger or consolidation;
- a liquidation or dissolution of Invitrogen;
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- the acquisition of 50% or more of Invitrogen's voting securities by any
person; or
- a majority change in board membership without board approval.
The following table sets forth the number of options granted under the 1997
Stock Option Plan, including outstanding options and options that have been
exercised, as of July 31, 2000 for:
- each of Invitrogen's executive officers listed in its summary compensation
table found in the Invitrogen 2000 Proxy Statement;
- each person who received 5% of such options;
- all current executive officers of Invitrogen as a group;
- all current directors of Invitrogen who are not executive officers as a
group; and
- all employees of Invitrogen, including current officers who are not
executive officers, as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF BENEFICIAL OWNER OPTIONS GRANTED
------------------------ ---------------
<S> <C>
Lyle C. Turner President and Chief Executive Officer........ 0
James R. Glynn Executive Vice President and Chief Financial
Officer................................................... 402,221
Donald W. Grimm............................................. 30,000
Kurt R. Jaggers............................................. 10,000
Bradley G. Lorimier......................................... 20,000
David E. McCarty............................................ 120,000
Jay M. Short, Ph.D.......................................... 162,000
Lewis J. Shuster............................................ 272,115
All current executive officers as a group (3 persons)....... 674,336
All current directors who are not executive officers at a
group (5 persons)......................................... 342,000
All current employees, including all current officers who
are not executive officers, as a group (710 persons)...... 4,109,523
</TABLE>
ADMINISTRATION, AMENDMENT AND TERMINATION. The plan is administered by a
committee of the board, which consists of at least two non-employee directors
who are disinterested within the meaning of Rule 16b-3 of the Exchange Act, and
who are eligible to receive only automatic, non-employee directors options.
However, the board, instead of the committee, may exercise any authority granted
to the committee under the plan. The committee has the authority to interpret
the plan and the rights of recipients of awards granted under the plan. The
committee also has the power to discontinue, suspend or amend the plan in any
manner, subject to certain limited exceptions, including increases in the number
of shares available that may be the subject of awards under the plan which
requires stockholder approval. With respect to all other amendments to the plan,
the board may, in its discretion, determine that such amendment shall only
become effective upon approval by Invitrogen's stockholders if the board
determines that such stockholder approval may be advisable, such as for the
purpose of obtaining or retaining any statutory or regulatory benefits under
federal or state securities laws, federal or state tax laws, or for the purpose
of satisfying applicable stock exchange listing requirements. The committee may,
with the consent of the recipient of an option, modify the terms and conditions,
accelerate or extend the vesting or exercise period and adjust or reduce the
purchase price of an option.
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TERMS AND CONDITIONS OF OPTIONS UNDER THE PLAN. The committee will select
the recipients of options granted under the plan and will determine the dates,
amounts, exercise prices, vesting periods and other relevant terms of the
option.
OPTION PRICING. The exercise price for stock options shall be determined by
the committee as of the date the award is granted. Options to purchase
Invitrogen common stock may, with some limitations, be granted with an exercise
price below the market value of such stock on the grant date.
OPTION VESTING. Options granted under the plan vest and become exercisable
as determined by the committee in its discretion. Options granted under the plan
may be exercised at any time after they vest and before the expiration date
determined by the committee, provided that any options intended to qualify as an
incentive stock option under the Internal Revenue Code will not be exercisable
after the expiration of five years from the date of grant to certain holders of
significant amounts of outstanding Invitrogen common stock. Furthermore, in the
absence of a specific agreement to the contrary, options will generally expire
and become unexercisable three months following termination of the recipient's
employment with Invitrogen for any reason other than for cause. The committee
may accelerate the vesting of any options and may also extend the period
following termination of employment with Invitrogen during which options may
vest and/or be exercised.
OPTION PAYMENTS. The exercise price for options may be paid in cash or in
any other consideration the committee deems acceptable, including securities of
Invitrogen surrendered by the recipient or withheld from the shares otherwise
deliverable upon exercise. Invitrogen may extend or arrange for the extension of
credit to any recipient to finance the recipient's purchase of shares upon
exercise of the recipient's award and/or the payment of taxes payable in
connection with an option, on terms approved by the committee, subject to
restrictions under applicable laws and regulations, or allow exercise in a
broker's transaction in which the exercise price will not be received until
after exercise and subsequent sale of the underlying common stock.
LIMITED TRANSFERABILITY OF OPTIONS. Options are generally not transferable
by the recipient during the life of the recipient.
OPTION DOCUMENTATION. Options granted under the plan will be evidenced by
an agreement duly executed on behalf of Invitrogen and by the recipient, or by a
confirming memorandum issued by Invitrogen to the recipient, setting forth the
terms and conditions applicable to the option. The plan does not preclude
Invitrogen from establishing any other forms of incentive or other compensation
for its employees, directors, advisors or consultants, whether or not approved
by stockholders.
RIGHTS WITH RESPECT TO COMMON STOCK. No recipient of an option under the
plan has any right, title or interest in or to any shares of common stock
subject to any option or any rights as a stockholder unless and until the option
is duly exercised pursuant to the terms of the plan and the exercise of the
option results in the issuance of shares of common stock to the recipient.
PLAN PROVISIONS REGARDING SECTION 162(M) OF THE CODE. In general,
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the
amount of compensation that may be deducted by Invitrogen in any tax year with
respect to its Chief Executive Officer and its other four most highly
compensated employees, including any compensation relating to an award under the
plan. The plan is designed to allow Invitrogen to grant options that are not
subject to the $1 million limit of Section 162(m). No one eligible person may be
granted any awards with respect to more than 250,000 shares of common stock or
in excess of $1 million in any one calendar year. Furthermore, if
Section 162(m) would otherwise apply and if the amount of compensation an
eligible person would receive under an award is not based solely on an increase
in the value of the underlying Invitrogen common stock after the date of grant
the committee may condition the grant, vesting, or exercisability of the option
on the attainment of a preestablished objective performance goal. A
preestablished
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objective performance goal may include one or more of the following performance
criteria: (a) cash flow, (b) earnings per share (including earnings before
interest, taxes, and amortization), (c) return on equity, (d) total shareholder
return, (e) return on capital, (f) return on assets or net assets, (g) income or
net income, (h) operating income or net operating income, (i) operating margin,
(j) return on operating revenue, and (k) any other similar performance criteria.
PARTICIPATION IN THE PLAN BY DIRECTORS, EXECUTIVE OFFICERS AND OTHER
EMPLOYEES. On July 31, 2000, the market value of Invitrogen common stock was
$62.75 per share, options to purchase 2,064,561 shares had been exercised under
the plan and options to purchase an aggregate of 3,071,659 shares of common
stock have been granted and were outstanding under the plan at exercise prices
ranging from $0.8357 to $95.75 a share.
Participation in the plan is at the discretion of the board or the
committee; accordingly, future participation by directors, executive officers
and other employees under the plan is not determinable.
FEDERAL INCOME TAX TREATMENT. The following brief description of federal
income tax treatment which will generally apply to options granted under the
plan, based on federal income tax laws currently in effect. The exact federal
income tax treatment of options and other awards will depend on the specific
circumstances of the recipient. No information is provided with respect to
estate, inheritance, gift, state or local tax laws, although there may be
certain tax consequences upon receipt or exercise of an option or other award or
the disposition of any acquired shares under those laws.
INCENTIVE STOCK OPTIONS. Stock options granted under the plan may qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code. If a recipient exercises an incentive stock option in accordance
with its terms and does not dispose of the shares acquired within two years from
the date of the grant of the incentive stock option nor within one year from the
date of exercise, the required holding periods, the recipient generally will not
be subject to regular federal income tax, and Invitrogen will not be entitled to
any deduction on either the grant or the exercise of the incentive stock option.
A recipient's basis in the shares acquired upon exercise will be the amount paid
upon exercise. Provided a recipient holds the shares as a capital asset at the
time of sale or other disposition of the shares, a recipient's gain or loss, if
any, recognized on the sale or other disposition will be capital gain or loss.
The amount of a recipient's gain or loss will be the difference between the
amount realized on the disposition of the shares and the recipient's basis in
the shares.
If, however, the recipient disposes of the acquired shares at any time
before the expiration of the required holding periods, then, subject to certain
exceptions, the recipient will recognize ordinary income at the time of such
disposition which will equal the excess, if any, of the lesser of (a) the amount
realized on such disposition, or (b) the fair market value of the shares on the
date of exercise, over the recipient's basis in the shares. Invitrogen generally
will be entitled to a deduction in an amount equal to the amount of ordinary
income recognized by a recipient. Any gain in excess of such ordinary income
amount will be a capital gain. If a recipient disposes of such shares for less
than the recipient's basis in the shares, the difference between the amount
realized and the recipient's basis will be capital loss.
The excess of the fair market value of the shares acquired on the exercise
date of an incentive stock option over the exercise price of such option
generally is required to be included in the recipient's alternative minimum
taxable income for the year in which the option is exercised and, accordingly,
may subject a recipient to the alternative minimum tax.
NON-QUALIFIED STOCK OPTIONS. In general, there are no tax consequences to
the recipient or to Invitrogen on the grant of a stock option that does not
qualify as an incentive stock option. On exercise, however, the recipient
generally will recognize ordinary income equal to the excess of the fair market
value of the shares as of the exercise date over the purchase price paid for
such shares, and Invitrogen will be entitled to a deduction equal to the amount
of ordinary income recognized by the
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recipient. On a later disposition of the shares received under a non-qualified
stock option, the difference between the amount realized on such disposition and
the fair market value of the shares on the date of exercise generally will be
treated as a capital gain or loss.
MISCELLANEOUS TAX ISSUES. Invitrogen generally will be required to make
arrangements for withholding applicable taxes with respect to any ordinary
income recognized by a recipient in connection with the exercise of options
granted under the plan.
Special rules will apply in cases where a recipient of an option pays the
exercise price or applicable withholding tax obligations by delivering
previously owned shares of common stock or by reducing the amount of shares
otherwise issuable pursuant to the exercise of an option. The surrender or
withholding of such shares will in certain circumstances result in the
recognition of income with respect to such shares or a carryover basis in the
shares acquired.
APPROVAL OF AMENDMENT OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
BACKGROUND AND PROPOSAL
On November 20, 1998 the Board of Directors voted to establish the 1998
Employee Stock Purchase Plan to attract and retain highly-qualified employees.
The plan was approved by the stockholders at their annual meeting on
January 15, 1999 and an amendment adding 100,000 shares was approved on
April 27, 2000. A total of 350,000 shares of Invitrogen common stock have been
reserved for issuance under the plan. Of those, 119,123 had been issued as of
July 31, 2000, leaving 230,877 available. The plan permits eligible employees to
purchase common stock at a discount through payroll deductions, during 24-month
offering periods. Unless the Board of Directors establishes different periods,
each offering period is divided into eight consecutive three-month purchase
periods. Unless the Board of Directors establishes a higher purchase price, the
price at which stock is purchased under the employee stock purchase plan is
equal to 85% of the fair market value of the common stock on the first day of
the offering period or the last day of the purchase period, whichever is lower.
In August of 1999 we merged with NOVEX and in February of 2000 we merged
with Research Genetics, Inc. Primarily because of these mergers, the proposed
merger with Life Technologies, and our recent stock price, management projects
that the current share reserve of 350,000 shares will be exhausted before the
2001 Annual Meeting of Stockholders.
Because benefits under the plan will depend on employees' elections to
participate and the fair market value of Invitrogen's common stock at various
future dates, it is not possible to determine the dollar value of benefits that
will be received by executive officers and other employees if the proposed
amendment to the plan is approved by the stockholders. Nonemployee directors are
not eligible to participate in the plan.
Accordingly, management requested, and on August 8, 2000 the Board of
Directors approved, an amendment to the plan to increase the number of shares
reserved under the plan by 200,000 for a total of 550,000 shares, subject to
stockholder approval.
The affirmative vote of a majority of the votes cast at the annual meeting
of stockholders, at which a quorum is present and voting, either in person or by
proxy, is required for approval of this proposal. Abstentions will have the same
effect as a negative vote. Broker non-votes will have no effect on the outcome
of the vote.
The Board of Directors believes that the approval of the amendment to the
plan, increasing the share reserve by 200,000 shares is in the best interests of
the stockholders and Invitrogen for the reasons stated above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT
TO THE 1998 EMPLOYEE STOCK PURCHASE PLAN.
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SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
The following is a summary of the plan, which is provided for your
information. The plan is ultimately controlled by the specific language of the
plan itself, a copy of which is available to any stockholder upon request.
GENERAL. The plan is intended to qualify as an "employee stock purchase
plan" under section 423 of the Internal Revenue Code. Each participant in the
plan is granted at the beginning of each offering under the plan the right to
purchase through accumulated payroll deductions up to a number of shares of our
common stock determined on the first day of the offering. This right to purchase
stock is automatically exercised on the last day of each purchase period within
the offering unless the participant has withdrawn from participation in the
offering or in the plan prior to that date.
SHARES SUBJECT TO THE PLAN. Currently, a maximum of 350,000 of our
authorized but unissued or reacquired shares of common stock may be issued under
the plan, subject to appropriate adjustment in the event of a stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in our capital structure or in the event of
any merger, sale of assets or other reorganization of Invitrogen. If any right
to purchase stock expires or terminates, the shares subject to the unexercised
portion of that right will again be available for issuance under the plan.
ADMINISTRATION. The plan is administered by our board of directors. Subject
to the provisions of the plan, the board determines the terms and conditions of
the rights to purchase stock granted under the plan. The board will interpret
the plan and the rights granted thereunder, and all determinations of the board
will be final and binding on all persons having an interest in the plan or any
rights to buy stock under the plan. The plan provides, subject to certain
limitations, that Invitrogen will indemnify any director, officer or employee
against all reasonable expenses, including attorney's fees, incurred in
connection with any legal action arising from that person's action or failure to
act in administering the plan.
ELIGIBILITY. Any employee of Invitrogen or of any present or future parent
or subsidiary corporation of Invitrogen designated by the board for inclusion in
the plan is eligible to participate in an offering to purchase stock under the
plan so long as the employee is customarily employed for at least 20 hours per
week and 5 months per calendar year. However, no employee who owns or holds
options to purchase, or as a result of participation in the plan would own or
hold options to purchase, five percent or more of the total combined voting
power or value of all classes of stock of Invitrogen or of any parent or
subsidiary corporation of Invitrogen is entitled to participate in the plan.
OFFERINGS. Generally, each offering of common stock under the plan is for a
period of twenty-four months. Offering periods under the plan are overlapping,
with a new offering period beginning every three months. However, employees may
only participate in one offering at a time. Offering periods generally commence
on the first days of February, May, August and November of each year and end on
the last day of January, April, July and October. However, the first offering
period commenced on February 26, 1999, the effective date of the Company's
registration of its common stock with the Securities and Exchange Commission and
will end on January 31, 2001. Shares are purchased on the last day of each
purchase period. The board may establish a different term for one or more
offerings or purchase periods or different commencement or ending dates for an
offering or a purchase period.
PARTICIPATION AND PURCHASE OF SHARES. Participation in the plan is limited
to eligible employees who authorize payroll deductions prior to the start of an
offering period. Payroll deductions may not exceed 15% (or such other rate as
the board determines) of an employee's compensation for any pay period during
the offering period. Once an employee becomes a participant in the plan, that
employee will automatically participate in each successive offering period until
such time as that employee withdraws from the plan, becomes ineligible to
participate in the plan, or terminates employment.
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Subject to certain limitations, each participant in an offering has a
purchase right equal to the lesser of that number of whole shares determined by
dividing $50,000 by the fair market value of a share of common stock on the
first day of the offering period or 5,000 shares, provided that these dollar and
share amounts will be prorated for any offering period that is other than
24 months in duration. No participant may purchase under the plan shares of
Invitrogen's common stock having a fair market value exceeding $25,000 in any
calendar year. This dollar amount is measured using the fair market value of
Invitrogen's common stock on the first day of the offering period in which the
shares are purchased.
At the end of each purchase period, Invitrogen issues to each participant
the number of shares of common stock determined by dividing the amount of
payroll deductions accumulated for the participant during that purchase period
by the purchase price, limited in any case by the number of shares subject to
the participant's Purchase Right for that Offering. The price per share at which
shares are sold at the end of a purchase period generally equals 85% of the
lesser of the fair market value per share of Invitrogen's common stock on the
first day of the offering period or the purchase date. The fair market value of
the common stock on any relevant date generally will be the closing price per
share on such date as reported on the Nasdaq National Market. Any payroll
deductions under the plan not applied to the purchase of shares will be returned
to the participant, unless the amount remaining is less than the amount
necessary to purchase a whole share of common stock, in which case the remaining
amount may be applied to the next purchase period or offering period. A
participant may withdraw from an offering at any time without affecting his or
her eligibility to participate in future offerings. However, once a participant
withdraws from an offering, that participant may not again participate in the
same offering.
CHANGE IN CONTROL. The plan provides that in the event of a change in
control, the acquiring or successor corporation may assume Invitrogen's rights
and obligations under the plan or substitute substantially equivalent purchase
rights for such corporation's stock. If the acquiring or successor corporation
elects not to assume or substitute for the outstanding purchase rights, the
board may adjust the last day of the offering period to a date on or before the
date of the change in control. Any purchase rights that are not assumed,
substituted for, or exercised prior to the change in control will terminate.
TERMINATION OR AMENDMENT. The plan will continue until terminated by the
board or until all of the shares reserved for issuance under the plan have been
issued. The board may at any time amend or terminate the plan. However, the
approval of Invitrogen's stockholders is required within twelve months of the
adoption of any amendment that increases the number of shares authorized for
issuance under the plan or changes the definition of the corporations which may
be designated by the board as corporations whose employees may participate in
the plan.
SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.
A participant recognizes no taxable income either as a result of commencing
to participate in the plan or purchasing shares of the common stock under the
terms of the plan. If a participant disposes of shares purchased under the plan
within two years from the first day of the applicable offering period or within
one year from the purchase date, known as a disqualifying disposition, the
participant will realize ordinary income in the year of such disposition equal
to the amount by which the fair market value of the shares on the purchase date
exceeds the purchase price. The amount of the ordinary income will be added to
the participant's basis in the shares, and any additional gain or resulting loss
recognized on
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the disposition of the shares will be a capital gain or loss. A capital gain or
loss will be long-term if the participant's holding period is more than twelve
months.
If the participant disposes of shares purchased under the plan at least two
years after the first day of the applicable offering period and at least one
year after the purchase date, the participant will realize ordinary income in
the year of disposition equal to the lesser of (i) the excess of the fair market
value of the shares on the date of disposition over the purchase price or
(ii) 15% of the fair market value of the shares on the first day of the
applicable offering period. The amount of any ordinary income will be added to
the participant's basis in the shares, and any additional gain recognized upon
the disposition after such basis adjustment will be a long-term capital gain. If
the fair market value of the shares on the date of disposition is less than the
purchase price, there will be no ordinary income and any loss recognized will be
a long-term capital loss.
If the participant still owns the shares at the time of death, the lesser of
the excess of the fair market value of the shares on the date of death over the
purchase price or 15% of the fair market value of the shares on the first day of
the offering period in which the shares were purchased will constitute ordinary
income in the year of death.
Invitrogen should be entitled to a deduction in the year of a disqualifying
disposition equal to the amount of ordinary income recognized by the participant
as a result of the disposition, except to the extent such deduction is limited
by applicable provisions of the Internal Revenue Code or the regulations
thereunder. In all other cases, no deduction is allowed to Invitrogen.
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EXPERTS
The audited financial statements of Invitrogen and Research Genetics
included in and incorporated by reference in this joint proxy statement and
prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The consolidated financial statements of Life Technologies, Inc. as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 included in this joint proxy statement and prospectus, have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
With respect to the unaudited consolidated financial information of Life
Technologies for the three-month periods ended March 31, 2000 and 1999
incorporated, by reference in this joint proxy statement and prospectus, and the
six-month periods ended June 30, 2000 and 1999, included in this joint proxy
statement and prospectus, PricewaterhouseCoopers LLP reported that they have
applied limited procedures in accordance with professional standards for the
review of such information. However, their separate reports dated April 11, 2000
and July 12, 2000 incorporated by reference in this joint proxy statement and
prospectus, state that they did not audit and they do not express an opinion on
that unaudited consolidated financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. PricewaterhouseCoopers LLP
is not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their reports on the unaudited consolidated financial information
because those reports are not a "report" or a "part" of the registration
statement prepared or certified by PricewaterhouseCoopers LLP within the meaning
of Sections 7 and 11 of the Securities Act.
The consolidated financial statements of Dexter incorporated by reference in
this joint proxy statement and prospectus by reference to Dexter's Annual Report
on Form 10-K for the year ended December 31, 1999, have been so incorporated by
reference in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
With respect to the unaudited consolidated financial information of Dexter
for the three-month and six-month periods ended March 31, 2000 and 1999 and
June 30, 2000 and 1999, respectively, incorporated by reference in this joint
proxy statement and prospectus by reference to Dexter's Quarterly Report on Form
10-Q for the quarters ended March 31, 2000 and June 30, 2000, respectively,
PricewaterhouseCoopers LLP reported that they have applied limited procedures in
accordance with professional standards for the review of such information.
However, their separate reports dated April 13, 2000 and July 18, 2000
incorporated by reference in this joint proxy statement and prospectus, state
that they did not audit and they do not express an opinion on that unaudited
consolidated financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. PricewaterhouseCoopers LLP is not subject to
the liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited consolidated financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11
of the Securities Act.
LEGAL MATTERS
The validity of the Invitrogen common stock to be issued in connection with
the business combination will be passed upon by Gray Cary Ware &
Freidenrich LLP. Certain United States federal income tax consequences of the
mergers will be passed upon for Dexter and Life Technologies by Skadden, Arps,
Slate, Meagher & Flom LLP and for Invitrogen by Gray Cary Ware & Freiderich LLP.
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WHERE YOU CAN FIND MORE INFORMATION
Invitrogen, Life Technologies and Dexter file annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
we file at the Securities and Exchange Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. The SEC filings of Invitrogen, Life Technologies and
Dexter are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "HTTP://WWW.SEC.GOV."
Invitrogen has filed a Registration Statement on Form S-4 to register with
the SEC for the Invitrogen common stock to be issued to Life Technologies
stockholders and Dexter stockholders in the mergers. This joint proxy statement
and prospectus is a part of that Registration Statement and constitutes a
prospectus of Invitrogen in addition to being a proxy statement of Invitrogen,
Life Technologies and Dexter for the special meetings. As allowed by SEC rules,
this document does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this joint
proxy statement and prospectus. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
joint proxy statement and prospectus, except for any information superseded by
information in this joint proxy statement and prospectus. This joint proxy
statement and prospectus incorporate by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about our companies and their finances.
<TABLE>
<S> <C>
INVITROGEN SEC FILINGS FILE (FILE NO. PERIOD
0-25317)
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports of Form 10-Q Quarters ended March 31, 2000 and June 30,
2000
Current Reports on Forms 8-K and 8-K/A Filed on February 16, 2000, February 17, 2000
and July 11, 2000
Registration Statement on Forms S-3 and S-3/A Filed on May 26, 2000 and July 28, 2000
LIFE TECHNOLOGIES (FILE NO. 0-14991)
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000 and June 30,
2000
Current Reports on Form 8-K Filed on January 27, 2000 and July 14, 2000
DEXTER CORPORATION (FILE NO. 1-5542)
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000 and June 30,
2000
Current Reports on Form 8-K Filed on June 22, 2000 and July 10, 2000
</TABLE>
We are also incorporating by reference additional documents that we file
with the SEC between the date of this joint proxy statement and prospectus and
the dates of the special meetings of our stockholders.
Invitrogen has supplied all information contained or incorporated by
reference in this document relating to Invitrogen, Life Technologies has
supplied all information contained or incorporated by reference in this document
relating to Life Technologies and Dexter has supplied all information contained
or incorporated by reference in this document relating to Dexter.
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If you are a stockholder, we may have previously sent you some of the
documents incorporated by reference. You can obtain any of the incorporated
documents by contacting us or the SEC. We will send you the documents
incorporated by reference without charge, excluding exhibits to the information
that is incorporated by reference, unless we have specifically incorporated by
reference the exhibit in this document.
Stockholders may obtain documents incorporated by reference in this document
by requesting them in writing or by telephone from the appropriate party at the
following addresses:
<TABLE>
<S> <C> <C>
Invitrogen Corporation Life Technologies, Inc. Dexter Corporation
1600 Faraday Avenue 9800 Medical Center Drive One Elm Street
Carlsbad, California 92008 Rockville, Maryland 20850 Windsor Locks,
760-603-7200 301-610-8000 Connecticut 06096
860-292-7675
</TABLE>
If you would like to request documents from us, including any documents we
may subsequently file with the Securities and Exchange Commission prior to the
special meetings, please do so by September 7, 2000 so that you will receive
them before the special meetings.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT AND PROSPECTUS TO VOTE ON THE MERGERS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS JOINT PROXY STATEMENT AND PROSPECTUS. THIS JOINT PROXY
STATEMENT AND PROSPECTUS IS DATED AUGUST 14, 2000. YOU SHOULD NOT ASSUME THAT
THE INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT AND PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THE
JOINT PROXY STATEMENT AND PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF
INVITROGEN COMMON STOCK IN THE MERGERS SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
<TABLE>
<S> <C> <C>
By order of the Board By order of the Board By order of the Board
of Directors, of Directors, of Directors,
Invitrogen Corporation Life Technologies, Inc. Dexter Corporation
Warner R. Broaddus C. Eric Winzer Bruce H. Beatt
SECRETARY SECRETARY SECRETARY
</TABLE>
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INVITROGEN CORPORATION
AUDITED FINANCIAL STATEMENTS
Report of Independent Public Accountants.................. F-2
Consolidated Balance Sheets as of December 31, 1999 and
1998.................................................... F-3
Consolidated Statements of Income for the Years Ended
December 31,
1999, 1998 and 1997..................................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended
December 31, 1999, 1998 and 1997........................ F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31,
1999, 1998 and 1997..................................... F-7
Notes to Consolidated Financial Statements................ F-8
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Interim Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999................................... F-29
Interim Consolidated Statements of Income for the Six
Months ended
June 30, 2000 and 1999.................................. F-30
Interim Consolidated Statements of Cash Flows for the Six
Months ended
June 30, 2000 and 1999.................................. F-31
Notes to Interim Consolidated Financial Statements........ F-32
LIFE TECHNOLOGIES, INC.
AUDITED FINANCIAL STATEMENTS
Report of Independent Accountants......................... F-37
Consolidated Balance Sheets as of December 31, 1999 and
1998.................................................... F-38
Consolidated Statements of Income for the Years Ended
December 31, 1999,
1998 and 1997........................................... F-39
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999,
1998 and 1997........................................... F-40
Consolidated Statements of Comprehensive Income for the
Years Ended December 31, 1999,
1998 and 1997........................................... F-41
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended
December 31, 1999, 1998 and 1997........................ F-42
Notes to Consolidated Financial Statements................ F-43
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Interim Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999................................... F-63
Interim Consolidated Statements of Income for the Six
Months ended
June 30, 2000 and 1999.................................. F-64
Interim Consolidated Statements of Cash Flows for the Six
Months ended
June 30, 2000 and 1999.................................. F-65
Interim Consolidated Statements of Comprehensive Income
for the Six Months ended
June 30, 2000 and 1999.................................. F-66
Notes to Consolidated Financial Statements................ F-67
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Invitrogen Corporation:
We have audited the accompanying consolidated balance sheets of Invitrogen
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1999
and 1998 and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Invitrogen Corporation and
subsidiaries as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.
/s/ ARTHUR ANDERSEN LLP
San Diego, California
June 21, 2000
F-2
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $102,238 $ 2,345
Short-term investments.................................... -- 4,214
Accounts receivable, net of allowance for doubtful
accounts of $835 and $617............................... 11,530 8,366
Note receivable officer................................... -- 150
Inventories............................................... 7,556 6,021
Income taxes receivable................................... 4,495 --
Deferred income taxes..................................... 3,561 1,057
Prepaid expenses and other current assets................. 1,017 1,088
-------- -------
Total current assets.................................... 130,397 23,241
Property and Equipment, net................................. 21,678 18,921
Intangible Assets, net...................................... 4,139 1,860
Deferred Income Taxes....................................... 117 106
Other Assets................................................ 445 1,279
-------- -------
Total assets............................................ $156,776 $45,407
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank..................................... $ 850 $ 1,806
Current portion of long term obligations.................. 6,300 1,345
Accounts payable.......................................... 4,266 4,457
Accrued expenses.......................................... 5,252 3,227
Income taxes payable...................................... 1,680 1,002
-------- -------
Total current liabilities............................... 18,348 11,837
-------- -------
Long Term Obligations....................................... 7,324 8,095
-------- -------
Deferred Income Taxes....................................... 439 322
-------- -------
Commitments and Contingencies
Non-voting Redeemable Common Stock of Invitrogen B.V;
Subsidiary common stock, 66,000 shares authorized; no
shares issued or outstanding on December 31, 1999 and
18,000 issued and outstanding on December 31, 1998........ -- 1,599
-------- -------
Convertible Redeemable Preferred Stock; $0.01 par value,
2,202,942 shares authorized; no shares issued or
outstanding on December 31, 1999 and 2,202,942 shares
issued and outstanding on December 31, 1998............... -- 16,141
-------- -------
Stockholders' Equity:
Common stock; $0.01 par value, 50,000,000 shares
authorized; 22,470,009 and 13,339,432 shares issued and
outstanding at December 31, 1999 and 1998,
respectively............................................ 225 133
Additional paid-in-capital................................ 121,924 7,032
Deferred compensation..................................... (746) (962)
Value of common stock designated pursuant to Employee
Stock Ownership Plan.................................... -- 100
Accumulated other comprehensive loss...................... (439) (40)
Retained earnings......................................... 9,701 1,150
-------- -------
Total stockholders' equity.............................. 130,665 7,413
-------- -------
Total liabilities and stockholders' equity.............. $156,776 $45,407
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues.................................................... $92,945 $70,593 $ 55,341
Cost of Revenues............................................ 32,983 26,572 22,713
------- ------- --------
Gross margin.............................................. 59,962 44,021 32,628
Operating Expenses:
Sales and marketing....................................... 16,244 13,209 9,955
General and administrative................................ 12,226 11,154 9,651
Research and development.................................. 14,792 11,500 7,950
Merger costs.............................................. 3,895 -- --
------- ------- --------
Total operating expenses................................ 47,157 35,863 27,556
------- ------- --------
Income from operations.................................. 12,805 8,158 5,072
------- ------- --------
Other Income (Expense):
Net (losses) gains on foreign currency transactions....... (99) 25 145
Interest and other expense................................ (922) (918) (700)
Interest and other income................................. 2,231 700 239
------- ------- --------
1,210 (193) (316)
------- ------- --------
Income before provision for income taxes.................... 14,015 7,965 4,756
Provision for income taxes.................................. 4,779 2,988 1,846
------- ------- --------
Net income.................................................. 9,236 4,977 2,910
Less: Preferred stock dividends........................... (163) (900) (475)
Accretion of non-voting redeemable common stock...... (74) (204) (175)
Adjustment to beneficial conversion feature related
to convertible preferred stock..................... 985 -- (15,000)
------- ------- --------
Net income (loss) applicable to common shares........... $ 9,984 $ 3,873 $(12,740)
------- ------- --------
Earnings (loss) per share:
Basic..................................................... $ 0.52 $ 0.25 $ (0.86)
======= ======= ========
Diluted................................................... $ 0.46 $ 0.22 $ (0.86)
======= ======= ========
Weighted average shares used in per share calculation:
Basic..................................................... 19,268 15,540 14,837
Diluted................................................... 21,828 17,271 14,837
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
INVITROGEN COPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
COMMON STOCK SERIES A SERIES B ADDITIONAL
------------------- -------------------- -------------------- PAID-IN-
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- -------- -------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996.......... 5,894 $ 59 7,226 $ -- 1,188 $ -- $ 6,024
Recapitalization of stock............... 8,414 84 (7,226) -- (1,188) -- (84)
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. -- -- -- -- -- -- --
Deferred compensation................... -- -- -- -- -- -- 664
Amortization of deferred compensation
expense............................... -- -- -- -- -- -- --
Common stock issued under employee
plans................................. 202 2 -- -- -- -- 258
Shareholder equity contribution......... 9 -- -- -- -- -- 286
Repurchase of common stock.............. (1,190) (12) -- -- -- -- (1,437)
Beneficial conversion feature related to
convertible preferred stock........... -- -- -- -- -- -- 15,000
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- -- -- (15,000)
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- -- -- -- --
Foreign currency translation
adjustment............................ -- -- -- -- -- -- --
Net income.............................. -- -- -- -- -- -- --
------- ---- ------- --------- ------- --------- --------
Balance at December 31, 1997........ 13,329 133 -- -- -- -- 5,711
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. -- -- -- -- -- -- --
Deferred compensation................... -- -- -- -- -- -- 683
Amortization of deferred compensation
expense............................... -- -- -- -- -- -- --
Common stock issued under employee
plans................................. 38 -- -- -- -- -- 206
Shareholder equity contribution......... 6 -- -- -- -- -- 297
Tax effect of exercise of stock
options............................... -- -- -- -- -- -- 138
Repurchase of common stock.............. (34) -- -- -- -- -- (150)
Stock option issued to acquire
Morphagen, Inc........................ -- -- -- -- -- -- 147
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- -- -- -- --
Foreign currency translation
adjustment............................ -- -- -- -- -- -- --
Net income.............................. -- -- -- -- -- -- --
------- ---- ------- --------- ------- --------- --------
Balance at December 31, 1998........ 13,339 133 -- -- -- -- 7,032
<CAPTION>
ACCUMULATED
EMPLOYEE STOCK OTHER RETAINED
DEFERRED OWNERSHIP PLAN COMPREHENSIVE EARNINGS STOCKHOLDERS'
COMPENSATION CONTRIBUTION INCOME (LOSS) (DEFICIT) EQUITY
------------- --------------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996.......... $ -- $100 $ (29) $ 2,399 $ 8,553
Recapitalization of stock............... -- -- -- -- --
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. -- 100 -- -- 100
Deferred compensation................... (664) -- -- -- --
Amortization of deferred compensation
expense............................... 169 -- -- -- 169
Common stock issued under employee
plans................................. -- (100) -- -- 160
Shareholder equity contribution......... -- -- -- -- 286
Repurchase of common stock.............. -- -- -- (6,385) (7,834)
Beneficial conversion feature related to
convertible preferred stock........... -- -- -- -- 15,000
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- (15,000)
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- (990) (990)
Foreign currency translation
adjustment............................ -- -- (95) -- (95)
Net income.............................. -- -- -- 2,910 2,910
----- ---- ----- ------- --------
Balance at December 31, 1997........ (495) 100 (124) (2,066) 3,259
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. -- 100 -- -- 100
Deferred compensation................... (683) -- -- -- --
Amortization of deferred compensation
expense............................... 216 -- -- -- 216
Common stock issued under employee
plans................................. -- (100) -- -- 106
Shareholder equity contribution......... -- -- -- -- 297
Tax effect of exercise of stock
options............................... -- -- -- -- 138
Repurchase of common stock.............. -- -- -- -- (150)
Stock option issued to acquire
Morphagen, Inc........................ -- -- -- -- 147
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- (1,761) (1,761)
Foreign currency translation
adjustment............................ -- -- 84 -- 84
Net income.............................. -- -- -- 4,977 4,977
----- ---- ----- ------- --------
Balance at December 31, 1998........ (962) 100 (40) 1,150 7,413
<CAPTION>
COMPREHENSIVE
INCOME
--------------
<S> <C>
Balance at December 31, 1996.......... $ --
Recapitalization of stock............... --
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. --
Deferred compensation................... --
Amortization of deferred compensation
expense............................... --
Common stock issued under employee
plans................................. --
Shareholder equity contribution......... --
Repurchase of common stock.............. --
Beneficial conversion feature related to
convertible preferred stock........... --
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... --
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... --
Foreign currency translation
adjustment............................ (95)
Net income.............................. 2,910
------
Balance at December 31, 1997........ $2,815
======
Value of common stock designated
pursuant to Employee Stock Ownership
Plan.................................. --
Deferred compensation................... --
Amortization of deferred compensation
expense............................... --
Common stock issued under employee
plans................................. --
Shareholder equity contribution......... --
Tax effect of exercise of stock
options............................... --
Repurchase of common stock.............. --
Stock option issued to acquire
Morphagen, Inc........................ --
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... --
Foreign currency translation
adjustment............................ 84
Net income.............................. 4,977
------
Balance at December 31, 1998........ $5,061
======
</TABLE>
F-5
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
COMMON STOCK SERIES A SERIES B ADDITIONAL
------------------- -------------------- -------------------- PAID-IN-
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- -------- -------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial public stock offering........... 3,525 35 -- -- -- -- 48,094
Conversion of redeemable preferred
stock................................. 2,203 22 -- -- -- -- 729
Adjustment to beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- -- -- 985
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- -- -- (985)
Secondary stock offering................ 2,400 24 -- -- -- -- 56,443
Deferred compensation................... -- -- -- -- -- -- 126
Amortization of deferred compensation
expense............................... -- -- -- -- -- -- (20)
Common stock issued under employee
plans................................. 1,003 11 -- -- -- -- 3,240
Shareholder equity contribution......... -- -- -- -- -- -- 80
Tax effect of exercise of stock
options............................... -- -- -- -- -- -- 6,200
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- -- -- -- --
Foreign currency translation
adjustment............................ -- -- -- -- -- -- --
Net income.............................. -- -- -- -- -- -- --
------- ---- ------- --------- ------- --------- --------
Balance at December 31, 1999........ 22,470 $225 -- $ -- -- $ -- $121,924
======= ==== ======= ========= ======= ========= ========
<CAPTION>
ACCUMULATED
EMPLOYEE STOCK OTHER RETAINED
DEFERRED OWNERSHIP PLAN COMPREHENSIVE EARNINGS STOCKHOLDERS
COMPENSATION CONTRIBUTION INCOME (LOSS) (DEFICIT) EQUITY
------------- --------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Initial public stock offering........... -- -- -- -- 48,129
Conversion of redeemable preferred
stock................................. -- -- -- -- 751
Adjustment to beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- 985
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... -- -- -- -- (985)
Secondary stock offering................ -- -- -- -- 56,467
Deferred compensation................... (126) -- -- -- --
Amortization of deferred compensation
expense............................... 342 -- -- -- 322
Common stock issued under employee
plans................................. -- (100) -- -- 3,151
Shareholder equity contribution......... -- -- -- -- 80
Tax effect of exercise of stock
options............................... -- -- -- -- 6,200
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... -- -- -- (685) (685)
Foreign currency translation
adjustment............................ -- -- (399) -- (399)
Net income.............................. -- -- -- 9,236 9,236
----- ---- ----- ------ --------
Balance at December 31, 1999........ $(746) $ -- $(439) $9,701 $130,665
===== ==== ===== ====== ========
<CAPTION>
COMPREHENSIVE
INCOME
--------------
<S> <C>
Initial public stock offering........... --
Conversion of redeemable preferred
stock................................. --
Adjustment to beneficial conversion
feature related to convertible
preferred stock....................... --
Accretion of beneficial conversion
feature related to convertible
preferred stock....................... --
Secondary stock offering................ --
Deferred compensation................... --
Amortization of deferred compensation
expense............................... --
Common stock issued under employee
plans................................. --
Shareholder equity contribution......... --
Tax effect of exercise of stock
options............................... --
Preferred and common stock dividends
declared and accretion of redemption
value over stated value on subsidiary
common stock.......................... --
Foreign currency translation
adjustment............................ (399)
Net income.............................. 9,236
------
Balance at December 31, 1999........ $8,837
======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 9,236 $ 4,977 $ 2,910
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................. 4,472 3,238 2,362
Amortization of deferred compensation..................... 322 216 169
Employee stock ownership plan contribution................ -- 100 100
Deferred income taxes..................................... (700) 45 (676)
Non-cash write-off of investments......................... -- -- 330
Non-cash merger related costs............................. 1,820 -- --
Other non-cash adjustments................................ 409 26 179
Changes in operating assets and liabilities:
Accounts receivable..................................... (3,383) (2,174) (1,298)
Inventories............................................. (1,620) (2,426) (65)
Prepaid expenses and other current assets............... (447) (342) (171)
Other assets............................................ 405 (530) (310)
Accounts payable........................................ (118) 1,920 710
Accrued expenses........................................ 2,103 1,101 405
Income taxes payable.................................... 703 469 (172)
-------- -------- -------
Net cash provided by operating activities............. 13,202 6,620 4,473
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in short-term investments.......................... 4,214 (438) (3,777)
Payments received on notes receivable..................... 150 27 509
Purchases of property and equipment....................... (5,249) (10,080) (4,330)
Payments for intangible assets............................ (1,741) (958) (254)
Investment in related party............................... -- -- (500)
-------- -------- -------
Net cash used in investing activities................. (2,626) (11,449) (8,352)
-------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances (principal payments) on lines of credit, net..... (925) (487) 976
Proceeds from long term obligations....................... 1,916 4,708 1,447
Principal payments on long term obligations............... (2,260) (2,338) (1,747)
Proceeds from sale of preferred stock..................... -- -- 14,766
Proceeds from sale of common stock and equity
contributions........................................... 108,138 359 447
Redemption of preferred and common stock and payment of
accrued dividends....................................... (17,507) (657) (340)
Repurchase of common stock................................ -- (150) (7,834)
-------- -------- -------
Net cash provided by financing activities............. 89,362 1,435 7,715
Effect of exchange rate changes on cash................... (45) 183 (105)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents.......................................... 99,893 (3,211) 3,731
Cash and cash equivalents, beginning of period............ 2,345 5,556 1,825
-------- -------- -------
Cash and cash equivalents, end of period.................. $102,238 $ 2,345 $ 5,556
======== ======== =======
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Convertible Redeemable Preferred Stock into
Redeemable Preferred Stock.............................. $ 14,015 $ -- $ --
======== ======== =======
Conversion of Redeemable Preferred Stock into Common
Stock................................................... $ 751 $ -- $ --
======== ======== =======
Preferred dividends declared.............................. $ 163 $ 900 $ 475
======== ======== =======
Accretion of redemption value for redeemable common
stock................................................... $ 74 $ 204 $ 175
======== ======== =======
Deferred compensation..................................... $ 164 $ 683 $ 664
======== ======== =======
Contribution of common stock to ESOP...................... $ 100 $ 100 $ 100
======== ======== =======
Note issued for patent rights............................. $ 1,000 $ -- $ --
======== ======== =======
Property acquired with debt............................... $ 3,500 $ -- $ --
======== ======== =======
Converted deposit to note receivable-officer.............. $ -- $ 150 $ --
======== ======== =======
Options issued for assets of Morphagen, Inc............... $ -- $ 147 $ --
======== ======== =======
Note issued for Serva product line assets acquired........ $ -- $ 500 $ --
======== ======== =======
Accretion of beneficial conversion feature of convertible
preferred stock......................................... $ -- $ -- $15,000
======== ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 644 $ 716 $ 694
======== ======== =======
Cash paid for income taxes................................ $ 3,659 $ 1,971 $ 1,980
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999, 1998 AND 1997
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
Invitrogen Corporation (the "Company") was incorporated in the state of
California on September 29, 1989. The Company operates in one business segment
which develops, manufactures and sells products designed to facilitate molecular
biology research. The Company sells its products to researchers at universities,
corporations, and research institutions throughout North America, the Pacific
Rim and Europe. In 1997, the Company changed its state of incorporation to
Delaware. In connection with the Company's recapitalization, all of the
Series A common stock and Series B common stock of the former California
Corporation were converted to the common stock of the new Delaware corporation;
accordingly, Series A common stock and Series B common stock ceased to exist
(see Note 3).
On August 17, 1999, the Company consummated a merger with NOVEX, in a
stock-for-stock transaction (see Note 2). NOVEX, formerly known as Novel
Experimental Technology, a California Corporation, was incorporated on April 5,
1989. NOVEX manufactures protein and nucleic acid electrophoresis gels and
related equipment, solutions, standards, and fine chemicals, primarily for use
in research laboratories. On February 2, 2000, the Company consummated a merger
with Research Genetics, an Alabama Corporation, incorporated on June 1, 1994
(see Note 2). Research Genetics supplies products and services for functional
genomics and gene-based drug discovery research. On June 21, 2000, the Company
consummated a merger with Ethrog Biotechnologies, Ltd., a privately-held company
located in Israel. Ethrog manufactures a fully enclosed system for the
electrophoretic separation of macromolecules. These transactions have been
accounted for as pooling of interests' and, accordingly, the Company's
consolidated financial statements have been restated for all periods prior to
the business combinations to include the financial results of Invitrogen, NOVEX,
Research Genetics and Ethrog.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its 100% controlled subsidiaries, Invitrogen B.V., which commenced
operations in The Netherlands in April 1993, NOVEX Electrophoresis GmbH
(formerly known as Anamed GmbH), which commended operations in Germany in
December 1992, Serva GmbH, incorporated in Germany in May 1998, Invitrogen
Export Company, Ltd., a foreign sales corporation incorporated in 1996, NOVEX
International Sales Corporation, incorporated in February 1997 and Ethrog
Biotechnologies, Ltd., incorporated in August 1993. All significant intercompany
accounts and transactions have been eliminated in consolidation.
CONCENTRATIONS OF RISKS
SEGMENT AND GEOGRAPHIC DATA. The Company has adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" and has determined that it operates in one business segment
dedicated to molecular biology research. The
F-8
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Company does not report product line information as it would be impracticable to
do so. Information about the Company by geographic area is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
Product sales to unrelated customers located in:
North America............................................. $63,017 $48,198 $39,994
Europe.................................................... 22,475 17,089 10,672
Pacific Rim............................................... 5,728 4,023 3,538
------- ------- -------
Total product revenue................................... $91,220 $69,310 $54,204
======= ======= =======
Net long-lived assets located in:
North America............................................. $19,139 $15,426
Europe.................................................... 2,443 3,380
Other foreign............................................. 96 115
------- -------
Total net long-lived assets............................. $21,678 $18,921
======= =======
</TABLE>
CUSTOMERS. Approximately $39.5 million, $29.7 million and $23.9 million, or
42%, 42% and 43% of the Company's revenues during the years ended December 31,
1999, 1998, and 1997, respectively, were derived from university and research
institutions which management believes are, to some degree, directly or
indirectly supported by the U.S. Government. A change in current research
fundings, particularly with respect to the National Institute of Health, may
have an adverse impact on the Company's future results of operations.
REVENUE RECOGNITION
Revenues from product sales are recognized upon shipment to the customer.
The Company does not receive material upfront fees; those that are received are
deferred and recognized upon shipment to the customers. Grant revenue is
recorded as earned, as defined within the specific agreements and is not
refundable. Grant revenue was $1.7 million, $1.3 million and $1.1 million in
1999, 1998 and 1997, respectively. Cost of grant revenue is included in research
and development.
Royalty revenue is recognized when earned, generally upon the receipt of
cash, and is not refundable.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash equivalents at
December 31, 1999 and 1998 consist primarily of U.S. Treasury and government
agency obligations, corporate debt securities and dividend-bearing securities.
F-9
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at lower of cost (first-in, first-out method) or
market. The Company reviews the components of its inventory on a quarterly basis
for excess, obsolete and impaired inventory and makes appropriate dispositions
as obsolete stock is identified.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciated over the estimated
useful lives of the assets (3 to 39 years) using the straight-line method.
Amortization of leasehold improvements is computed on the straight-line method
over the shorter of the lease term or the estimated useful lives of the assets.
Maintenance and repairs are charged to operations as incurred. When assets are
sold, or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is included in operations.
INTANGIBLE ASSETS
Intangible assets represent patents, license agreements and genome
libraries, are recorded at cost and are amortized on a straight-line basis over
estimated useful lives of 3 to 17 years. The excess of cost over the fair value
of the net tangible assets purchased (goodwill) arose from the Company's 1996
acquisition of its wholly-owned subsidiary, NOVEX Electrophoresis GmbH, and is
being amortized over ten years.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets". The statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be fully recoverable. The Company periodically re-evaluates the original
assumptions and rationale utilized in the establishment of the carrying value
and estimated lives of its long-lived assets. The criteria used for these
evaluations include management's estimate of the asset's continuing ability to
generate income from operations and positive cash flow in future periods as well
as the strategic significance of any intangible asset in the Company's business
objectives.
RESEARCH AND DEVELOPMENT COSTS
All research and development costs are charged to operations as incurred.
INCOME TAXES
The Company uses the liability method of accounting for income taxes in
accordance with Statement of Financial Statement Accounting Standards No. 109,
"Accounting for Income Taxes". Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes,
using enacted tax rates in effect for the year in which the differences are
expected to reverse.
F-10
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
FOREIGN CURRENCY TRANSLATION
The balance sheet accounts of the Company's foreign operations are
translated from their respective foreign currencies into U.S. dollars at the
exchange rate in effect at the balance sheet date and revenue and expense
accounts are translated using an average exchange rate during the period of
recognition. The effects of translation are recorded as a separate component of
stockholders' equity. Exchange gains and losses arising from transactions
denominated in foreign currencies are recorded using the actual exchange
differences on the date of the transaction and are included in the consolidated
statements of income.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of all financial instruments such as cash equivalents,
foreign cash accounts, accounts receivable, accounts payable and accrued
expenses are reasonable estimates of their fair value because of the short
maturity of these items. The Company believes the carrying amounts of the
Company's line of credit and obligations under capital leases approximate fair
value because the interest rates on these instruments are subject to change
with, or approximate, market interest rates.
COMPUTATION OF EARNINGS PER SHARE
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), "Earnings Per Share." SFAS No. 128 requires
companies to compute basic and diluted per share data for all periods for which
an income statement is presented. Basic earnings per share was computed by
dividing net income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflects the potential dilution
that could occur if the income were divided by the weighted-average number of
common shares and potential common shares from outstanding stock options.
Potential common shares were calculated using the treasury stock method and
represent incremental shares issuable upon exercise of the Company's outstanding
options. Diluted earnings per share does not consider the impact of the
conversion of outstanding redeemable convertible preferred stock as its
inclusion would be anti-dilutive for all periods presented. Potentially dilutive
securities are not considered in the calculation of net loss per share as their
impact would be antidilutive.
COMPREHENSIVE INCOME
The Company has implemented Statement of Financial Accounting Standards
No. 130 "Comprehensive Income." This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. Accordingly, in addition to
reporting net income under the current rules, the Company is required to display
the impact of any fluctuations in its foreign currency translation adjustments
as a component of
F-11
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
comprehensive income and to display an amount representing total comprehensive
income for each period presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC's view in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101 is effective for all registrants during the fourth quarter of fiscal
2000. Management has reviewed the impact of SAB No. 101 on the Company's
financial statements, and does not believe that its adoption will have a
material impact on the Company's financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 was amended
by SFAS No. 137 which defers the effective date to all fiscal quarters of fiscal
years beginning after June 15, 2000. SFAS No. 133 is effective for our first
quarter in the fiscal year ending March 31, 2001 and is not expected to have a
material effect on our financial position or results of operations.
RECLASSIFICATIONS
Certain reclassifications of prior year amounts have been made to conform to
the current year presentation.
2. BUSINESS COMBINATIONS
ETHROG BIOTECHNOLOGIES MERGER
On June 21, 2000, the Company completed a merger with Ethrog
Biotechnologies, Ltd., a privately-held company located in Israel that has
developed and patented a novel, fully enclosed system for the electrophoretic
separation of macromolecules. The Company issued 198,869 shares of its common
stock for all of the capital stock of Ethrog in a transaction that has been
accounted for as a pooling of interests. Costs incurred as a result of the
merger were $.2 million and are subject to change. These costs were expensed in
June 2000 upon completion of the merger. As of June 30, 2000, the Company had
$.1 million remaining in accrued merger related costs.
F-12
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
2. BUSINESS COMBINATIONS (CONTINUED)
RESEARCH GENETICS MERGER
On February 2, 2000, the Company completed a merger with Research Genetics,
a privately-held U.S. company that supplies products and services for functional
genomics and gene-based drug discovery research. The Company issued 3.2 million
shares of common stock for all of the outstanding common stock of Research
Genetics. The transaction has been accounted for as a pooling of interests and
qualifies as a tax free exchange. Costs incurred as a result of the merger and
related integration are expected to be $6.4 million and are subject to change.
These costs were expensed in February 2000 upon completion of the merger.
NOVEX MERGER
On August 17, 1999, the Company consummated a merger with NOVEX, in a
stock-for-stock transaction. NOVEX manufactures protein and nucleic acid
electrophoresis gels and related equipment, solutions, standards, and fine
chemicals, primarily for use in research laboratories.
Invitrogen issued 2,530,124 shares of common stock in exchange for all the
outstanding shares of NOVEX stock based on an exchange ratio of approximately
.23188 shares of Invitrogen common stock for each share of NOVEX common stock.
Invitrogen also assumed and exchanged all options to purchase NOVEX common stock
for options to purchase 469,678 shares of Invitrogen common stock. The merger is
intended to qualify as a tax-free reorganization and has been accounted for as a
pooling of interests. In August 1999, after the merger was completed, the
Company recorded $4.4 million in merger-related costs. These costs included
transaction costs to complete the merger, severance, write-downs of duplicate
property, plant and equipment and other costs to close duplicate facilities. The
duplicate facilities were located in San Diego, California and in Frankfurt,
Germany and the closure of these facilities included workforce reductions of
approximately 45 employees in 1999 and 22 in 2000. It is expected that the
closure of the duplicate facilities will be completed by the end of 2000. At
December 31, 1999 the Company had $1.7 million remaining in accrued merger
related costs, which are subject to change.
Prior to the merger, NOVEX used a fiscal year ending March 31. In order to
report the combined results on a consistent basis, NOVEX's fiscal years have
been recast to a twelve-month period ended December 31, for all periods
presented. These recast results have been combined with the corresponding fiscal
years ended December 31, 1999, 1998 and 1997, of Invitrogen to arrive at the
financial information presented. The combined results of operations of
Invitrogen and NOVEX are presented as if the merger had occurred at the
beginning of the periods presented.
The combined results of operations of Invitrogen, Research Genetics, Ethrog
and NOVEX are presented as if the mergers had occurred at the beginning of the
periods presented.
F-13
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
2. BUSINESS COMBINATIONS (CONTINUED)
The reconciliations of revenues and net income previously reported prior to
the respective mergers by the separate companies to the combined results
reported in the consolidated statements of income for the years ended
December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
Revenues:
Invitrogen..................................... $49,530 $31,414 $24,965
Research Genetics.............................. 24,581 17,006 14,331
NOVEX.......................................... 18,807 22,293 16,240
Ethrog......................................... 753 609 7
Intercompany sales............................. (726) (729) (202)
------- ------- -------
$92,945 $70,593 $55,341
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
Net Income (Loss):
Invitrogen........................................ $5,526 $2,978 $2,524
Research Genetics................................. 2,395 1,289 982
NOVEX............................................. 1,139 1,252 (89)
Ethrog............................................ (46) (299) (522)
Eliminations...................................... 222 (243) 15
------ ------ ------
$9,236 $4,977 $2,910
====== ====== ======
</TABLE>
SERVA ACQUISITION
In May 1998, the Company purchased the assets of the Serva product line from
Boehringer Ingelheim Bioproducts Partnership ("Boehringer Ingelheim") in
Heidelberg, Germany. The purchase price was $1.5 million comprised of
$.8 million in cash, acquisition costs of $.2 million, and a promissory note for
$.5 million. The assets acquired include inventory and property with an
estimated fair value of $1.5 million. Revenues, expenses and acquired assets
relating to this product line are included in the consolidated financial
statements from the date of acquisition
3. RELATED PARTY TRANSACTIONS
INVESTMENT IN MORPHAGEN, INC.
In February 1997, the Company entered into an agreement with
Morphagen, Inc., a start-up company, for an initial investment of $500,000 in
exchange for 109,850 shares of Series A Preferred Stock of Morphagen, Inc. The
former president of Morphagen, Inc. is the spouse of a member of the board of
directors of the Company. On November 3, 1998, the Company acquired all of the
outstanding common stock of Morphagen, Inc. which the Company did not already
own for 50,000 options to purchase company stock at $8.50 per share. In
connection with this acquisition, the Company recorded $147,000 as additional
paid-in-capital representing the estimated fair value of the options issued.
F-14
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
3. RELATED PARTY TRANSACTIONS (CONTINUED)
RESEARCH GENETICS
Related party transactions consist of minor pass-through arrangements with
various start-up biotech companies in which the President of Research Genetics
holds a nominal equity interest.
ETHROG BIOTECHNOLOGIES
Related party transactions consist of insignificant short-term and long-term
notes payable to a shareholder who was a majority shareholder of Ethrog prior to
the merger.
COMMON STOCK
In connection with the Company's recapitalization in 1997, all of the
Series A common stock and Series B common stock of the former California
Corporation were converted to the common stock of the new Delaware corporation;
accordingly, Series A common stock and Series B common stock ceased to exist.
SERIES A. All outstanding shares of Series A common stock have been issued
to founders, directors, employees or consultants of the Company pursuant to
agreements which entitles the Company to repurchase the shares at the current
market value in the event of termination of employment.
SERIES B. All outstanding shares of Series B common stock have been issued
to the president and majority stockholder of the Company. The Series B common
stock has the same rights, preferences, privileges and restrictions of Series A
common stock except the Series B shares may not vote in the election of
directors of the Company. In 1997, the Company converted all the outstanding
Series B common stock to Series A common stock on a one to one basis.
4. INVENTORIES
Inventories include material, labor and overhead costs and consist of the
following at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Raw materials and components................................ $2,002 $1,851
Work in process............................................. 1,082 1,217
Finished goods.............................................. 4,472 2,953
------ ------
$7,556 $6,021
====== ======
</TABLE>
F-15
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Land.................................................... $ 5,592 $ 2,107
Building and improvements............................... 5,845 5,304
Machinery and equipment................................. 22,110 20,385
Leasehold improvements.................................. 1,976 1,523
Construction in process................................. 10 302
-------- --------
35,533 29,621
Accumulated depreciation and amortization............... (13,855) (10,700)
-------- --------
$ 21,678 $ 18,921
======== ========
</TABLE>
6. INTANGIBLE ASSETS
Intangible assets consist of the following at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Licensing agreements (see Note 11).......................... $2,691 $ 834
Patents and trademarks...................................... 1,305 848
Genome libraries............................................ 806 350
Goodwill.................................................... 156 156
Other....................................................... 49 49
------ ------
5,007 2,237
Accumulated amortization.................................... (868) (377)
------ ------
$4,139 $1,860
====== ======
</TABLE>
7. ACCRUED EXPENSES
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Accrued purchases........................................... $ 734 $ 944
Accrued payroll and related expenses........................ 1,482 1,186
Accrued benefit plan contributions.......................... 692 254
Accrued merger related costs................................ 1,678 --
Customer prepayments........................................ 171 192
Accrued other............................................... 495 651
------ ------
$5,252 $3,227
====== ======
</TABLE>
F-16
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
8. LINES OF CREDIT
The Company has an available line of credit for advances up to $3 million.
The credit facility bears interest at the bank's Libor rate (6.5% at
December 31, 1999) plus 2% or the bank's prime rate (8.5% at December 31, 1999).
The line of credit expires on October 1, 2001. No amounts were outstanding on
this credit facility at December 31, 1999. The line is collateralized by assets
with a net book value of $135.5 million at December 31, 1999. The line of credit
agreement contains various normal and customary financial covenants, which the
Company was in compliance with for all periods presented.
In February and March 2000, due to sufficient cash balances, the Company
terminated certain revolving line of credit facilities with banks for advances
totaling up to $2.7 million. At December 31, 1999, $415,000 was outstanding on
these lines and $2,285,000 was available. The outstanding balances on the lines
were paid in full in January and March 2000.
In addition, the Company through Ethrog had two short term notes payabale.
The notes had an interest rate of 18.5%, and were indexed to the New Israeli
Shekels. The notes were personally guaranteed by the former major shareholders
of Ethrog, contained no financial convenants, and were renewed on a
month-to-month basis as long as the personal guarantee of the shareholders
remained in place. As of December 31, 1999 the balance of the notes was
$435,000.
9. LONG TERM OBLIGATIONS
The Company leases certain equipment under capital leases which are due in
aggregate monthly installments of $8,000 and mature at various dates through
November 2002. Property and equipment, net, at December 31, 1999 and 1998,
include approximately $326,000 and $398,000, respectively, of equipment under
capital leases which have been capitalized.
Long term obligations consist of the following at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Notes payable to SouthTrust Bank, paid in full March
2000..................................................... $ 8,855 $3,862
Bonds payable to State Industrial Development Authority of
Alabama, interest due monthly, principal due annually
through 2008, variable rate interest, supported by a
letter of credit for $3.6 million with a bank............ 2,880 3,120
Note payable to Molecular Biology Resources, principal and
interest due annually through June 2003, with interest at
6%, supported by a standby letter of credit with a
bank..................................................... 1,030 --
Note payable to Boehringer Ingelheim, payable $500 plus
interest on December 31, 1999, with interest at 8%,
supported by a standby letter of credit with a bank, paid
in full January 2000..................................... 500 500
Other notes payable........................................ 187 1,820
Capital leases............................................. 172 138
------- ------
13,624 9,440
Less current maturities.................................... (6,300) (1,345)
------- ------
$ 7,324 $8,095
======= ======
</TABLE>
F-17
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
9. LONG TERM OBLIGATIONS (CONTINUED)
The bonds payable represent Variable Rate Industrial Development Revenue
Bonds issued for the benefit of Research Genetics. Improvements and equipment
acquired with the bond proceeds become the property of the Industrial
Development Board of the City of Huntsville, Alabama. The Company has entered
into a lease arrangement with the Board whereby the property is leased for one
dollar per year through January 1, 2008. At that time, the Company has an option
to purchase the property from the Board for one hundred dollars.
Maturities of long term obligations at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
(IN THOUSANDS) DECEMBER 31,
-------------- ------------
<S> <C>
2000........................................................ $ 6,300
2001........................................................ 1,443
2002........................................................ 1,234
2003........................................................ 1,124
2004........................................................ 853
Thereafter.................................................. 2,670
-------
$13,624
=======
</TABLE>
10. INCOME TAXES
Significant components of the Company's deferred tax assets and liabilities
are as follows at December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
-------------- -------- --------
<S> <C> <C>
Deferred tax assets:
Various accruals.......................................... $ 842 $ 743
Net operating loss and credit carryforwards............... 2,147 --
State taxes............................................... 66 91
Depreciation and amortization............................. 161 --
Reserves.................................................. 160 141
Other..................................................... 302 188
------ ------
Total deferred tax assets................................... 3,678 1,163
Deferred tax liabilities:
Valuation allowance....................................... -- --
Depreciation and amortization............................. (439) (322)
------ ------
Net deferred tax assets..................................... $3,239 $ 841
====== ======
</TABLE>
F-18
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
10. INCOME TAXES (CONTINUED)
Income before income taxes includes the following components for the years
ended December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
United States...................................... $11,224 $7,395 $4,522
Foreign............................................ 2,791 570 234
------- ------ ------
$14,015 $7,965 $4,756
======= ====== ======
</TABLE>
F-19
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
10. INCOME TAXES (CONTINUED)
The provision for income taxes consists of the following for the years ended
December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $ 5,183 $2,040 $1,628
State............................................ 1,103 414 363
Foreign.......................................... 1,015 342 334
------- ------ ------
Total current provision............................ 7,301 2,796 2,325
------- ------ ------
Deferred:
Federal.......................................... (2,165) 168 (344)
State............................................ (357) 24 (135)
------- ------ ------
Total deferred provision........................... (2,522) 192 (479)
------- ------ ------
Total provision.................................... $ 4,779 $2,988 $1,846
======= ====== ======
</TABLE>
The difference between the provision for income taxes and the amounts that
would be obtained by applying the Federal statutory rate to income before income
taxes relates primarily to the utilization of certain tax credit and net
operating loss carryforwards.
The provision for income taxes differs from the amount computed by applying
the federal statutory rate to the Company's income before provision for income
taxes as follows for the years ended December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C>
Federal tax provision at statutory rate............. $4,702 $2,892 $1,790
State tax, net of federal benefit................... 408 460 276
Foreign Sales Corporation Benefit................... (98) (74) (39)
Research and development and other credits.......... (384) (455) (280)
Change in valuation allowance....................... -- (80) 26
Other............................................... 151 245 73
------ ------ ------
Provision for income taxes.......................... $4,779 $2,988 $1,846
====== ====== ======
</TABLE>
The Company's Israeli subsidiary is under a tax-free holiday which is
available to be used any 10 of 14 years. Due to the tax holiday the Company has
not recorded any provision or benefit for income taxes or deferred tax assets
with respect to losses that may be carried forward for tax purposes.
The tax benefit associated with the disqualifying dispositions by employees
of shares issued in the Company's stock options plans reduced taxes payable by
$6.2 million and $138,000 for 1999 and 1998, respectively. A portion of this
benefit was utilized in the current year and has been reflected as additional
paid-in-capital in the accompanying consolidated statement of stockholders'
equity.
F-20
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
11. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases certain equipment and its office and manufacturing
facilities under operating leases which expire through September 2010. Certain
rental commitments provide for specific escalating rental payments and certain
commitments have renewal options extending through the year 2015. Rent expense
under all operating leases was $1.2 million, $1.3 million and $1.0 million for
the years ended December 31, 1999, 1998 and 1997, respectively.
Future minimum lease commitments for operating leases at December 31, 1999
are as follows:
<TABLE>
<S> <C>
Years Ending December 31,
2000........................................................ $ 1,475
2001........................................................ 1,490
2002........................................................ 1,326
2003........................................................ 1,335
2004........................................................ 1,388
Thereafter.................................................. 6,209
-------
Total minimum lease payments.............................. $13,223
=======
</TABLE>
LICENSING AGREEMENTS
The Company manufactures and sells certain products under several licensing
agreements. The agreements require royalty payments based upon various
percentages of sales or profits from the products. Terms of the agreements
generally range from the remaining life of the patent up to twenty years and
initial costs are amortized over their terms using the straight-line method.
Total royalties paid under the agreements were approximately $1.2 million,
$1.4 million and $1.1 million for the years ended December 31, 1999, 1998 and
1997, respectively.
Certain of the licensing agreements require guaranteed minimum annual
royalty payments, to maintain exclusivity. Future minimum guaranteed royalties
at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Years Ending December 31,
2000........................................................ $ 643
2001........................................................ 708
2002........................................................ 693
2003........................................................ 696
2004........................................................ 660
Thereafter.................................................. 2,682
------
$6,082
======
</TABLE>
F-21
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
PURCHASE COMMITMENTS
The Company has minimum purchase commitments for inventory from certain
vendors. Future minimum guaranteed minimum purchase commitments at December 31,
1999 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Years Ending December 31,
2000........................................................ $ 812
2001........................................................ 837
2002........................................................ 987
2003........................................................ 1,026
2004........................................................ 1,000
Thereafter.................................................. 1,871
------
$6,533
======
</TABLE>
LITIGATION
The Company and its subsidiaries are subject to claims and from time to time
are named as defendants in legal proceedings. In the opinion of management, the
amount of ultimate liability, if any, with respect to those actions will not
materially affect the financial position or results of operations of the
Company.
HEDGING
At December 31, 1999 the Company had outstanding put options to sell
1.7 million U.K. pounds sterling at $1.63 per pound. Additionally, the Company
had outstanding call options to purchase 1.7 million U.K. pounds sterling at
$1.66 per pound. These contracts expire monthly through December 2000. The above
contracts had no net value at December 31, 1999.
12. REDEEMABLE COMMON STOCK OF INVITROGEN B.V.
Effective February 26, 1993, Invitrogen B.V. entered into a money loan
agreement with N.V. Noordelijke Ontwikkelingsmaatschappij, Investment and
Development Company for the Northern Netherlands ("NOM"). As of December 31,
1994, the due date of the Loan, the Company had borrowed $618,000, at a 15%
effective interest rate, under the agreement which had provisions by which NOM
could convert its loan balance to Invitrogen B.V. common stock. On April 7,
1995, the Company, Invitrogen B.V. and NOM entered into a Shareholders'
Agreement. As a result, Invitrogen B.V. issued 18,000 shares of non-voting
redeemable common stock to NOM in exchange for the Netherlands Guilder (NLG)
1.8 million. The proceeds from the issuance of the non-voting redeemable common
stock were utilized to retire the outstanding debt of $618,000 (NLG
1.2 million). The Company redeemed all of the shares on April 7, 1999 for the
redemption amount of NLG 3,150,000 (U.S. dollars $1,507,000).
The excess of the redemption value over the issue price was accredited by
periodic charges to equity over the life of the issue through April 7, 1999.
F-22
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
13. PREFERRED STOCK
AUTHORIZED SHARES
The Company has authorized 6,405,884 shares of preferred stock, designated
as follows:
<TABLE>
<CAPTION>
SHARES
---------
<S> <C>
Series A cumulative convertible redeemable preferred
stock..................................................... 2,202,942
Series A redeemable preferred stock......................... 2,202,942
Undesignated preferred stock................................ 2,000,000
---------
Total preferred shares...................................... 6,405,884
=========
</TABLE>
The Series A Cumulative Convertible Redeemable Preferred Stock ("Convertible
Preferred Stock") accrues dividends at a rate of 6% per annum and has a
liquidation preference of $6.8091 per share plus accrued and unpaid dividends.
Additionally, the Convertible Preferred Stock entitles the holder thereof to
elect one director of the Company and vote on certain other significant
transactions, voting together as one separate class. The Convertible Preferred
Stock may be voluntarily converted upon the election of holders of not less than
66.67% of the voting power of this stock. The rate at which the Convertible
Preferred Stock converts to common stock is automatically adjusted in the event
of most future issuances of equity securities by the Company below the original
purchase price of the Convertible Preferred Stock. After June 18, 2003, any
holders of the Convertible Preferred Stock have the right to require the Company
to redeem their shares for the original purchase price plus accrued dividends.
There were no shares of Convertible Preferred Stock outstanding at December 31,
1999.
The Series A Redeemable Preferred Stock ("RPS") accrues dividends at 3% per
annum and entitles the holder thereof to one vote per outstanding share in the
election of one director of the Company, voting together as a separate class.
The RPS is redeemable upon the occurrence of a qualified public offering or sale
or other qualified event. Upon liquidation, the RPS is entitled to be paid out
of the assets of the Company at the redeemable base liquidation amount (original
issue price of $6.8091 per share plus accrued dividends) per share determined at
the measurement date. There were no shares of RPS outstanding at December 31,
1999.
ISSUED SHARES
On June 20, 1997, the Company entered into a stock purchase agreement with a
group of three investors ("Investors"). The Company sold 2,202,942 shares of
Convertible Preferred Stock at $6.8091 per share to the Investors in exchange
for $14,766,000, net of issuance costs. Additionally in conjunction with the
stock purchase agreement, the Company repurchased and retired 1,101,471 shares
of the Company's common stock at $6.8091 per share, representing the fair value
of these shares, from certain stockholders of the Company in exchange for
$7.5 million. In accordance with Emerging Issues Task Force D-60 ("EITF D-60"),
"Accounting for the Issuance of Convertible Preferred Stock and Debt Securities
with a Nondetachable Conversion Feature," the maximum possible premium to
holders of convertible preferred stock ($15 million) was recognized as a
beneficial conversion feature through a charge to equity on June 20, 1997, the
date the Convertible Preferred Stock first became convertible. This $15 million
charge has been recognized as a reduction to earnings available to common
stockholders in 1997.
F-23
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
13. PREFERRED STOCK (CONTINUED)
SUBSEQUENT CONVERSION AND REDEMPTION
In February 1999, upon the closing of the Company's Initial Public Offering
("IPO") (see Note 14), each of the 2,202,942 outstanding shares of Convertible
Preferred Stock were automatically converted into 2,202,942 shares of common
stock and 2,202,942 shares of RPS. At the closing of the IPO, the RPS was
redeemed for $14,015,000 and accumulated dividends on the Convertible Preferred
Stock of $1,538,000 were paid. Upon determination of the final redemption price
of $14,015,000 at the IPO a credit to equity of $985,000 was recorded which has
been reported as an adjustment to Income Available to Common Stockholders in the
statement of income for the quarter ended March 31, 1999.
14. COMMON STOCK, INITIAL PUBLIC OFFERING AND SECONDARY STOCK OFFERING
AUTHORIZED SHARES
In November 1998, the Company amended its bylaws to reflect an increase of
authorized shares of common stock from 20,000,000 to 50,000,000.
STOCK SPLIT
On June 20, 1997, the Company approved a recapitalization which authorized
20,000,000 shares of common stock and a stock split that converted each share of
Class A and Class B stock into seven shares of common stock of the Company. All
prior period share amounts have been restated to reflect the stock split.
INITIAL PUBLIC OFFERING
In February 1999, the Company completed its initial public offering and
issued 3,525,000 newly issued shares of its Common Stock at a price of $15.00
per share. The Company received $48.1 million in cash, net of underwriting
discounts, commissions and other offering costs.
SECONDARY STOCK OFFERING
In November 1999, the Company completed a secondary stock offering and
issued 2,400,000 newly issued shares of its Common Stock at a price of $25.00
per share. The Company received $56.5 million in cash, net of underwriting
discounts, commissions and offering costs.
F-24
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
15. EARNINGS PER SHARE
Earnings per share is calculated as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1999
--------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR) AMOUNT
---------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders..... $9,984 19,268 $0.52
=====
Stock options............................... -- 2,560
====== ======
Diluted EPS:
Income available to common stockholders plus
assumed conversions....................... $9,984 21,828 $0.46
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
1998
-----------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR)(1) AMOUNT
---------------------------------------- ----------- ---------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders... $3,873 15,540 $0.25
=====
Stock options............................. -- 1,731
====== ======
Diluted EPS:
Income available to common stockholders
plus assumed conversions................ $3,873 17,271 $0.22
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
1997
-----------------------------------------
INCOME SHARES
(NUMERATOR) (DENOMINATOR)(1) AMOUNT
----------- ---------------- --------
<S> <C> <C> <C>
Basic and Diluted EPS:
Loss available to common stockholders..... $(12,740) 14,837 $(0.86)
======== ====== ======
</TABLE>
------------------------
(1) In accordance with SAB Topic 4D, "Earnings Per Share Computations in an
Initial Public Offering," the Company considers any common stock issuable
upon the occurrence of an IPO for little or no consideration as a nominal
issuance. In accordance with the above bulletin, the Company has considered
2,202,942 common shares issuable in connection with the conversion of
convertible preferred stock to be a nominal issuance and outstanding for all
periods since the original issuance of the underlying security.
16. EMPLOYEE BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLANS
The Company previously had an Employee Stock Ownership Plan ("ESOP") for the
benefit of all Invitrogen employees. The ESOP was terminated as of December 31,
1998 and the assets of the ESOP were distributed to the participants or rolled
into the Invitrogen 401(k) plan or other qualified retirement plans as
designated by the participants in December 1999 and January 2000. Contributions
of $100,000 were designated for the ESOP for each of the years ended
December 31, 1998 and 1997.
F-25
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
16. EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company also has a 401(k)/ESOP plan covering all NOVEX. The 401(k)/ESOP
plan was terminated as of December 31, 1999. Upon receipt of the IRS
Determination Letter, the Company intends to distribute the assets to the
participants or roll those assets into the Invitrogen 401(k) plan or other
qualified retirement plans as designated by the participants. Previous
contributions to the 401(k)/ ESOP were based upon a Company match of employee
401(k) salary deferrals, as well as a discretionary percentage of eligible
participants' total compensation. The Company made contributions of $117,000,
$136,000 and $383,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
SECTION 401(k) PROFIT SHARING PLAN
The Company has a profit sharing plan which allows each eligible employee to
voluntarily make pre-tax deferred salary contributions. The Company may make
matching contributions in amounts as determined by the board of directors. The
Company made matching contributions of approximately $313,000, $179,000 and
$134,000, for the years ended December 31, 1999, 1998 and 1997, respectively.
The Company also has a 401(k) profit sharing plan that covers all Research
Genetics employees who meet minimum participation requirements. Annual
compensation may be deferred up to the maximum prescribed by the Internal
Revenue Code. The Company contributes an amount equal to 50% of the first 5% of
the participant's pre-tax contribution. Matching contributions for the years
ended December 31, 1999, 1998 and 1997 were $91,000, $71,000 and $49,000,
respectively. The Company intends to terminate this plan and to distribute the
assets to the participants or roll those assets into the Invitrogen 401(k) plan
or other qualified retirement plans as designated by the participants.
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan which became effective upon
the Company's initial public offering in February 1999. During 1999 employees
purchased 34,191 shares at an average price of $12.86 per share. As of
December 31, 1999 there were 215,809 shares of the Company's common stock
reserved for future issuance under the plan.
17. STOCK OPTION PLANS
The Company has five stock option plans, the 1995, 1997 and 2000 Invitrogen
Corporation Stock Option Plans and the 1996 and 1998 NOVEX Stock Option/Stock
Issuance Plans. Under these plans, incentive stock options and non-qualified
stock options are granted to eligible employees to purchase shares of the
Company's common stock at an exercise price equal to no less than the estimated
fair market value of such stock as determined by the Board of Directors on the
date of grant. The Company recognizes as compensation expense any difference
between the exercise price and the fair market value of the common stock on the
date of grant based on subsequent valuations of the stock. Stock based
compensation expense is deferred and recognized over the vesting period of the
stock option. During the years ended December 31, 1999, 1998 and 1997 the
Company recognized $322,000, $216,000 and $169,000, respectively, in stock based
compensation expense.
F-26
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
17. STOCK OPTION PLANS (CONTINUED)
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
fixed stock option or stock purchase plans. Had compensation cost for the
Company's stock-based compensation plans been determined based on the fair value
at the grant dates for awards under those plans consistent with the method of
SFAS 123, the Company's results of operations would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1999 1998 1997
---------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Income (loss) available to common stockholders:
As reported..................................... $9,984 $3,873 $(12,740)
Pro forma....................................... 7,957 3,639 (12,764)
Basic earnings per share:
As reported..................................... $ 0.52 $ 0.25 $ (0.86)
Pro forma....................................... 0.41 0.27 (0.84)
Diluted earnings per share:
As reported..................................... $ 0.46 $ 0.22 $ (0.86)
Pro forma....................................... 0.36 0.24 (0.84)
</TABLE>
Under these four Plans, the Company may grant up to 5,962,875 options, of
which 3,430,800 are outstanding and 1,365,359 are available for future issuance
at December 31, 1999. Options vest immediately or over a period of time ranging
up to five years, are exercisable in whole or in installments, and expire ten
years from date of grant.
A summary of the status of the Company's stock option plans at December 31,
1997, 1998 and 1999 and changes during the periods then ended is presented in
the tables below:
<TABLE>
<CAPTION>
WTD. AVG.
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SHARES EX. PRICE
---------------------------------------- -------- ---------
<S> <C> <C>
Outstanding at December 31, 1996........................... 3,605 $ 1.01
Granted.................................................. 393 $ 3.88
Exercised................................................ (179) $ 0.90
Canceled................................................. (1,579) $ 0.90
------
Outstanding at December 31, 1997........................... 2,240 $ 1.60
Granted.................................................. 1,429 $ 8.00
Exercised................................................ (20) $ 1.66
Canceled................................................. (29) $ 2.80
------
Outstanding at December 31, 1998........................... 3,620 $ 4.12
Granted.................................................. 1,155 $25.69
Exercised................................................ (953) $ 2.75
Canceled................................................. (391) $15.89
------
Outstanding at December 31, 1999........................... 3,431 $10.40
======
Exercisable at December 31, 1999........................... 1,540 $ 4.76
</TABLE>
F-27
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 1999, 1998 AND 1997
17. STOCK OPTION PLANS (CONTINUED)
At December 31, 1999:
<TABLE>
<CAPTION>
(OPTIONS IN THOUSANDS) WTD. AVG.
---------------------- REMAINING
OPTIONS OPTIONS EXERCISE CONTRACTUAL LIFE
OUTSTANDING EXERCISABLE PRICE IN YEARS
----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
1,024 916 $ 0.84-$1.78 5.1
1,108 403 $ 3.28-$8.63 8.0
489 110 $12.00-$19.44 9.0
787 111 $24.56-$29.75 9.6
23 -- $47.88-$48.00 10.0
----- -----
3,431 1,540 $ 10.40 7.7
===== =====
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the present value pricing method as described in SFAS No. 123. The underlying
assumptions used to estimate the fair values of options granted during the years
ended December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- ---------- -----------
<S> <C> <C> <C>
Weighted average risk free interest rate..... 5.55% 5.48% 5.89%
Expected option life......................... 5.4 yrs 8.7 yrs 7.0 yrs
Expected stock price volatility.............. 45% -- --
Expected dividend yield...................... -- -- --
Weighted average fair value of options
granted.................................... $12.47 $3.04 $1.26
</TABLE>
18. SUBSEQUENT EVENT
CONVERTIBLE SUBORDINATED NOTES
In March 2000, we issued $172.5 million principal amount of 5.5% convertible
subordinated notes (the "Convertible Notes") due March 1, 2007. After expenses,
the Company received net proceeds of $167.0 million. Interest on the Convertible
Notes is payable semi-annually on March 1st and September 1st, commencing in
September 2000. The notes were issued at 100% of principal value, and are
convertible into 2,024,648 shares of stock at the option of the holder at any
time at a price of $85.20 per share. The Convertible Notes may be redeemed, in
whole or in part, at our option on or after March 1, 2003 at a premium of
103.143% of par value which declines annually to par value at maturity date.
Costs incurred to issue the Convertible Notes will be deferred and included
in other assets in the consolidated balance sheet. These costs will be amortized
over the term of the related Convertible Notes using the effective interest
method.
The Convertible Notes are subordinate to substantially all of the current
and future outstanding debt of the Company, including all our secured debt and
all debts and liabilities of our subsidiaries. The Convertible Notes are not
subordinate to amounts the Company owes for employee compensation, goods or
services the Company purchases or to amounts owed to the Company's subsidiaries.
F-28
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $175,781 $102,238
Short-term investments, held-to-maturity.................. 98,060 --
Accounts receivable, net of allowance for doubtful
accounts of $829 and $835............................... 13,950 11,530
Inventories............................................... 8,229 7,556
Income taxes receivable................................... 2,352 4,495
Deferred income taxes..................................... 9,020 3,561
Prepaid expenses and other current assets................. 1,576 1,017
-------- --------
Total current assets.................................... 308,968 130,397
Property and Equipment, net................................. 25,831 21,678
Intangible Assets, net...................................... 5,403 4,139
Other Assets................................................ 6,229 562
-------- --------
Total assets............................................ $346,431 $156,776
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank..................................... $ 420 $ 850
Current portion of long-term obligations.................. 743 6,300
Accounts payable.......................................... 4,038 4,266
Accrued expenses.......................................... 10,244 5,252
Income taxes payable...................................... -- 1,680
-------- --------
Total current liabilities............................... 15,445 18,348
Long term obligations....................................... 2,782 7,324
Deferred income taxes....................................... -- 439
5.5% Convertible subordinated notes due March 1, 2007....... 172,500 --
-------- --------
Total liabilities....................................... 190,727 26,161
-------- --------
Stockholders' Equity:
Common stock; $0.01 par value, 50,000,000 shares
authorized; 23,669,458 and 22,470,009 shares issued and
outstanding at June 30, 2000 and December 31, 1999,
respectively............................................ 237 225
Additional paid-in-capital................................ 144,019 121,924
Deferred compensation..................................... (513) (746)
Accumulated other comprehensive loss...................... (698) (439)
Retained earnings......................................... 12,659 9,701
-------- --------
Total stockholders' equity.............................. 155,704 130,665
-------- --------
Total liabilities and stockholders' equity.............. $346,431 $156,776
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-29
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................ $27,692 $23,638 $54,983 $45,243
Cost of Revenues........................................ 8,864 8,329 17,985 16,501
------- ------- ------- -------
Gross margin.......................................... 18,828 15,309 36,998 28,742
Operating Expenses:
Sales and marketing................................... 5,512 4,172 10,291 8,167
General and administrative............................ 3,482 3,227 7,102 6,283
Research and development.............................. 3,772 4,086 7,333 7,600
Merger related costs.................................. 153 -- 6,580 --
------- ------- ------- -------
Total operating expenses............................ 12,919 11,485 31,306 22,050
------- ------- ------- -------
Income from operations............................ 5,909 3,824 5,692 6,692
------- ------- ------- -------
Other Income (Expense), net:
Gain (loss) on foreign currency transactions.......... 171 (147) 12 (210)
Interest and other expense............................ (2,633) (184) (3,685) (377)
Interest and other income............................. 4,131 447 6,138 675
------- ------- ------- -------
Total other income, net............................. 1,669 116 2,465 88
------- ------- ------- -------
Income before provision for income taxes................ 7,578 3,940 8,157 6,780
Provision for income taxes.............................. (2,752) (1,416) (5,199) (2,509)
------- ------- ------- -------
Net income.............................................. 4,826 2,524 2,958 4,271
Less: Preferred stock dividends....................... -- -- -- (163)
Accretion of non-voting redeemable common stock..... -- (18) -- (74)
Adjustment to beneficial conversion feature related
to convertible preferred stock.................... -- -- -- 985
------- ------- ------- -------
Income available to common stockholders........... $ 4,826 $ 2,506 $ 2,958 $ 5,019
Earnings per share:
Basic................................................. $ 0.20 $ 0.13 $ 0.13 $ 0.28
======= ======= ======= =======
Diluted............................................... $ 0.19 $ 0.11 $ 0.12 $ 0.24
======= ======= ======= =======
Weighted average shares used in per share calculation:
Basic................................................. 23,575 19,262 23,275 18,043
Diluted............................................... 25,282 21,889 25,365 20,499
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-30
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
2000 1999
--------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 2,958 $ 4,271
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................. 2,449 1,758
Amortization of deferred compensation..................... 90 210
Deferred income taxes..................................... 6,519 7
Merger related costs...................................... 2,390 --
Other non-cash adjustments................................ 11 (264)
Changes in operating assets and liabilities:
Accounts receivable..................................... (2,820) (2,857)
Inventories............................................. (759) (1,105)
Prepaid expenses and other current assets............... 1,444 (600)
Other assets............................................ (167) 405
Accounts payable........................................ (236) 563
Accrued expenses........................................ 5,157 574
Income taxes payable.................................... (1,775) 228
--------- --------
Net cash provided by operating activities............. 15,261 3,190
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on note receivables..................... 183 --
Purchases of short-term investments, held-to-maturity..... (98,060) --
Purchases of property and equipment....................... (6,451) (2,289)
Sale of property and equipment............................ 12 5
Payments for intangible assets............................ (168) (1,466)
--------- --------
Net cash used in investing activities................. (104,484) (3,750)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (payments on) line-of-credit, net........... (438) 1,311
Proceeds from long-term obligations....................... 166,999 --
Principal payments on long-term obligations............... (10,116) (650)
Redemption of preferred and common stock and payment of
accrued dividends....................................... -- (17,060)
Proceeds from sale of common stock........................ 6,315 49,032
--------- --------
Net cash provided by financing activities............. 162,760 32,633
Effect of exchange rate changes on cash................... 6 126
--------- --------
Net increase in cash and cash equivalents................. 73,543 32,199
Cash and cash equivalents, beginning of period............ 102,238 6,559
--------- --------
Cash and cash equivalents, end of period.................. $ 175,781 $ 38,758
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 68 $ 178
========= ========
Cash paid for income taxes................................ $ 509 $ 1,057
========= ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Stock issued for merger costs............................. $ 2,208 $ --
========= ========
Stock issued for business combination..................... $ 1,337 $ --
========= ========
Conversion of Convertible Redeemable Preferred Stock to
Redeemable Preferred Stock.............................. $ -- $ 14,015
========= ========
Conversion of Redeemable Preferred Stock to Common
Stock................................................... $ -- $ 751
========= ========
Note issued for patent rights............................. $ -- $ 1,000
========= ========
Preferred dividends declared.............................. $ -- $ 163
========= ========
Contribution of common stock to ESOP...................... $ -- $ 100
========= ========
Accretion of redemption value for Redeemable Common
Stock................................................... $ -- $ 74
========= ========
Deferred compensation..................................... $ -- $ 164
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-31
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
GENERAL
The consolidated financial statements include the accounts of Invitrogen
Corporation and its 100% controlled subsidiaries, Invitrogen B.V., Invitrogen
Export Company, Ltd., NOVEX Electrophoresis GmbH (formerly known as Anamed
GmbH), Serva GmbH, NOVEX International Sales Corporation. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The interim financial statements have been prepared by Invitrogen, without
audit, according to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments, which include only normal
recurring adjustments, necessary to state fairly the financial position, results
of operations and cash flows as of and for the periods indicated.
It is suggested that these financial statements be read in conjunction with
the audited financial statements and the notes thereto included in our Form
10-K, filed with the Securities and Exchange Commission on March 14, 2000.
1. SHORT-TERM INVESTMENTS
The Company's short-term investments are held-to-maturity, and consist of
the following: corporate debt securities of $68.6 million and mortgage-backed
securities of $29.4 million. The contractual maturities of these securities
ranged from various dates with the last security maturing on November 15, 2000
as of June 30, 2000. The were no sales of or transfers from securities
classified as held-to-maturity for the six months ended June 30, 2000.
2. INVENTORIES
Inventories include material, labor and overhead costs and consist of the
following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
-------------- -------- ------------
<S> <C> <C>
Raw materials and components................................ $1,571 $2,002
Work in process............................................. 1,986 1,082
Finished goods.............................................. 4,672 4,472
------ ------
$8,229 $7,556
====== ======
</TABLE>
3. ACCUMULATED DEPRECIATION AND AMORTIZATION
Accumulated depreciation and amortization of property, plant and equipment
was $16 million and $13.8 million at June 30, 2000 and December 31, 1999,
respectively. Accumulated amortization of intangible assets was $1.2 million and
$0.9 million at June 30, 2000 and December 31, 1999, respectively.
F-32
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
-------------- -------- ------------
<S> <C> <C>
Accrued purchases........................................... $ 1,618 $ 734
Accrued payroll and related expenses........................ 2,711 1,482
Accrued ESOP contribution................................... -- 692
Accrued merger related costs................................ 840 1,678
Deferred revenue............................................ 1,388 171
Accrued interest............................................ 3,173 --
Accrued other............................................... 514 495
------- ------
$10,244 $5,252
======= ======
</TABLE>
5. EARNINGS PER SHARE
Earnings per share is calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 2000
--------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR) AMOUNT
---------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders..................... $4,826 23,575 $0.20
Stock options............................................... -- 1,707
------ ------ -----
Diluted EPS:
Income available to common stockholders plus assumed
conversions............................................... $4,826 25,282 $0.19
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
--------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR) AMOUNT
---------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders..................... $2,506 19,262 $0.13
Stock options............................................... -- 2,627
------ ------ -----
Diluted EPS:
Income available to common stockholders plus assumed
conversions............................................... $2,506 21,889 $0.11
====== ====== =====
</TABLE>
F-33
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR) AMOUNT
---------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders..................... $2,958 23,275 $0.13
Stock options............................................... -- 2,090
------ ------ -----
Diluted EPS:
Income available to common stockholders plus assumed
conversions............................................... $2,958 25,365 $0.12
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------
INCOME SHARES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (NUMERATOR) (DENOMINATOR) AMOUNT
---------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
Basic EPS:
Income available to common stockholders..................... $5,019 18,043 $0.28
Stock options............................................... -- 2,456
------ ------ -----
Diluted EPS:
Income available to common stockholders plus assumed
conversions............................................... $5,019 20,499 $0.24
====== ====== =====
</TABLE>
6. COMPREHENSIVE INCOME
Total comprehensive income is determined as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
(IN THOUSANDS) 2000 1999 2000 1999
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income.................................................. $4,826 $2,506 $2,958 $5,019
Foreign currency translation adjustments.................... (171) 147 (12) 210
------ ------ ------ ------
Total comprehensive income................................ $4,655 $2,653 $2,946 $5,229
====== ====== ====== ======
</TABLE>
7. BUSINESS COMBINATIONS
RESEARCH GENETICS MERGER
On February 2, 2000, the Company completed a merger with Research Genetics,
a privately-held U.S. company that supplies products and services for functional
genomics and gene-based drug discovery research. The Company issued 3.2 million
shares of common stock for all of the outstanding common stock of Research
Genetics. The merger has been accounted for as a pooling of interests and is
intended to qualify as a tax-free exchange. Costs incurred as a result of the
merger and related integration are expected to be $6.4 million and are subject
to change. These costs were expensed in
F-34
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. BUSINESS COMBINATIONS (CONTINUED)
February 2000 upon completion of the merger. As of June 30, 2000 the Company had
$.4 million remaining in accrued merger related costs.
ETHROG MERGER
On June 21, 2000, the Company completed a merger with Ethrog
Biotechnologies, Ltd., a privately-held company headquartered in Israel that has
developed and patented a novel, fully enclosed system for the electrophoretic
separation of macromolecules. The Company issued 198,869 shares of its common
stock for all of the capital stock of Ethrog in a transaction that has been
accounted for as a pooling of interests. Costs incurred as a result of the
merger were $.2 million and are subject to change. These costs were expensed in
June 2000 upon completion of the merger. As of June 30, 2000 the Company had $.1
million remaining in accrued merger related costs.
The combined financial information is presented to show the combined results
of operations of Invitrogen, Research Genetics, and Ethrog Biotechnologies as if
the mergers had occurred at the beginning of the periods presented.
NAP ACQUISITION
On June 30, 2000, the Company acquired Nucleic Acid Purification, Inc (NAP),
a privately-held U.S. biotechnology company. The Company issued 17,778 shares of
its common stock for all of the capital stock of NAP in a transaction that has
been accounted for under the purchase method of accounting. Costs incurred as a
result of the acquisition were $55,000, and were treated as part of the purchase
price. The excess of purchase price over acquired assets was $1.4 million, and
based on the life of the acquired technology will be amortized over 3 years.
8. ISSUANCE OF CONVERTIBLE SUBORDINATED DEBT
In March 2000, the Company issued $172.5 million principal amount of 5.5%
convertible subordinated notes (the "Convertible Notes") due March 1, 2007 to
certain accredited investors. After expenses, the Company received net proceeds
of $167.0 million. Interest on the Convertible Notes is payable semi-annually on
March 1st and September 1st, commencing in September 2000. The Convertible Notes
were issued at 100% of principal value, and are convertible into 2,024,648
shares of stock at the option of the holder at any time at a price of $85.20 per
share. The Convertible Notes may be redeemed, in whole or in part, at the
Company's option on or after March 1, 2003 at a premium of 103.143% of par value
which declines annually to par value at maturity date.
Costs incurred to issue the debt totaled $5.7 million and have been deferred
and included in other assets in the consolidated balance sheet. These costs are
being amortized over the term of the related debt using the effective interest
method.
The Convertible Notes are subordinate to substantially all of the current
and future outstanding debt of Invitrogen, including all of its secured debt and
all debts and liabilities of Invitrogen's subsidiaries. The Convertible Notes
are not subordinate to amounts the Company owes for employee compensation, goods
or services purchased or to amounts the Company may owe to its subsidiaries.
F-35
<PAGE>
INVITROGEN CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. SUBSEQUENT EVENT
In July 2000, the Company signed definitive agreements to acquire all of the
outstanding shares of both Life Technologies, a supplier of molecular biology
and cell culture products for the life science industry, and Dexter Corporation
(Dexter), which currently owns approximately 75% of Life Technologies'
outstanding stock.
Under the terms of the agreements, the Company will acquire all of the
outstanding common stock of Dexter for $62.50 per share or approximately $1.5
billion and all of the outstanding common stock of Life Technologies, other than
the shares held by Dexter, for $60.00 per share or approximately $400 million.
The consideration will consist of Invitrogen common stock and cash. The maximum
cash available is approximately $410 million for Dexter shareholders and
approximately $105 million for Life Technologies shareholders, or 28% of the
aggregate merger consideration for each company.
Dexter shareholders who elect to receive stock will receive between 1.0417
and 0.7813 shares of Invitrogen common stock per Dexter share and Life
Technologies shareholders who elect to receive stock will receive between 1.0000
and 0.7500 shares of Invitrogen common stock per Life Technologies share. The
ratio will be determined based on the average closing price of Invitrogen's
common stock for the 20 consecutive trading days ending three days prior to the
shareholder meetings to approve the transactions. The Company will assume the
outstanding options of Life Technologies which will be converted into options to
purchase approximately 800,000 shares of common stock of the Company.
These transactions will be accounted for as purchases. Consummation of the
transactions are subject to the closing of the previously announced sales of
Dexter's chemical businesses and usual and customary closing conditions and
approvals, including the approval of the companies' stockholders and regulatory
approvals. These transactions are expected to close in the Fall of 2000. The
estimated direct costs of the transactions to be incurred by Invitrogen and the
fair value of stock options assumed are estimated to be $43.6 million and are
subject to change. These costs will be included in the purchase price of the
transactions. Certain costs associated with the restructuring of existing
Invitrogen operations and costs necessary to integrate the businesses of
Invitrogen and Life Technologies that are expected to benefit future operations
are estimated to range from $10 million to $20 million. These estimated costs
will be expensed as restructuring costs after the completion of the mergers and
after Invitrogen's management has completed and approved the restructuring plans
and associated costs.
F-36
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Life Technologies, Inc.
In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows present fairly, in all material respects,
the consolidated financial position of Life Technologies, Inc. and subsidiaries
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/S/ PRICEWATERHOUSECOOPERS LLP
McLean, Virginia
January 24, 2000
F-37
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 51,489 $ 56,047
Trade accounts receivable, net............................ 79,301 67,797
Inventories:
FIFO.................................................... 84,172 75,739
LIFO reserve............................................ (1,226) (1,420)
-------- --------
Total inventory......................................... 82,946 74,319
Prepaid and other current assets.......................... 17,384 16,121
Current deferred tax assets............................... 8,491 5,871
-------- --------
Total current assets.................................... 239,611 220,155
Property, plant and equipment, net........................ 128,827 107,374
Investments and other assets.............................. 22,973 15,392
Excess of cost over net assets of businesses acquired,
net..................................................... 11,560 10,666
-------- --------
Total assets.............................................. $402,971 $353,587
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt........................................... $ 848 $ 2,210
Accounts payable.......................................... 28,364 23,916
Accrued and deferred income taxes......................... 11,145 2,755
Accrued liabilities and expenses.......................... 27,494 30,871
-------- --------
Total current liabilities............................... 67,851 59,752
Long-term debt.............................................. 3,259 --
Pension liabilities......................................... 11,471 9,103
Deferred income taxes....................................... 6,164 5,173
Minority interests.......................................... 4,131 3,451
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, one million shares
authorized; none issued
Common stock, $.01 par value, 50 million shares
authorized; issued and outstanding 25,003,681 in 1999
and 24,941,180 in 1998.................................. 250 249
Additional paid-in capital.................................. 96,362 94,067
Retained earnings........................................... 223,986 188,202
Accumulated other comprehensive income (loss)............... (10,503) (6,410)
-------- --------
Total stockholders' equity................................ 310,095 276,108
-------- --------
Total liabilities and stockholders' equity................ $402,971 $353,587
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-38
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Net sales................................................. $407,199 $361,726 $330,967
Net royalties............................................. 2,410 2,480 1,841
-------- -------- --------
Total revenues.......................................... 409,609 364,206 332,808
-------- -------- --------
Expenses:
Cost of sales............................................. 186,667 167,862 152,547
Marketing and administrative.............................. 138,795 118,620 108,046
Research and development.................................. 23,836 21,880 21,281
Provision for contract settlement......................... 3,870 -- --
Shareholder acquisition expenses.......................... -- 5,335 --
-------- -------- --------
Total operating expenses................................ 353,168 313,697 281,874
-------- -------- --------
Operating income............................................ 56,441 50,509 50,934
-------- -------- --------
Other income, net......................................... 493 606 404
-------- -------- --------
Income before income taxes.................................. 56,934 51,115 51,338
Income taxes................................................ 17,583 19,168 18,481
-------- -------- --------
Income before minority interests............................ 39,351 31,947 32,857
Minority interests.......................................... (1,074) (644) (622)
-------- -------- --------
Net income.................................................. $ 38,277 $ 31,303 $ 32,235
======== ======== ========
Earnings per share:
Basic..................................................... $ 1.53 $ 1.32 $ 1.39
Diluted................................................... $ 1.53 $ 1.29 $ 1.35
Average shares outstanding:
Basic..................................................... 24,954 23,687 23,171
Diluted................................................... 25,040 24,204 23,945
Cash dividends declared per share........................... $ 0.10 $ 0.20 $ 0.18
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-39
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
-------------------------------- -------- -------- --------
<S> <C> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income................................................ $ 38,277 $ 31,303 $ 32,235
Non-cash items:
Depreciation............................................ 12,645 11,383 10,126
Amortization............................................ 3,005 2,947 2,591
Deferred income taxes................................... (6,083) 481 (627)
Minority interests in net income........................ 1,074 644 622
Changes in assets and liabilities net of acquisitions:
Trade accounts receivable............................... (11,767) (8,769) (7,461)
Inventories............................................. (5,695) (5,953) (9,035)
Prepaid and other current assets........................ (1,327) (4,745) (1,367)
Accounts payable........................................ 4,135 2,433 3,286
Accrued income taxes.................................... 7,270 2,548 (1,783)
Accrued liabilities and expenses........................ (2,844) 8,143 2,020
Other................................................... 3,548 1,697 1,003
-------- -------- --------
Cash provided by operating activities..................... 42,238 42,112 31,610
Investments:
Capital expenditures...................................... (30,667) (25,359) (27,300)
Acquisitions and joint ventures........................... (12,682) (1,047) (914)
Other..................................................... (5) 585 (127)
-------- -------- --------
Cash used in investing activities......................... (43,354) (25,821) (28,341)
-------- -------- --------
Financing:
Proceeds from exercise of stock options................... 3,258 27,051 4,052
Dividends paid............................................ (3,740) (4,711) (3,929)
Short-term borrowings, net................................ (1,943) (971) 1,896
Long-term loan repayments................................. 381 (23) (713)
-------- -------- --------
Cash provided by (used in) financing activities........... (2,044) 21,346 1,306
-------- -------- --------
Effect of exchange rate changes on cash..................... (1,398) (666) (825)
-------- -------- --------
Increase (decrease) in cash and cash equivalents............ (4,558) 36,971 3,750
Cash and cash equivalents at beginning of year.............. 56,047 19,076 15,326
-------- -------- --------
Cash and cash equivalents at end of year.................... $ 51,489 $ 56,047 $ 19,076
======== ======== ========
Supplemental cash flow information:
Cash paid during the year:
Income tax, net of refunds.............................. $ 16,330 $ 16,120 $ 20,081
Interest expense........................................ 72 91 70
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-40
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income.................................................. $38,277 $31,303 $32,235
Other comprehensive income (loss)
Currency translation effects.............................. (4,082) 1,292 (8,414)
Minimum pension liability................................. (11) -- --
------- ------- -------
Comprehensive income........................................ $34,184 $32,595 $23,821
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-41
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) TOTAL
-------- -------- ---------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1996...................... 22,951 $230 $48,344 $133,633 $ 712 $182,919
Net Income............................. 32,235 32,235
Dividends--$.18 per share.............. (4,179) (4,179)
Shares issued under stock option and
stock grant plans.................... 400 4 4,124 4,128
Tax benefit on stock option plans...... 2,035 2,035
Currency effects....................... (8,414) (8,414)
------ ---- ------- -------- -------- --------
Balances at
December 31, 1997...................... 23,351 234 54,503 161,689 (7,702) 208,724
Net Income............................. 31,303 31,303
Dividends--$.20 per share.............. (4,790) (4,790)
Shares issued under stock option and
stock grant plans.................... 1,590 15 28,585 28,600
Tax benefit on stock option plans...... 10,979 10,979
Currency effects....................... 1,292 1,292
------ ---- ------- -------- -------- --------
Balances at
December 31, 1998...................... 24,941 249 94,067 188,202 (6,410) 276,108
Net Income............................. 38,277 38,277
Dividends--$.10 per share.............. (2,493) (2,493)
Shares issued under stock option and
stock grant plans.................... 63 1 1,643 1,644
Tax benefit on stock option plans...... 652 652
Other Comprehensive income:
Minimum pension liability.............. (11) (11)
Currency Effects....................... (4,082) (4,082)
------ ---- ------- -------- -------- --------
Balances at
December 31, 1999...................... 25,004 $250 $96,362 $223,986 $(10,503) $310,095
====== ==== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-42
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of Life
Technologies, Inc. (the "Company" or "Life Technologies") and its majority owned
or controlled subsidiaries. Intercompany accounts, transactions, and profits
have been eliminated in the consolidated financial statements. Investments in
affiliated companies (20% to 50% Life Technologies' ownership) are recorded in
the consolidated financial statements using the equity method of accounting
except in cases where the Company can effectively exercise control. In these
cases, the accounts of the affiliate are included in the Company's consolidated
financial statements. Certain amounts for prior years have been reclassified to
conform to, and be consistent with, the 1999 presentation.
Management has made estimates and assumptions in the preparation of these
financial statements that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
NATURE OF OPERATIONS
Life Technologies is a multinational firm that develops, manufactures, and
sells cell culture and cell and molecular biology products used principally in
life sciences research and commercial manufacture of genetically engineered
products. The Company's principal customers consist of laboratories generally
associated with universities, medical research centers, and government
institutions as well as biotechnology, pharmaceutical, energy, agricultural and
chemical companies.
BUSINESS ACQUISITIONS
On May 17, 1999, the Company acquired the process chromatography and
research products businesses of BioSepra Inc., in an all cash transaction of
$11.6 million, including transaction costs and net of cash acquired. Based upon
the net assets purchased and the net cash paid of $11.6 million, the Company
recorded $2.3 million of goodwill, $2.0 million of deferred tax assets
consisting of net operating loss carryforwards, net of a valuation allowance,
and $2.9 million of other intangibles. The intangibles are being amortized over
a ten year period on a straight-line basis.
In January 1996, the Company paid $7.1 million to purchase 75% of the common
stock of Custom Primers, Inc. ("CPI"), a California-based producer of
oligonucleotides, increasing the Company's ownership to 100%. The Company had
acquired 25% of CPI in several transactions prior to 1996 valued at
$0.8 million. Based upon the net assets purchased in January 1996 and the total
cash paid of $7.9 million, the Company recorded $7.4 million of acquisition
costs in excess of net assets acquired in 1996. The January 1996 purchase
agreement provides for additional earn-out contingencies based on the sales of
oligonucleotides over the five year period following the date of the purchase
agreement. For the years 1999, 1998 and 1997, the Company recorded additional
earn-outs of $1.4 million, $1.1 million and $1.0 million, respectively. The
Company is amortizing the goodwill related to CPI on a straight-line basis over
six years.
None of the businesses acquired during the period, individually or in the
aggregate, constitute a significant subsidiary of the Company.
F-43
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
TECHNOLOGY AGREEMENTS
The Company has obtained rights to products and technologies under a number
of licensing agreements or patents. Where the agreement requires the Company to
pay royalties on sales of licensed products or technologies, the Company
includes the royalty expense in cost of sales in the period of the sale. Where
the Company acquires technologies from outside sources for incorporation into
its own development efforts or products, the cost of the technology is
capitalized and amortized over the legal or expected useful life when the
technology is commercially available at the time acquired by the Company. Where
considerable development effort is required to have acquired technologies become
part of the Company's product lines, the cost of the acquired technologies is
reported as research and development expense in the period the technology is
acquired. Internal efforts to develop or patent technologies are expensed when
incurred.
The Company also licenses technology it has developed to others. The Company
recognizes revenue on these licenses when payment is reasonably certain.
Revenues are reduced by related transaction expenses.
EARNINGS PER SHARE
Basic earnings per common share have been computed by dividing net income by
the weighted-average number of common shares outstanding during the period.
Diluted earnings per common share have been computed by dividing net income by
the weighted-average number of common shares outstanding plus an assumed
increase in common shares outstanding for dilutive securities. Net income as
reported is available to common stockholders and is not adjusted for basic or
diluted earnings per share. Dilutive securities consist entirely of options to
acquire common stock for a specified price and their dilutive effect is measured
using the treasury method.
The following table reconciles the weighted-average number of common shares
outstanding during each period for basic earnings per share with the comparable
amount for diluted earnings per share.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Weighted average shares outstanding-basic........... 24,954 23,687 23,171
Stock options....................................... 86 517 774
------ ------ ------
Weighted average shares outstanding-diluted......... 25,040 24,204 23,945
====== ====== ======
</TABLE>
RELATED PARTY--DEXTER
At December 31, 1999, Dexter Corporation ("Dexter") owned approximately
71.5% of the outstanding shares of the Company's common stock. Dexter acquired
approximately 22% of the outstanding shares of the Company through a tender
offer consummated on December 22, 1998. On January 20, 2000 Dexter announced a
proposal to acquire for $49.00 per share the 28.5% of Life Technologies that it
did not then own in a merger transaction subject to acceptance by a group of
minority interest stockholders who control most of the shares not owned by
Dexter.
Most transactions with Dexter are administrative in nature (e.g., insurance)
and are not significant in amount. The Company has no significant product sales
to Dexter or its affiliates. The Company's nine member board of directors
currently includes three executives of Dexter, two members of the Dexter board
of directors and a retired Dexter executive.
F-44
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In 1999 the Company engaged Bain & Company ("Bain"), a consulting firm, for
a fee of $750,000 to evaluate the Company's strategic opportunities. Dexter, the
Company's majority shareholder, engaged Bain to evaluate opportunities for
Dexter to increase its participation in the life sciences market. Dexter
received a report from Bain that was based in part on Bain's evaluation of the
Company's strategic opportunities. The Company's transaction with Bain was
funded solely by Company funds, although Dexter separately paid a fee to Bain
for services provided to Dexter.
The Company can borrow up to $8.0 million under a revolving line of credit
from Dexter to finance short-term working capital needs. There have been no
amounts outstanding under this line of credit since prior to 1997.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued, SFAS NO. 137,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES--DEFERRAL OF THE
EFFECTIVE DATE OF FASB STATEMENT NO. 133. This statement amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities to be effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS
NO. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, requires
that every derivative instrument be recorded in the balance sheet as either an
asset or liability measured at its fair value. The statement requires that
changes in the derivative's fair value be recognized in earnings unless specific
hedge accounting criteria are met. The Company believes that the effect of
adoption of SFAS No. 133 will not have a material effect on the Company's
financial statements.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid short-term investments readily
convertible into cash. Cash equivalents consist primarily of time deposits and
certificates of deposit with various financial institutions throughout the
world. These investments are carried at cost, which approximates market, and
mature within 90 days and, therefore, are subject to minimal risk.
TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are reduced by allowances of $3.2 million,
$2.0 million and $1.6 million at December 31, 1999, 1998, and 1997,
respectively.
INVENTORIES
Inventories are valued at the lower of cost or market. Inventories valued at
cost using the LIFO method were approximately 28% and 29% of total inventories
at December 31, 1999 and 1998, respectively. Inventories were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Materials and supplies.................................... $16,519 $12,946
Work-in-process........................................... 14,595 11,291
Finished goods............................................ 53,058 51,502
------- -------
Total FIFO value.......................................... 84,172 75,739
LIFO reserve.............................................. (1,226) (1,420)
------- -------
Total inventory........................................... $82,946 $74,319
======= =======
</TABLE>
F-45
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Inventories were reduced by allowances, other than the LIFO reserve, of
$6.1 million, $4.7 million and $3.5 million at December 31, 1999, 1998, and 1997
respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost. Depreciation is provided
by the straight-line method for financial reporting purposes based upon the
estimated useful lives of the assets which range from 3 to 50 years. The cost of
assets sold or retired and the related amounts of accumulated depreciation are
eliminated from the accounts and the resulting gain or loss is included in
income. Renewals and betterments are capitalized. Repairs and maintenance are
charged to expense when incurred and were $5.6 million in 1999, $4.7 million in
1998 and $4.5 million in 1997.
Amounts under a capital lease included in property, plant and equipment at
December 31,1999 included $0.4 million of land and $2.9 million for a building.
Accumulated depreciation on the building as of December 31, 1999 was
$0.1 million.
Interest expense is capitalized in connection with the construction of major
facilities. Capitalized interest is recorded as part of the cost of the asset to
which it relates and is amortized over the asset's estimated useful life. The
Company capitalized $0.1 million of interest cost in 1999, $0.1 million of
interest cost in 1998 and $0.3 million of interest cost in 1997, all of which
interest related to debt associated with capital leases.
The cost and accumulated depreciation of property, plant and equipment were
as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Land and land improvements.............................. $ 14,148 $ 11,527
Buildings and leasehold improvements.................... 76,656 67,244
Machinery and equipment................................. 84,245 75,979
Construction-in-progress................................ 17,113 4,790
-------- --------
Total cost.............................................. 192,162 159,540
Accumulated depreciation................................ (63,335) (52,166)
-------- --------
Property, plant and equipment, net...................... $128,827 $107,374
======== ========
</TABLE>
LEASES
The Company leases buildings, automobiles and equipment under operating
lease arrangements. These leases contain various renewal options, purchase
options and escalation clauses. The total rental expense of all operating leases
was $10.1 million in 1999, $8.9 million in 1998, and $6.3 million in 1997.
F-46
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The future minimum rental payments required under noncancellable leases as
of December 31, 1999 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) OPERATING LEASES
---------------------- ----------------
<S> <C>
For the years ending
2000...................................................... $ 8,066
2001...................................................... 5,473
2002...................................................... 3,441
2003...................................................... 1,478
2004...................................................... 994
2005 and thereafter....................................... 1,630
-------
Total minimum lease payments................................ $21,082
=======
</TABLE>
INVESTMENTS AND OTHER ASSETS
Significant components of investments and other assets were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Pension and retirement related............................ $ 4,753 $ 6,018
Software, net of amortization............................. 3,953 4,196
Deferred tax assets....................................... 9,884 3,571
Patents, net of amortization.............................. 2,825 --
Other..................................................... 1,558 1,607
------- -------
Investments and other assets.............................. $22,973 $15,392
======= =======
</TABLE>
EXCESS ACQUISITION COSTS
The excess of costs over the net asset values of businesses acquired prior
to 1992 are being amortized on a straight-line basis principally over 30 years.
The excess of costs over net asset values of businesses acquired since 1992 are
being amortized on a straight-line basis over no more than 10 years. The Company
assesses the recoverability of net cost in excess of net assets of acquired
businesses by determining whether the amortization of this intangible asset over
its remaining life can be recovered through future operating cash flows. The
Company makes a specific provision against the asset when impairment is
identified. The Company did not make an impairment charge in 1999, 1998 or 1997.
Future acquisitions will be evaluated using this method and an appropriate
useful life will be determined for amortization of the excess of costs over the
net asset value of businesses acquired, if any.
Accumulated amortization at December 31, 1999 and 1998 amounted to
$13.4 million and $10.8 million, respectively.
F-47
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ACCRUED LIABILITIES AND EXPENSES
Accrued liabilities and expenses were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Salaries, wages and benefits.............................. $10,096 $11,400
Royalties................................................. 4,632 5,867
Shareholder acquisition expenses.......................... -- 3,973
Taxes, other than income.................................. 2,117 1,779
Dividends payable......................................... -- 1,245
Deferred purchase payments (CPI).......................... 1,429 1,225
Contract settlement reserve............................... 2,795 --
Other..................................................... 6,425 5,382
------- -------
Accrued liabilities and expenses.......................... $27,494 $30,871
======= =======
</TABLE>
DEBT
The following is a summary of the outstanding debt at December 31, 1999 and
1998.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Short-term debt:
Japanese Yen bank borrowings.............................. $391 $2,210
French Franc bank borrowings.............................. 17 --
Current portion of long-term debt......................... 245 --
Current portion of obligations under a capital lease...... 195 --
---- ------
Short-term debt............................................. $848 $2,210
==== ======
</TABLE>
Short-term debt consisted of notes payable to various banks denominated in
Japanese Yen and French Francs. The carrying value of short-term borrowings
approximates fair value. The average interest rate on the Japanese Yen bank
borrowings during the year was .97% in 1999 and 1.53% in 1998. The average
interest rate on the French Franc borrowings in 1999 was 5.25%. The year-end
weighted average interest rates on the Japanese Yen bank borrowings were 1.20%
in 1999 and 1.47% in 1998. The year-end weighted average interest rate on the
French bank borrowings was 5.25%.
The Company exercised an option to purchase a parcel of land previously
under a capital lease in the first quarter of 1998 for $4.6 million. The parcel
of land is used for the new corporate R&D center and administrative office
facility, including the Company's headquarters.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Long-term debt:
Unsecured notes............................................. $ 814 --
(Less) current portion...................................... (245) --
Capital lease obligation.................................... 2,885 --
(Less) current portion...................................... (195) --
------ --------
Long-term debt.............................................. $3,259 --
====== ========
</TABLE>
F-48
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In May of 1999, the Company acquired BioSepra, SA. At acquisition BioSepra,
SA was obligated under a French Franc denominated capital lease as well as
several long-term unsecured notes. The capital lease is used to maintain an
administration and manufacturing facility in Cergy, France. At December 31,
1999, the capital lease had a carrying value of approximately $2.9 million. The
lease is a 12-year lease with payments of approximately $0.1 million due at the
beginning of each quarter. The unsecured long-term notes have an aggregate
principal of approximately $0.8 million. The note's interest rates range from
3.9% to 5.8% and have maturity dates between 2001 and 2005. The approximate
yearly payments on these notes are as follows: 2001--$0.2 million,
2002--$0.1 million, 2003--$0.1 million, 2004--$0.1 million, and 2005--less than
$0.1 million.
INCOME TAXES
The differences between the U.S. federal statutory tax rate and the
Company's effective tax rate are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate.................... 35.0% 35.0% 35.0%
State income taxes........................................ 2.2 2.0 1.7
Non-U.S. tax rate differences............................. 0.1 (.8) 0.8
Repatriation of foreign earnings, net of related
benefits................................................ (0.3) (1.3) (0.7)
Non-deductible expenses................................... 2.0 5.1 1.5
Tax settlements........................................... (4.1) -- --
Other, including tax credits.............................. (4.0) (2.5) (2.3)
---- ---- ----
Effective income tax rate................................. 30.9% 37.5% 36.0%
==== ==== ====
</TABLE>
The provision (benefit) for taxes on income for 1999, 1998, and 1997 is
summarized below:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Current:
United States.................................. $13,942 $ 9,443 $ 9,540
International.................................. 6,833 7,684 8,569
State.......................................... 2,891 1,560 999
------- ------- -------
Total current.................................... 23,666 18,687 19,108
------- ------- -------
Deferred:
United States.................................. (5,191) 270 (497)
International.................................. 55 162 (46)
State.......................................... (947) 49 (84)
------- ------- -------
Total deferred................................... (6,083) 481 (627)
------- ------- -------
Total provision for income taxes................. $17,583 $19,168 $18,481
======= ======= =======
</TABLE>
F-49
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred tax assets and liabilities were comprised of the following:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998
---------------------- -------- --------
<S> <C> <C>
Deferred tax assets:
Expenses not currently deductible........................ $ 6,805 $2,081
Retirement benefits...................................... 4,251 3,038
Net operating loss carryforward.......................... 3,336 19
Intercompany profits..................................... 2,868 1,937
Inventory reserves....................................... 1,889 1,645
Other.................................................... 716 722
------- ------
Total deferred tax assets.................................. 19,865 9,442
Less: valuation allowance.................................. (1,490) --
------- ------
Net deferred tax assets.................................... 18,375 9,442
Deferred tax liabilities:
Fixed assets, principally depreciation................... 5,682 4,768
Inventory................................................ 555 582
Retirement benefits...................................... 473 399
Other.................................................... 9 25
------- ------
Total deferred tax liabilities............................. 6,719 5,774
------- ------
Net deferred tax asset..................................... $11,656 $3,668
======= ======
</TABLE>
Management has determined that tax benefits associated with the net deferred
tax asset, other than the net operating loss ("NOL") carryforward at BioSepra,
SA, will more likely than not be realized based on the availability of taxable
income in prior carryback years against which future tax deductions may be
offset and on expectations that future operating income of the Company will be
sufficient to fully realize the net deferred tax asset. At December 31, 1999,
BioSepra, SA had an NOL carryforward totaling $3.3 million, of which
$1.8 million expires at December 31, 2000 and the remainder has no expiration
date. Due to the uncertainty of the realization of the expiring NOL carryforward
at BioSepra, SA, management has established a valuation allowance in the amount
of $1.5 million.
In 1999, 1998 and 1997, income tax benefits of $0.7 million, $11.0 million
and $2.0 million, respectively, attributable to employee stock option
transactions were allocated to stockholders' equity.
U.S. and international withholding taxes have not been provided on
approximately $88.1 million of undistributed earnings of foreign subsidiaries.
The Company remits only those earnings which are considered to be in excess of
the reasonably anticipated working capital needs of the foreign subsidiaries,
with the balance considered to be permanently reinvested in the operations of
such subsidiaries. It is impractical to estimate the total tax liability, if
any, until such a distribution is made. Pretax income from international
operations amounted to $24.1 million in 1999, $27.2 million in 1998, and
$26.6 million in 1997.
RETIREMENT BENEFITS
The Company has a qualified pension plan ("defined benefit") and a 401(k)
plan ("employee deferral" and "defined contribution") for substantially all
United States employees. With respect to the defined benefit, the Company's
policy is to deposit with an independent trustee amounts as are
F-50
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
necessary on an actuarial basis to provide for benefits in accordance with the
requirements of the Employee Retirement Income Security Act and any other
applicable Federal laws and regulations. The U.S. pension plan provides benefits
that are generally based upon the employee's highest average compensation in any
consecutive five year period in the ten years before retirement. The Company's
401(k) plan allows employees to contribute, on a tax-deferred basis, up to
fifteen percent of their annual base compensation subject to certain regulatory
and plan limitations. The Company matches one half of the employee's 401(k)
deferral up to a maximum Company match of three percent of annual base
compensation.
The Company also sponsors an unfunded, nonqualified supplementary retirement
plan for certain senior management. The Company has purchased life insurance on
the lives of participants designed to provide sufficient funds to recover all
costs of the plan. In addition to the above plans, the Company sponsors an
unfunded, nonqualified executive supplemental plan that provides for a target
benefit based upon the average annual compensation during the highest five
consecutive years of the last ten years before retirement, which benefit is then
offset by other work related benefits payable to the participant.
The retirement benefits for most employees of non-U.S. operations are
generally provided by government sponsored or insured programs and, in certain
countries, by defined benefit plans. The only significant non-U.S. defined
benefit plan is for United Kingdom employees. The Company's policy with respect
to its U.K. pension plan is to fund amounts as are necessary on an actuarial
basis to provide for benefits under the plan in accordance with local laws and
income tax regulations. The U.K. pension plan provides benefits based upon the
employee's highest average base compensation over three consecutive years.
F-51
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The funded status of the Company's domestic pension plans and amounts
recognized at December 31, 1999, 1998, and 1997 was as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year......... $ 33,776 $26,569 $22,821
Service cost.................................... 2,672 2,244 2,098
Interest cost................................... 2,208 1,900 1,615
Amendments...................................... -- 1,567 437
Actuarial (gain)/loss........................... (8,977) 2,317 295
Benefits paid................................... (638) (692) (535)
Expenses paid................................... (109) (129) (162)
-------- ------- -------
Benefit obligation at end of year............... 28,932 33,776 26,569
-------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of
year.......................................... 22,233 19,611 15,567
Actual return on plan assets.................... 7,683 3,032 3,058
Employer contribution........................... 173 411 1,683
Benefits paid................................... (638) (692) (535)
Expenses paid................................... (109) (129) (162)
-------- ------- -------
Fair value of plan assets at end of year........ 29,342 22,233 19,611
-------- ------- -------
Funded status:.................................. 411 (11,543) (6,958)
Unrecognized actuarial (gain)/loss.............. (14,254) 401 (604)
Unrecognized prior service cost................. 3,086 3,544 2,295
-------- ------- -------
Net amount recognized........................... $(10,757) $(7,598) $(5,267)
======== ======= =======
Amounts recognized in the statement of financial
position consist of:
Accrued benefit liability....................... (11,617) (9,265) (5,772)
Intangible asset................................ 849 1,667 505
Accumulated other comprehensive income.......... 11 -- --
-------- ------- -------
Net amount recognized........................... $(10,757) $(7,598) $(5,267)
======== ======= =======
</TABLE>
The weighted average assumptions used in accounting for the domestic pension
plans in 1999, 1998, and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Discount rate...................................... 8.00% 6.75% 7.00%
Expected return on plan assets..................... 9.00% 9.00% 9.00%
Rate of compensation increase...................... 4.83% 4.83% 4.83%
</TABLE>
The discount rate is the estimated rate at which the obligation for pension
benefits could effectively be settled. The expected return on plan assets
reflects the average rate of earnings that the Company estimates will be
generated on the assets of the plans. The rate of compensation increase reflects
the Company's best estimate of the future compensation levels of the individual
employees covered by the plans.
F-52
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of net periodic pension cost for the Company's domestic
pension plans for the years 1999, 1998, and 1997 are provided in the following
table:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Service cost........................................ $2,672 $2,244 $2,098
Interest cost....................................... 2,208 1,900 1,615
Expected return on plan assets...................... (1,978) (1,743) (1,375)
Amortization of:
Prior service cost................................ 459 318 270
Actuarial (gain)/loss............................. (27) 23 108
------ ------ ------
Net periodic pension cost........................... $3,334 $2,742 $2,716
====== ====== ======
</TABLE>
The funded status of the Company's U.K. pension plan and amounts recognized
at December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year.......... $12,664 $ 9,026 $ 5,777
Service cost..................................... 976 513 319
Interest cost.................................... 789 682 504
Plan participants' contributions................. 320 160 154
Amendments....................................... -- -- (9)
Actuarial (gain)/loss............................ (323) 2,270 2,527
Benefits paid.................................... (150) (110) (12)
Foreign currency exchange rate changes........... (369) 123 (234)
------- ------- -------
Benefit obligation at end of year................ 13,907 12,664 9,026
------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year... 8,831 7,217 6,147
Actual return on plan assets..................... 751 1,000 724
Employer contribution............................ 942 471 453
Plan participants' contributions................. 320 160 154
Benefits paid.................................... (150) (110) (12)
Foreign currency exchange rate changes........... (258) 93 (249)
------- ------- -------
Fair value of plan assets at end of year......... 10,436 8,831 7,217
------- ------- -------
Funded status:................................... (3,471) (3,833) (1,809)
Unrecognized actuarial loss...................... 4,037 4,749 2,943
Unrecognized portion of net obligation at
transition..................................... (256) 654 (307)
Unrecognized prior service cost.................. 587 (287) 697
Fourth quarter contribution...................... -- 293 112
------- ------- -------
Net amount recognized............................ $ 897 $ 1,576 $ 1,636
======= ======= =======
Amounts recognized in the statement of financial
position consist of:
Prepaid benefit cost............................. 897 1,576 1,636
------- ------- -------
Net amount recognized............................ $ 897 $ 1,576 $ 1,636
======= ======= =======
</TABLE>
F-53
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The weighted average assumptions used in accounting for the U.K. pension
plan in 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Discount rate...................................... 6.50% 6.00% 7.50%
Expected return on plan assets..................... 8.00% 8.00% 8.00%
Rate of compensation increase...................... 5.00% 5.00% 6.00%
</TABLE>
The components of net periodic pension costs for the Company's U.K. pension
plan for the years 1999, 1998, and 1997 are provided in the following table:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Service cost......................................... $ 976 $ 513 $ 319
Interest cost........................................ 789 682 504
Expected return on plan assets....................... (708) (592) (487)
Amortization of:
Transition obligation.............................. (23) (23) (23)
Prior service cost................................. 49 50 50
Actuarial loss..................................... 209 119 31
------ ----- -----
Net periodic pension cost............................ $1,292 $ 749 $ 394
====== ===== =====
</TABLE>
The projected benefit obligations, accumulated benefit obligations and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Projected benefit obligation........................ $3,974 $4,466 $2,418
Accumulated benefit obligation...................... $3,321 $3,512 $2,034
Fair value of plan assets........................... -- -- --
</TABLE>
The Company's match to the 401(k) plan totaled $1.3 million, $1.1 million
and $1.1 million in 1999, 1998, and 1997, respectively. The Company's
contribution to its remaining plans totaled $0.3 million, $0.3 million and
$0.6 million in 1999, 1998, and 1997, respectively.
CONTINGENCIES
In September 1999, the Company submitted a report in connection with a
voluntary disclosure to the Department of Veterans Affairs ("VA") regarding
matters involving the management of the Company's Federal Supply Schedule
contract with the VA that has been in effect since April 1992. As part of the
disclosure the Company offered to provide a refund to the government in the
amount of $3.9 million. The Company expensed this amount in September 1999. The
Company has made a cash payment of $1.1 million to the VA and had an accrued
liability of $2.8 million at December 31, 1999 related to this matter. There can
be no assurance that the government will agree with the Company's assessment of
this matter or accept the Company's offered refund amount. Consequently, it is
possible the final resolution of this matter could materially differ from the
Company's proposal and could have a material adverse effect on the Company's
consolidated financial position, operating results or cash flows when resolved
in a future reporting period.
Apart from the matter above, the Company is subject to other potential
liabilities under government regulations and various claims and legal actions
which are pending or may be asserted.
F-54
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
These matters have arisen in the ordinary course and conduct of the Company's
business and some are expected to be covered, at least partly, by insurance.
Estimated amounts for claims that are probable and can be reasonably estimated
are reflected as liabilities of the Company. The ultimate resolution of these
matters is subject to many uncertainties. It is reasonably possible that some of
the matters which are pending or may be asserted could be decided unfavorably to
the Company. Although the amount of liability at December 31, 1999 with respect
to these matters can not be ascertained with certainty, the Company believes
that any resulting liability should not materially affect the Company's
consolidated financial statements.
CURRENCY EFFECTS
The financial statements of the Company's non-U.S. operations are translated
to U.S. dollars for consolidation using exchange rates at period end for assets
and liabilities and average exchange rates during each reporting period for
results of operations. Net exchange gains or losses resulting from the
translation of foreign financial statements, the effect of exchange rate changes
on intercompany transactions of a long-term investment nature, and net exchange
rate gains and losses on foreign currency transactions that are designated as,
and are effective as, economic hedges of the net investment in a foreign entity
are recorded as a separate component of stockholder's equity. These adjustments
will affect net income only upon sale or liquidation of the underlying non-U.S.
investment.
Many of the Company's reporting entities conduct a portion of their business
in currencies other than the entity's functional currency. These transactions
give rise to receivables or payables that are denominated in currencies other
than the entity's functional currency. Changes in the exchange rates between the
functional currency and the currency in which the transaction is denominated
result in currency transaction gains and losses that are included in the
determination of income. Currency exchange gains and losses realized on business
transactions were $1.4 million of net losses in 1999, $0.3 million of net gains
in 1998, and $1.0 million of net losses in 1997. In addition to the net losses
on business transactions above, operating income in 1999 was reduced by
$1.0 million related to devaluation in cash held in non-functional currencies in
the Company's U.K. subsidiary.
The Company utilizes forward exchange contracts to hedge non-local currency
transactions and commitments. Gains and losses on forward exchange contracts
that hedge specific currency commitments are deferred and recognized in income
in the same period as the hedged transaction. Gains and losses on forward
contracts that do not hedge an identifiable currency commitment are included in
income as the gain or loss arises.
The market risk associated with forward exchange contracts is caused by
fluctuations in exchange rates subsequent to entering into the forward exchange
contracts. Forward exchange contracts outstanding at year-end 1999 were
short-term in nature and related to non-local currency transactions of the
Company's Japanese and U.S. operations. The equivalent U.S. dollar purchase
amounts of all forward contracts outstanding were $4.2 million, $3.1 million,
and $2.9 million as of December 31, 1999, 1998, and 1997, respectively. The
equivalent U.S. dollar sale amount of all forward contracts outstanding was
$18.5 million as of December 31, 1999. There were no sale amounts outstanding as
of December 31, 1998 and 1997. Deferred unrealized gains and losses at
December 31, 1999, 1998 and 1997 were not significant.
STOCK INCENTIVE PLANS
In 1997, the Company established a Long-term Incentive Plan for certain key
management and other personnel. The Company's 1997 Long-term Incentive Plan
provides that up to 1,000,000 shares of
F-55
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
common stock may be awarded through various stock and stock related awards. For
options awarded under the Plan, the option price cannot be less than
100 percent of the fair market value of common stock at the time the option is
granted. Through December 31, 1999 the Company has granted 983,255 stock options
under this Plan, net of forfeitures.
In 1996, the Company established a Non-Employee Directors' Annual Retainer
Stock Plan enabling members of the Board of Directors who are not officers or
employees of the Company to receive common stock in lieu of all or a portion of
the annual cash retainer fee and to receive an automatic annual amount of 300
shares of common stock for services rendered. The plan provides that up to
112,500 shares may be granted based on the fair market value of the common stock
at the date of issue. There have been 6,035 shares granted through December 31,
1999 under this plan. The plan was frozen, effective as of February 2, 1999.
Consequently, there will be no future grants under this plan.
In 1996, the Company established a Non-Employee Directors' Stock Option Plan
that provides for each of the Company's non-employee directors to receive an
automatic, annual option to purchase 6,750 shares of common stock. The plan
provides that up to 750,000 shares may be granted based on the fair market value
of the common stock at the annual grant date. There have been 121,500 stock
options granted through December 31, 1999 under this plan. The plan was frozen,
effective as of February 2, 1999. Consequently, there will be no future grants
under this plan.
All other stock option plans have been frozen and no further grants under
the frozen plans can be made. These plans are listed under "Former Plans No
Longer Granting Options."
Most options become exercisable on a cumulative basis over a three year
period of service and are generally exercisable for a period not exceeding ten
years from the date of grant. At December 31, 1999 there were 16,745 shares of
common stock available for future grant under the 1997 stock option plan.
F-56
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The options outstanding and transactions under the stock option plans were
as follows:
<TABLE>
<CAPTION>
1997 1996 FORMER PLANS
LONG-TERM NON-EMPLOYEE NO LONGER
INCENTIVE DIRECTORS' GRANTING
PLAN PLAN OPTIONS
--------- ------------ ------------
<S> <C> <C> <C>
Options outstanding at December 31,
1996.................................... 40,500 2,055,281
Granted at average price of $34.26 per
share................................. 524,000 33,750
Expired or canceled at average price of
$21.10 per share...................... (4,500) (6,241)
Exercised at average price of $10.96 per
share................................. (2,250) (413,186)
-------- --------- ----------
Options outstanding at December 31,
1997.................................... 524,000 67,500 1,635,854
Granted at average price of $35.56 per
share................................. 16,000 47,250
Expired or canceled at average price of
$27.45 per share...................... (30,916) (6,750) (39,729)
Exercised at average price of $18.00 per
share................................. (148,557) (27,000) (1,418,493)
-------- --------- ----------
Options outstanding at December 31,
1998.................................. 360,527 81,000 177,632
Granted at average price of $36.73 per
share................................. 484,000
Expired or canceled at average price of
$31.45 per share...................... (9,829) (33,750) (1,831)
Exercised at average price of $26.31 per
share................................. (16,046) (46,455)
-------- --------- ----------
Options outstanding at December 31,
1999.................................. 818,652 47,250 129,346
======== ========= ==========
Price range:
Minimum................................. $ 34.41 $ 22.88 $ 4.83
Maximum................................. $ 38.19 $ 38.28 $ 25.00
Weighted average price.................... $ 34.53 $ 30.86 $ 23.86
Exercisable............................... 167,461 22,500 129,346
</TABLE>
F-57
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information with respect to stock options outstanding at December 31, 1999
is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF REMAINING WEIGHTED NUMBER OF WEIGHTED
OPTIONS CONTRACTUAL AVERAGE OPTIONS AVERAGE
PRICE RANGE OUTSTANDING LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
----------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$12.25 to $22.88................... 24,300 5.7 $18.32 24,300 $18.32
$25.00 to $25.00................... 111,796 6.8 $25.00 111,796 $25.00
$31.88 to $33.25................... 27,000 8.5 $32.91 11,250 $32.70
$34.41 to $34.41................... 323,552 7.8 $34.41 162,127 $34.41
$36.72 to $36.72................... 465,600 9.1 $36.72 -- --
$37.00 to $38.28................... 43,000 8.7 $37.83 9,834 $38.21
------- -------
$12.25 to $38.28................... 995,248 8.3 $34.15 319,307 $29.95
======= =======
</TABLE>
The Company has elected the disclosure-only presentation of SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, and consequently, makes no charge
against income in the financial statements with respect to options granted at
fair market value. To measure stock-based compensation in accordance with SFAS
No. 123, the fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model. The following table sets forth the
assumptions used and the pro forma net income and earnings per share resulting
from applying SFAS No. 123.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income (amounts in thousands)
As reported............................................... $38,277 $31,303 $32,235
Pro forma................................................. $35,499 $28,784 $30,501
Basic earnings per share (in dollars)
As reported............................................... $ 1.53 $ 1.32 $ 1.39
Pro forma................................................. $ 1.42 $ 1.22 $ 1.32
Diluted earnings per share (in dollars)
As reported............................................... $ 1.53 $ 1.29 $ 1.35
Pro forma................................................. $ 1.42 $ 1.19 $ 1.27
Average Shares Outstanding (in thousands)
Actual.................................................... 24,954 23,687 23,171
Assuming Dilution......................................... 25,040 24,204 23,945
Risk-free interest rate..................................... 6.2% 4.6% 5.8%
Dividend yield.............................................. 0.2% 0.5% 0.5%
Expected life in years...................................... 3.0 3.4 5.0
Volatility.................................................. 27% 28% 29%
Weighted average remaining contractual life in years........ 8.3 8.5 7.0
Weighted average fair value at date of grant (in dollars)... $ 10.13 $ 9.82 $ 11.93
</TABLE>
F-58
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(QUARTERLY AMOUNTS ARE UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) FIRST SECOND THIRD FOURTH YEAR
--------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1999:
Net sales................................... $99,537 $99,814 $101,798 $106,050 $407,199
Net royalties............................... 447 497 509 957 2,410
Cost of sales............................... 44,283 45,187 46,472 50,725 186,667
Provision for contract settlement........... -- -- 3,870 -- 3,870
Operating income............................ 17,290 14,891 10,957 13,303 56,441
Net income.................................. 10,492 9,756 9,412 8,617 38,277
Basic earnings per share.................... $ .42 $ .39 $ .38 $ .35 $ 1.53
Diluted earnings per share.................. $ .42 $ .39 $ .38 $ .34 $ 1.53
Shares outstanding
Basic..................................... 29,944 24,947 24,918 24,976 24,954
Stock options............................. 70 69 93 122 86
Diluted................................... 25,014 25,016 25,011 25,098 25,040
Market price per share:
High...................................... $ 40 3/4 $ 38 1/2 $ 41 $ 43 $ 43
Low....................................... $ 34 $ 34 1/2 $ 36 1/8 $ 38 $ 34
1998:
Net sales................................... $88,355 $91,544 $ 89,084 $ 92,743 $361,726
Net royalties............................... 447 689 518 836 2,480
Cost of sales............................... 41,076 42,701 40,833 43,252 167,862
Provision for contract settlement........... -- -- 310 5,025 5,335
Operating income............................ 13,489 14,675 13,319 9,026 50,509
Net income.................................. 8,625 9,447 8,754 4,477 31,303
Basic earnings per share.................... $ .37 $ .40 $ .37 $ .18 $ 1.32
Diluted earnings per share.................. $ .36 $ .39 $ .36 $ .18 $ 1.29
Shares outstanding
Basic..................................... 23,447 23,575 23,668 24,050 23,687
Stock options............................. 582 547 541 401 517
Diluted................................... 24,029 24,122 24,209 24,451 24,204
Market price per share:
High...................................... $ 38 1/2 $ 39 1/2 $ 39 3/8 $ 40 $ 40
Low....................................... $ 30 $ 30 3/4 $ 30 1/2 $ 29 3/8 $ 29 3/8
</TABLE>
SEGMENT REPORTING AND RELATED INFORMATION
Operating segments are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance. Life Technologies is managed in a
matrixed fashion with some organizational units focused on delivering the
Company's product and service offerings to customers. These organizational units
have been established primarily by geography. Other organizational units are
focused on developing and managing various components of the product and service
offerings. While the chief operating decision maker reviews financial
information with respect to all of these organization units, the units based on
geography are most routinely reviewed by
F-59
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the chief operating decision maker in terms of assessing performance with
respect to revenues and related expenses.
The Company has four operating segments. The Americas Research segment
serves universities, medical research centers, government institutions and other
related "not-for-profit" research institutions in the United States as well as
all customers in Canada, Mexico, and Latin and South America. The U.S.
Bioindustrial segment delivers products and services to biotechnology,
pharmaceutical, chemical and related "for-profit" companies in the United
States. The European segment serves customers in Europe, Africa and the Middle
East. The Asia Pacific segment serves customers in Asia, including Japan,
Australasia, China and India. All four of the operating segments offer
essentially the same products and services.
The accounting policies of the operating segments are the same as those
described earlier in the notes to the consolidated financial statements.
Intercompany transactions between geographic areas are eliminated prior to
reporting operating segment financial information to the chief operating
decision maker. All profit related to intercompany transactions between
geographic areas is reported in the operating segment in which the sale to the
Company's trade customer occurs. Expenses related to developing and managing the
Company's product and service offerings, as well as some expenses managed
globally or not related to operating segments, are not included in operating
segment results. Operating segment identifiable assets are primarily inventories
and receivables. Long-lived assets are principally related to manufacturing or
developing products and services and are not allocated to operating segments.
Operating segment revenues for the years ended December 31, 1999, 1998, and
1997 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Americas Research........................................... $139,619 $129,428 $118,095
U.S. Bioindustrial.......................................... 84,289 71,634 61,335
Europe...................................................... 128,987 116,996 105,682
Asia Pacific................................................ 54,304 43,915 45,756
Other, principally royalties................................ 2,410 2,233 1,940
-------- -------- --------
Total revenues............................................ $409,609 $364,206 $332,808
======== ======== ========
</TABLE>
Operating segment profit and a reconciliation to reported operating income
for the years ended December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Americas Research........................................... $45,120 $43,012 $42,035
U.S. Bioindustrial.......................................... 31,293 26,163 20,790
Europe...................................................... 30,397 29,607 29,045
Asia Pacific................................................ 12,520 10,371 11,041
Research and development.................................... (23,836) (21,880) (21,281)
Other, non-segment expenses................................. (39,053) (31,429) (30,696)
Shareholder acquisition expenses............................ -- (5,335) --
------- ------- -------
Operating income.......................................... $56,441 $50,509 $50,934
======= ======= =======
</TABLE>
F-60
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Identifiable operating segment assets and a reconciliation to total assets
as of December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Americas Research........................................... $ 52,957 $ 48,544 $ 45,088
U.S. Bioindustrial.......................................... 33,555 28,136 23,761
Europe...................................................... 56,151 50,351 39,856
Asia Pacific................................................ 30,681 24,866 21,939
Property, plant & equipment, net............................ 128,827 107,374 100,098
Other long-lived assets..................................... 34,533 26,057 24,718
Cash and cash equivalents................................... 51,489 56,047 19,076
Other, principally tax related.............................. 14,778 12,212 7,059
-------- -------- --------
Operating income.......................................... $402,971 $353,587 $281,595
======== ======== ========
</TABLE>
Life Technologies offers numerous products, services and technologies that
can be characterized broadly into two categories: cell culture and cell and
molecular biology. Cell culture products and services are used to grow cells
under laboratory conditions and for the commercial manufacture of
pharmaceuticals and other life sciences products. Cell culture products include
cell and tissue culture media, reagents, fetal bovine ("FBS") and other animal
sera, growth and attachment factors, and plasticware. Cell and molecular biology
products, services and technologies are used to identify, isolate, and
manipulate the metabolic processes and genetic material of living organisms.
Cell and molecular biology products include enzymes, nucleic acids, lipids,
competent cells, custom oligonucleotides, and related products.
The major product line components of revenues for 1999, 1998, and 1997
compare as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
Cell culture................................................ $201,597 $182,411 $173,643
Cell and molecular biology.................................. 208,012 181,795 159,165
-------- -------- --------
Total revenues............................................ $409,609 $364,206 $332,808
======== ======== ========
</TABLE>
Sales of FBS accounted for 11% of net sales in 1999, 12% of net sales in
1998 and 13% of net sales in 1997. Historically, the availability and price of
FBS have been volatile and periodically have had a significant effect on the
Company's results.
The Company earns revenues from customers in many countries. Other than the
United States, the Company's country of domicile, there is no individual country
in which revenues from external customers represent 10% or more of the Company's
consolidated revenues. Revenues attributed to customers based in the United
States, as well as revenues from customers in all other countries combined, were
as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
United States............................................... $205,424 $181,765 $161,863
All other countries......................................... 204,185 182,411 170,945
-------- -------- --------
Total revenues............................................ $409,609 $364,206 $332,808
======== ======== ========
</TABLE>
F-61
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Long-lived assets by geographic area as of December 31, 1999, 1998, and 1997
were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1999 1998 1997
---------------------- -------- -------- --------
<S> <C> <C> <C>
United States............................................... $118,164 $104,598 $ 98,394
United Kingdom.............................................. 19,353 16,736 15,841
All other................................................... 15,960 8,526 7,806
-------- -------- --------
Total revenues.............................................. $153,477 $129,860 $122,041
======== ======== ========
</TABLE>
F-62
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
-------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 67,072 $ 51,489
Trade accounts receivable, net............................ 79,412 79,301
Inventories:
Materials and supplies................................ 14,662 16,519
In process and finished............................... 69,918 67,653
LIFO reserve.......................................... (1,658) (1,226)
-------- --------
Total inventory..................................... 82,922 82,946
Prepaid and other current assets.......................... 16,678 17,384
Current deferred tax assets............................... 9,107 8,491
-------- --------
Total current assets................................ 255,191 239,611
Property, plant and equipment............................. 195,172 192,162
Less accumulated depreciation............................. (67,457) (63,335)
-------- --------
Total property, plant and equipment................. 127,715 128,827
Investments and other assets.............................. 23,008 22,973
Excess of cost over net assets of businesses acquired,
net..................................................... 10,771 11,560
-------- --------
Total assets........................................ $416,685 $402,971
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt........................................... $ 4,181 $ 848
Accounts payable.......................................... 20,837 28,364
Accrued and deferred income tax liabilities............... 8,945 11,145
Accrued liabilities and expenses.......................... 29,568 27,494
-------- --------
Total current liabilities........................... 63,531 67,851
Long-term debt............................................ 2,855 3,259
Pension liabilities....................................... 12,162 11,471
Deferred income tax liabilities........................... 6,561 6,164
Minority interests........................................ 4,556 4,131
Stockholders' equity:
Common stock.............................................. 251 250
Additional paid-in capital................................ 101,304 96,362
Retained earnings......................................... 245,131 223,986
Unearned compensation expense............................. (2,553) --
Accumulated other comprehensive income (loss)............. (17,113) (10,503)
-------- --------
Total stockholders' equity.......................... 327,020 310,095
-------- --------
Total liabilities and stockholders' equity........ $416,685 $402,971
======== ========
</TABLE>
Amounts as of June 30, 2000 are unaudited.
The accompanying notes are an integral part of these consolidated financial
statements.
F-63
<PAGE>
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues:
Net sales................................................. $218,907 $199,351
Net royalties............................................. 1,014 944
-------- --------
219,921 200,295
Operating expenses:
Cost of sales............................................. 100,476 89,470
Marketing and administrative.............................. 72,379 66,711
Research and development.................................. 13,150 11,933
Merger related expenses................................... 889 --
-------- --------
Total operating expenses................................ 186,894 168,114
-------- --------
Operating income............................................ 33,027 32,181
Other income (expense), net................................. 1,362 (213)
-------- --------
Income before income taxes.................................. 34,389 31,968
Income taxes................................................ 12,380 11,189
-------- --------
Income before minority interests............................ 22,009 20,779
Minority interests.......................................... (863) (531)
-------- --------
Net income.................................................. $ 21,146 $ 20,248
======== ========
Earnings per share:
Basic..................................................... $ 0.84 $ 0.81
Diluted................................................... $ 0.84 $ 0.81
Average shares outstanding:
Basic..................................................... 25,037 24,946
Diluted................................................... 25,257 25,014
Dividends declared per share................................ $ -- $ 0.10
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these consolidated financial
statements.
F-64
<PAGE>
LIFE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income................................................ $21,146 $20,248
Non-cash items:
Depreciation and amortization............................. 8,640 8,002
Other..................................................... (279) 600
Changes in assets and liabilities......................... (9,547) (9,304)
------- -------
19,960 19,546
Investing:
Capital expenditures...................................... (8,124) (19,426)
Acquisitions.............................................. (1,667) (12,578)
------- -------
(9,791) (32,004)
Financing:
Dividends paid............................................ -- (2,493)
Proceeds from exercise of stock options................... 1,768 1,625
Short term borrowings (net)............................... 3,357 (1,272)
Long-term debt repayments................................. (244) 419
------- -------
4,881 (1,721)
Effect of exchange rate changes on cash................... 533 626
------- -------
Increase (decrease) in cash and cash equivalents.......... 15,583 (13,533)
Cash and cash equivalents at beginning of period.......... 51,489 56,047
------- -------
Cash and cash equivalents at end of period................ $67,072 $42,494
======= =======
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-65
<PAGE>
LIFE TECHNOLOGIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Net income.................................................. $21,146 $20,248
Other comprehensive income (loss)........................... (6,610) (3,874)
------- -------
Currency translation effects
Comprehensive income........................................ $14,536 $16,374
======= =======
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these consolidated financial
statements.
F-66
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS:
BASIS OF PRESENTATION
In the opinion of the Company's management, the unaudited financial
statements reflect all adjustments (which consist of normal recurring
adjustments) necessary to present a fair statement of the results for the
interim periods. The results for the six-month period ended June 30, 2000 are
not necessarily indicative of the results for the year ending December 31, 2000.
EARNINGS PER SHARE
Basic earnings per common share have been computed by dividing net income by
the weighted-average number of common shares outstanding during the period.
Diluted earnings per common share have been computed by dividing net income by
the weighted-average number of common shares outstanding plus an assumed
increase in common shares outstanding for dilutive securities.
The following table reconciles the weighted average number of common shares
outstanding during each period for basic earnings per share with the comparable
amount for diluted earnings per share.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
(AMOUNTS IN THOUSANDS) 2000 1999
---------------------- -------- --------
<S> <C> <C>
Weighted average shares outstanding-basic.............. 25,037 24,946
Stock options.......................................... 220 68
------ ------
Weighted average shares outstanding-diluted.......... 25,257 25,014
====== ======
</TABLE>
COMPREHENSIVE INCOME
The following are included as components of accumulated other comprehensive
income (loss).
<TABLE>
<CAPTION>
TOTAL
FOREIGN COMPREHENSIVE
PENSION CURRENCY INCOME
(AMOUNTS IN THOUSANDS) LIABILITY TRANSLATION (LOSS)
---------------------- --------- ----------- -------------
<S> <C> <C> <C>
Beginning balance (January 1, 2000)......... (11) (10,492) (10,503)
Current period change....................... -- (6,610) (6,610)
--- ------- -------
Ending balance (June 30, 2000)............ (11) (17,102) (17,113)
=== ======= =======
</TABLE>
U.S. and international withholding taxes have not been provided on
undistributed earnings of foreign subsidiaries. The Company remits only those
earnings which are considered to be in excess of the reasonably anticipated
working capital needs of the foreign subsidiaries, with the balance considered
to be permanently reinvested in the operations of such subsidiaries. It is
impractical to estimate the total tax liability, if any, until such a
distribution is made.
F-67
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS: (CONTINUED)
SEGMENT REPORTING AND RELATED INFORMATION
Operating segment revenues for the periods ended June 30, 2000 and 1999 were
as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
(AMOUNTS IN THOUSANDS) 2000 1999
---------------------- -------- --------
<S> <C> <C>
Americas Research.................................. $ 76,607 $ 68,675
U.S. Bioindustrial................................. 46,204 40,416
Europe............................................. 63,932 64,548
Asia Pacific....................................... 32,164 25,712
Other.............................................. 1,014 944
-------- --------
Total Revenue...................................... $219,921 $200,295
======== ========
</TABLE>
Operating segment profit and a reconciliation to reported operating income
for the periods ended June 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
(AMOUNTS IN THOUSANDS) 2000 1999
---------------------- -------- --------
<S> <C> <C>
Americas Research................................... $ 29,003 $ 25,412
U.S. Bioindustrial.................................. 18,375 14,972
Europe.............................................. 12,509 18,865
Asia Pacific........................................ 8,921 6,679
Research and development............................ (13,150) (11,933)
Other non-segment expenses.......................... (21,742) (21,814)
Merger related expenses............................. (889) --
-------- --------
Operating income.................................. $ 33,027 $ 32,181
======== ========
</TABLE>
MERGER RELATED EXPENSES
On February 25, 2000, Dexter Corporation, the Company's majority
shareholder, announced an effort to explore all strategic alternatives available
to maximize shareholder value in the short term. In conjunction with this
effort, the Company entered into retention agreements with certain employees,
which provide for payments by the Company totaling up to a maximum of
$3.3 million. The Company has expensed $0.9 million related to these agreements
in the second quarter of 2000.
UNEARNED COMPENSATION
In May 2000, the Dexter Corporation issued to certain LTI employees common
stock of Dexter Corporation subject to the following restrictions:
(1) seventy-five percent of the stock award is based on achievement by LTI of
specified financial performance during the three year period commencing on
January 1, 2000 and ending December 31, 2002 and (2) one hundred percent of the
stock is subject to time-lapse restrictions. The employee must be continuously
employed by the Dexter Corporation or one of its subsidiaries from the date of
the agreement through May 8, 2003. The Company recorded unearned compensation
and additional paid in capital on the date of grant. The awards, which are
subject to performance restrictions, are treated as variable awards, and
adjustments are made to unearned compensation for changes in the stock value at
each reporting period. The remaining 25% of the awards, which are subject only
to passage of time restrictions, are treated as fixed stock awards the value of
which was determined on the grant date. Dividends when declared are charged to
compensation expense and a payable to Dexter Corporation. The compensation cost
that has been
F-68
<PAGE>
LIFE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS: (CONTINUED)
charged against income for these restricted stock agreements is $0.2 million for
the second quarter and year to date 2000. Unearned compensation of $2.6 million
representing the unearned portion of the restricted stock is shown as a
component of stockholders' equity.
CONTINGENCIES
In September 1999, the Company submitted a report in connection with a
voluntary disclosure to the Department of Veterans Affairs ("VA") regarding
matters involving the management of the Company's Federal Supply Schedule
contract with the VA that has been in effect since April 1992. As part of the
disclosure the Company offered to provide a refund to the government in the
amount of $3.9 million. The Company expensed this amount in September 1999. The
Company has made a cash payment of $1.1 million to the VA and had an accrued
liability of $2.8 million at June 30, 2000. There can be no assurance that the
government will agree with the Company's assessment of this matter or accept the
Company's offered refund amount. Consequently, it is possible the final
resolution of this matter could materially differ from the Company's proposal
and could have a material adverse effect on the Company's consolidated financial
position, operating results or cash flows when resolved in a future reporting
period.
On December 31, 1996, the Company sued Clontech Laboratories, Inc. in the
U.S. District Court for the District of Maryland, Civil Action No. AW-96-4080,
alleging patent infringement of the Company's patents covering H minus reverse
transcriptase. The court issued a decision on July 16, 1999, that two of the
Company's patents are unenforceable and followed this decision on May 24, 2000,
with a ruling that would require the Company to pay $1.64 million in legal fees,
plus costs, to Clontech. The Company has appealed both the District Court's
decision of July 16, 1999 and the May 24, 2000 ruling to the Court of Appeals
for the Federal Circuit.
Apart from the matter above, the Company is subject to other potential
liabilities under government regulations and various claims and legal actions
which are pending or may be asserted. These matters have arisen in the ordinary
course and conduct of the Company's pending business and some are expected to be
covered, at least partly, by insurance. Estimated amounts for claims that are
probable and can be reasonably estimated are reflected as liabilities of the
Company. The ultimate resolution of these matters is subject to many
uncertainties. It is reasonably possible that some of the matters which are
pending or may be asserted could be decided unfavorably to the Company. Although
the amount of liability at June 30, 2000 with respect to these matters can not
be ascertained with certainty, the Company believes that any resulting liability
should not materially affect the Company's consolidated financial statements.
SUBSEQUENT EVENT
On July 9, 2000, Life Technologies, Inc. (the "Company") announced that it
signed a definitive agreement with Invitrogen Corporation ("Invitrogen")
providing for a merger of the Company into Invitrogen in which all of the
Company's outstanding shares of common stock will be converted into cash and/or
Invitrogen stock.
F-69
<PAGE>
ANNEX A
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AGREEMENT AND PLAN OF MERGER
BETWEEN
INVITROGEN CORPORATION
AND
LIFE TECHNOLOGIES, INC.
DATED AS OF JULY 7, 2000
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
Section 1.1 The Merger.................................................. A-2
Section 1.2 Closing..................................................... A-2
Section 1.3 Effective Time.............................................. A-2
Section 1.4 Effects of the Merger....................................... A-3
Section 1.5 Certificate of Incorporation; Bylaws........................ A-3
Section 1.6 Directors; Officers of Surviving Corporation;
Headquarters.............................................. A-3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities.................................... A-4
Section 2.2 Exchange of Certificates.................................... A-6
Section 2.3 Adjustments to Prevent Dilution............................. A-9
Section 2.4 Appraisal Rights............................................ A-9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Organization, Qualification, Etc............................ A-11
Section 3.2 Capital Stock............................................... A-12
Section 3.3 Corporate Authority Relative to this Agreement; No
Violation................................................. A-13
Section 3.4 Reports and Financial Statements............................ A-15
Section 3.5 No Undisclosed Liabilities.................................. A-16
Section 3.6 No Violation of Law......................................... A-16
Section 3.7 Environmental Matters....................................... A-16
Section 3.8 Employee Benefit Plans; ERISA............................... A-18
Section 3.9 Absence of Certain Changes or Events........................ A-20
Section 3.10 Proxy Statement/Prospectus; Registration Statement.......... A-20
Section 3.11 Tax Matters................................................. A-21
Section 3.12 Title and Related Matters................................... A-23
Section 3.13 Contracts................................................... A-24
Section 3.14 Patents, Trademarks and Similar Rights...................... A-25
Section 3.15 Legal Proceedings, etc...................................... A-25
Section 3.16 Disclosure.................................................. A-25
Section 3.17 Opinion of Financial Advisors............................... A-26
Section 3.18 Bidder Share Ownership...................................... A-26
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Conduct of Business by the Company.......................... A-26
Section 4.2 Bidder Interim Operations................................... A-29
Section 4.3 Access; Confidentiality..................................... A-31
Section 4.4 Stockholders Meeting; Proxy Statement; Registration
Statement................................................. A-32
Section 4.5 Commercially Reasonable Efforts; Further Assurances......... A-33
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Section 4.6 Employee Stock Options and Other Employee Benefits.......... A-34
Section 4.7 Takeover Statute............................................ A-37
Section 4.8 Public Announcements........................................ A-37
Section 4.9 Affiliates.................................................. A-38
Section 4.10 Nasdaq National Market Quotation............................ A-38
Section 4.11 Tax-Free Reorganization..................................... A-38
Section 4.13 Indemnification; Insurance.................................. A-39
Section 4.14 Additional Reports and Information.......................... A-40
ARTICLE V
CONDITIONS TO THE MERGER
Section 5.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................... A-40
Section 5.2 Conditions to Obligation of the Bidder to Effect the
Merger.................................................... A-41
Section 5.3 Conditions to Obligation of the Company to Effect the
Merger.................................................... A-42
ARTICLE VI
TERMINATION
Section 6.1 Termination................................................. A-43
Section 6.2 Effect of Termination....................................... A-45
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Survival of Representations and Warranties............... A-45
Section 7.2 Expenses.................................................... A-45
Section 7.3 Counterparts; Effectiveness................................. A-45
Section 7.4 Governing Law............................................... A-45
Section 7.5 Notices..................................................... A-45
Section 7.6 Assignment; Binding Effect.................................. A-47
Section 7.7 Severability................................................ A-47
Section 7.8 Enforcement of Agreement.................................... A-47
Section 7.9 Entire Agreement; Third-Party Beneficiaries................. A-48
Section 7.10 Headings.................................................... A-48
Section 7.11 Definitions................................................. A-48
Section 7.12 Finders or Brokers.......................................... A-48
Section 7.13 Amendment or Supplement..................................... A-49
Section 7.14 Extension of Time, Waiver, Etc.............................. A-49
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INDEX OF DEFINED TERMS
<TABLE>
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DEFINED TERM SECTION
------------ ------------------------
<S> <C>
Affiliated Group............................................ 3.11(a)
affiliates.................................................. 7.11
Agreement................................................... Introduction
Average Bidder Trading Price................................ 2.1(a)
Bidder...................................................... Introduction
Bidder Common Stock......................................... Recitals
Bidder Disclosure Schedule.................................. Article III Introduction
Bidder Stockholder Approval................................. 3.3(b)
Bidder Stockholders Meeting................................. 4.4(a)
Cash Election............................................... 2.1(b)
Cash Election Proration Factor.............................. 2.1(b)
Certificate of Merger....................................... 1.3
Certificates................................................ 2.2(a)
Charter Amendment........................................... 4.4(a)
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
Company..................................................... Introduction
Company Common Stock........................................ Recitals
Company Disclosure Schedule................................. Article III Introduction
Company Employee............................................ 4.5(b)
Company Equity Plan......................................... 4.1(vii)
Company Option Plans........................................ 4.6(a)
Company Policies............................................ 4.13(b)
Company Stock Options....................................... 4.6(a)
Company Stockholder Approval................................ 3.3(a)
Company Stockholders Meeting................................ 4.4(a)
Dexter...................................................... Recitals
Dexter Merger............................................... Recitals
Dexter Merger Agreement..................................... Recitals
DGCL........................................................ Recitals
Dissenting Shares........................................... 2.4
Effective Time.............................................. 1.3
Election Deadline........................................... 2.2(a)
Election Form............................................... 2.2(a)
Environmental Claim......................................... 3.7(d)(i)
Environmental Law........................................... 3.7(d)(ii)
Environmental Permits....................................... 3.7(a)
ERISA....................................................... 3.8(a)
ERISA Affiliate............................................. 3.8(a)
ESP......................................................... 4.6(c)
Exchange Act................................................ 3.3(c)
Exchange Agent.............................................. 2.2(a)
Exchange Fund............................................... 2.2(a)
Exchange Ratio.............................................. 2.1(b)
Expiration Date............................................. 6.1(b)
GAAP........................................................ 3.4
Governmental Entity......................................... 3.3(c)
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DEFINED TERM SECTION
------------ ------------------------
<S> <C>
Hazardous Materials......................................... 3.7(d)(iii)
HSR Act..................................................... 3.3(c)
including................................................... 7.11
Indemnified Parties......................................... 4.13
Intellectual Property....................................... 3.14
International Plans......................................... 3.8(i)
Lien........................................................ 3.1(b)
Material.................................................... 3.16
Material Adverse Effect..................................... 3.1(a)
Material Contracts.......................................... 3.13(a)
Merger...................................................... Recitals
Merger Consideration........................................ 2.1(b)
Person...................................................... 7.11
Plans....................................................... 3.8(a)
Proxy Statement............................................. 4.3(b)
Registration Statement...................................... 3.10(b)
Representing Party.......................................... Article III Introduction
Representing Party's Disclosure Schedule.................... Article III Introduction
SEC......................................................... 3.4(a)
SEC Reports................................................. 3.4
Securities Act.............................................. 3.3(c)
Shares...................................................... Recitals
Significant Subsidiaries.................................... 7.11
Special Committee........................................... Recitals
Standard Election........................................... 2.1(b)
Standard Election Consideration............................. 2.1(b)
Stock Election.............................................. 2.1(b)
Stock Election Consideration................................ 2.1(b)
Stockholders Meeting........................................ 4.4(a)
Subsidiaries................................................ 7.11
Surviving Corporation....................................... 1.1
Tax Return.................................................. 3.11(f)
Taxes....................................................... 3.11(f)
Termination Date............................................ 4.1
Trading Day................................................. 2.1(b)
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of July 7, 2000 (the "Agreement"),
between INVITROGEN CORPORATION, a Delaware corporation (the "Bidder"), and LIFE
TECHNOLOGIES, INC., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Bidder and the Company and a special
committee (the "Special Committee") of the Board of Directors of the Company
consisting of members of the Board of Directors who are "Continuing Directors"
as such term is defined in Article Eighth of the Certificate of Incorporation of
the Company deem it advisable and in the best interests of their respective
stockholders that the Company be merged with and into the Bidder (the "Merger")
upon the terms and subject to the conditions provided for in this Agreement,
whereby each outstanding share of common stock, par value $0.01 per share, of
the Company (the "Company Common Stock" or the "Shares") will be converted into
(i) shares of common stock, par value $.01 per share, of the Bidder (the "Bidder
Common Stock"), (ii) cash or (iii) a combination of Bidder Common Stock and
cash;
WHEREAS, immediately after the execution and delivery of this Agreement, the
Bidder is entering into an Agreement and Plan of Merger, dated as of the date
hereof (the "Dexter Merger Agreement"), between the Bidder and Dexter
Corporation, a Connecticut corporation ("Dexter"), pursuant to which Dexter will
be merged with and into the Bidder (the "Dexter Merger") simultaneously with the
Merger upon the terms and subject to the conditions set forth in the Dexter
Merger Agreement, whereby each share of common stock, par value $1 per share, of
Dexter will be converted into (i) shares of Bidder Common Stock, (ii) cash or
(iii) a combination of Bidder Common Stock and cash;
WHEREAS, the obligations of the parties hereto to consummate this Agreement
are expressly conditioned on the consummation of the transactions contemplated
by the Dexter Merger Agreement;
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger and the Dexter Merger contemplated hereby shall each qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for purposes of Section 368 of the
Code; and
WHEREAS, the Boards of Directors of the Bidder and the Company have each
approved this Agreement and approved the Merger in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), and upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the Bidder and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective Time
the Company shall merge with and into the Bidder, and the separate corporate
existence of the Company shall thereupon cease, and the Bidder shall be the
surviving corporation in the Merger (the "Surviving Corporation"). The Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature and shall be subject to all of the
restrictions, disabilities, duties, debts and obligations of the Company and the
Bidder, all as provided in the DGCL.
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second
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business day after satisfaction or waiver of the conditions set forth in
Article V, unless another time or date, or both, are agreed to by the parties
hereto. The Closing will be held at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, New York, unless another place
is agreed to by the parties hereto.
Section 1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
on the Closing Date the parties shall file with the Secretary of State of the
State of Delaware a certificate of merger (the "Certificate of Merger"),
executed in accordance with the relevant provisions of the DGCL, and shall make
all other filings or recordings required under the DGCL in order to effect the
Merger. The Merger shall become effective upon the filing of the Certificate of
Merger or at such other time as is agreed by the parties hereto and specified in
the Certificate of Merger (the time at which the Merger becomes fully effective
being hereinafter referred to as the "Effective Time"); PROVIDED, that the
Merger and the Dexter Merger shall occur simultaneously.
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.5 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of the
Bidder, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation; PROVIDED,
HOWEVER, the first paragraph of Article IV of the Certificate of Incorporation
of the Bidder shall be amended to read in its entirety to read as follows:
"The total number of shares of capital stock which the Corporation shall
have authority to issue is 131,405,884, of which (a) 6,405,884 shares shall
be preferred stock, par value $.01 per share ("Preferred Stock"), and
(b) 125,000,000 shares shall be common stock, par value $.01 per share."
(b) At the Effective Time, the Bylaws of the Bidder, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
Section 1.6 DIRECTORS; OFFICERS OF SURVIVING CORPORATION; HEADQUARTERS.
(a) The directors of the Bidder at the Effective Time shall be the
directors of the Surviving Corporation until their respective successors are
duly elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. Prior to the Effective Time, the Bidder shall take all action
necessary to appoint J. Stark Thompson and Thomas H. Adams to the Board of
Directors of the Bidder, such appointments to be effective as of the Effective
Time.
(b) The officers of the Bidder at the Effective Time shall be the
officers of the Surviving Corporation until their respective successors are duly
elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. After the Effective Time, J. Stark Thompson shall continue to be
the President and Chief Executive Officer of the Company's operations and shall
also hold a senior executive management position with the Bidder.
(c) After the Effective Time, the Company's operations will continue to
be headquartered at the site of the Company's current headquarters in Rockville,
Maryland.
A-2
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any securities
of the Bidder or the Company:
(a) Each issued and outstanding Share that is owned by the Bidder,
Dexter or the Company or any of their respective Subsidiaries shall
automatically be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(b) Subject to the provisions of Sections 2.2(h) and 2.4, each
issued and outstanding Share, other than Shares cancelled and retired in
accordance with Section 2.1(a) and Dissenting Shares, shall be converted, at
the election of the holder thereof in accordance with the procedures set
forth herein, into one of the following (as adjusted pursuant to the
provisions of this Section 2.1, the "Merger Consideration"):
(A) for each such Share with respect to which an election to
receive only Bidder Common Stock has been effectively made and not
revoked or lost pursuant to Section 2.2(a) (a "Stock Election"), the
right to receive that fraction of a share of Bidder Common Stock
calculated by dividing (x) $60.00 by (y) the Average Bidder Trading Price
(as hereinafter defined), rounded to four decimal places (the "Exchange
Ratio"). As used herein, the "Average Bidder Trading Price" shall mean
the average of the reported closing sales prices per share of Bidder
Common Stock as reported in THE WALL STREET JOURNAL for the 20
consecutive Nasdaq National Market trading days (each, a "Trading Day")
ending on (and including) the third Trading Day prior to the date of the
Company Shareholders Meeting; PROVIDED, HOWEVER, that if the quotient
obtained as prescribed in the preceding sentence exceeds 1.0, then for
all purposes the Exchange Ratio shall be 1.0, and if such quotient is
less than 0.7500, then for all purposes the Exchange Ratio shall be
0.7500 (the "Stock Election Consideration").
(B) for each such Share with respect to which an election to
receive only cash has been effectively made and not revoked or lost
pursuant to Section 2.2(a) (a "Cash Election"), (i) the right to receive
an amount in cash equal to $60.00 multiplied by the Cash Election
Proration Factor, without interest except as set forth in
Section 2.2(b), plus (ii) if the Cash Election Proration Factor is less
than 1, a fraction of a share of Bidder Common Stock equal to the
Exchange Ratio multiplied by a fraction the numerator of which is $60.00
minus the cash determined pursuant to clause (i) and the denominator of
which is $60.00. As used herein, the "Cash Election Proration Factor"
means the lesser of (x) 1.00 or (y) a fraction (i) the numerator of which
is (1) the product of the total number of Shares outstanding multiplied
by $16.80 minus (2) $16.80 multiplied by the number of Shares for which
Standard Elections have been effectively made and not revoked or lost,
and (ii) the denominator of which is the product of $60.00 multiplied by
the number of Shares for which Cash Elections have been effectively made
and not revoked or lost.
(C) for each such Share as to which neither a Stock Election nor
a Cash Election has been effectively made and not revoked or lost
pursuant to Section 2.2(a) (a "Standard Election"), the right to receive
$16.80 in cash, plus a fraction of a share of Bidder Common Stock equal
to the Exchange Ratio multiplied by 0.7200 (the "Standard Election
Consideration").
(c) Each Person who, at the Effective Time, is a record holder of
Shares (other than Shares to be cancelled as set forth in Section 2.1(a) or
Dissenting Shares) shall have the right to submit an Election Form
specifying the number of Shares that such Person desires to have converted
into shares of Bidder Common Stock, the number of Shares that such Person
desires to have converted into the right to receive cash and Bidder Common
Stock, if any, and the number
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of Shares that such Person desires to have converted into the right to
receive the Standard Election Consideration. Any Person who fails properly
to submit an Election Form on or prior to the Election Deadline in
accordance set forth in Section 2.2(a) shall be deemed to have made a
Standard Election.
(d) Each share of Bidder Common Stock issued and outstanding
immediately prior to the Effective Time shall on and after the Effective
Time continue to be issued and outstanding as an identical share of Bidder
Common Stock.
(e) Each share of Bidder Common Stock issued and held in the
treasury or by any Subsidiary of the Bidder as of the Effective Time, if
any, shall, on and after the Effective Time, continue to be issued and held
in the treasury of the Bidder or by such Subsidiary unaffected by the
Merger.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, the Bidder shall appoint
an agent (the "Exchange Agent") for the purpose of (i) exchanging certificates
representing Shares (the "Certificates") for the Merger Consideration. At the
Effective Time the Bidder will deposit with the Exchange Agent the Merger
Consideration and cash in the amount required by Section 2.2(g) (the "Exchange
Fund"). Upon receipt, the Exchange Agent will invest the cash portion of the
Exchange Fund in United States government securities maturing at the Election
Deadline or such other government securities maturing at the Election Deadline
or such other investments as the Bidder and the Company may mutually agree. Any
interest and other income resulting from such investments shall be paid to the
Bidder. Promptly after the Effective Time, the Exchange Agent will send to each
holder of Shares a letter of transmittal and instructions (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) for use in such
exchange, and to each holder of Shares an election form (the "Election Form")
providing for such holders to make the Standard Election, the Cash Election or
the Stock Election. Any Standard Election (other than a deemed Standard
Election), Cash Election or Stock Election shall be validly made only if the
Exchange Agent shall have received by 5:00 p.m., New York City Time, on a date
(the "Election Deadline") to be mutually agreed upon by the Bidder and the
Company (which date shall not be later than the twentieth Business Day after the
Effective Time), an Election Form properly completed and executed (with the
signature or signatures thereon guaranteed to the extent required by the
Election Form) by such holder accompanied by such holder's Certificates, or by
appropriate guarantees of delivery of such Certificates from a member of any
national securities exchange or of the National Association of Securities
Dealers or a commercial bank or trust company in the United States as set forth
in such Election Form. Any holder of Shares who has made an election by
submitting an Election Form to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a revised Election
Form, properly completed and signed that is received by the Exchange Agent prior
to the Election Deadline. Any holder of Shares may at any time prior to the
Election Deadline revoke his election by written notice to the Exchange Agent
received by the close of business on the day prior to the Election Deadline, and
such holder will receive the Standard Election Consideration.
(b) LETTER OF TRANSMITTAL. Upon surrender to the Exchange Agent of its
Certificate, together with a properly completed letter of transmittal, each
holder of Shares will be entitled to receive promptly after the Election
Deadline the Merger Consideration in respect of the Shares represented by its
Certificate. In addition, each such holder of Shares shall be entitled to
receive any dividends and distributions payable pursuant to Section 2.2(g).
Until so surrendered, each such Certificate shall represent after the Effective
Time, for all purposes, only the right to receive the Merger Consideration.
(c) PAYMENT TO NON-REGISTERED OWNERS. If any portion of the Merger
Consideration is to be paid to a Person other than the Person in whose name the
Certificate so surrendered is registered, it shall
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be a condition to such payment that such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the Person requesting such
payment shall pay to the Exchange Agent any transfer or other Taxes required as
a result of such payment to a Person other than the registered holder of such
Certificate, or establish to the satisfaction of the Exchange Agent that such
Tax has been paid or is not payable.
(d) NO FURTHER REGISTRATION OF TRANSFERS. After the Effective Time there
shall be no further registration of transfers of Shares. If after the Effective
Time Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration in accordance with the
procedures set forth in this Article II.
(e) TERMINATION OF EXCHANGE FUND; NO LIABILITY. At any time following the
first anniversary of the Effective Time, the Surviving Corporation shall be
entitled to require the Exchange Agent to deliver to it any remaining portion of
the Exchange Fund (including any interest received with respect thereto), and
holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) with respect to the Merger
Consideration, any cash in lieu of fractional shares of Bidder Common Stock and
any dividends or other distributions with respect to Bidder Common Stock payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration (or dividends or distributions with respect thereto) or cash from
the Exchange Fund in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
for Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate(s) to be lost,
stolen or destroyed and, if required by the Bidder, the posting by such Person
of a bond in such sum as the Bidder may reasonably direct as indemnity against
any claim that may be made against it or the Surviving Corporation with respect
to such Certificate(s), the Exchange Agent will issue the Merger Consideration
pursuant to Section 2.1(b) deliverable in respect of the Shares represented by
such lost, stolen or destroyed Certificates.
(g) DIVIDENDS; DISTRIBUTIONS. No dividends or other distributions with
respect to Bidder Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Bidder Common Stock represented thereby, and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to
Section 2.2(h), and all such dividends, other distributions and cash in lieu of
fractional shares of Bidder Common Stock shall be paid by the Bidder to the
Exchange Agent and shall be included in the Exchange Fund, in each case until
the surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable abandoned property, escheat or similar laws, following
surrender of any such Certificate there shall be paid to the holder of a Bidder
Certificate representing whole shares of Bidder Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Bidder Common Stock and
the amount of any cash payable in lieu of a fractional share of Bidder Common
Stock to which such holder is entitled pursuant to Section 2.2(h), and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Bidder Common Stock. The Bidder shall make available to the Exchange
Agent cash for these purposes, if necessary.
(h) NO FRACTIONAL SHARES. No Bidder Certificates or scrip representing
fractional shares of Bidder Common Stock shall be issued upon the surrender for
exchange of Certificates; no dividend or distribution by the Bidder shall relate
to such fractional share interests; and such fractional share interests will not
entitle the owner thereof to vote or to any rights as a shareholder of the
Bidder. In
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lieu of any such fractional shares, each holder of Certificate who would
otherwise have been entitled to receive a fractional share interest in exchange
for such Certificate pursuant to this Section shall receive from the Exchange
Agent an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder (after taking into account all
Shares held by such holder at the Effective Time) would otherwise be entitled by
(B) the average reported closing sales price for a share of Bidder Common Stock
as reported in THE WALL STREET JOURNAL(or if not reported thereby, any other
authoritative source) for five consecutive Trading Days immediately preceding
the Closing Date. The Bidder shall provide the Exchange Agent the aggregate
amount of cash payable pursuant to this Section 2.2(h) promptly following the
Effective Time.
Section 2.3 ADJUSTMENTS TO PREVENT DILUTION. In the event that the Bidder
changes the number of outstanding shares of Bidder Common Stock or the number of
outstanding securities convertible or exchangeable into or exercisable for
shares of Bidder Common Stock prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, subdivision, or other similar transaction, or
declares or pays any dividend or distribution (including of rights) other than
any regular quarterly cash dividends, the Stock Election Consideration and the
Standard Election Consideration will be correspondingly and equitably adjusted
to reflect such stock dividend, subdivision, split, combination of shares or
other specified transaction.
Section 2.4 APPRAISAL RIGHTS. Notwithstanding anything in this Agreement
to the contrary, Shares that are issued and outstanding immediately prior to the
Effective Time and which are held by shareholders who did not vote in favor of
the Merger and who comply with all the relevant provisions of Section 262 of the
DGCL (the "Dissenting Shareholders") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration (the "Dissenting
Shares"), unless and until the holder or holders thereof shall have failed to
perfect or shall have effectively withdrawn or lost their rights to appraisal
under the DGCL. If any Dissenting Shareholder shall have failed to perfect or
shall have effectively withdrawn or lost such right, such holder's Shares shall
thereupon be converted into and become exchangeable for the right to receive, as
of the Effective Time, the Merger Consideration for each Share without any
interest thereon. The Company shall give the Bidder (i) prompt notice of any
written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company relating to shareholders' rights of appraisal, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL; PROVIDED, HOWEVER, the Company shall have the
right to participate in any such negotiations and proceedings. The Company shall
not, except with the prior written consent of the Bidder, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Shares had been
converted into the right to receive the Standard Election Consideration pursuant
to Section 2.1(b).
Section 2.5 WITHHOLDING RIGHTS. The Bidder shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article II such amounts as it is required to deduct and withhold with respect to
the making of such payment under any provision of federal, state, local or
foreign Tax law. If the Bidder so withholds amounts, such amounts shall be
treated for all purposes of this Agreement as having been paid to the holders of
Shares in respect of which the Bidder made such deduction and withholding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth on the schedule delivered by the Company to the Bidder
in connection with the execution and delivery of this Agreement (the "Company
Disclosure Schedule") the Company hereby
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represents and warrants to the Bidder, and except as set forth in the disclosure
schedule delivered by the Bidder to the Company in connection with the execution
and delivery of this Agreement (the "Bidder Disclosure Schedule"), the Bidder
hereby represents and warrants to the Company, in each case as set forth in this
Article III, with the party making such representations and warranties being
referred to as the "Representing Party" and such Representing Party's Disclosure
Schedule as the "Representing Party's Disclosure Schedule." Notwithstanding the
foregoing, any representation or warranty which expressly refers to the Bidder
or its Subsidiaries is being made solely by the Bidder and any representation or
warranty which expressly refers to the Company or its Subsidiaries is being made
solely by the Company.
Section 3.1 ORGANIZATION, QUALIFICATION, ETC.
(a) The Representing Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority required for it to own
its properties and assets and to carry on its business as it is now being
conducted. The Representing Party is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Representing Party or substantially delay consummation of
the transactions contemplated by this Agreement or otherwise prevent the
Representing Party from performing its obligations hereunder. As used in this
Agreement, any reference to any state of facts, event, change or effect having a
"Material Adverse Effect" on or with respect to the Representing Party means a
material adverse effect on the financial condition, assets, liabilities or
results of operations of the Representing Party and its Subsidiaries, taken as a
whole, excluding any such effect resulting from or arising in connection with
(A) changes or conditions generally affecting the industries in which the
Representing Party and its Subsidiaries operate, unless, in the case of the
Company, such changes or conditions have a disproportionate effect on the
Company and its Subsidiaries, taken as a whole, or (B) changes in general
economic, regulatory or political conditions, unless, in the case of the
Company, such changes have a disproportionate effect on the Company and its
Subsidiaries, taken as a whole. Each Representing Party has made available to
the other copies of its certificate of incorporation and bylaws. Such copies of
each Representing Party's certificate of incorporation and bylaws are complete
and correct and in full force and effect, and the Representing Party is not in
violation of any of the provisions of its certificate of incorporation or
bylaws.
(b) Each of the Representing Party's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Representing Party's
Subsidiaries has the corporate power and authority required for it to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Representing Party. All the outstanding shares of capital stock of, or other
ownership interests in, the Representing Party's Subsidiaries are duly
authorized, validly issued, fully paid and non-assessable and, with respect to
such shares or ownership interests that are owned by the Representing Party and
its Subsidiaries, are owned free and clear of all liens, claims, mortgages,
encumbrances, pledges and security interests of any kind (each, a "Lien"). All
the outstanding shares of capital stock of, or other ownership interests in, the
Representing Party's Subsidiaries are wholly owned by the Representing Party,
directly or indirectly.
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Section 3.2 CAPITAL STOCK.
(a) Section 3.2(a) of the Representing Party's Disclosure Schedule sets
forth as of June 30, 2000:
(i) the number of authorized shares of each class or series of
capital stock of the Representing Party;
(ii) the number of shares of each class or series of capital stock
of the Representing Party which are issued and outstanding;
(iii) the number of shares of each class or series of capital stock
which are held in the treasury of such Representing Party;
(iv) the number of shares of each class or series of capital stock
of the Representing Party which are reserved for issuance, indicating each
specific reservation; and
(v) the number of shares of each class or series of capital stock of
such Representing Party which are subject to employee stock options or other
rights to purchase or receive capital stock granted under such Person's
stock option or other stock based employee or non-employee director benefit
plans, and, with respect to the Company, indicating the name of the plan,
the date of grant, the number of shares and the exercise price thereof.
(b) All the outstanding shares of capital stock of the Representing
Party are, and all shares of Bidder Common Stock to be issued in the Merger will
be when issued in accordance with the terms of this Agreement, duly authorized,
validly issued, fully paid and non-assessable and issued in compliance with all
applicable U.S. state and federal and foreign securities laws. Except as set
forth in Section 3.2(a) of the Representing Party's Disclosure Schedule and for
the transactions contemplated by this Agreement, (1) there are no shares of
capital stock of the Representing Party authorized, or as of the date of this
Agreement issued or outstanding, (2) as of the date of this Agreement there are
no authorized or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Representing
Party or any of its Subsidiaries, obligating the Representing Party or any of
its Subsidiaries to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock or other equity interest in the Representing
Party or any of its Subsidiaries or securities convertible into or exchangeable
for such shares or equity interests, or obligating the Representing Party or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and
(3) there are no outstanding contractual obligations of the Representing Party
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Representing Party or any Subsidiary of the Representing
Party or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary of the Representing Party or other
entity.
Section 3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION.
(a) The Company has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the Company
and, except for obtaining the requisite approval of the stockholders of the
Company (the "Company Stockholder Approval") and the filing of the Certificate
of Merger, no other corporate proceedings on the part of the Company are
necessary to authorize the consummation of the transactions contemplated hereby.
The Board of Directors of the Company has taken all appropriate action so that
Section 203 of the DGCL will not be applicable to the Company or to the Bidder
for any purpose. This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes a valid and binding
agreement of Bidder,
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constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) The Bidder has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the Bidder,
and other than the obtaining the requisite approval of the stockholders of the
Bidder (the "Bidder Stockholder Approval") and the filing of the Certificate of
Merger no other corporate proceedings on the part of the Bidder are necessary to
authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Bidder and,
assuming this Agreement constitutes a valid and binding agreement of the
Company, constitutes a valid and binding agreement of the Bidder, enforceable
against the Bidder in accordance with its terms.
(c) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 3.3(c) of the Representing Party's Disclosure
Schedule or as may be required under, and other applicable requirements of, the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") (in the case of the Bidder only), the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), state securities or blue
sky laws, and the rules and regulations of the Nasdaq National Market, or the
anti-competition laws or regulations of the European Union or any foreign
jurisdiction in which the Company or the Bidder (directly or through
Subsidiaries, in each case) has material assets or conducts material operations,
and the filing of the Certificate of Merger under the DGCL, none of the
execution, delivery or performance of this Agreement by the Representing Party,
the consummation by the Representing Party of the transactions contemplated
hereby or compliance by the Representing Party with any of the provisions hereof
will (i) conflict with or result in any breach of any provision of the
certificate of incorporation, bylaws or similar organizational documents of the
Representing Party or any of its Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any federal, regional, state or
local court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, whether U.S. or foreign (a
"Governmental Entity"), (iii) 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, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Representing Party or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, judgment, permit, license, ordinance, law,
statute, rule or regulation applicable to the Representing Party, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such filings, permits, authorizations, consents,
approvals, violations, breaches or defaults which are not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on the
Representing Party or prevent or substantially delay the consummation of the
transactions contemplated hereby.
Section 3.4 REPORTS AND FINANCIAL STATEMENTS. The Representing Party has
previously furnished or otherwise made available (by electronic filing or
otherwise) to the Bidder true and complete copies of:
(a) Annual Reports on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") for each of the years ended December 31,
1998 and 1999 in the case of the Company and the year ended December 31,
1999 in the case of Bidder.
(b) the Quarterly Report on Form 10-Q filed with the SEC for the
quarter ended March 31, 2000, for each of the Representing Parties;
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(c) each definitive proxy statement filed with the SEC since
December 31, 1998, for each of the Representing Parties;
(d) each final prospectus filed with the SEC since December 31,
1998, except any final prospectus on Form S-8, for each of the Representing
Parties; and
(e) all Current Reports on Form 8-K filed with the SEC since
January 1, 2000, for each of the Representing Parties.
As of their respective dates, such reports, proxy statements and prospectuses
filed with the SEC by the Representing Party (collectively with, and giving
effect to, all amendments, supplements and exhibits thereto, the "SEC Reports")
(i) complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. None
of the Representing Party's Subsidiaries is required to file any forms, reports
or other documents with the SEC. The audited consolidated financial statements
and unaudited consolidated interim financial statements included in the
Representing Party's SEC Reports (including any related notes and schedules)
fairly present in all material respects the financial position of the Bidder or
the Company and its consolidated Subsidiaries, as the case may be, as of the
dates thereof and the results of operations and cash flows for the periods or as
of the dates then ended (subject, in the case of the unaudited interim financial
statements, to normal recurring adjustments), in each case in accordance with
past practice and generally accepted accounting principles in the United States
("GAAP") consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since the date of Bidder's initial public
offering, the Bidder has timely filed all reports, registration statements and
other filings required to be filed by it with the SEC under the rules and
regulations of the SEC. Since January 1, 1999, the Company has timely filed all
reports, registration statements and other filings required to be filed by it
with the SEC under the rules and regulations of the SEC.
Section 3.5 NO UNDISCLOSED LIABILITIES. Neither the Representing Party nor
any of its Subsidiaries has any liabilities or obligations of any nature
required to be set forth on a balance sheet of the Representing Party under
GAAP, whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Representing Party's SEC Reports or (b) liabilities and
obligations which are not, individually or in the aggregate, reasonably expected
to have a Material Adverse Effect on the Representing Party.
Section 3.6 NO VIOLATION OF LAW. The businesses of the Representing Party
and its Subsidiaries are not being conducted in violation of any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute, rule or
regulation of any Governmental Entity (PROVIDED that no representation or
warranty is made in this Section 3.6 with respect to Environmental Laws), except
(a) as described in the Representing Party's SEC Reports, and (b) for violations
or possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Representing
Party.
Section 3.7 ENVIRONMENTAL MATTERS.
(a) Each of the Representing Party and its Subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required under any applicable Environmental Law and necessary
for it to carry on its business or operations as now conducted ("Environmental
Permits"), except for such failures to have Environmental Permits which,
individually or in the aggregate, are not reasonably expected to have a Material
Adverse Effect on the Representing Party. Each of such Environmental Permits is
in full force and effect, and each of the Representing Party and its
Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures to be in
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full force and effect or to be in compliance which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Representing Party.
(b) There are no Environmental Claims pending, or to the knowledge of
the Representing Party, threatened, against the Representing Party or any of its
Subsidiaries, or, to the knowledge of the Representing Party, any Person whose
liability for any such Environmental Claim the Representing Party or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law for which reserves have not been established in accordance with
GAAP, that, individually or in the aggregate, would have a Material Adverse
Effect on the Representing Party.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
threatened release or presence of any Hazardous Material, that would form the
basis of any Environmental Claim against the Representing Party or any of its
Subsidiaries, or for which the Representing Party or any of its Subsidiaries is
liable, except for such liabilities which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Representing
Party.
(d) As used in this Agreement:
(i) "Environmental Claim" means any claim, action, lawsuit or
proceeding by any Person which seeks to impose liability (including, without
limitation, liability for investigatory costs, cleanup costs, governmental
response costs, natural resources, damages, property damages, personal
injuries or penalties) arising out of, based on or resulting from (A) the
presence, or release or threatened release, of any Hazardous Materials at
any location, whether or not owned or operated by the Representing Party or
any of its Subsidiaries, or (B) circumstances which would give rise to any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Law" means any law or order of any Governmental
Entity relating to (A) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of, or (B) the
environment or to emissions, discharges, releases or threatened releases of,
Hazardous Materials, into the environment.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials or friable asbestos; (B) any chemicals or
other materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," or "toxic pollutants" under any Environmental Law; and
(C) pesticides.
Section 3.8 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.8(a) of the Representing Party's Disclosure Schedule
contains a true and complete list of each material deferred compensation,
incentive compensation or equity compensation plan; "welfare" plan, fund or
program (within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); each material employment,
termination or severance agreement; and each other material employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the
Representing Party or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Representing Party would be deemed at
any relevant time a "single employer" within the meaning of Section 4001(b) of
ERISA, for the benefit of any employee or former employee of the Representing
Party or any Subsidiary (the "Plans").
(b) In respect of Plans that are not International Plans, the
Representing Party has made available to the other Party: (i) correct and
complete copies of all documents embodying each Plan including (without
limitation) all amendments thereto and all related trust documents; (ii) the
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if
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any, required under ERISA or the Code in connection with each Plan; and
(iii) if the Plan is funded, the most recent annual and periodic accounting Plan
assets.
(c) No liability under Title IV or Section 312 of ERISA has been
incurred by the Representing Party or any ERISA Affiliate of the Representing
Party that has not been satisfied in full, and no condition exists that presents
a material risk to the Representing Party or any ERISA Affiliate of the
Representing Party of incurring any such liability, other than liability for
premiums due the Pension Benefits Guaranty Corporation (which premiums have been
paid when due), except as are not reasonably likely to have a Material Adverse
Effect on the Representing Party. To the knowledge of the Representing Party,
each Plan subject to Title IV of ERISA or Section 412 of the Code is
fully-funded on a termination basis.
(d) Neither the Representing Party nor any ERISA Affiliate of the
Representing Party has any liability to any Pension Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
(e) Each Plan of the Representing Party has been operated and
administered in accordance with its terms and applicable law, including but not
limited to ERISA and the Code, except as are not reasonably likely to have a
Material Adverse Effect on the Representing Party, and each Plan of the
Representing Party intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code, except for failures
to so qualify or be exempt which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Representing Party.
(f) Section 3.8(f) of the Representing Party's Disclosure Schedule sets
forth each Plan of the Representing Party under which as a result of the
consummation of the transactions contemplated by this Agreement, either alone or
in combination with another event, (i) any current or former employee or officer
of the Representing Party or any ERISA Affiliate of the Representing Party may
become entitled to severance pay or any other payment, except as expressly
provided in this Agreement, or (ii) any compensation due any such employee or
officer may be increased or the time of payment or vesting may become
accelerated.
(g) Except as set forth in Section 3.8(g) of the Representing Party's
Disclosure Schedule, no Plan of the Representing Party which is not an
International Plan provides, or reflects or represents any liability to provide,
retiree life insurance, retiree health or other retiree employee welfare
benefits to any Person for any reason, except as may be required by COBRA or
other applicable law. The program described by this Section 3.8(g) has at all
times provided that the Representing Party may amend and/or terminate such
program without liability (except in respect of current obligations outstanding
for current retired employees receiving benefits).
(h) There are no pending or, to the knowledge of the Representing Party,
threatened claims by of on behalf of any Plan of the Representing Party, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routing claims for benefits), except as would not,
individually or in the aggregate be reasonably likely to have a Material Adverse
Effect on the Representing Party.
(i) Each Plan of the Representing Party that has been adopted or
maintained by the Representing Party or any of its Subsidiaries, whether
formally or informally, for the benefit of employees outside the United States
("International Plans") has been established, maintained and administered in
material compliance with its terms and conditions and with the requirements
prescribed by any and all statutory or regulatory laws that are applicable to
such International Plans. No International Plan of the Representing Party has
unfunded liabilities that would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party.
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(j) Except as set forth in Section 3.8(j) of the Representing Party's
Disclosure Schedule, the Representing Party is not bound by or obligated under
any labor, collective bargaining or union agreements.
Section 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Representing Party's SEC Reports, since December 31, 1999 (a) the businesses
of the Representing Party and its Subsidiaries have been conducted in all
material respects in the ordinary course and (b) there has not been any event,
occurrence, development or state of circumstances or facts that has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Representing Party.
Section 3.10 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) The Proxy Statement (or any amendment or supplement thereto) will
not, on the date the Proxy Statement is mailed to stockholders of the Company
and to stockholders of the Bidder and at the time of the Stockholders Meetings,
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 the light of the circumstances under which they are made, not
misleading. None of the information supplied by or on behalf of the Company or
any of its Subsidiaries for inclusion or incorporation by reference in the
Registration Statement will, at the date it becomes effective and at the time of
the Stockholders Meetings 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 are made, not misleading. The Proxy Statement will, when filed by the
Company and the Bidder with the SEC, comply as to form in all material respects
with the applicable provisions of the Exchange Act. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to the
statements made in any of the foregoing documents based on and in conformity
with information supplied by or on behalf of the Bidder for inclusion or
incorporation by reference therein.
(b) The Registration Statement on Form S-4 to be filed with the SEC by
the Bidder in connection with the Merger, as amended or supplemented from time
to time (as so amended and supplemented, the "Registration Statement"), will
not, on the date of filing with the SEC or at the time it becomes effective
under the Securities Act, and on the date the Proxy Statement is first mailed to
stockholders of the Company and stockholders of the Bidder and at the time of
the Stockholders Meetings, 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 the light of the circumstances
under which they are made, not misleading. None of the information supplied by
or on behalf of the Bidder or any of its Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
the stockholders of the Bidder and at the time of the Stockholders Meetings,
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 they were made, not misleading. The Proxy
Statement will, when filed by the Bidder and the Company with the SEC, and the
Registration Statement will, when filed by the Bidder with the SEC, comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, the
Bidder makes no representation or warranty with respect to the statements made
in the Registration Statement based on and in conformity with information
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference therein.
Section 3.11 TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of the Representing Party, each affiliated, combined,
consolidated or unitary group of which the Representing Party is a member (an
"Affiliated Group") have been timely filed or requests for
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extensions have been timely filed and any such extension has been granted and
has not expired, and all such filed Tax Returns are complete and accurate except
to the extent any failure to file or any inaccuracies in filed Tax Returns would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Representing Party. All Taxes due and owing by the
Representing Party or any Representing Party's Affiliated Group have been paid,
or adequately reserved for, except to the extent any failure to pay or reserve
for would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on the Representing Party. There is no audit or
examination and there is no deficiency, refund litigation, proposed adjustment
or matter in controversy with respect to any Taxes due and owing by the
Representing Party or any Representing Party's Affiliated Group which if
determined adversely would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party. All
assessments for Taxes due and owing by the Representing Party or any
Representing Party's Affiliated Group with respect to completed and settled
examinations or concluded litigation have been paid, except to the extent that
any failures to pay would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party.
(b) The Representing Party has not (i) entered into a closing agreement
or other similar agreement with a taxing authority relating to Taxes of the
Representing Party or any Representing Party's Affiliated Group with respect to
a taxable period for which the statute of limitations is still open, or
(ii) with respect to U.S. federal income Taxes, granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any income Tax, in either case, that is still outstanding. There
are no Liens relating to material Taxes upon the assets of the Representing
Party or any Representing Party's Affiliated Group other than Liens relating to
Taxes not yet due and Liens that would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party. Neither the
Representing Party, any Representing Party's Affiliated Group is a party to or
is bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement in respect of Taxes (other than with respect to agreements solely
between or among members of the consolidated group of which the Representing
Party is the common parent and agreements and obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on the
Representing Party). Neither the Representing Party nor any Representing Party's
Affiliated Group has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent either the Merger or the
Dexter Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(c) Section 3.11(c) of the Company Disclosure Schedule lists each Tax
Return of the Company or any Affiliated Group for which an accurate copy of the
actual Tax Return as filed with the relevant taxing authority has been made
available by the Company to the Bidder on or before the date hereof.
(d) Neither the Company nor any Affiliated Group has received any
private letter ruling from the Internal Revenue Service within the three-year
period ending on the date hereof.
(e) Neither the Company nor any member of any Affiliated Group has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock (to any Person or entity that is not a member of any Affiliated Group)
qualifying for tax-free treatment under Section 355 of the Code (i) within the
two-year period ending on the date hereof or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger or the Dexter Merger.
(f) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits,
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gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation or net worth, and
taxes or other charges in the nature of excise, withholding, ad valorem or value
added, and (ii) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 3.12 TITLE AND RELATED MATTERS. Except as set forth in
Section 3.12(a) of the Company Disclosure Schedule, the Company or one of its
Subsidiaries has good and valid title to, or a valid leasehold or contractual
interest in, all of the properties and assets reflected in the latest balance
sheet included in the SEC Reports or acquired after the date thereof (except for
properties or assets sold or otherwise disposed of since the date thereof), free
and clear of all Liens, except for those exceptions to title listed in
Section 3.12(a) of the Company Disclosure Schedule, statutory Liens securing
payments not yet due or delinquent or the validity of which is being contested
in good faith by appropriate proceedings, and such imperfections or
irregularities in title that do not materially and adversely affect the current
use of the properties or assets subject thereto or affected thereby or otherwise
materially impair the business operations currently conducted at such
properties. As of the date hereof, Section 3.12(b) of the Company Disclosure
Schedule contains a complete and correct list of all real property owned by the
Company or any of its Subsidiaries, and a complete and correct list of each
title insurance policy insuring title to any of such real properties.
Section 3.13 CONTRACTS.
(a) Schedule 3.13 (a) of the Company Disclosure Schedule sets forth a
complete and correct list of each contract (the "Material Contracts") to which
the Company or any of the Subsidiaries is a party which, as of the date hereof,
(i) is a collective bargaining agreement or any agreement that contains any
severance pay liabilities or obligations; (ii) is an employment or consulting
agreement or contract with an employee or individual consultant or a consulting
agreement or contract with a consulting firm or other organization (other than
employment agreements that are created as a matter of Law); (iii) is a note,
bond or debenture or other agreement or instrument relating to borrowed money or
an agreement of guarantee or indemnification running to any Person other than a
Subsidiary; (iv) is an agreement or contract containing any covenant limiting
the freedom of the Company or any of its Subsidiaries to engage in any line of
business or compete with any person; (v) provides for aggregate future payments
of more than $250,000; (vi) provides for aggregate future payments in excess of
$100,000, has a term exceeding one year and which may not be cancelled upon 90
or fewer days' notice without any liability, penalty or premium (other than a
nominal cancellation fee or charge); or (vii) is material to the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole; PROVIDED that Schedule 3.13(a) does not list any contract for the
purchase or sale of goods or services entered into in the ordinary course of
business which may be cancelled on 90 or fewer days' notice without any
liability, penalty or premium (other than a nominal cancellation fee or charge).
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
Schedule, (i) each Material Contract is in full force and effect, and
(ii) there is not, with respect to the Material Contracts, any existing default,
or event of default, or event which with or without due notice or lapse of time
or both would constitute a default or event of default, on the part of the
Company or any of its Subsidiaries or to the best knowledge of the Company any
other party thereto, except where the failure to be in full force and effect or
where such default or event of default is not reasonably likely to have a
Material Adverse Effect on the Company.
Section 3.14 PATENTS, TRADEMARKS AND SIMILAR RIGHTS. Section 3.14 of the
Representing Party's Disclosure Schedule sets forth a complete and correct list
of all worldwide patents, trademarks, trade names, service marks, copyrights,
copyright registrations and applications, together with appropriate registration
numbers, that are necessary for the conduct of the business of the Representing
Party and
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its Subsidiaries as presently conducted (other than commercially available
software) (the "Intellectual Property"). Subject to the licenses and other
restrictions listed in Section 3.14 of the Representing Party's Disclosure
Schedule, the Representing Party or one of its Subsidiaries owns or holds the
Intellectual Property in each case free and clear of all Liens, except where the
failure to so own or hold would not have a Material Adverse Effect on the
Representing Party. Except as set forth in Section 3.14 of the Representing
Party's Disclosure Schedule, to the best knowledge of the Representing Party:
(i) none of the Intellectual Property presently being sold or used in the
business of the Representing Party and its Subsidiaries as presently conducted
infringes upon or conflicts with any rights owned or held by any other Person;
(ii) no Person is infringing any Intellectual Property; or (iii) there is not
pending or threatened in writing any claim or litigation against the
Representing Party or any of its Subsidiaries contesting the rights of the
Representing Party or any of its Subsidiaries to the Intellectual Property,
except for any claims or litigation which would not have a Material Adverse
Effect on the Representing Party.
Section 3.15 LEGAL PROCEEDINGS, ETC. As of the date hereof, except as set
forth in Section 3.15 of the Company Disclosure Schedule and except for matters
involving only monetary recovery in which the damages sought to be imposed do
not exceed $200,000 individually or $1 million in the aggregate, there are no
legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to the best knowledge of the Company, threatened in
writing against the Company or any of its Subsidiaries.
Section 3.16 DISCLOSURE. The representations and warranties by the
Representing Party in this Agreement and the statements contained in the
schedules, certificates and other writings furnished and to be furnished by the
Representing Party to the other party pursuant to this Agreement, when
considered as a whole and giving effect to any supplements or amendments thereof
prior to the time of signing on the date hereof, do not and will not contain any
untrue statement of a material fact and do not and will not omit to state any
material fact necessary to make the statements herein or therein not misleading,
it being understood that as used in this Section 3.16 "material" means material
to the Representing Party and its Subsidiaries, taken as a whole.
Section 3.17 OPINION OF FINANCIAL ADVISORS.
(a) The Special Committee has received the opinion of Credit Suisse
First Boston Corporation, dated the date of this Agreement, substantially to the
effect that, as of such date, the Merger Consideration to be received in the
Merger by the holders of Shares (other than Dexter and its subsidiaries,
officers and directors) is fair to such holders from a financial point of view.
(b) The Board of Directors of the Bidder has received the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, dated the date of this
Agreement, substantially to the effect that, as of such date, the consideration
to be issued and delivered by the Bidder in the Merger and the Dexter Merger,
taken together, is fair to the Bidder from a financial point of view.
Section 3.18 BIDDER SHARE OWNERSHIP. As of the date hereof, the Bidder
does not own any securities of the Company.
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY. From and after the date
hereof and prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 6.1 (the "Termination
Date"), and except with the prior written consent of the Bidder (which
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consent will not be unreasonably withheld or delayed), as set forth in
Section 4.1 of the Company Disclosure Schedule or as may be expressly permitted
pursuant to this Agreement, the Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their ordinary and usual course of business
consistent with past practice;
(ii) shall use its reasonable best efforts, and cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact its
present business organization and goodwill, keep available the services of
its current officers and other key employees and preserve its relationships
with those Persons having material business dealings with the Company and
its Subsidiaries;
(iii) shall not, and shall not permit its Subsidiaries to, authorize
or pay any dividends on or make any distribution with respect to its
outstanding shares of capital stock (other than any dividends or
distribution by a wholly owned Subsidiary of the Company to the Company or
any of its wholly owned Subsidiaries);
(iv) shall not, and shall not permit any of its Subsidiaries to
establish, enter into or amend any severance plan, agreement or arrangement
or any Plan of the Company or increase the compensation payable or to become
payable or the benefits provided to its officers, directors or employees,
other than as contemplated by law or any existing contract, employee benefit
or welfare plan or policy, or in the ordinary course of business consistent
with past practice (1) with respect to employees who are not officers of the
Company, and (2) with respect to annual bonuses and other incentive awards
for employees including officers;
(v) shall not, and shall not permit any of its Subsidiaries to,
authorize, or announce an intention to authorize, or enter into an agreement
with respect to, any merger, consolidation or business combination, any
acquisition of a material amount of assets or securities, any disposition of
a material amount of assets or securities or any other similar extraordinary
transaction;
(vi) shall not, and shall not permit any of its Subsidiaries to,
propose or adopt any amendments to its certificate of incorporation or
bylaws (or other similar organizational documents);
(vii) shall not, and shall not permit any of its Subsidiaries to,
issue or authorize the issuance of, or agree to issue or sell any shares of
capital stock of any class (whether through the issuance or granting of
options, warrants, commitments, convertible securities, subscriptions,
rights to purchase or otherwise), except for (1) the issuance of Life
Technologies Common Stock pursuant to options and grants outstanding as of
the date hereof under the Company's 1997 Long-Term Incentive Plan, 1996
Non-Employee Directors Stock Option Plan, 1995 Long-Term Incentive Plan and
1991 Stock Option Plan (each such plan, a "Company Equity Plan") or
(2) options and other equity awards granted in the ordinary course of
business consistent with past practice to any new employee hired after the
date hereof but before the Closing Date or pursuant to formula awards, in
either case under a Company Equity Plan;
(viii)shall not, and shall not permit any of its Subsidiaries to,
reclassify, combine, split, purchase or redeem any shares of its capital
stock or purchase or redeem any rights, warrants or options to acquire any
such shares;
(ix) shall not, and shall not permit any of its Subsidiaries to,
(A) incur, assume or prepay any indebtedness or any other liabilities for
borrowed money or issue any debt securities other than incurrences and
repayments of indebtedness under the Company's or its Subsidiaries' credit
facilities in existence on the date of this Agreement, or (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
(other than wholly owned Subsidiaries), except for guarantees by
Subsidiaries of the Company indebtedness permitted under the preceding
clause (A);
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(x) shall not, and shall not permit any of its Subsidiaries to (or
consent to any proposal by any Person in which the Company has an investment
to), make or forgive any loans, advances or capital contributions to, or
investments in, any other Person other than the Company or any wholly owned
Subsidiary of the Company (including any intercompany loans, advances or
capital contributions to, or investments in, any affiliate) other than
advances to employees in the ordinary course of business in accordance with
the Company's or its Subsidiaries' established policies;
(xi) shall not, and shall not permit any of its Subsidiaries to,
(A) enter into any material lease, license, contract or agreement or
otherwise subject to any material Lien any of its properties or assets
(including securitizations), other than in the ordinary course of business
consistent with past practice; (B) modify, amend in any material respect, or
terminate any of its material contracts; (C) waive, release or assign any
rights that are material to the Company and its Subsidiaries taken as a
whole; or (D) permit any insurance policy naming it as a beneficiary or a
loss payable payee to lapse, be cancelled or expire unless a new policy with
substantially identical coverage is in effect as of the date of lapse,
cancellation or expiration;
(xii) shall not, and shall not permit any of its Subsidiaries to,
change any of the financial accounting methods or practices used by it
unless required by GAAP;
(xiii)shall not, and shall not permit any of its Subsidiaries to,
make any Tax election that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company or settle or
compromise any material Tax liability;
(xiv) shall not, and shall not permit any of its Subsidiaries to,
take any action that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code; and
(xv) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would result in any of the conditions to the Merger set
forth in Article V hereof not being satisfied.
Section 4.2 BIDDER INTERIM OPERATIONS. Except as otherwise expressly
contemplated hereby, without the prior consent of the Company (which consent
will not be unreasonably withheld or delayed), from the date hereof until the
earlier of the Effective Time or the Termination Date, the Bidder shall, and
shall cause each of its Subsidiaries to, conduct their business in all material
respects in the ordinary and usual course consistent with past practice and use
all reasonable efforts to (i) preserve intact its present business organization
and goodwill, (ii) keep available the services of its current officers and other
key employees, (iii) maintain in effect all material licenses, approvals and
authorizations from Governmental Entities, including, without limitation, all
material licenses and permits that are required for the Bidder or any of its
Subsidiaries to carry on its business as presently conducted and (iv) preserve
existing relationships with its material partners, lenders, suppliers and others
having material business relationships with it so that the business of the
Bidder and its Subsidiaries shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing, except as
otherwise expressly contemplated by this Agreement, from the date hereof until
the earlier of the Effective Time or the Termination Date, without the prior
consent of the Company (which consent will not be unreasonably withheld or
delayed), the Bidder shall not, nor shall it permit any Subsidiary to:
(a) amend its certificate of incorporation or bylaws (or other
similar organizational documents);
(b) amend in any respect the terms of the capital stock of the
Bidder;
(c) split, combine, subdivide or reclassify any shares of Bidder
Common Stock or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of Bidder Common Stock, except for (i) regular quarterly cash dividends by
the Bidder consistent in timing and amount with past practice, or
(ii) dividends paid by any Subsidiary to the Bidder or any Subsidiary that
is, directly or indirectly, wholly owned by the Bidder;
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(d) change any of the financial accounting methods or practices used
by it unless required by GAAP;
(e) enter into or acquire any new line of business that (i) is
material to the Bidder and its Subsidiaries, taken as a whole, and (ii) is
not strategically related to the current business or operations of the
Bidder and its Subsidiaries;
(f) incur indebtedness outside of the ordinary course or for
acquisitions (other than in order to consummate the transactions
contemplated by this Agreement or the Dexter Merger Agreement);
(g) engage in any merger, consolidation, share exchange, business
combination, reorganization, recapitalization or other similar transaction
or any disposition, directly or indirectly, of assets, securities or
ownership interests representing a material portion of the total assets of
the Bidder and its Subsidiaries taken as a whole;
(h) shall not, and shall not permit any of its Subsidiaries to, take
any action that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code; or
(i) agree, in writing or otherwise, to take any of the foregoing
actions or take any action which would result in any of the conditions to
the Merger set forth in Article V hereof not being satisfied.
Section 4.3 ACCESS; CONFIDENTIALITY.
(a) Except for competitively sensitive information and subject to legal
and contractual restrictions, the Company shall (and shall cause its
Subsidiaries to) afford to the Bidder's officers, employees, accountants,
counsel and other authorized representatives reasonable access during normal
business hours upon reasonable notice, throughout the period prior to the
earlier of the Effective Time or the Termination Date, to its properties,
offices, employees, contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the requirements
of federal or state securities laws and shall (and shall cause each of its
Subsidiaries to) furnish to the Bidder such additional financial and operating
data and other information as to its and its Subsidiaries' respective businesses
and properties as the Bidder may from time to time reasonably request. The
Bidder will make all reasonable best efforts to minimize any disruption to the
businesses of the Company and the Company's Subsidiaries which may result from
the requests for access, data and information hereunder. The Bidder shall afford
to the Company's officers, employees, accountants, counsel and other authorized
representatives reasonable access during normal business hours upon reasonable
notice, to its officers, employees, and books and records to the extent
reasonably necessary in connection with the preparation of the Proxy Statement.
No investigation pursuant to this Section 4.3 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All requests for access and information shall
be coordinated through designated senior executives of each of the parties.
(b) The Bidder will hold all information provided under this
Section 4.2 that is non-public in confidence to the extent required by, and in
accordance with, the provisions of the letter dated February 27, 2000, between
Dexter and the Bidder. Except as required by law, the Company will hold, and
will cause its officers, employees, accountants, counsel and other authorized
representatives to hold, confidential, all information and documents obtained
pursuant to this Section 4.3 except for information (i) the Company can show by
tangible evidence to have been in its possession prior to your receipt thereof
from the Bidder; PROVIDED that such information is not subject to another
confidentiality agreement with, or other obligation (legal, fiduciary or
contractual) of secrecy to, the Bidder or another party; (ii) is as of the date
of this Agreement or hereafter becomes generally available to the public, other
than as a result of a disclosure by the Company or its representatives;
(iii) was or may after the
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date of this Agreement be available to the Company on a non-confidential basis
from a third party that is not under any confidentiality obligation (legal,
fiduciary or contractual) to the Bidder regarding such information; or (iv) is
independently acquired or developed by the Company or its representatives
without violating any of the Company's obligations under this Section 4.3(b).
Section 4.4 STOCKHOLDERS MEETING; PROXY STATEMENT; REGISTRATION STATEMENT.
(a) As promptly as practicable following the date of this Agreement,
(i) the Company shall, acting through its Board of Directors and subject to the
Company's Board of Directors' fiduciary duties under applicable law, duly call,
give notice of, solicit proxies for, convene and hold an annual or special
meeting of its stockholders (the "Company Stockholders Meeting") in accordance
with applicable law, its certificate of incorporation and its bylaws, and
(ii) the Bidder shall, acting through its Board of Directors, duly call, give
notice of, solicit proxies for, convene and hold an annual or special meeting of
its stockholders (the "Bidder Stockholders Meeting" and, together with the
Company Stockholders Meeting, the "Stockholders Meetings") in accordance with
applicable law, its certificate of incorporation and bylaws, for the purposes
of, among other actions, in each case, considering and taking action upon the
approval of the Merger and the approval and adoption of this Agreement. Each of
the Company (subject to the Company's Board of Directors' fiduciary duties under
applicable law) and the Bidder shall include in the Proxy Statement the
recommendation of its respective Board of Directors that its respective
stockholders vote in favor of the approval of the Merger and the approval and
adoption of this Agreement and, in the case of the Bidder, in favor of the
approval of an amendment to the Bidder's certificate of incorporation to
authorize a sufficient number of shares of Bidder Common Stock to issue the
Merger Consideration (the "Charter Amendment") and an increase in the number of
shares issuable by the Bidder under the Bidder's option plans. The Bidder and
the Company shall cause their respective Stockholders Meetings to be held on the
same date, which date shall be the same as the date of the Company Shareholders
Meeting (as defined in the Dexter Merger Agreement).
(b) As promptly as practicable following the date of this Agreement, the
Company and the Bidder shall (x) prepare and file with the SEC a preliminary
joint proxy statement relating to the Merger, this Agreement and the Charter
Amendment, and (y) obtain and furnish the information required to be included by
the SEC in the Proxy Statement and, after consulting with one another respond
promptly to any comments made by the SEC with respect to the preliminary joint
proxy statement and cause a definitive joint proxy statement, including any
amendments or supplements thereto, to be mailed to their respective stockholders
at the earliest practicable date; PROVIDED that no amendments or supplements to
the Proxy Statement will be made by either party without consultation with the
other party and its counsel. Such definitive joint proxy statement shall also
constitute the prospectus of the Bidder with respect to shares of Bidder Common
Stock to be issued in connection with the transactions contemplated by this
Agreement (such joint proxy statement and prospectus is referred to herein as
the "Proxy Statement"), which prospectus is to be filed with the SEC as part of
the Registration Statement for the purpose of registering Bidder Common Stock
under the Securities Act. Each of the parties agrees to provide the other party
and its counsel with any comments, whether written or oral, that such party may
receive from time to time from the SEC or its staff with respect to the Proxy
Statement or the Registration Statement, as the case may be, promptly after the
receipt of such comments and to consult with the other party and its counsel
prior to responding to any such comments.
(c) As promptly as practicable following the date of this Agreement, the
Bidder shall prepare and file with the SEC the Registration Statement, and shall
use its reasonable best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. The Bidder shall obtain and
furnish the information required to be included by the SEC in the Registration
Statement and, after consultation with the Company, respond promptly to any
comments made by the SEC with respect to the Registration Statement and cause
the prospectus included therein, including any
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amendments or supplements thereto, to be mailed to the Company's stockholders at
the earliest practicable date after the Registration Statement is declared
effective by the SEC, PROVIDED that no amendments or supplements to the
Registration Statement will be made by the Bidder without consultation with the
Company and its counsel. The Bidder shall also take any action required to be
taken under state blue sky or other securities laws in connection with the
issuance of Bidder Common Stock in the Merger.
Section 4.5 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement and applicable
law, each of the parties shall act in good faith and use commercially reasonable
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
the transactions contemplated by this Agreement as soon as practicable. Without
limiting the foregoing, the parties shall, and shall cause their respective
Subsidiaries to, and the parties shall use commercially reasonable efforts to
cause their (and their respective Subsidiaries') directors, officers, employees,
agents, attorneys, accountants and representatives, to (i) consult and cooperate
with and provide assistance to each other in the preparation and filing with the
SEC of the preliminary Proxy Statement, the Proxy Statement and the Registration
Statement and all necessary amendments or supplements thereto; (ii) obtain all
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permissions or actions by, and give all necessary
notices to, and make all filings with and applications and submissions to, any
Governmental Entity or other Person necessary in connection with the
consummation of the transactions contemplated by this Agreement as soon as
reasonably practicable; (iii) provide all such information concerning such
party, its Subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with any of
the foregoing; (iv) avoid the entry of, or have vacated or terminated, any
injunction, decree, order, or judgment that would restrain, prevent, or delay
the consummation of the Merger, including but not limited to defending through
litigation on the merits any claim asserted in any court by any Person; and
(v) take any and all reasonable steps necessary to avoid or eliminate every
impediment under any antitrust, competition, or trade regulation law that is
asserted by any Governmental Entity with respect to the Merger so as to enable
the consummation of the Merger to occur as expeditiously as possible. Prior to
making any application to or filing with a Governmental Entity or other entity
in connection with this Agreement (other than filing under the HSR Act), each
party shall provide the other party with drafts thereof and afford the other
party a reasonable opportunity to comment on such drafts.
(b) The Company and the Bidder shall keep the other reasonably apprised
of the status of matters relating to the completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by the Bidder or the Company, as the
case may be, or by any of their respective Subsidiaries, from any third party
and/or any Governmental Entity with respect to the transactions contemplated by
this Agreement.
Section 4.6 EMPLOYEE STOCK OPTIONS AND OTHER EMPLOYEE BENEFITS.
(a) Simultaneously with the Merger, (i) each outstanding option (each a
"Company Stock Option") to purchase or acquire a share of Company Common Stock
under employee incentive or benefit plans, programs or arrangements and
non-employee director plans presently maintained by the Company (the "Company
Option Plans") shall be assumed by the Bidder and converted into an option to
purchase the number of shares (rounded down to the nearest full share) of Bidder
Common Stock equal to the product of (x) the Exchange Ratio multiplied by
(y) the number of shares of Company Common Stock which could have been issued
prior to the Effective Time upon the exercise of such option and were not
previously exercised, at an exercise price per share (rounded upward to the
nearest cent) equal to the exercise price for each share of Company Common Stock
subject to such option divided by the Exchange Ratio, with all references in
each such option to the Company being
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deemed to refer to the Bidder, where appropriate, PROVIDED, HOWEVER, that with
respect to any Common Stock Option which, immediately prior to the Merger, is an
"incentive stock option," within the meaning of Section 422 of the Code, the
adjustments provided in this Section 4.6 shall, if applicable, be modified in a
manner so that the adjustments are consistent with requirements of
Section 424(a) of the Code, and (ii) the Bidder shall assume the obligations of
the Company under the Company Option Plans. The other terms of each such option,
and the plans under which they were issued, shall continue to apply in
accordance with their terms, including any provisions providing for acceleration
of vesting and exercisability. At or prior to the Effective Time, the Bidder
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Bidder Common Stock for delivery upon exercise of Company
Stock Options assumed by it in accordance with this Section 4.6. As soon as
practicable after the Effective Time, if necessary, the Bidder shall file a
registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the Bidder Common Stock
subject to such Company Stock Options, and shall use its best efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as the Company Stock Options remain outstanding. The Company shall take such
steps as may be required to cause the transactions contemplated by this
Section 4.6(a) and any other dispositions of Company equity securities
(including derivative securities) in connection with this Agreement or the
transactions contemplated hereby by any individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
The Bidder shall take such steps as may be required to cause the transactions
contemplated by this Section 4.6(a) and any other acquisitions of Bidder equity
securities (including derivative securities) in connection with this Agreement
or the transactions contemplated hereby by any individual who is or becomes at
or before Closing a director or officer of the Bidder to be exempt under
Rule 16b-3 promulgated under the Exchange Act. The steps to taken by the Company
and the Bidder in connection with the exemption under Rule 16b-3 described above
shall be taken in accordance with the interpretative letter dated January 12,
1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
(b) For the period through and including December 31, 2001, the Bidder
shall, or shall cause its Subsidiaries to, maintain (i) employee benefit plans,
programs, policies and arrangements, wages or salaries, as applicable, and bonus
and other incentive compensation plans, programs, policies and arrangements for
each individual who was an employee of the Company or any Subsidiary of the
Company immediately prior to the Effective Time, which are, in the aggregate, no
less favorable than those provided by the Company and its Subsidiaries as of
immediately before the Effective Time and (ii) contribution levels and loan
provisions under the defined contribution plans of the Company and its
Subsidiaries, in each case, at levels and subject to terms and conditions which
are no less favorable that those provided by the Company and its Subsidiaries as
of immediately prior to the Effective Time. Each Person who is an employee or
former employee of the Company or its Subsidiaries immediately prior to the
Effective Time (a "Company Employee") shall be given credit for all service with
the Company or any of its Subsidiaries (and service credited by the Company or
any of its Subsidiaries) prior to the Effective Time, using the same methodology
utilized by the Company as of immediately before the Effective Time for
crediting service and determining levels of benefits, (i) for all purposes
(other than benefit accrual under any defined benefit pension plan) under all
employee benefit plans, programs and arrangements maintained by or contributed
to by the Bidder and its Subsidiaries in which such Company Employees become
participants for purposes of eligibility to participate, vesting and
determination of level of benefits, and (ii) for purposes of calculating the
amount of each Company Employee's benefits under all severance and vacation pay
plans, programs, policies and arrangements. The Bidder shall (x) waive, or cause
to be waived, all limitations as to preexisting conditions exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Company Employees under any welfare benefit plans that such
Company Employees may be eligible to participate in after the Effective Time,
except to the extent such limitations or waiting periods are
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already in effect with respect to such employees and have not been satisfied as
of the Effective Time under any welfare benefit plan maintained for the Company
Employees immediately prior to the Effective Time, and (y) provide each Company
Employee with credit for any co-payments, deductibles and other out-of-pocket
expenses incurred prior to the Effective Time in satisfying any applicable
co-payment, deductible and other out-of-pocket expense requirements under any
welfare plans that such Company Employees are eligible to participate in after
the Effective Time, as if those deductibles, co-payments and other out-of-pocket
expenses had been incurred under the welfare plans in which such employees are
eligible to participate after the Effective Time. Without limiting the
generality of the foregoing, the Bidder shall, and shall cause its Subsidiaries
to, assume and honor all employment, consulting, termination and severance
agreements to which the Company or any of its Subsidiaries is a party.
(c) At the direction of the Bidder, the Company shall terminate the Life
Technologies, Inc. Extra Savings Plan (the "ESP"). The Bidder shall notify the
Company at least (3) days prior to the Closing of its decision to terminate the
ESP. If the Bidder has notified the Company of its decision to terminate the
ESP, the Bidder shall receive from the Company evidence (in a form satisfactory
to the Bidder) that the ESP shall be terminated effective as of the day
immediately preceding the Closing. The Bidder shall, consistent with the terms
of its 401(k) plan, and applicable law, allow individuals who were employees of
the Company or any Subsidiary of the Company as of immediately prior to the
Closing to participate in the Bidder's 401(k) plan and the Bidder shall cause
such plan to accept direct rollovers and rollover contributions (each, to the
extent requested by a ESP participant) in respect of the ESP account balances
(including any outstanding loans) held by such individuals.
(d) Promptly following the Effective Time, to the extent permitted by
applicable law (and pending shareholder approval, which the Bidder shall use its
best efforts to obtain), the Bidder will (after consultation with the Company's
current senior management team) issue awards pursuant to the Bidder's stock
option plan to the Company's employees, which awards are consistent in terms of
depth and amount of participation with the policies presently employed by the
Bidder after giving consideration to relevant differences in total benefits
between the Company and the Bidder.
Section 4.7 TAKEOVER STATUTE. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company
and the Bidder and the members of their respective Boards of Directors shall
grant such approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
Section 4.8 PUBLIC ANNOUNCEMENTS. The Bidder and the Company agree that
neither one of them will issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the other party
(which approval will not be unreasonably withheld), except as may be required by
applicable law or the rules of any applicable stock exchange on which such
party's securities are listed.
Section 4.9 AFFILIATES. As soon as practicable, the Company shall deliver
to the Bidder a list identifying, to the best of the Company's knowledge, all
persons who will be, at the time of the Company Stockholder Approval, deemed to
be "affiliates" of the Company for purposes of Rule 145 under the Securities
Act. The Company shall advise the Bidder of any additions or deletions to or
from such list from time to time thereafter. The Company shall use its
reasonable best efforts to cause each such person to deliver to the Bidder at
least 30 days prior to the Closing Date a written "affiliates" agreement in
customary form and substance.
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Section 4.10 NASDAQ NATIONAL MARKET QUOTATION. The Bidder shall use its
best efforts to cause the shares of Bidder Common Stock to be issued in
connection with the transactions contemplated by this Agreement to be approved
for quotation on Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
Section 4.11 TAX-FREE REORGANIZATION. The Bidder and the Company intend
that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. The Bidder and the Company shall each use all
reasonable efforts to cause the Merger to so qualify and to obtain the opinions
of their respective tax counsel referred to in Sections 5.2(a) and 5.3(a),
including the execution of the representation letters referred to therein.
Neither the Bidder nor the Company shall knowingly take any action, or knowingly
fail to take any action, that would cause the Merger not to qualify as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required pursuant to a "determination" within the meaning of
Section 1313(a) of the Code.
Section 4.12 DISCLOSURE SCHEDULE SUPPLEMENTS. From time to time after the
date of this Agreement and prior to the Effective Time, the Company will
promptly supplement or amend the Company Disclosure Schedule with respect to any
matter hereafter arising which, if existing or occurring at or prior to the date
of this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby in any material respect. From time to time after the
date of this Agreement and prior to the Effective Time, the Bidder will promptly
supplement or amend the Bidder Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Bidder Disclosure Schedule or which is necessary to correct any information in a
schedule or in any representation and warranty of the Bidder which has been
rendered inaccurate thereby in any material respect. For purposes of determining
the accuracy of the representations and warranties of the Company contained in
this Agreement and the accuracy of the representations and warranties of the
Bidder contained in this Agreement in order to determine the fulfillment of the
conditions set forth in Sections 5.2(b) and 5.3(b), the Company Disclosure
Schedule and the Bidder Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any subsequent supplement or amendment
thereto.
Section 4.13 INDEMNIFICATION; INSURANCE.
(a) From and after the Effective Time, the Bidder will indemnify and
hold harmless each present and former director and officer of the Company and
its Subsidiaries (the "Indemnified Parties"), against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, by
reason of the fact that such individual is or was a director, officer, employee
or agent of the Company or any of its Subsidiaries, or is or was serving at the
request of the Company or any of its Subsidiaries as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent permitted under applicable law, and the
Bidder shall also advance fees and expenses (including attorneys fees) as
incurred to the fullest extent permitted under applicable law; PROVIDED, that to
the extent the Company or any of its Subsidiaries and any Indemnified Party are
parties to an existing indemnification agreement, the indemnification provided
for pursuant to this Section 4.13(a) shall be provided by the Bidder in
accordance with the procedures prescribed in such indemnification agreement.
(b) For six years from the Effective Time, the Bidder shall maintain in
effect the Company's and its Subsidiaries' current directors' and officers'
liability insurance policies (the "Company Policies") covering those Persons who
are currently covered by the Company Policies; PROVIDED, HOWEVER, that in
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no event shall the Bidder be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by the Company or its
Subsidiaries for such insurance, and PROVIDED FURTHER, that if the annual
premiums of such insurance coverage exceeds such amount, the Bidder shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount; and PROVIDED FURTHER that the Bidder may meet its
obligations under this paragraph by covering the above Persons under the
Bidder's insurance policy or policies on the terms described above.
Section 4.14 ADDITIONAL REPORTS AND INFORMATION. The Bidder shall furnish
to the Company copies of all reports of the type referred to in Section 3.4
which it files with the SEC on or after the date hereof, and the Bidder
represents and warrants that as of the respective dates thereof, such reports
will not contain any untrue statement of a material fact or 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 audited consolidated financial statements and the unaudited
consolidated interim financial statements included in such reports (including
any related notes and schedules) will fairly present the financial position of
the Bidder and its consolidated Subsidiaries as of the dates thereof and the
results of operations and cash flows or other information included therein for
the periods or as of the date then ended (subject, in the case of the interim
financial statements, to normal, recurring adjustments), in each case in
accordance with past practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto).
ARTICLE V
CONDITIONS TO THE MERGER
Section 5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Stockholder Approval shall have been obtained.
(b) The Bidder Stockholder Approval shall have been obtained.
(c) All of the conditions to the effectiveness of the Dexter Merger
shall have been satisfied or waived in accordance with the terms of the
Dexter Merger Agreement and the Dexter Merger shall be effective
simultaneously with the Effective Time. The condition set forth in this
paragraph (c) shall not be waivable by either party.
(d) No statute, rule, regulation, executive order, decree, ruling or
permanent injunction shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits the consummation of the
Merger substantially on the terms contemplated hereby; PROVIDED that the
party seeking to rely upon this condition has fully complied with and
performed its obligations pursuant to Section 4.3.
(e) The applicable waiting period under the HSR Act shall have
expired or been terminated.
(f) The shares of Bidder Common Stock to be issued in the Merger
shall have been approved for quotation on the Nasdaq National Market,
subject to official notice of issuance.
(g) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect.
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Section 5.2 CONDITIONS TO OBLIGATION OF THE BIDDER TO EFFECT THE
MERGER. The obligation of the Bidder to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Bidder:
(a) The Bidder shall have received an opinion of Gray Cary Ware &
Freidenrich LLP, special tax counsel to the Bidder, dated as of the
Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such tax
counsel of customary representation letters from each of the Bidder and the
Company, in each case, in form and substance reasonably satisfactory to such
tax counsel and the issuance of the opinion of counsel to the Company
provided in Section 5.3(a). The specific provisions of each such
representation letter shall be in form and substance reasonably satisfactory
to such tax counsel, and each such representation letter shall be dated on
or before the date of such opinion and shall not have been withdrawn or
modified in any material respect. The opinion condition referred to in this
Section 5.2(a) shall not be waivable after receipt of the Company
Stockholder Approval and the Bidder Stockholder Approval referred to in
Sections 5.1(a) and 5.1(b), unless further Company Stockholder Approval is
obtained with appropriate disclosure.
(b) The representations and warranties of the Company set forth in
this Agreement that are qualified by materiality or Material Adverse Effect
shall be true and correct, and the representations and warranties of the
Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as if such
representations or warranties were made as of the Effective Time (other than
those that speak as of a specific date or as of the date hereof, which
representations and warranties shall be true and correct or true and correct
in all material respects, as the case may be, as of such specific date or as
of the date hereof, respectively).
(c) The Company shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to
be performed and complied with by it on or prior to the Closing Date.
(d) The Company shall have furnished a certificate of an executive
officer to evidence compliance with the conditions set forth in Sections
5.2(b) and (c) of this Agreement.
Section 5.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company (but only with the prior
approval of the Special Committee):
(a) The Company shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special tax counsel to the Company, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such tax
counsel of customary representation letters from each of the Bidder and the
Company, in each case, in form and substance reasonably satisfactory to such
tax counsel. The specific provisions of each such representation letter
shall be in form and substance reasonably satisfactory to such tax counsel,
and each such representation letter shall be dated on or before the date of
such opinion and shall not have been withdrawn or modified in any material
respect. The opinion condition referred to in this Section 5.3(a) shall not
be waivable after receipt of the Company Stockholder Approval and the Bidder
Stockholder Approval referred to in Sections 5.1(a) and 5.1(b), unless
further Company stockholder approval is obtained with appropriate
disclosure.
(b) The representations and warranties of the Bidder set forth in
this Agreement that are qualified by materiality or Material Adverse Effect
shall be true and correct, and the
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representations and warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in all material
respects, in each case, as if such representations or warranties were made
as of the Effective Time (other than those that speak as of a specific date
or as of the date hereof, which representations and warranties shall be true
and correct or true and correct in all material respects, as the case may
be, as of such specific date or as of the date hereof, respectively).
(c) The Bidder shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to
be performed and complied with by it on or prior to the Closing Date.
(d) The Bidder shall have furnished a certificate of an executive
officer of the Bidder to evidence compliance with the conditions set forth
in Section 5.3(b) and (c) of this Agreement.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after obtaining the Company
Stockholder Approval and the Bidder Stockholder Approval:
(a) by the mutual written consent of the Company and the Bidder;
(b) by either the Bidder or the Company, if the Merger has not been
consummated by October 31, 2000 (the "Expiration Date"); PROVIDED, HOWEVER,
that in the event either the condition set forth in Section 5.1(e) shall not
have been satisfied or, prior to September 15, 2000, the Registration
Statement shall not have been declared effective, the Expiration Date shall
be extended to the earlier of (x) the later of (1) the date which is three
business days after the date on which the condition set forth in
Section 5.1(e) is satisfied and (2) the date which is three business days
following the date of the Company Shareholders Meeting and
(y) December 31, 2000; PROVIDED FURTHER, that the right to terminate this
Agreement under this clause (b) shall not be available to any party whose
failure to fulfill any of its obligations under this Agreement has been the
cause of or resulted in the failure to consummate the Merger by such date;
(c) by either the Bidder or the Company if (i) a statute, rule,
regulation or executive order shall have been enacted, entered, promulgated
or enforced by any Governmental Entity prohibiting the consummation of the
Merger substantially on the terms contemplated hereby; or (ii) an order,
decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the
Merger substantially on the terms contemplated hereby and such order,
decree, ruling or injunction shall have become final and non-appealable;
PROVIDED, that the party seeking to terminate this Agreement pursuant to
this Section 6.1(c)(ii) shall have used its reasonable best efforts to
remove such order, decree, ruling or injunction and shall not be in
violation of Section 4.4;
(d) by the Bidder or the Company, if after the Bidder convenes and
holds the Bidder Stockholders Meeting and certifies the vote with respect to
the Merger and the amendment of the Bidder's certificate of incorporation,
the Bidder's stockholders shall have failed to deliver the stockholder
approval required by law to be given by the Bidder's stockholders;
(e) by the Bidder or the Company, if the Dexter Merger Agreement
shall have been terminated in accordance with its terms;
(f) by the Bidder, if there has been a material violation or breach
by the Company of any agreement, representation or warranty contained in
this Agreement that has rendered the
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satisfaction of any condition to the obligations of the Bidder impossible
and such violation or breach has not been waived by the Bidder;
(g) by the Company, if there has been a material violation or breach
by the Bidder of any agreement, representation or warranty contained in this
Agreement that has rendered the satisfaction of any condition to the
obligations of the Company impossible and such violation or breach has not
be waived by the Company; or
(h) in the event that the Expiration Date is extended beyond
October 31, 2000, by the Bidder or the Company, at any time after the tenth
business day following the termination of either the Asset Purchase
Agreement, dated as of June 20, 2000, between Dexter and Loctite Corporation
or the Asset Purchase Agreement, dated as of June 20, 2000, between Dexter
and Ahlstrom Paper Group Oy, in accordance with its terms.
Section 6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 6.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall terminate and be of no
further force and effect (except for the provisions of Section 7.2), and there
shall be no other liability on the part of the Bidder or the Company except
liability arising out of a willful breach of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 7.2 EXPENSES. Except as otherwise expressly contemplated by this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
Section 7.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in
two or more separate counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
Section 7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 7.5 NOTICES. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 7.5 and the appropriate telecopy confirmation
is received or (b) if given by any other means, when delivered at the address
specified in this Section 7.5:
To the Bidder:
Invitrogen Corporation
1600 Faraday Avenue
Carlsbad, California 92008
Attention: Chief Financial Officer
Telecopy: (760) 602-6505
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copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121-2189
Attention: Cameron Jay Rains, Esq.
Telecopy: (858) 677-1477
To the Company or to the Special Committee:
Life Technologies, Inc.
9800 Medical Center Drive
Rockville, Maryland 20850
Attention: General Counsel
Telecopy: (301) 610-8606
with a copy to:
Life Technologies, Inc.
9800 Medical Center Drive
Rockville, Maryland 20850
Attention: Chairman, Special Committee
Telecopy: (301) 610-8606
with a further copy to:
Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096-2334
Attention: General Counsel
Telecopy: (860) 292-7669
a further copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: J. Michael Schell, Esq.
Margaret L. Wolff, Esq.
Telecopy: (212) 735-2000
and a further copy to:
Wachtell Lipton Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attention: David A. Katz, Esq.
Telecopy: (212) 403-2000
Section 7.6 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the first sentence of this
Section 7.6, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns. Any
assignment not permitted under this Section 7.6 shall be null and void.
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Section 7.7 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 7.8 ENFORCEMENT OF AGREEMENT. The parties hereto agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including, without limitation, specific
performance, without bond or other security being required.
Section 7.9 ENTIRE AGREEMENT; Third-Party Beneficiaries. This Agreement
together with the Dexter Merger Agreement, the Confidentiality Agreement, dated
February 27, 2000, between the Bidder and Dexter, the Company Disclosure
Schedule, the Bidder Disclosure Schedule and exhibits hereto constitute the
entire agreement, and supersede all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof and, except for the provisions of
Section 4.6(a), (b) and (c) and Section 4.13, is not intended to and shall not
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 7.10 HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 7.11 DEFINITIONS. References in this Agreement to
(a) "Subsidiaries" of the Company or the Bidder shall mean any corporation or
other form of legal entity of which more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by the Company or
the Bidder or in which the Company or the Bidder has the right to elect a
majority of the members of the board of directors or other similar governing
body; (b) "Significant Subsidiaries" shall mean Subsidiaries which constitute
"significant subsidiaries" under Rule 405 promulgated by the SEC under the
Securities Act; (c) "affiliates" shall mean, as to any Person, any other Person
which, directly or indirectly, controls, or is controlled by, or is under common
control with, such Person; and (d) "Person" shall mean an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a Governmental Entity. As used in
the definition of "affiliates," "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise. "Including," as used herein, shall mean "including, without
limitation."
Section 7.12 FINDERS OR BROKERS. Except for Lehman Brothers Inc. and
Credit Suisse First Boston Corporation with respect to the Company, and
Donaldson, Lufkin & Jenrette Securities Corporation with respect to the Bidder,
neither the Company nor the Bidder nor any of their respective Subsidiaries has
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger.
Section 7.13 AMENDMENT OR SUPPLEMENT. At any time prior to the Effective
Time, this Agreement may be amended or supplemented in any and all respects,
whether before or after the Company Stockholder Approval and the Bidder
Stockholder Approval, by written agreement of the parties hereto by action taken
by their respective Boards of Directors (which in the case of the Company may be
taken only upon the recommendation of the Special Committee) with respect to any
of the terms contained in this Agreement; PROVIDED, HOWEVER that following the
Company Stockholder Approval and the Bidder Stockholder Approval there shall be
no amendment or change to the
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provisions hereof which would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger or other change requiring stockholder approval without further approval
by the stockholders of the Company.
Section 7.14 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, any party may (a) extend the time for the performance of any of
the obligations or acts of any other party hereto; (b) waive any inaccuracies in
the representations and warranties of any other party hereto contained herein or
in any document delivered pursuant hereto; or (c) subject to the proviso of
Section 7.13 waive compliance with any of the agreements or conditions of any
other party hereto contained herein; PROVIDED that the waiver of any of the
conditions to the Company's obligations to effect the Merger shall be authorized
only upon the recommendation of the Special Committee; and PROVIDED, FURTHER,
that any waiver on the part of the Company of the Bidder's compliance with the
provisions of Section 4.2 may be authorized only by the affirmative vote of at
least six members of the Board of Directors of the Company. Notwithstanding the
foregoing no failure or delay by the Company or the Bidder in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right hereunder. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
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INVITROGEN CORPORATION
By: /s/ LYLE C. TURNER
-----------------------------------------
Name: Lyle C. Turner
Title: Chairman & CEO
LIFE TECHNOLOGIES, INC.
By: /s/ J. STARK THOMPSON
-----------------------------------------
Name: J. Stark Thompson
Title: President & CEO
By: /s/ THOMAS H. ADAMS
-----------------------------------------
Name: Thomas H. Adams
Title: Director
</TABLE>
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ANNEX B
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AGREEMENT AND PLAN OF MERGER
BETWEEN
INVITROGEN CORPORATION
AND
DEXTER CORPORATION
DATED AS OF JULY 7, 2000
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger.................................................. 2
Section 1.2 Closing..................................................... 2
Section 1.3 Effective Time.............................................. 2
Section 1.4 Effects of the Merger....................................... 3
Section 1.5 Certificate of Incorporation; Bylaws........................ 3
Section 1.6 Directors; Officers of Surviving Corporation................ 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities.................................... 4
Section 2.2 Surrender and Payment....................................... 6
Section 2.3 Adjustments to Prevent Dilution............................. 9
Section 2.4 Appraisal Rights............................................ 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Organization, Qualification, Etc............................ 10
Section 3.2 Capital Stock............................................... 12
Section 3.3 Equity Investments.......................................... 13
Corporate Authority Relative to this Agreement; No
Section 3.4 Violation................................................... 14
Section 3.5 Reports and Financial Statements............................ 15
Section 3.6 No Undisclosed Liabilities.................................. 17
Section 3.7 No Violation of Law......................................... 17
Section 3.8 Environmental Matters....................................... 17
Section 3.9 Employee Benefit Plans; ERISA............................... 19
Section 3.10 Absence of Certain Changes or Events 21
Section 3.11 Proxy Statement/Prospectus; Registration Statement.......... 21
Section 3.12 Disclosure.................................................. 22
Section 3.13 Tax Matters................................................. 23
Section 3.14 Opinion of Financial Advisors............................... 25
Section 3.15 Required Vote of Shareholders............................... 25
Section 3.16 Rights Agreement............................................ 26
Loctite Acquisition Agreement; Ahlstrom Acquisition
Section 3.17 Agreement................................................... 26
Section 3.19 Contracts................................................... 26
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Conduct of Business by the Company.......................... 27
Section 4.2 Bidder Interim Operations................................... 31
Section 4.3 Access; Confidentiality..................................... 32
Shareholders Meetings; Proxy Statement; Registration
Section 4.4 Statement................................................... 33
Section 4.5 Commercially Reasonable Efforts; Further Assurances......... 35
Section 4.6 Employee Matters............................................ 36
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Section 4.7 Takeover Statute............................................ 38
Section 4.8 No Solicitation by the Company.............................. 38
Section 4.9 Public Announcements........................................ 40
Section 4.10 Indemnification; Insurance.................................. 40
Section 4.11 Additional Reports and Information.......................... 41
Section 4.12 Affiliates.................................................. 42
Section 4.13 Nasdaq National Market Quotation............................ 42
Section 4.14 Tax-Free Reorganization..................................... 42
ARTICLE V
CONDITIONS TO THE MERGER
Conditions to Each Party's Obligation to Effect the
Section 5.1 Merger...................................................... 44
Conditions to Obligation of the Bidder to Effect the
Section 5.2 Merger...................................................... 45
Conditions to Obligation of the Company to Effect the
Section 5.3 Merger...................................................... 46
ARTICLE VI
TERMINATION
Section 6.1 Termination................................................. 47
Section 6.2 Effect of Termination....................................... 49
Section 6.3 Termination Fee............................................. 49
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Survival of Representations and Warranties............... 49
Section 7.2 Expenses.................................................... 50
Section 7.3 Counterparts; Effectiveness................................. 50
Section 7.4 Governing Law............................................... 50
Section 7.5 Notices..................................................... 50
Section 7.6 Assignment; Binding Effect.................................. 51
Section 7.7 Severability................................................ 51
Section 7.8 Enforcement of Agreement.................................... 51
Section 7.9 Entire Agreement; Third-Party Beneficiaries................. 52
Section 7.10 Headings.................................................... 52
Section 7.11 Definitions................................................. 52
Section 7.12 Finders or Brokers.......................................... 52
Section 7.13 Amendment or Supplement..................................... 53
Section 7.14 Extension of Time, Waiver, Etc.............................. 53
</TABLE>
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INDEX OF DEFINED TERMS
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DEFINED TERM SECTION
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<S> <C>
Acquisition Agreement....................................... 4.8(b)
Acquisition Proposal........................................ 4.8(a)
Affiliated Group............................................ 3.13(a)
affiliates.................................................. 7.11
Agreement................................................... Introduction
Ahlstrom Acquisition Agreement.............................. 3.17
Asset Transaction........................................... 4.8(a)
Average Bidder Trading Price................................ 4.6(a)
Bidder...................................................... Introduction
Bidder Common Stock......................................... Recitals
Bidder Disclosure Schedule.................................. Article III Introduction
Bidder Shareholders Meeting................................. 4.4(a)
Business Combination Transaction............................ 4.8(a)
Cancellation Price.......................................... 4.6
Cash Election............................................... 2.1(b)(B)
Cash Election Proration Factor.............................. 2.1(b)(B)
CBCA........................................................ Recitals
Certificate of Merger....................................... 1.3
Certificates................................................ 2.2(a)
Charter Amendment........................................... 4.4(a)
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
Company..................................................... Introduction
Company Common Stock........................................ Recitals
Company Disclosure Schedule................................. Article III Introduction
Company Equity Plan......................................... 4.1(vii)
Company Option Plans........................................ 4.6
Company Policies............................................ 4.10(b)
Company Representatives..................................... 4.8(a)
Company Shareholder Approval................................ 3.15(a)
Company Shareholder Meeting................................. 4.4(a)
Connecticut Certificate of Merger........................... 1.3
Delaware Certificate of Merger.............................. 1.3
DGCL........................................................ Recitals
Dissenting Shareholders..................................... 2.4
Dissenting Shares........................................... 2.4
Effective Time.............................................. 1.3
Election Deadline........................................... 2.2(a)
Election Form............................................... 2.2(a)
Employee Stock Options...................................... 4.6
Environmental Claim......................................... 3.8(d)(i)
Environmental Law........................................... 3.8(d)(ii)
Environmental Permits....................................... 3.8(a)
ERISA....................................................... 3.9(a)
ERISA Affiliate............................................. 3.9(a)
Exchange Act................................................ 3.4(c)
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DEFINED TERM SECTION
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Exchange Agent.............................................. 2.2(a)
Exchange Fund............................................... 2.2(a)
Exchange Ratio.............................................. 2.1(b)(A)
Expiration Date............................................. 6.1(b)
GAAP........................................................ 3.5
Governmental Entity......................................... 3.4(c)
Hazardous Materials......................................... 3.8(d)(iii)
HSR Act..................................................... 3.4(c)
including................................................... 7.11
Indemnified Parties......................................... 4.10(a)
International Plans......................................... 3.9(i)
Lien........................................................ 3.1(b)
Life Technologies........................................... Recitals
Life Technologies Common Stock.............................. Recitals
Life Technologies Equity Plan............................... 4.1(vii)
Life Technologies Merger.................................... Recitals
Life Technologies Merger Agreement.......................... Recitals
Loctite Acquisition Agreement............................... 3.17
Material Adverse Effect..................................... 3.1(a)
Material Contracts.......................................... 3.19
Merger...................................................... Recitals
Merger Consideration........................................ 2.1(b)
NASDAQ...................................................... 2.1(b)(A)
NYSE........................................................ 3.4(c)
Person...................................................... 7.11
Plans....................................................... 3.9(a)
Proxy Statement............................................. 4.4(b)
Registration Statement...................................... 3.11(b)
Representing Party.......................................... Article III Introduction
Representing Party's Disclosure Schedule.................... Article III Introduction
Rights Agreement............................................ Recitals
Savings Plans............................................... 4.6(c)
SEC......................................................... 3.5(a)
SEC Reports................................................. 3.5
Securities Act.............................................. 3.4(c)
Shareholders Meeting........................................ 4.4(a)
Shares...................................................... Recitals
Significant Subsidiaries.................................... 7.11
Standard Election........................................... 2.1(b)(C)
Standard Election Consideration............................. 2.1(b)(C)
Stock Election.............................................. 2.1(b)(A)
Stock Election Consideration................................ 2.1(b)(A)
Subsidiaries................................................ 7.11
Superior Proposal........................................... 4.8(a)
Surviving Corporation....................................... 1.1
Tax Return.................................................. 3.13(g)
Taxes....................................................... 3.13(g)
Termination Date............................................ 4.1
Termination Fee............................................. 6.3
Trading Day................................................. 2.1(b)(A)
</TABLE>
iv
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AGREEMENT AND PLAN OF MERGER, dated as of July 7, 2000 (the "Agreement"),
between INVITROGEN CORPORATION, a Delaware corporation (the "Bidder"), and
DEXTER CORPORATION, a Connecticut corporation (the "Company").
WHEREAS, the Boards of Directors of the Bidder and the Company deem it
advisable and in the best interests of their respective shareholders that the
Company be merged with and into the Bidder (the "Merger") upon the terms and
subject to the conditions provided for in this Agreement, whereby each
outstanding share of common stock, par value $1 per share, of the Company
(together with the rights associated with such shares issued pursuant to the
Rights Agreement, dated as of August 23, 1996, as amended, between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agreement"), the "Company Common Stock" or the "Shares") will be converted, at
the holder's election, into (i) shares of common stock, par value $.01 per
share, of the Bidder (the "Bidder Common Stock"), (ii) cash or (iii) a
combination of Bidder Common Stock and cash;
WHEREAS, immediately prior to the execution and delivery of this Agreement,
the Bidder entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Life Technologies Merger Agreement"), between the Bidder and Life
Technologies, Inc., a Delaware corporation and a Subsidiary of the Company
("Life Technologies"), pursuant to which Life Technologies will be merged with
and into the Bidder (the "Life Technologies Merger") simultaneously with the
Merger upon the terms and subject to the conditions set forth in the Life
Technologies Merger Agreement, whereby each share of common stock, par value
$.01 per share, of Life Technologies (the "Life Technologies Common Stock") will
be converted into (i) shares of Bidder Common Stock, (ii) cash or (iii) a
combination of Bidder Common Stock and cash;
WHEREAS, the obligations of the parties hereto to consummate this Agreement
are expressly conditioned on the consummation of the transactions contemplated
by the Life Technologies Merger Agreement;
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger and the Life Technologies Merger contemplated hereby shall each qualify
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for purposes of Section 368 of the
Code; and
WHEREAS, the Boards of Directors of the Bidder and the Company have each
approved and adopted this Agreement and approved the Merger in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), in the case
of the Bidder, and in accordance with the Connecticut Business Corporation Act
(the "CBCA"), in the case of the Company, and upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the Bidder and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL and the CBCA, at the
Effective Time the Company shall merge with and into the Bidder, and the
separate corporate existence of the Company shall thereupon cease, and the
Bidder shall be the surviving corporation in the Merger (the "Surviving
Corporation"). The Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature and
shall be subject to all of the restrictions, disabilities,
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duties, debts and obligations of the Company and the Bidder, all as provided in
the DGCL and the CBCA.
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Article V, unless another time or date,
or both, are agreed to by the parties hereto. The Closing will be held at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, New York, unless another place is agreed to by the parties hereto.
Section 1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
on the Closing Date the parties shall (i) file with the Secretary of State of
the State of Delaware a certificate of merger (the "Delaware Certificate of
Merger") and (ii) file with the Secretary of State of the State of Connecticut a
certificate of merger (the "Connecticut Certificate of Merger" and together with
the Delaware Certificate of Merger, the "Certificates of Merger"), in each case,
executed in accordance with the relevant provisions of the DGCL or the CBCA, as
the case may be, and shall make all other filings or recordings required under
the DGCL and the CBCA in order to effect the Merger. The Merger shall become
effective upon the filing of the Certificates of Merger or at such other time as
is agreed by the parties hereto and specified in the Certificates of Merger (the
time at which the Merger becomes fully effective being hereinafter referred to
as the "Effective Time"); PROVIDED that the Merger and the Life Technologies
Merger shall occur simultaneously.
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL and Section 33-820 of the CBCA.
Section 1.5 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of the
Bidder, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation; PROVIDED,
HOWEVER, the first paragraph of Article IV of the Certificate of Incorporation
of the Bidder shall be amended to read in its entirety to read as follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is 131,405,884, of which (a) 6,405,884
shares shall be preferred stock, par value $.01 per share ("Preferred
Stock"), and (b) 125,000,000 shares shall be common stock, par value $.01
per share."
(b) At the Effective Time, the Bylaws of the Bidder, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
Section 1.6 DIRECTORS; OFFICERS OF SURVIVING CORPORATION.
(a) The directors of the Bidder at the Effective Time shall be the
directors of the Surviving Corporation until their respective successors are
duly elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(b) The officers of the Bidder at the Effective Time shall be the
officers of the Surviving Corporation until their respective successors are duly
elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any securities
of the Bidder or the Company:
(a) Each issued and outstanding Share that is owned by the Bidder or the
Company or any of their respective Subsidiaries shall automatically be cancelled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(b) Subject to the provisions of Sections 2.2(h) and 2.4, each issued
and outstanding Share, other than Shares cancelled and retired in accordance
with Section 2.1(a) and Dissenting Shares, shall be converted, at the election
of the holder thereof in accordance with the procedures set forth herein, into
one of the following (as adjusted pursuant to the provisions of this
Section 2.1, the "Merger Consideration"):
(A) for each such Share with respect to which an election to receive
only Bidder Common Stock has been effectively made and not revoked or lost
pursuant to Section 2.2(a) (a "Stock Election"), the right to receive that
fraction of a share of Bidder Common Stock calculated by dividing
(x) $62.50 by (y) the Average Bidder Trading Price (as hereinafter defined),
rounded to four decimal places (the "Exchange Ratio"). As used herein, the
"Average Bidder Trading Price" shall mean the average of the reported
closing sales prices per share of Bidder Common Stock as reported in THE
WALL STREET JOURNAL for the 20 consecutive Nasdaq National Market trading
days (each, a "Trading Day") ending on (and including) the third Trading Day
prior to the date of the Company Shareholders Meeting; PROVIDED, HOWEVER,
that if the quotient obtained as prescribed in the preceding sentence
exceeds 1.0417, then for all purposes the Exchange Ratio shall be 1.0417,
and if such quotient is less than 0.7813, then for all purposes the Exchange
Ratio shall be 0.7813 (the "Stock Election Consideration").
(B) for each such Share with respect to which an election to receive
only cash has been effectively made and not revoked or lost pursuant to
Section 2.2(a) (a "Cash Election"), (i) the right to receive an amount in
cash equal to $62.50 multiplied by the Cash Election Proration Factor,
without interest except as set forth in Section 2.2(b), plus (ii) if the
Cash Election Proration Factor is less than 1, a fraction of a share of
Bidder Common Stock equal to the Exchange Ratio multiplied by a fraction the
numerator of which is $62.50 minus the cash determined pursuant to
clause (i) and the denominator of which is $62.50. As used herein, the "Cash
Election Proration Factor" means the lesser of (x) 1.00 or (y) a fraction
(i) the numerator of which is (1) the product of the total number of Shares
outstanding multiplied by $17.50 minus (2) $17.50 multiplied by the number
of Shares for which Standard Elections have been effectively made and not
revoked or lost, and (ii) the denominator of which is the product of $62.50
multiplied by the number of Shares for which Cash Elections have been
effectively made and not revoked or lost.
(C) for each such Share as to which neither a Stock Election nor a
Cash Election has been effectively made and not revoked or lost pursuant to
Section 2.2(a) (a "Standard Election"), the right to receive $17.50 in cash,
plus a fraction of a share of Bidder Common Stock equal to the Exchange
Ratio multiplied by .7200 (the "Standard Election Consideration").
(c) Each Person who, at the Effective Time, is a record holder of Shares
(other than Shares to be cancelled as set forth in Section 2.1(a) or Dissenting
Shares) shall have the right to submit an Election Form specifying the number of
Shares that such Person desires to have converted into shares of Bidder Common
Stock, the number of Shares that such Person desires to have converted into the
right to receive cash and Bidder Common Stock, if any, and the number of Shares
that such Person desires to have converted into the right to receive the
Standard Election Consideration. Any Person
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who fails properly to submit an Election Form on or prior to the Election
Deadline in accordance set forth in Section 2.2(a) shall be deemed to have made
a Standard Election.
(d) Each share of Bidder Common Stock issued and outstanding immediately
prior to the Effective Time shall on and after the Effective Time continue to be
issued and outstanding as an identical share of Bidder Common Stock.
(e) Each share of Bidder Common Stock issued and held in the treasury or
by any Subsidiary of the Bidder as of the Effective Time, if any, shall, on and
after the Effective Time, continue to be issued and held in the treasury of the
Bidder or such Subsidiary unaffected by the Merger.
Section 2.2 SURRENDER AND PAYMENT.
(a) EXCHANGE AGENT. Prior to the Effective Time, the Bidder shall
appoint an agent (the "Exchange Agent") for the purpose of (i) exchanging
certificates representing Shares (the "Certificates") for the Merger
Consideration. At the Effective Time the Bidder will deposit with the Exchange
Agent the Merger Consideration and cash in the amount required by
Section 2.2(g) (the "Exchange Fund"). Upon receipt, the Exchange Agent will
invest the cash portion of the Exchange Fund in United States government
securities maturing at the Election Deadline or such other government securities
maturing at the Election Deadline or such other investments as the Bidder and
the Company may mutually agree. Any interest and other income resulting from
such investments shall be paid to the Bidder. Promptly after the Effective Time,
the Exchange Agent will send to each holder of Shares a letter of transmittal
and instructions (which shall specify that the delivery shall be effected, and
risk of loss and title shall pass, only upon proper delivery of the Certificates
to the Exchange Agent) for use in such exchange, and to each holder of Shares an
election form (the "Election Form") providing for such holders to make the
Standard Election, the Cash Election or the Stock Election. Any Standard
Election (other than a deemed Standard Election), Cash Election or Stock
Election shall be validly made only if the Exchange Agent shall have received by
5:00 p.m., New York City Time, on a date (the "Election Deadline") to be
mutually agreed upon by the Bidder and the Company (which date shall not be
later than the twentieth Business Day after the Effective Time), an Election
Form properly completed and executed (with the signature or signatures thereon
guaranteed to the extent required by the Election Form) by such holder
accompanied by such holder's Certificates, or by appropriate guarantees of
delivery of such Certificates from a member of any national securities exchange
or of the National Association of Securities Dealers or a commercial bank or
trust company in the United States as set forth in such Election Form. Any
holder of Shares who has made an election by submitting an Election Form to the
Exchange Agent may at any time prior to the Election Deadline change such
holder's election by submitting a revised Election Form, properly completed and
signed that is received by the Exchange Agent prior to the Election Deadline.
Any holder of Shares may at any time prior to the to the Election Deadline
revoke his election and withdraw his Certificates deposited with the Exchange
Agent by written notice to the Exchange Agent received by the close of business
on the day prior to the Election Deadline, and such holder will receive the
Standard Election Consideration.
(b) LETTER OF TRANSMITTAL. Upon surrender to the Exchange Agent of its
Certificate, together with a properly completed letter of transmittal, each
holder of Shares will be entitled to receive promptly after the Election
Deadline the Merger Consideration in respect of the Shares represented by its
Certificate. In addition, each such holder of Shares shall be entitled to
receive any dividends and distributions payable pursuant to Section 2.2(g).
Until so surrendered, each such Certificate shall represent after the Effective
Time, for all purposes, only the right to receive the Merger Consideration.
(c) PAYMENT TO NON-REGISTERED OWNERS. If any portion of the Merger
Consideration is to be paid to a Person other than the Person in whose name the
Certificate so surrendered is registered, it shall be a condition to such
payment that such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment shall pay to the
Exchange Agent any
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transfer or other Taxes required as a result of such payment to a Person other
than the registered holder of such Certificate, or establish to the satisfaction
of the Exchange Agent that such Tax has been paid or is not payable.
(d) NO FURTHER REGISTRATION OF TRANSFERS. After the Effective Time
there shall be no further registration of transfers of Shares. If after the
Effective Time Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration in accordance with
the procedures set forth in this Article II.
(e) TERMINATION OF EXCHANGE FUND; NO LIABILITY. At any time following
the first anniversary of the Effective Time, the Surviving Corporation shall be
entitled to require the Exchange Agent to deliver to it any remaining portion of
the Exchange Fund (including any interest received with respect thereto), and
holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) with respect to the Merger
Consideration, any cash in lieu of fractional shares of Bidder Common Stock and
any dividends or other distributions with respect to Bidder Common Stock payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration (or dividends or distributions with respect thereto) or cash from
the Exchange Fund in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate(s)
to be lost, stolen or destroyed and, if required by the Bidder, the posting by
such Person of a bond in such sum as the Bidder may reasonably direct as
indemnity against any claim that may be made against it or the Surviving
Corporation with respect to such Certificate(s), the Exchange Agent will issue
the Merger Consideration pursuant to Section 2.1(b) deliverable in respect of
the Shares represented by such lost, stolen or destroyed Certificates.
(g) DIVIDENDS; DISTRIBUTIONS. No dividends or other distributions with
respect to Bidder Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Bidder Common Stock represented thereby, and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to
Section 2.2(h), and all such dividends, other distributions and cash in lieu of
fractional shares of Bidder Common Stock shall be paid by the Bidder to the
Exchange Agent and shall be included in the Exchange Fund, in each case until
the surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable abandoned property, escheat or similar laws, following
surrender of any such Certificate there shall be paid to the holder of a Bidder
Certificate representing whole shares of Bidder Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Bidder Common Stock and
the amount of any cash payable in lieu of a fractional share of Bidder Common
Stock to which such holder is entitled pursuant to Section 2.2(h), and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Bidder Common Stock. The Bidder shall make available to the Exchange
Agent cash for these purposes, if necessary.
(h) NO FRACTIONAL SHARES. No Bidder Certificates or scrip representing
fractional shares of Bidder Common Stock shall be issued upon the surrender for
exchange of Certificates; no dividend or distribution by the Bidder shall relate
to such fractional share interests; and such fractional share interests will not
entitle the owner thereof to vote or to any rights as a shareholder of the
Bidder. In lieu of any such fractional shares, each holder of Certificate who
would otherwise have been entitled to receive a fractional share interest in
exchange for such Certificate pursuant to this Section shall receive
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from the Exchange Agent an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such holder (after taking
into account all Shares held by such holder at the Effective Time) would
otherwise be entitled by (B) the average reported closing sales price for a
share of Bidder Common Stock as reported in THE WALL STREET JOURNAL(or if not
reported thereby, any other authoritative source) for five consecutive Trading
Days immediately preceding the Closing Date. The Bidder shall provide the
Exchange Agent the aggregate amount of cash payable pursuant to this
Section 2.2(h) promptly following the Effective Time.
Section 2.3 ADJUSTMENTS TO PREVENT DILUTION. In the event that the Bidder
changes the number of outstanding shares of Bidder Common Stock or the number of
outstanding securities convertible or exchangeable into or exercisable for
shares of Bidder Common Stock prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, subdivision, or other similar transaction, or
declares or pays any dividend or distribution (including of rights) other than
any regular quarterly cash dividends, the Stock Election Consideration and the
Standard Election Consideration will be correspondingly and equitably adjusted
to reflect such stock dividend, subdivision, split, combination of shares or
other specified transaction.
Section 2.4 APPRAISAL RIGHTS. Notwithstanding anything in this Agreement
to the contrary, Shares that are issued and outstanding immediately prior to the
Effective Time and which are held by shareholders who did not vote in favor of
the Merger and who comply with all the relevant provisions of Section 33-861 of
the CBCA (the "Dissenting Shareholders") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration (the "Dissenting
Shares"), unless and until the holder or holders thereof shall have failed to
perfect or shall have effectively withdrawn or lost their rights to appraisal
under the CBCA. If any Dissenting Shareholder shall have failed to perfect or
shall have effectively withdrawn or lost such right, such holder's Shares shall
thereupon be converted into and become exchangeable for the right to receive, as
of the Effective Time, the Merger Consideration for each Share without any
interest thereon. The Company shall give the Bidder (i) prompt notice of any
written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the CBCA and received by
the Company relating to shareholders' rights of appraisal, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the CBCA; PROVIDED, HOWEVER, the Company shall have the
right to participate in any such negotiations and proceedings. The Company shall
not, except with the prior written consent of the Bidder, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Shares had been
converted into the right to receive the Standard Election Consideration pursuant
to Section 2.1(b).
Section 2.5 WITHHOLDING RIGHTS. The Bidder shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article II such amounts as it is required to deduct and withhold with respect to
the making of such payment under any provision of federal, state, local or
foreign Tax law. If the Bidder so withholds amounts, such amounts shall be
treated for all purposes of this Agreement as having been paid to the holders of
Shares in respect of which the Bidder made such deduction and withholding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth on the schedule delivered by the Company to the Bidder
in connection with the execution and delivery of this Agreement (the "Company
Disclosure Schedule") the Company hereby represents and warrants to the Bidder,
and except as set forth in the disclosure schedule delivered by the Bidder to
the Company in connection with the execution and delivery of this Agreement (the
"Bidder Disclosure Schedule), the Bidder hereby represents and warrants to the
Company, in each case
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as set forth in this Article III, with the party making such representations and
warranties being referred to as the "Representing Party" and such Representing
Party's Disclosure Schedule as the "Representing Party's Disclosure Schedule."
Notwithstanding the foregoing, any representation or warranty which expressly
refers to the Bidder or its Subsidiaries is being made solely by the Bidder and
any representation or warranty which expressly refers to the Company or Life
Technologies or their respective Subsidiaries is being made solely by the
Company.
Section 3.1 ORGANIZATION, QUALIFICATION, ETC.
(a) The Representing Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority required for it to own
its properties and assets and to carry on its business as it is now being
conducted. The Representing Party is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Representing Party or substantially delay consummation of
the transactions contemplated by this Agreement or otherwise prevent the
Representing Party from performing its obligations hereunder. As used in this
Agreement, any reference to any state of facts, event, change or effect having a
"Material Adverse Effect" on or with respect to the Representing Party means a
material adverse effect on the financial condition, assets, liabilities or
results of operations of the Representing Party and its Subsidiaries, taken as a
whole, excluding any such effect resulting from or arising in connection with
(A) changes or conditions generally affecting the industries in which the
Representing Party and its Subsidiaries operate unless, in the case of the
Company, such changes or effects have a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, or (B) changes in general economic,
regulatory or political conditions, unless, in the case of the Company, such
changes have a disproportionate effect on the Company and its Subsidiaries,
taken as a whole. Each Representing Party has made available to the other copies
of its certificate of incorporation and bylaws. Such copies of each Representing
Party's certificate of incorporation and bylaws are complete and correct and in
full force and effect, and the Representing Party is not in violation of any of
the provisions of its certificate of incorporation or bylaws.
(b) Each of the Representing Party's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Representing Party's
Subsidiaries has the corporate power and authority required for it to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Representing Party. All the outstanding shares of capital stock of, or other
ownership interests in, the Representing Party's Subsidiaries are duly
authorized, validly issued, fully paid and non-assessable and, with respect to
such shares or ownership interests that are owned by the Representing Party and
its Subsidiaries, are owned free and clear of all liens, claims, mortgages,
encumbrances, pledges and security interests of any kind (each, a "Lien"). All
the outstanding shares of capital stock of, or other ownership interests in, the
Representing Party's Subsidiaries are wholly owned by the Representing Party,
directly or indirectly, except for the Life Technologies Common Stock of which
the Company beneficially owns as of the date hereof 18,815,447 shares.
Section 3.1(b) of the Company Disclosure Schedule sets forth a list of each
Subsidiary of the Company.
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Section 3.2 CAPITAL STOCK.
(a) Section 3.2(a) of the Representing Party's Disclosure Schedule sets
forth as of June 30, 2000:
(i) the number of authorized shares of each class or series of capital
stock of the Representing Party and, in the case of the Company
Disclosure Schedule, Life Technologies;
(ii) the number of shares of each class or series of capital stock of
the Representing Party and, in the case of the Company Disclosure
Schedule, Life Technologies, which are issued and outstanding;
(iii) the number of shares of each class or series of capital stock which
are held in the treasury of such Representing Party and, in the
case of the Company Disclosure Schedule, Life Technologies;
(iv) the number of shares of each class or series of capital stock of
the Representing Party and, in the case of the Company Disclosure
Schedule, Life Technologies, which are reserved for issuance,
indicating each specific reservation; and
(v) the number of shares of each class or series of capital stock of
such Representing Party and, in the case of the Company Disclosure
Schedule, Life Technologies, which are subject to employee stock
options or other rights to purchase or receive capital stock granted
under such Person's stock option or other stock based employee or
non-employee director benefit plans, and, with respect to the
Company, indicating the name of the plan, the date of grant, the
number of shares and the exercise price thereof.
(b) All the outstanding shares of capital stock of the Representing
Party are, and all shares of Bidder Common Stock to be issued in the Merger will
be when issued in accordance with the terms of this Agreement, duly authorized,
validly issued, fully paid and non-assessable and issued in compliance with all
applicable U.S. state and federal and foreign securities laws. Except as set
forth in Section 3.2(a) of the Representing Party's Disclosure Schedule, for the
Company's obligations under the Rights Agreement, and for the transactions
contemplated by this Agreement, (1) there are no shares of capital stock of the
Representing Party authorized, or as of the date of this Agreement issued or
outstanding, (2) as of the date of this Agreement there are no authorized or
outstanding options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Representing Party or any of its
Subsidiaries, obligating the Representing Party or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or other equity interest in the Representing Party or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, or obligating the Representing Party or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment, and
(3) there are no outstanding contractual obligations of the Representing Party
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Representing Party or any Subsidiary of the Representing
Party or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary of the Representing Party or other
entity.
Section 3.3 EQUITY INVESTMENTS.
(a) Section 3.3(a) of the Company's Disclosure Schedule sets forth:
(i) the name of each corporation, partnership, joint venture or other entity
(other than the Subsidiaries) in which the Company or Life Technologies has, or
pursuant to any agreement has the right to acquire by any means, directly or
indirectly, an equity interest or investment; (ii) in the case of each of such
Person
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described in the foregoing clause (i), either (x) a listing of relevant
agreement or agreements pursuant to which the Company has acquired such right or
such interest or investment or (y) (A) the jurisdiction of incorporation and
(B) the authorized and outstanding capitalization thereof and the percentage of
each class of voting capital stock owned, directly or indirectly, by the
Company.
(b) Except as set forth in Schedule 3.3(b), Life Technologies' interest,
if any, in any of the Persons listed on Schedule 3.3(a) which are stated to be
owned directly or indirectly by Life Technologies (except for directors'
qualifying shares, if any, which the Company will cause to be transferred at the
Effective Time to nominees of the Bidder), will, after giving effect to the
transactions contemplated hereby, be owned by the Bidder, directly or
indirectly, in each case, free and clear of all Liens.
Section 3.4 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION.
(a) The Company has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the Company
and, except for obtaining the Company Shareholder Approval and the filing of the
Connecticut Certificate of Merger, no other corporate proceedings on the part of
the Company are necessary to authorize the consummation of the transactions
contemplated hereby. The Board of Directors of the Company has approved the
entry into this Agreement and the consummation of the transactions contemplated
hereby by the Company and has taken all appropriate action such that Sections
33-841 and 33-844 of the CBCA will not be applicable to the Company or to the
Bidder by virtue of either the Company's or the Bidder's entering into this
Agreement or consummating the transactions contemplated hereby. The Board of
Directors of Life Technologies has taken all appropriate action so that
Section 203 of the DGCL, with respect to Life Technologies, will not be
applicable to the Bidder for any purpose. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding agreement of the Bidder, constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) The Bidder has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the Bidder,
and other than the Bidder Shareholder Approval and the filing of the Connecticut
Certificate of Merger and the Delaware Certificate of Merger no other corporate
proceedings on the part of the Bidder are necessary to authorize the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Bidder and, assuming this
Agreement constitutes a valid and binding agreement of the Company, constitutes
a valid and binding agreement of each of the Bidder, enforceable against the
Bidder in accordance with its terms.
(c) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 3.4(c) of the Representing Party's Disclosure
Schedule or as may be required under, and other applicable requirements of, the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") (in the case of the Bidder only), the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), state securities or blue
sky laws and the rules and regulations of the New York Stock Exchange (the
"NYSE") (in the case of the Company only), state securities or blue sky laws and
the rules and regulations of the Nasdaq National Market (in the case of the
Bidder), or the anti-competition laws or regulations of the European Union or
any foreign jurisdiction in which the Company or the Bidder (directly or through
Subsidiaries, in each case) has material assets or conducts material operations,
and
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the filing of the Certificates of Merger under the DGCL and the CBCA, none of
the execution, delivery or performance of this Agreement by the Representing
Party, the consummation by the Representing Party of the transactions
contemplated hereby or compliance by the Representing Party with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation, bylaws or similar organizational
documents of the Representing Party or any of its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any federal,
regional, state or local court, arbitrator, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
whether U.S. or foreign (a "Governmental Entity"), (iii) 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, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Representing Party or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, or (iv) violate any order, writ, injunction, decree,
judgment, permit, license, ordinance, law, statute, rule or regulation
applicable to the Representing Party, any of its Subsidiaries or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and
(iv) such filings, permits, authorizations, consents, approvals, violations,
breaches or defaults which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Representing Party or prevent or
substantially delay the consummation of the transactions contemplated hereby.
Section 3.5 REPORTS AND FINANCIAL STATEMENTS. The Representing Party has
previously furnished or otherwise made available (by electronic filing or
otherwise) to the Bidder true and complete copies of:
(a) Annual Reports on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") for each of the years ended December 31, 1998 and 1999 in
the case of the Company and Life Technologies and the year ended December 31,
1999 in the case of Bidder.
(b) the Quarterly Report on Form 10-Q filed with the SEC for the quarter
ended March 31, 2000, for each of the Representing Parties and, in the case of
the Company, for Life Technologies;
(c) each definitive proxy statement filed with the SEC since
December 31, 1998, for each of the Representing Parties and, in the case of the
Company, for Life Technologies;
(d) each final prospectus filed with the SEC since December 31, 1998,
except any final prospectus on Form S-8, for each of the Representing Parties
and, in the case of the Company, for Life Technologies; and
(e) all Current Reports on Form 8-K filed with the SEC since January 1,
2000, for each of the Representing Parties and, in the case of the Company, for
Life Technologies.
As of their respective dates, such reports, proxy statements and prospectuses
filed with the SEC by the Representing Party (collectively with, and giving
effect to, all amendments, supplements and exhibits thereto, the "SEC Reports")
(i) complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Other
than Life Technologies which is registered under Section 12 of the Exchange Act,
none of the Representing Party's Subsidiaries is required to file any forms,
reports or other documents with the SEC. The audited consolidated financial
statements and unaudited consolidated interim financial statements included in
the Representing Party's (and in the case of the Company, Life Technologies')
SEC Reports (including any related notes and schedules) fairly present in all
material respects the financial position of the Bidder, the Company or Life
Technologies and its consolidated Subsidiaries, as the case may be, as of the
dates thereof and the results of operations and cash flows for the periods or as
of the dates then ended (subject, in the case of the unaudited interim financial
statements, to
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normal recurring year-end adjustments), in each case in accordance with past
practice and generally accepted accounting principles in the United States
("GAAP") consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since the date of Bidder's initial public
offering, the Bidder has timely filed all reports, registration statements and
other filings required to be filed by it with the SEC under the rules and
regulations of the SEC. Since January 1, 1999, each of the Company and Life
Technologies has timely filed all reports, registration statements and other
filings required to be filed by it with the SEC under the rules and regulations
of the SEC.
Section 3.6 NO UNDISCLOSED LIABILITIES. Neither the Representing Party nor
any of its Subsidiaries has any liabilities or obligations of any nature
required to be set forth on a balance sheet of the Representing Party under
GAAP, whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Representing Party's SEC Reports or (b) liabilities and
obligations which are not, individually or in the aggregate, reasonably expected
to have a Material Adverse Effect on the Representing Party.
Section 3.7 NO VIOLATION OF LAW. The businesses of the Representing Party
and its Subsidiaries are not being conducted in violation of any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute, rule or
regulation of any Governmental Entity (PROVIDED that no representation or
warranty is made in this Section 3.7 with respect to Environmental Laws), except
(a) as described in the Representing Party's SEC Reports, and (b) for violations
or possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Representing
Party.
Section 3.8 ENVIRONMENTAL MATTERS.
(a) Each of the Representing Party and its Subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required under any applicable Environmental Law and necessary
for it to carry on its business or operations as now conducted ("Environmental
Permits"), except for such failures to have Environmental Permits which,
individually or in the aggregate, are not reasonably expected to have a Material
Adverse Effect on the Representing Party. Each of such Environmental Permits is
in full force and effect, and each of the Representing Party and its
Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures to be in full force and effect or to be in compliance which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Representing Party.
(b) There are no Environmental Claims pending, or to the knowledge of
the Representing Party, threatened, against the Representing Party or any of its
Subsidiaries, or, to the knowledge of the Representing Party, any Person whose
liability for any such Environmental Claim the Representing Party or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law for which reserves have not been established in accordance with
GAAP, that, individually or in the aggregate, would have a Material Adverse
Effect on the Representing Party. As of the date of this Agreement, the Company
has available cash resources that are adequate to fund the GAAP reserves that
the Company has established in respect of Environmental Claims, and such cash
resources will be adequate for such purpose at the Effective Time; PROVIDED that
there shall have been no change outside the ordinary course of business in the
capitalization or asset base of the Company's captive insurance companies.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
threatened release or presence of any Hazardous Material, that would form the
basis of any Environmental Claim against the Representing Party or any of its
Subsidiaries, or for which the Representing Party or any of its Subsidiaries is
liable, except for such liabilities which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Representing
Party.
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(d) As used in this Agreement:
(i) "Environmental Claim" means any claim, action, lawsuit or proceeding
by any Person which seeks to impose liability (including, without
limitation, liability for investigatory costs, cleanup costs, governmental
response costs, natural resources, damages, property damages, personal
injuries or penalties) arising out of, based on or resulting from (A) the
presence, or release or threatened release, of any Hazardous Materials at
any location, whether or not owned or operated by the Representing Party or
any of its Subsidiaries, or (B) circumstances which would give rise to any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Law" means any law or order of any Governmental
Entity relating to (A) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of, or (B) the
environment or to emissions, discharges, releases or threatened releases of,
Hazardous Materials, into the environment.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials or friable asbestos; (B) any chemicals or
other materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," or "toxic pollutants" under any Environmental Law; and
(C) pesticides.
Section 3.9 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.9(a) of the Representing Party's Disclosure Schedule
contains a true and complete list of each material deferred compensation,
incentive compensation or equity compensation plan; "welfare" plan, fund or
program (within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); each material employment,
termination or severance agreement; and each other material employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the
Representing Party (and, in the case of the Company, Life Technologies) or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Representing Party (or Life Technologies) would be deemed at
any relevant time a "single employer" within the meaning of Section 4001(b) of
ERISA, for the benefit of any employee or former employee of the Representing
Party or any Subsidiary (the "Plans").
(b) In respect of Plans that are not International Plans, the
Representing Party has made available to the other Party: (i) correct and
complete copies of all documents embodying each Plan including (without
limitation) all amendments thereto and all related trust documents; (ii) the
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Plan; and (iii) if the Plan is funded, the most recent
annual and periodic accounting Plan assets.
(c) No liability under Title IV or Section 312 of ERISA has been
incurred by the Representing Party or any ERISA Affiliate of the Representing
Party that has not been satisfied in full, and no condition exists that presents
a material risk to the Representing Party or any ERISA Affiliate of the
Representing Party of incurring any such liability, other than liability for
premiums due the Pension Benefits Guaranty Corporation (which premiums have been
paid when due), except as are not reasonably likely to have a Material Adverse
Effect on the Representing Party. To the knowledge of the Representing Party,
each Plan subject to Title IV of ERISA or Section 412 of the Code is
fully-funded on a termination basis.
(d) Neither the Representing Party nor any ERISA Affiliate of the
Representing Party has any liability to any Pension Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
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(e) Each Plan of the Representing Party has been operated and
administered in accordance with its terms and applicable law, including but not
limited to ERISA and the Code, except as are not reasonably likely to have a
Material Adverse Effect on the Representing Party, and each Plan of the
Representing Party intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code, except for failures
to so qualify or be exempt which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Representing Party.
(f) Section 3.9(f) of the Representing Party's Disclosure Schedule sets
forth each Plan of the Representing Party under which as a result of the
consummation of the transactions contemplated by this Agreement, either alone or
in combination with another event, (i) any current or former employee or officer
of the Representing Party or any ERISA Affiliate of the Representing Party may
become entitled to severance pay or any other payment, except as expressly
provided in this Agreement, or (ii) any compensation due any such employee or
officer may be increased or the time of payment or vesting may become
accelerated.
(g) Except as set forth in Section 3.9(g) of the Representing Party's
Disclosure Schedule, no Plan of the Representing Party which is not an
International Plan provides, or reflects or represents any liability to provide,
retiree life insurance, retiree health or other retiree employee welfare
benefits to any Person for any reason, except as may be required by COBRA or
other applicable law. The program described by this Section 3.9(g) has at all
times provided that the Representing Party may amend and/or terminate such
program without liability (except in respect of current obligations outstanding
for current retired employees receiving benefits).
(h) There are no pending or, to the knowledge of the Representing Party,
threatened claims by of on behalf of any Plan of the Representing Party, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routing claims for benefits), except as would not,
individually or in the aggregate be reasonably likely to have a Material Adverse
Effect on the Representing Party.
(i) Each Plan of the Representing Party that has been adopted or
maintained by the Representing Party or any of its Subsidiaries, whether
formally or informally, for the benefit of employees outside the United States
("International Plans") has been established, maintained and administered in
material compliance with its terms and conditions and with the requirements
prescribed by any and all statutory or regulatory laws that are applicable to
such International Plans. No International Plan of the Representing Party has
unfunded liabilities that would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party.
(j) Except as set forth in Section 3.9(j) of the Representing Party's
Disclosure Schedule, the Representing Party is not bound by or obligated under
any labor, collective bargaining or union agreements.
Section 3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Representing Party's SEC Reports, since December 31, 1999 (a) the businesses
of the Representing Party and its Subsidiaries have been conducted in all
material respects in the ordinary course and (b) there has not been any event,
occurrence, development or state of circumstances or facts that has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Representing Party.
Section 3.11 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) The Proxy Statement (or any amendment or supplement thereto) will
not, on the date the Proxy Statement is mailed to shareholders of the Company
and to shareholders of the Bidder and at the time of the Shareholders Meetings,
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
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therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied by or on behalf of the Company or
any of its Subsidiaries for inclusion or incorporation by reference in the
Registration Statement will, at the date it becomes effective and at the time of
the Shareholders Meetings, 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 are made, not misleading. The Proxy Statement will, when filed by the
Company and the Bidder with the SEC, comply as to form in all material respects
with the applicable provisions of the Exchange Act. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to the
statements made in any of the foregoing documents based on and in conformity
with information supplied by or on behalf of the Bidder for inclusion or
incorporation by reference therein.
(b) The Registration Statement on Form S-4 to be filed with the SEC by
the Bidder in connection with the Merger, as amended or supplemented from time
to time (as so amended and supplemented, the "Registration Statement"), will
not, on the date of filing with the SEC or at the time it becomes effective
under the Securities Act, and on the date the Proxy Statement is first mailed to
shareholders of the Company and shareholders of the Bidder and at the time of
the Shareholders Meetings, 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 the light of the circumstances
under which they are made, not misleading. None of the information supplied by
or on behalf of the Bidder or any of its Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
the shareholders of the Bidder and at the time of the Shareholders Meetings,
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 they were made, not misleading. The Proxy
Statement will, when filed by the Bidder and the Company, and the Registration
Statement will, when filed by the Bidder with the SEC, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, the Bidder
makes no representation or warranty with respect to the statements made in the
Registration Statement based on and in conformity with information supplied by
or on behalf of the Company specifically for inclusion or incorporation by
reference therein.
Section 3.12 DISCLOSURE. The representations and warranties by the Company
in this Agreement and the statements contained in the schedules, certificates
and other writings furnished and to be furnished by the Company to the Bidder
pursuant to this Agreement, when considered as a whole and giving effect to any
supplements or amendments thereof prior to the time of signing on the date
hereof, do not and will not contain any untrue statement of a material fact and
do not and will not omit to state any material fact necessary to make the
statements herein or therein not misleading, it being understood that as used in
this Section 3.12 "material" means material to the Company and its Subsidiaries,
taken as a whole.
Section 3.13 TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of the Representing Party, each affiliated, combined,
consolidated or unitary group of which the Representing Party is a member (an
"Affiliated Group") have been timely filed or requests for extensions have been
timely filed and any such extension has been granted and has not expired, and
all such filed Tax Returns are complete and accurate except to the extent any
failure to file or any inaccuracies in filed Tax Returns would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the Representing Party. All Taxes due and owing by the Representing Party or any
Representing Party's Affiliated Group have been paid, or adequately reserved
for, except to the extent any failure to pay or reserve for would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Representing Party. There is
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no audit or examination and there is no deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing by
the Representing Party or any Representing Party's Affiliated Group which if
determined adversely would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party. All
assessments for Taxes due and owing by the Representing Party or any
Representing Party's Affiliated Group with respect to completed and settled
examinations or concluded litigation have been paid, except to the extent that
any failures to pay would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party.
(b) The Representing Party has not (i) entered into a closing agreement
or other similar agreement with a taxing authority relating to Taxes of the
Representing Party or any Representing Party's Affiliated Group with respect to
a taxable period for which the statute of limitations is still open, or
(ii) with respect to U.S. federal income Taxes, granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any income Tax, in either case, that is still outstanding. There
are no Liens relating to material Taxes upon the assets of the Representing
Party or any Representing Party's Affiliated Group other than Liens relating to
Taxes not yet due and Liens that would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party. Neither the
Representing Party, any Representing Party's Affiliated Group is a party to or
is bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement in respect of Taxes (other than with respect to agreements solely
between or among members of the consolidated group of which the Representing
Party is the common parent and agreements and obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on the
Representing Party). Neither the Representing Party nor any Representing Party's
Affiliated Group has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent either the Merger or the
Life Technologies Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
(c) Section 3.13(c) of the Company Disclosure Schedule lists each Tax
Return of the Company or any Affiliated Group for which an accurate copy of the
actual Tax Return as filed with the relevant taxing authority has been made
available by the Company to the Bidder on or before the date hereof.
(d) Section 3.13(d) of the Company Disclosure Schedule lists, with
respect to the Company, each unemployment, severance and termination agreement,
other compensation arrangements, or benefit plans currently in effect which
provide for the payment of any amount (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement that individually or collectively could give rise to a payment which
is nondeductible by reason of Section 280G of the Code.
(e) Neither the Company nor any Affiliated Group has received any
private letter ruling from the Internal Revenue Service within the three-year
period ending on the date hereof.
(f) Neither the Company nor any member of any Affiliated Group has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock (to any Person or entity that is not a member of any Affiliated Group)
qualifying for tax-free treatment under Section 355 of the Code (i) within the
two-year period ending on the date hereof or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger or the Life Technologies Merger.
(g) Neither the Company nor any Affiliated Group is a party to any
contract, agreement or other arrangement which could result in the payment of
amounts that would be nondeductible by reason of Section 162(m) of the Code.
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(h) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth, and taxes or other charges in the nature of excise, withholding, ad
valorem or value added, and (ii) "Tax Return" means any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
Section 3.14 OPINION OF FINANCIAL ADVISORS.
(a) The Board of Directors of the Company has received the opinion of
Lehman Brothers Inc., dated the date of this Agreement, substantially to the
effect that, as of such date, the Merger Consideration to be received by the
Company's shareholders in the Merger is fair to such holders from a financial
point of view.
(b) The Board of Directors of the Bidder has received the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, dated the date of this
Agreement, substantially to the effect that, as of such date, the consideration
to be issued and delivered by the Bidder in the Merger and the Life Technologies
Merger, taken together, is fair to the Bidder from a financial point of view.
Section 3.15 REQUIRED VOTE OF SHAREHOLDERS.
(a) The affirmative vote of the holders of a two-thirds of the
outstanding shares of Company Common Stock (the "Company Shareholder Approval")
is the only vote of the holders of any class or series of the Company's capital
stock which is necessary to approve and adopt this Agreement and the
transactions contemplated hereby.
(b) As of the date hereof, the Bidder does not own any securities of the
Company or Life Technologies. The affirmative vote of the holders of a majority
of the outstanding shares of Bidder Common Stock in favor of the approval and
adoption of this Agreement and the affirmative vote of the holders of a majority
of the outstanding shares of Bidder Common Stock in favor of the approval of an
amendment to the Bidder's certificate of incorporation to authorize a sufficient
number of shares of Bidder Common Stock to enable the Bidder to issue the Merger
Consideration are the only votes of the holders of any class or series of the
Bidder's capital stock which are necessary to approve and adopt this Agreement
and the transactions contemplated hereby.
Section 3.16 RIGHTS AGREEMENT. The Company has duly amended the Rights
Agreement so that the Rights Agreement will not be applicable to the Bidder,
this Agreement, the Merger or any other transaction contemplated by this
Agreement, in each case to the extent provided for and made consistent with the
terms of this Agreement.
Section 3.17 LOCTITE ACQUISITION AGREEMENT; AHLSTROM ACQUISITION
AGREEMENT. The Company has previously delivered to the Bidder complete and
correct copies of (i) the Asset Purchase Agreement, dated as of June 20, 2000,
between the Company and Loctite Corporation (the "Loctite Acquisition
Agreement") and (ii) the Asset Purchase Agreement, dated as of June 20, 2000,
between the Company and Ahlstrom Paper Group Oy (the "Ahlstrom Acquisition
Agreement").
Section 3.18 LEGAL PROCEEDINGS, ETC. As of the date hereof, except as set
forth in Section 3.18 of the Company Disclosure Schedule and except for matters
involving only monetary recovery in which the damages sought to be imposed do
not exceed $200,000 individually or $1 million in the aggregate, there are no
legal, administrative, arbitration or other proceedings or governmental
investigations
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pending or, to the best knowledge of the Company, threatened in writing against
the Company or any of its Subsidiaries.
Section 3.19 CONTRACTS.
(a) Section 3.19 (a) of the Company Disclosure Schedule sets forth a
complete and correct list of each contract (the "Material Contracts") to which
the Company or any of its Subsidiaries is a party which, as of the date hereof,
(i) is a collective bargaining agreement or any agreement that contains any
severance pay liabilities or obligations; (ii) is an employment or consulting
agreement or contract with an employee or individual consultant or a consulting
agreement or contract with a consulting firm or other organization (other than
employment agreements that are created as a matter of Law); (iii) is a note,
bond or debenture or other agreement or instrument relating to borrowed money or
an agreement of guarantee or indemnification running to any Person other than a
Subsidiary; (iv) is an agreement or contract containing any covenant limiting
the freedom of the Company or any of its Subsidiaries to engage in any line of
business or compete with any Person; (v) provides for aggregate future payments
of more than $250,000; (vi) provides for aggregate future payments in excess of
$100,000, has a term exceeding one year and which may not be cancelled upon 90
or fewer days' notice without any liability, penalty or premium (other than a
nominal cancellation fee or charge); or (vii) is material to the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole; PROVIDED that Section 3.13(a) of the Company Disclosure Schedule does
not list any contract for the purchase or sale of goods or services entered into
in the ordinary course of business which may be cancelled on 90 or fewer days'
notice without any liability, penalty or premium (other than a nominal
cancellation fee or charge).
(b) Except as set forth in Section 3.19(b) of the Company Disclosure
Schedule, (i) each Material Contract is in full force and effect, and
(ii) there is not, with respect to the Material Contracts, any existing default,
or event of default, or event which with or without due notice or lapse of time
or both would constitute a default or event of default, on the part of the
Company or any of its Subsidiaries or to the best knowledge of the Company any
other party thereto, except where the failure to be in full force and effect or
where such default or event of default would not have a Material Adverse Effect
on the Company.
Section 3.20 OWNED REAL PROPERTY. Section 3.20 of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, a complete and correct
list of real property which is owned by the Company or any of its Subsidiaries
and which will continue to be owned by the Company, directly or indirectly,
following consummation of the transactions contemplated by the Loctite
Acquisition Agreement and the Ahlstrom Acquisition Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY. From and after the date
hereof and prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 6.1 (the "Termination
Date"), and except (w) that the Company may take any and all actions (subject to
the provisions of Section 4.1(xiv)) required to consummate the transactions
contemplated by the Loctite Acquisition Agreement and the Ahlstrom Acquisition
Agreement, (x) that the Company may sell or otherwise dispose of its coatings
business, (y) with the prior written consent of the Bidder (which consent will
not be unreasonably withheld or delayed) or (z) as may be expressly permitted
pursuant to this Agreement, the Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their ordinary and usual course of business consistent
with past practice;
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(ii) shall use its reasonable best efforts, and cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact its present
business organization and goodwill, keep available the services of its current
officers and other key employees and preserve its relationships with those
Persons having material business dealings with the Company and its Subsidiaries;
(iii) shall not, and shall not permit its Subsidiaries to, authorize or
pay any dividends on or make any distribution with respect to its outstanding
shares of capital stock (other than (A) regular quarterly cash dividends by the
Company consistent in timing and amount with past practice or (B) any dividends
or distribution by a wholly owned Subsidiary of the Company to the Company or
any of its wholly owned Subsidiaries);
(iv) shall not, and shall not permit any of its Subsidiaries to
establish, enter into or amend any severance plan, agreement or arrangement or
any Plan of the Company or Life Technologies or increase the compensation
payable or to become payable or the benefits provided to its directors, officers
or employees, other than as contemplated by law or any existing contract,
employee benefit or welfare plan or policy, or in the ordinary course of
business consistent with past practice (1) with respect to employees who are not
officers of the Company, and (2) with respect to annual bonuses and other
incentive awards for employees including officers;
(v) shall not, and shall not permit any of its Subsidiaries to,
authorize, or announce an intention to authorize, or enter into an agreement
with respect to, any merger, consolidation or business combination (other than
the Merger and the Life Technologies Merger), any acquisition of a material
amount of assets or securities, any disposition of a material amount of assets
or securities or any other similar extraordinary transaction.
(vi) shall not, and shall not permit any of its Subsidiaries to, propose
or adopt any amendments to its certificate of incorporation or bylaws (or other
similar organizational documents);
(vii) shall not, and shall not permit any of its Subsidiaries to, issue
or authorize the issuance of, or agree to issue or sell any shares of capital
stock of any class (whether through the issuance or granting of options,
warrants, commitments, convertible securities, subscriptions, rights to purchase
or otherwise), except for (1) the issuance of Company Common Stock pursuant to
options and grants outstanding as of the date hereof under the Company's 1999
Long-Term Incentive Plan, or 1994 Long-Term Incentive Plan and 1988 Long-Term
Incentive Plan (each such plan, a "Company Equity Plan"), (2) the issuance of
Life Technologies Common Stock pursuant to options and grants outstanding as of
the date hereof under Life Technologies' 1997 Long-Term Incentive Plan, 1996
Non-Employee Directors Stock Option Plan, 1995 Long-Term Incentive Plan and 1991
Stock Option Plan (each such plan, a "Life Technologies Equity Plan") or
(3) options and other equity awards granted in the ordinary course of business
consistent with past practice to any new employee hired after the date hereof
but before the Closing Date or pursuant to formula awards, in either case under
a Company Equity Plan or a Life Technologies Equity Plan;
(viii)shall not, and shall not permit any of its Subsidiaries to,
reclassify, combine, split, purchase or redeem any shares of its capital stock
or purchase or redeem any rights, warrants or options to acquire any such
shares;
(ix) shall not, and shall not permit any of its Subsidiaries to,
(A) incur, assume or prepay any indebtedness or any other liabilities for
borrowed money or issue any debt securities other than incurrences and
repayments of indebtedness under the Company's or its Subsidiaries' credit
facilities in existence on the date of this Agreement or (B) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person (other than
wholly owned Subsidiaries), except for guarantees by Subsidiaries of the Company
indebtedness permitted under the preceding clause (A);
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(x) shall not, and shall not permit any of its Subsidiaries to (or
consent to any proposal by any Person in which the Company has an investment
to), make or forgive any loans, advances or capital contributions to, or
investments in, any other Person other than the Company or any wholly owned
Subsidiary of the Company (including any intercompany loans, advances or capital
contributions to, or investments in, any affiliate) other than advances to
employees in the ordinary course of business in accordance with the Company's or
its Subsidiaries' established policies;
(xi) shall not, and shall not permit any of its Subsidiaries to,
(A) enter into any material lease, license, contract or agreement or otherwise
subject to any material Lien any of its properties or assets (including
securitizations), other than in the ordinary course of business consistent with
past practice; (B) modify, amend in any material respect, or terminate any of
its material contracts; (C) waive, release or assign any rights that are
material to the Company and its Subsidiaries taken as a whole; or (D) permit any
insurance policy naming it as a beneficiary or a loss payable payee to lapse, be
cancelled or expire unless a new policy with substantially identical coverage is
in effect as of the date of lapse, cancellation or expiration;
(xii) shall not, and shall not permit any of its Subsidiaries to, change
any of the financial accounting methods or practices used by it unless required
by GAAP;
(xiii)shall not, and shall not permit any of its Subsidiaries to, make
any Tax election that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company or settle or compromise any
material Tax liability;
(xiv) shall not, without the prior consent of the Bidder (which consent
shall not be unreasonably withheld or delayed), amend or modify (x) the Loctite
Acquisition Agreement or (y) the Ahlstrom Acquisition Agreement in any material
respect;
(xv) shall not, and shall not permit any of its Subsidiaries to, take
any action that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code; and
(xvi) shall not, and shall not permit any of its Subsidiaries to, agree,
in writing or otherwise, to take any of the foregoing actions or take any action
which would result in any of the conditions to the Merger set forth in
Article V hereof not being satisfied.
Section 4.2 BIDDER INTERIM OPERATIONS. Except as otherwise expressly
contemplated hereby, without the prior consent of the Company (which consent
will not be unreasonably withheld or delayed), from the date hereof until the
earlier of the Effective Time or the Termination Date, the Bidder shall, and
shall cause each of its Subsidiaries to, conduct their business in all material
respects in the ordinary and usual course consistent with past practice and use
all reasonable efforts to (i) preserve intact its present business organization
and goodwill, (ii) keep available the services of its current officers and other
key employees, (iii) maintain in effect all material licenses, approvals and
authorizations from Governmental Entities, including, without limitation, all
material licenses and permits that are required for the Bidder or any of its
Subsidiaries to carry on its business as presently conducted and (iv) preserve
existing relationships with its material partners, lenders, suppliers and others
having material business relationships with it so that the business of the
Bidder and its Subsidiaries shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing, except as
otherwise expressly contemplated by this Agreement, from the date hereof until
the earlier of the Effective Time or the Termination Date, without the prior
written consent of the Company (which consent will not be unreasonably withheld
or delayed), the Bidder shall not, nor shall it permit any Subsidiary to:
(a) amend its certificate of incorporation or bylaws (or other similar
organizational documents);
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(b) amend in any respect the terms of the capital stock of the Bidder;
(c) split, combine, subdivide or reclassify any shares of Bidder Common
Stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of Bidder
Common Stock, except for (i) regular quarterly cash dividends by the Bidder
consistent in timing and amount with past practice, or (ii) dividends paid by
any Subsidiary to the Bidder or any Subsidiary that is, directly or indirectly,
wholly owned by the Bidder;
(d) change any of the financial accounting methods or practices used by
it unless required by GAAP;
(e) enter into or acquire any new line of business that (i) is material
to the Bidder and its Subsidiaries, taken as a whole, and (ii) is not
strategically related to the current business or operations of the Bidder and
its Subsidiaries;
(f) incur indebtedness outside of the ordinary course or for
acquisitions (other than in order to consummate the transactions contemplated by
this Agreement or the Life Technologies Merger Agreement);
(g) engage in any merger, consolidation, share exchange, business
combination, reorganization, recapitalization or other similar transaction or
any disposition, directly or indirectly, of assets, securities or ownership
interests representing a material portion of the total assets of the Bidder and
its Subsidiaries taken as a whole;
(h) shall not, and shall not permit any of its Subsidiaries to, take any
action that would prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code; or
(i) agree, in writing or otherwise, to take any of the foregoing actions
or take any action which would result in any of the conditions to the Merger set
forth in Article V hereof not being satisfied.
Section 4.3 ACCESS; CONFIDENTIALITY.
(a) Except for competitively sensitive information and subject to legal
and contractual restrictions, the Company shall (and shall cause its
Subsidiaries to) afford to the Bidder's officers, employees, accountants,
counsel and other authorized representatives reasonable access during normal
business hours upon reasonable notice, throughout the period prior to the
earlier of the Effective Time or the Termination Date, to its properties,
offices, employees, contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the requirements
of federal or state securities laws and shall (and shall cause each of its
Subsidiaries to) furnish to the Bidder such additional financial and operating
data and other information as to its and its Subsidiaries' respective businesses
and properties as the Bidder may from time to time reasonably request. The
Bidder will make all reasonable best efforts to minimize any disruption to the
businesses of the Company and the Company's Subsidiaries which may result from
the requests for access, data and information hereunder. The Bidder shall afford
to the Company's officers, employees, accountants, counsel and other authorized
representatives reasonable access during normal business hours upon reasonable
notice, to its officers, employees, and books and records to the extent
reasonably necessary in connection with the preparation of the Proxy Statement.
No investigation pursuant to this Section 4.3 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All requests for access and information shall
be coordinated through designated senior executives of each of the parties.
(b) The Bidder will hold all information provided under this
Section 4.3 that is non-public in confidence to the extent required by, and in
accordance with, the provisions of the letter dated February 27, 2000, between
the Company and the Bidder. Except as required by law, the Company will hold,
and will cause its officers, employees, accountants, counsel and other
authorized representatives to hold, confidential, all information and documents
obtained pursuant to this Section 4.3 in accordance with the letter dated
July 1, 2000 between the Company and the Bidder.
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Section 4.4 SHAREHOLDERS MEETINGS; PROXY STATEMENT; REGISTRATION STATEMENT.
(a) As promptly as practicable following the date of this Agreement,
(i) the Company shall, acting through its Board of Directors and subject to
Section 4.8, duly call, give notice of, solicit proxies for, convene and hold an
annual or special meeting of its shareholders (the "Company Shareholders
Meeting") in accordance with applicable law, its certificate of incorporation
and its bylaws, and (ii) the Bidder shall, acting through its Board of Directors
and subject to the Bidder's Board of Directors fiduciary duties under applicable
law duly call, give notice of, solicit proxies for, convene and hold an annual
or special meeting of its shareholders (the "Bidder Shareholders Meeting" and,
together with the Company Shareholders Meeting, the "Shareholders Meetings") in
accordance with applicable law, its certificate of incorporation and bylaws, for
the purposes of, among other actions, in each case, considering and taking
action upon the approval of the Merger and the approval and adoption of this
Agreement. Each of the Company (subject to Section 4.8) and the Bidder (subject
to the Bidder's Board of Directors' fiduciary duties under applicable law) shall
include in the Proxy Statement the recommendation of its respective Board of
Directors that its respective shareholders vote in favor of the approval of the
Merger and the approval and adoption of this Agreement and, in the case of the
Bidder, in favor of the approval of an amendment to the Bidder's certificate of
incorporation to authorize a sufficient number of shares of Bidder Common Stock
to issue the Merger Consideration (the "Charter Amendment"). The Bidder and the
Company shall cause their respective Shareholders Meetings to be held on the
same date, which date shall be the same as the date of the Company Stockholders
Meeting (as defined in the Life Technologies Merger Agreement).
(b) As promptly as practicable following the date of this Agreement, the
Company and the Bidder shall (x) prepare and file with the SEC a preliminary
joint proxy statement relating to the Merger, this Agreement and the Charter
Amendment, and (y) obtain and furnish the information required to be included by
the SEC in the Proxy Statement and, after consulting with one another respond
promptly to any comments made by the SEC with respect to the preliminary joint
proxy statement and cause a definitive joint proxy statement, including any
amendments or supplements thereto, to be mailed to their respective shareholders
at the earliest practicable date; PROVIDED that no amendments or supplements to
the Proxy Statement will be made by either party without consultation with the
other party and its counsel. Such definitive joint proxy statement shall also
constitute the prospectus of the Bidder with respect to shares of Bidder Common
Stock to be issued in connection with the transactions contemplated by this
Agreement (such joint proxy statement and prospectus is referred to herein as
the "Proxy Statement"), which prospectus is to be filed with the SEC as part of
the Registration Statement for the purpose of registering Bidder Common Stock
under the Securities Act. Each of the parties agrees to provide the other party
and its counsel with any comments, whether written or oral, that such party may
receive from time to time from the SEC or its staff with respect to the Proxy
Statement or the Registration Statement, as the case may be, promptly after the
receipt of such comments and to consult with the other party and its counsel
prior to responding to any such comments.
(c) As promptly as practicable following the date of this Agreement, the
Bidder shall prepare and file with the SEC the Registration Statement, and shall
use its reasonable best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. The Bidder shall obtain and
furnish the information required to be included by the SEC in the Registration
Statement and, after consultation with the Company, respond promptly to any
comments made by the SEC with respect to the Registration Statement and cause
the prospectus included therein, including any amendments or supplements
thereto, to be mailed to the Company's shareholders at the earliest practicable
date after the Registration Statement is declared effective by the SEC, PROVIDED
that no amendments or supplements to the Registration Statement will be made by
the Bidder without consultation with the Company and its counsel. The Bidder
shall also take any action required to be
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taken under state blue sky or other securities laws in connection with the
issuance of Bidder Common Stock in the Merger.
Section 4.5 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement and applicable
law, each of the parties shall act in good faith and use commercially reasonable
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
the transactions contemplated by this Agreement as soon as practicable. Without
limiting the foregoing, the parties shall, and shall cause their respective
Subsidiaries to, and the parties shall use commercially reasonable efforts to
cause their (and their respective Subsidiaries') directors, officers, employees,
agents, attorneys, accountants and representatives, to (i) consult and cooperate
with and provide assistance to each other in the preparation and filing with the
SEC of the preliminary Proxy Statement, the Proxy Statement and the Registration
Statement and all necessary amendments or supplements thereto; (ii) obtain all
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permissions or actions by, and give all necessary
notices to, and make all filings with and applications and submissions to, any
Governmental Entity or other Person necessary in connection with the
consummation of the transactions contemplated by this Agreement as soon as
reasonably practicable; (iii) provide all such information concerning such
party, its Subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with any of
the foregoing; (iv) avoid the entry of, or have vacated or terminated, any
injunction, decree, order, or judgment that would restrain, prevent, or delay
the consummation of the Merger, including but not limited to defending through
litigation on the merits any claim asserted in any court by any Person; and
(v) take any and all reasonable steps necessary to avoid or eliminate every
impediment under any antitrust, competition, or trade regulation law that is
asserted by any Governmental Entity with respect to the Merger so as to enable
the consummation of the Merger to occur as expeditiously as possible. Prior to
making any application to or filing with a Governmental Entity or other entity
in connection with this Agreement (other than filing under the HSR Act), each
party shall provide the other party with drafts thereof and afford the other
party a reasonable opportunity to comment on such drafts.
(b) The Company and the Bidder shall keep the other reasonably apprised
of the status of matters relating to the completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by the Bidder or the Company, as the
case may be, or by any of their respective Subsidiaries, from any third party
and/or any Governmental Entity with respect to the transactions contemplated by
this Agreement.
Section 4.6 EMPLOYEE MATTERS.
(a) The Company shall take all such actions as shall be necessary to
cause each outstanding stock option to purchase shares of Company Common Stock
(including any related alternative rights) granted under any stock option or
compensation plan or arrangement of the Company or its Subsidiaries
(collectively, the "Company Option Plans") (including those granted to current
or former employees and directors of the Company or any of its Subsidiaries)
(the "Employee Stock Options") to become fully vested and exercisable
immediately prior to the Effective Time, as permitted pursuant to the terms and
conditions of the applicable Company Option Plan. The Company shall take all
such actions as shall be necessary to cause all Employee Stock Options that are
outstanding immediately prior to the Effective Time (whether or not then
presently exercisable or vested) to be cancelled. In exchange for the
cancellation of each such Employee Stock Option (whether or not presently
exercisable or vested), the holder thereof shall be entitled to receive from the
Company (A) an amount in cash equal to the product of (1) the Option Value
Spread multiplied by (2) 0.2800 and (B) such number of shares of Bidder Common
Stock (rounded to the nearest full share) equal to product of (1) the quotient
obtained by dividing (x) the Option Value Spread by (y) Average Bidder Trading
Price
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multiplied by (2) 0.7200. For purposes of this Agreement the "Option Value
Spread" of an Employee Stock Option shall mean the product of (A) the excess, if
any, of (x) the Cancellation Price over (y) the per share exercise price of such
Employee Stock Option multiplied by (B) the number of Shares subject to such
Employee Stock Option and not previously purchased upon exercise of such option.
Any such payment shall be further reduced by any income Tax or employment Tax
witholding required under the Code. The "Cancellation Price" shall be the dollar
amount equal to the sum of (i) $17.50 and (ii) the product of (A) 0.7200 and
(B) the product of (x) the Exchange Ratio multiplied by (y) the Average Bidder
Trading Price. The Company shall take such steps as may be required to cause the
transactions contemplated by this Section 4.6(a) and any other dispositions of
Company equity securities (including derivative securities) in connection with
this Agreement or the transactions contemplated hereby by any individual who is
a director or officer of the Company to be exempt under Rule 16b-3 promulgated
under the Exchange Act. The Bidder shall take such steps as may be required to
cause the transactions contemplated by this Section 4.6(a) and any other
acquisitions of Bidder equity securities (including derivative securities) in
connection with this Agreement or the transactions contemplated hereby by any
individual who is or becomes at or before Closing a director or officer of the
Bidder to be exempt under Rule 16b-3 promulgated under the Exchange Act. The
steps to taken by the Company and the Bidder in connection with the exemption
under Rule 16b-3 described above shall be taken in accordance with the
interpretative letter dated January 12, 1999, issued by the SEC to Skadden,
Arps, Slate, Meagher & Flom LLP.
(b) Following the Effective Time, and to the extent not provided for in
an acquisition agreement that the Company is a party to as of the Effective
Time, or any agreement entered into after the Effective Time by the Company
and/or the Bidder with any purchaser of the Company's coatings business or any
other assets of the Company, the Bidder shall, or shall cause a Bidder
Subsidiary to, (i) provide to those former employees of the Company whose
employment terminated prior to the Effective Time (and eligible dependents of
such former employees) (collectively, "Retirees") post-retirement welfare
benefits substantially equivalent (both in terms of the benefits provided and
the cost of such benefits to a Retiree) to those provided to such individuals
under the post-retirement welfare benefit program of the Company as in effect
immediately prior to the Effective Time, (ii) continue an arrangement pursuant
to which such post-retirement welfare benefits shall be provided upon any
termination of employment with the Bidder or a Bidder Subsidiary, to those
employees (and their eligible dependents) who elect to receive such benefits
(substantially in accordance with the procedures utilized by the Company or
other such reasonable procedures the Bidder may establish) and who immediately
prior to the Effective Time would be eligible for such benefits upon a
termination of employment with the Company (collectively, "Vested Eligible
Employees") and (iii) continue an arrangement pursuant to which such
post-retirement welfare benefits shall be provided to those individuals (and
their eligible dependents) who are not Retirees or Vested Eligible Employees,
and who, as of the Effective Time, had attained the age of 50 and had been
credited with at least five years of service with the Company (collectively,
"Potential Grow-In Employees"), but only if, at the time of termination of any
termination with the Bidder or a Bidder Subsidiary, (A) such Potential Grow-In
Employee would have been eligible to receive such post-retirement welfare
benefits under the Company's post-retirement welfare benefit program as in
effect immediately prior to the Effective Time (crediting service with the
Bidder or a Bidder Subsidiary as service with the Company) and (B) such
Potential Grow-In Employee elects to receive such benefits (substantially in
accordance with procedures currently utilized by the Company or other such
reasonable procedures the Bidder may establish). The Bidder shall not, and shall
not permit any Bidder Subsidiary to, terminate or modify in any adverse manner
the post-retirement welfare benefit it has agreed to provide to Retirees, Vested
Eligible Employees and Potential Grow-In Employees pursuant to this
Section 4.6(b).
(c) At the direction of the Bidder, and to the extent permissible under
any previous acquisition agreement entered into by the Company, the Company
shall terminate the Dexter
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Corporation 401(k) Plan and or the Employees' Savings and Profit Sharing
Retirement Income Plan of Dexter Corporation and Dexter Corporation, Nonwoven
(collectively, the "Savings Plans"). The Bidder shall determine whether any such
previous acquisition agreement would affect the proposed plan terminations and
shall notify the Company at least three (3) days prior to the Closing of its
decision to, and may at that time, terminate a Savings Plan. Unless the Bidder
has not so directed the Company, the Bidder shall receive from the Company
evidence (in a form satisfactory to the Bidder) that the Savings Plan shall be
terminated effective as of the day immediately preceding the Closing. The Bidder
shall, consistent with the terms of the Bidder's 401(k) plan, and applicable
law, allow individuals who were employees of the Company or any Subsidiary of
the Company as of immediately prior to the Closing to participate in the
Bidder's 401(k) plan and the Bidder shall cause its 401(k) plan to accept direct
rollovers and rollover contributions (each, to the extent requested by a Savings
Plan participant) in respect of the Savings Plan account balances (including any
outstanding loans) held by such individuals.
Section 4.7 TAKEOVER STATUTE. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company
and the Bidder and the members of their respective Boards of Directors shall
grant such approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
Section 4.8 NO SOLICITATION BY THE COMPANY.
(a) Neither the Company nor any of its Subsidiaries nor any of the
officers and directors of any of them shall, and the Company shall direct and
use its reasonable best efforts to cause its and its Subsidiaries' employees,
agents and representatives, including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries (the Company, its
Subsidiaries and their respective officers, directors, employees, agents and
representatives being the "Company Representatives") not to, directly or
indirectly through another Person, (i) initiate, solicit, encourage or otherwise
knowingly facilitate any inquiries (by way of furnishing information or
otherwise) or the making of any Acquisition Proposal or (ii) participate in any
discussions or engage in any negotiations concerning an Acquisition Proposal;
PROVIDED, HOWEVER, that the Company's Board of Directors may, or may authorize
the Company Representatives to, in response to an Acquisition Proposal that the
Board of Directors of the Company concludes in good faith is, or is reasonably
likely to become, a Superior Proposal, (x) furnish information with respect to
the Company and its Subsidiaries to any Person making such Superior Proposal and
(y) participate in discussions or negotiations regarding such Superior Proposal,
PROVIDED that, prior to taking any such action, the Company provides reasonable
advance notice to the Bidder that it is taking such action. For purposes of this
Agreement "Acquisition Proposal" means any direct or indirect inquiry, proposal
or offer relating to the acquisition or purchase of a business or shares of any
class of equity securities of the Company or any of its Subsidiaries, any tender
offer or exchange offer that, if consummated, would result in any Person
beneficially owning any class of equity securities of the Company or any of its
Subsidiaries, or any merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction (a "Business Combination Transaction") involving the Company or any
of its Subsidiaries, or any purchase or sale of a substantial portion of the
consolidated assets (including without limitation stock of Subsidiaries owned
directly or indirectly by the Company) of the Company or any of its Subsidiaries
(an "Asset Transaction"); PROVIDED that the term Acquisition Proposal shall not
include the Loctite Acquisition Agreement, the Ahlstrom Acquisition Agreement or
communications relating to the sale of any business covered by any such
agreement or the Company's coatings business. For purposes of this Agreement
"Superior Proposal" means an unsolicited bona fide written Acquisition Proposal
that the Board of Directors of the Company concludes in good faith (after
consultation with the Company's
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legal and financial advisors) would, if consummated, provide greater aggregate
value to the Company's shareholders from a financial point of view than the
transactions contemplated by this Agreement; PROVIDED that for purposes of this
definition the term "Acquisition Proposal" shall have the meaning set forth
above, except that (x) references to "shares of any class of equity securities
of the Company" shall be deemed to be references to "100% of the outstanding
Shares" and (y) an "Acquisition Proposal" shall be deemed to refer only to a
Business Combination Transaction involving the Company or, with respect to an
Asset Transaction, such transaction must involve the assets of the Company and
its Subsidiaries, taken as a whole, and not any Subsidiary of the Company alone.
(b) Except as expressly permitted by this Section 4.8, neither the
Company's Board of Directors nor any committee thereof shall (i) withdraw,
modify or change, or propose publicly to withdraw, modify or change, in a manner
adverse to the Bidder, the recommendation by such Board of Directors or such
committee of the Merger or this Agreement unless the Board of Directors of the
Company shall have determined in good faith, after consultation with its legal
and financial advisors, that, the Merger or this Agreement is no longer in the
best interests of the Company's shareholders and that such withdrawal,
modification or change is, therefore, required in order to satisfy its fiduciary
duties to the Company's shareholders under applicable law, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
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 Acquisition Proposal. Notwithstanding
the foregoing, the Company may, in response to a Superior Proposal, (x) take any
of the actions described in clauses (i) or (ii) above or (y) subject to this
paragraph (b), terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into any Acquisition
Agreement with respect to any Superior Proposal) but only after the fifth
business day following the Bidder's receipt of written notice advising the
Bidder that the Company's Board of Directors is prepared to accept a Superior
Proposal, and attaching the most current version of any such Superior Proposal
or any draft of an Acquisition Agreement.
(c) Nothing contained in this Section 4.8 shall prohibit the Company or
its Board of Directors from at any time taking and disclosing to its
shareholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act or from making any disclosure to the Company's shareholders
required by applicable law.
Section 4.9 PUBLIC ANNOUNCEMENTS. The Bidder and the Company agree that
neither one of them will issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without prior consultation with the other
party, except as may be required by applicable law or the rules of any
applicable stock exchange on which such party's securities are listed.
Section 4.10 INDEMNIFICATION; INSURANCE. From and after the Effective
Time, the Bidder will indemnify and hold harmless each present and former
director and officer of the Company and its Subsidiaries (the "Indemnified
Parties"), against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, by reason of the fact that such individual is
or was a director, officer, employee or agent of the Company or any of its
Subsidiaries, or is or was serving at the request of the Company or any of its
Subsidiaries as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable law, and the Bidder shall also advance fees and
expenses (including attorneys fees) as incurred to the fullest extent permitted
under applicable law; PROVIDED, that to the extent the Company and any
Indemnified Party are parties to an existing indemnification agreement, the
indemnification provided for pursuant to this Section 4.10(a) shall be provided
by the Bidder in accordance with the procedures prescribed in such
indemnification agreement.
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(a) For six years from the Effective Time, the Bidder shall maintain in
effect the Company's and its Subsidiaries' current directors' and officers'
liability insurance policies (the "Company Policies") covering those Persons who
are currently covered by the Company Policies; PROVIDED, HOWEVER, that in no
event shall the Bidder be required to expend in any one year an amount in excess
of 150% of the annual premiums currently paid by the Company for such insurance,
and PROVIDED FURTHER, that if the annual premiums of such insurance coverage
exceeds such amount, the Bidder shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount; and PROVIDED
FURTHER that the Bidder may meet its obligations under this paragraph by
covering the above Persons under the Bidder's insurance policy or policies on
the terms described above.
Section 4.11 ADDITIONAL REPORTS AND INFORMATION.
(a) The Company shall furnish to the Bidder copies of all reports of the
type referred to in Section 3.4 which it or Life Technologies files with the SEC
on or after the date hereof, and the Company represents and warrants that as of
the respective dates thereof, such reports will not contain any untrue statement
of a material fact or 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 audited
consolidated financial statements and the unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present the financial position of the Company and its
consolidated Subsidiaries or Life Technologies and its consolidated
Subsidiaries, as the case may be, as of the dates thereof and the results of
operations and cash flows or other information included therein for the periods
or as of the date then ended (subject, in the case of the interim financial
statements, to normal, recurring year-end adjustments), in each case in
accordance with GAAP consistently applied during the periods involved (except as
otherwise disclosed in the notes thereto). The Company shall furnish to the
Bidder on a monthly basis a consolidating balance sheet for the Company and its
consolidated subsidiaries and the monthly internal financial report for Life
Technologies and its Subsidiaries which are currently being prepared in the
ordinary course of business (with deletions reasonably necessary to comply with
applicable antitrust laws).
(b) The Bidder shall furnish to the Company copies of all reports of the
type referred to in Section 3.4 which it files with the SEC on or after the date
hereof, and the Bidder represents and warrants that as of the respective dates
thereof, such reports will not contain any untrue statement of a material fact
or 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 audited consolidated financial statements and the
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the financial
position of the Bidder and its consolidated Subsidiaries as of the dates thereof
and the results of operations and cash flows or other information included
therein for the periods or as of the date then ended (subject, in the case of
the interim financial statements, to normal, recurring year-end adjustments), in
each case in accordance with past practice and GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto).
Section 4.12 AFFILIATES. As soon as practicable, the Company shall deliver
to the Bidder a list identifying, to the best of the Company's knowledge, all
Persons who will be, at the time of the Company Shareholder Approval, deemed to
be "affiliates" of the Company for purposes of Rule 145 under the Securities
Act. The Company shall advise the Bidder of any additions or deletions to or
from such list from time to time thereafter. The Company shall use its
reasonable best efforts to cause each such Person to deliver to the Bidder at
least 30 days prior to the Closing Date a written "affiliates" agreement in
customary form and substance.
Section 4.13 NASDAQ NATIONAL MARKET QUOTATION. The Bidder shall use its
best efforts to cause the shares of Bidder Common Stock to be issued in
connection with the transactions contemplated by
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this Agreement to be approved for quotation on the Nasdaq National Market,
subject to official notice of issuance, prior to the Closing Date.
Section 4.14 TAX-FREE REORGANIZATION. The Bidder and the Company intend
that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. The Bidder and the Company shall each use all
reasonable efforts to cause the Merger to so qualify and to obtain the opinions
of their respective tax counsel referred to in Sections 5.2(a) and 5.3(a),
including the execution of the representation letters referred to therein.
Neither the Bidder nor the Company shall knowingly take any action, or knowingly
fail to take any action, that would cause the Merger not to qualify as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required pursuant to a "determination" within the meaning of
Section 1313(a) of the Code.
Section 4.15 DISCLOSURE SCHEDULE SUPPLEMENTS. From time to time after the
date of this Agreement and prior to the Effective Time, the Company will
promptly supplement or amend the Company Disclosure Schedule with respect to any
matter hereafter arising which, if existing or occurring at or prior to the date
of this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby in any material respect. From time to time after the
date of this Agreement and prior to the Effective Time, the Bidder will promptly
supplement or amend the Bidder Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Bidder Disclosure Schedule or which is necessary to correct any information in a
schedule or in any representation and warranty of the Bidder which has been
rendered inaccurate thereby in any material respect. For purposes of determining
the accuracy of the representations and warranties of the Company contained in
this Agreement and the accuracy of the representations and warranties of the
Bidder contained in this Agreement in order to determine the fulfillment of the
conditions set forth in Sections 5.2(b) and 5.3(b), the Company Disclosure
Schedule and the Bidder Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any subsequent supplement or amendment
thereto.
Section 4.16 VOTING OF LIFE TECHNOLOGIES COMMON STOCK. Unless this
Agreement shall have been terminated in accordance with its terms, the Company
hereby agrees to vote all of the shares of Life Technologies Common Stock
beneficially owned by it in favor of the approval and adoption of the Life
Technologies Merger Agreement at any meeting of the shareholders of Life
Technologies held for that purpose.
ARTICLE XV
CONDITIONS TO THE MERGER
Section 5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Shareholder Approval shall have been obtained.
(b) The Bidder Shareholder Approval shall have been obtained.
(c) All of the conditions to the Life Technologies Merger shall have
been satisfied or waived in accordance with the terms of the Life Technologies
Merger Agreement, and the Life Technologies Merger shall be effective
simultaneously with the Effective Time. The condition set forth in this
paragraph (c) shall not be waivable by either party.
(d) No statute, rule, regulation, executive order, decree, ruling or
permanent injunction shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits the consummation of the Merger
substantially on the terms contemplated hereby; PROVIDED that the party
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seeking to rely upon this condition has fully complied with and performed its
obligations pursuant to Section 4.3.
(e) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(f) The shares of Bidder Common Stock to be issued in the Merger shall
have been approved for quotation on the Nasdaq National Market, subject to
official notice of issuance.
(g) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect.
Section 5.2 CONDITIONS TO OBLIGATION OF THE BIDDER TO EFFECT THE
MERGER. The obligation of the Bidder to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Bidder:
(a) The Bidder shall have received an opinion of Gray Cary Ware &
Freidenrich LLP, special tax counsel to the Bidder, dated as of the Effective
Time, to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such tax counsel of customary representation
letters from each of the Bidder and the Company, in each case, in form and
substance reasonably satisfactory to such tax counsel and the issuance of the
opinion of counsel to the Company provided in Section 5.3(a). The specific
provisions of each such representation letter shall be in form and substance
reasonably satisfactory to such tax counsel, and each such representation letter
shall be dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect. The opinion condition referred to
in this Section 5.2(a) shall not be waivable after receipt of the Company
Shareholder Approval and the Bidder Shareholder Approval referred to in Sections
5.1(a) and 5.1(b), unless further Company shareholder approval is obtained with
appropriate disclosure.
(b) The representations and warranties of the Company set forth in this
Agreement that are qualified by materiality or Material Adverse Effect shall be
true and correct, and the representations and warranties of the Company set
forth in this Agreement that are not so qualified shall be true and correct in
all material respects, in each case as if such representations or warranties
were made as of the Effective Time (other than those that speak as of a specific
date or as of the date hereof, which representations and warranties shall be
true and correct or true and correct in all material respects, as the case may
be, as of such specific date or as of the date hereof, respectively).
(c) The Company shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to be
performed and complied with by it on or prior to the Closing Date.
(d) The transactions contemplated by each of the Loctite Acquisition
Agreement and the Ahlstrom Acquisition Agreement shall have been consummated
substantially in accordance with the terms thereof.
(e) The Company shall have furnished a certificate of an executive
officer to evidence compliance with the conditions set forth in Section 5.2(b)
and (c) of this Agreement.
Section 5.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) The Company shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special tax counsel to the Company, dated as of the
Effective Time, to the effect that the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code. The issuance of such opinion
shall be conditioned upon the receipt by such tax counsel of customary
representation letters from each of the Bidder and the Company, in each case, in
form and substance reasonably satisfactory to such tax counsel. The specific
provisions of each such representation letter shall be in form and
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substance reasonably satisfactory to such tax counsel, and each such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect. The opinion
condition referred to in this Section 5.3(a) shall not be waivable after receipt
of the Company Shareholder Approval and the Bidder Shareholder Approval referred
to in Sections 5.1(a) and 5.1(b), unless further Company shareholder approval is
obtained with appropriate disclosure.
(b) The representations and warranties of the Bidder set forth in this
Agreement that are qualified by materiality or Material Adverse Effect shall be
true and correct, and the representations and warranties of the Company set
forth in this Agreement that are not so qualified shall be true and correct in
all material respects, in each case, as if such representations or warranties
were made as of the Effective Time (other than those that speak as of a specific
date or as of the date hereof, which representations and warranties shall be
true and correct or true and correct in all material respects, as the case may
be, as of such specific date or as of the date hereof, respectively).
(c) The Bidder shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to be
performed and complied with by it on or prior to the Closing Date.
(d) The Bidder shall have furnished a certificate of an executive
officer of the Bidder to evidence compliance with the conditions set forth in
Section 5.3(b) and (c) of this Agreement.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after obtaining the Company
Shareholder Approval and the Bidder Shareholder Approval:
(a) by the mutual written consent of the Company and the Bidder;
(b) by either the Bidder or the Company, if the Merger has not been
consummated by October 31, 2000 (the "Expiration Date"), PROVIDED, HOWEVER, that
in the event either the condition set forth in Section 5.1(e) shall not have
been satisfied or, prior to September 15, 2000, the Registration Statement shall
not have been declared effective, the Expiration Date shall be extended to the
earlier of (x) the later of (1) the date which is three business days after the
date on which the condition set forth in Section 5.1(e) is satisfied and
(2) the date which is three business days following the date of the Company
Shareholders Meeting and (y) December 31, 2000; PROVIDED FURTHER, that the right
to terminate this Agreement under this clause (b) shall not be available to any
party whose failure to fulfill any of its obligations under this Agreement has
been the cause of or resulted in the failure to consummate the Merger by such
date;
(c) by either the Bidder or the Company if (i) a statute, rule,
regulation or executive order shall have been enacted, entered, promulgated or
enforced by any Governmental Entity prohibiting the consummation of the Merger
substantially on the terms contemplated hereby; or (ii) an order, decree, ruling
or injunction shall have been entered permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger substantially on the terms
contemplated hereby and such order, decree, ruling or injunction shall have
become final and non-appealable; PROVIDED, that the party seeking to terminate
this Agreement pursuant to this Section 6.1(c)(ii) shall have used its
reasonable best efforts to remove such order, decree, ruling or injunction;
(d) by the Company in accordance with Section 4.8(b); PROVIDED that the
Company shall have complied with all provisions of Section 4.8(b); and PROVIDED
FURTHER that any such termination shall not be effective unless the Termination
Fee pursuant to Section 6.3 shall have been paid contemporaneously with such
termination;
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<PAGE>
(e) by the Bidder or the Company, if after the Company convenes and
holds the Company Shareholders Meeting and certifies the vote with respect to
the Merger the Company's shareholders have failed to deliver the affirmative
votes necessary to confer the Company Shareholder Approval;
(f) by the Bidder or the Company, if after the Bidder convenes and holds
the Bidder Shareholders Meeting and certifies the vote with respect to the
Merger and the amendment of the Bidder's certificate of incorporation, the
Bidder's shareholders shall have failed to deliver the affirmative votes
necessary to confer the Bidder Shareholder Approval;
(g) by the Bidder, if there has been a material violation or breach by
the Company of any agreement, representation or warranty contained in this
Agreement that has rendered the satisfaction of any condition to the obligations
of the Bidder impossible and such violation or breach has not been waived by the
Bidder;
(h) by the Company, if there has been a material violation or breach by
the Bidder of any agreement, representation or warranty contained in this
Agreement that has rendered the satisfaction of any condition to the obligations
of the Company, impossible and such violation or breach has not been waived by
the Company;
(i) by the Bidder or the Company, if the Life Technologies Merger
Agreement shall have been terminated in accordance with its terms; or
(j) in the event that the Expiration Date is extended beyond
October 31, 2000, by the Bidder or the Company, at any time after the tenth
business day following the termination of either the Loctite Acquisition
Agreement or the Ahlstrom Acquisition Agreement, in accordance with its terms.
Section 6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 6.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall terminate and be of no
further force and effect (except for the provisions of Sections 4.3 (b), 6.3 and
7.2), and there shall be no other liability on the part of the Bidder or the
Company except liability arising out of a willful breach of this Agreement.
Section 6.3 TERMINATION FEE. In the event that (i) this Agreement shall
have been terminated pursuant to Section 6.1(d) or (ii) an Acquisition Proposal
for the Company shall have been publicly announced and, following such
announcement, this Agreement is terminated pursuant to Section 6.1(e) and,
within 12 months of such termination, a Business Combination Transaction
involving a change of control of the Company or an Asset Transaction involving a
sale of all or substantially all of the assets of the Company and its
consolidated subsidiaries is consummated, then, the Company shall pay to the
Bidder a fee equal to $65 million (the "Termination Fee"), payable by wire
transfer of same day funds or by cashier's check, in accordance with the
provisions of the next sentence. In the event the Termination Fee is payable
(x) pursuant to clause (i) of the preceding sentence, payment of the termination
fee shall be a condition to the effectiveness of termination pursuant to
Section 6.1(d) and (y) pursuant to clause (ii) of the preceding sentence, the
Termination Fee shall be payable promptly, but in no event later than two days
after the date of consummation of the Business Combination Transaction or Asset
Transaction. The Company acknowledges that the agreements contained in this
Section 6.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Bidder would not enter into
this Agreement.
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<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 7.2 EXPENSES. Except as otherwise expressly contemplated by this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
Section 7.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in
two or more separate counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
Section 7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof, except to the extent the
provisions of this Agreement are expressly governed by or derive their authority
from the CBCA.
Section 7.5 NOTICES. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 7.5 and the appropriate telecopy confirmation
is received or (b) if given by any other means, when delivered at the address
specified in this Section 7.5:
<TABLE>
<S> <C> <C> <C>
To the Bidder:
Invitrogen Corporation
1600 Faraday Avenue
Carlsbad, California 92008
Attention: Chief Financial Officer
Telecopy: (760) 602-6505
copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121-2189
Attention: Cameron Jay Rains, Esq.
Telecopy: (858) 677-1477
To the Company:
Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096-2334
Attention: General Counsel
Telecopy: (860) 292-7669
</TABLE>
B-31
<PAGE>
<TABLE>
<S> <C> <C> <C>
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: J. Michael Schell, Esq.
Margaret L. Wolff, Esq.
Telecopy: (212) 735-2000
</TABLE>
Section 7.6 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the first sentence of this
Section 7.6, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns. Any
assignment not permitted under this Section 7.6 shall be null and void.
Section 7.7 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 7.8 ENFORCEMENT OF AGREEMENT. The parties hereto agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including, without limitation, specific
performance, without bond or other security being required.
Section 7.9 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
together with the Life Technologies Merger Agreement, the Confidentiality
Agreement, dated February 27, 2000, the Confidentiality Agreement, dated
July 1, 2000, the Company Disclosure Schedule, the Bidder Disclosure Schedule
and exhibits hereto constitute the entire agreement, and supersede all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof and thereof and except
for the provisions of Section 4.6 and Section 4.10, is not intended to and shall
not confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 7.10 HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 7.11 DEFINITIONS. References in this Agreement to
(a) "Subsidiaries" of the Company or the Bidder shall mean any corporation or
other form of legal entity of which more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by the Company or
the Bidder or in which the Company or the Bidder has the right to elect a
majority of the members of the board of directors or other similar governing
body; (b) "Significant Subsidiaries" shall mean Subsidiaries which constitute
"significant subsidiaries" under Rule 405 promulgated by the SEC under the
Securities Act; (c) "affiliates" shall mean, as to any Person, any other Person
which, directly or indirectly, controls, or is controlled by, or is under common
control with, such Person; and (d) "Person" shall mean an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a Governmental Entity. As used in
the definition of "affiliates," "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or
B-32
<PAGE>
partnership or other ownership interests, by contract or otherwise. "Including,"
as used herein, shall mean "including, without limitation."
Section 7.12 FINDERS OR BROKERS. Except for Lehman Brothers Inc. with
respect to the Company, and Donaldson, Lufkin & Jenrette Securities Corporation
with respect to the Bidder, neither the Company nor the Bidder nor any of their
respective Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon consummation
of the Merger.
Section 7.13 AMENDMENT OR SUPPLEMENT. At any time prior to the Effective
Time, this Agreement may be amended or supplemented in any and all respects,
whether before or after the Company Shareholder Approval and the Bidder
Shareholder Approval, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors, with respect to any of the terms
contained in this Agreement; PROVIDED, HOWEVER that following the Company
Shareholder Approval and the Bidder Shareholder Approval there shall be no
amendment or change to the provisions hereof which would reduce the amount or
change the type of consideration into which each Share shall be converted upon
consummation of the Merger or other change requiring shareholder approval
without further approval by the shareholders of the Company.
Section 7.14 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, any party may (a) extend the time for the performance of any of
the obligations or acts of any other party hereto; (b) waive any inaccuracies in
the representations and warranties of any other party hereto contained herein or
in any document delivered pursuant hereto; or (c) subject to the proviso of
Section 7.13 waive compliance with any of the agreements or conditions of any
other party hereto contained herein. Notwithstanding the foregoing no failure or
delay by the Company or the Bidder in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
<TABLE>
<S> <C> <C>
INVITROGEN CORPORATION
By: /s/ LYLE C. TURNER
-----------------------------------------
Name: Lyle C. Turner
Title: Chairman & CEO
DEXTER CORPORATION
By: /s/ K. GRAHAME WALKER
-----------------------------------------
Name: K. Grahame Walker
Title: Chairman & CEO
</TABLE>
B-33
<PAGE>
ANNEX C
[LOGO]
July 8, 2000
Board of Directors
Invitrogen Corporation
1600 Faraday Avenue
Carlsbad, CA 92008
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to Invitrogen Corporation (the "Company") of the consideration to be paid
by the Company pursuant to the terms of (i) the Agreement and Plan of Merger, to
be dated as of July 7, 2000 (the "Dexter Agreement"), by and between the Company
and Dexter Corporation ("Dexter") pursuant to which Dexter will be merged (the
"Dexter Merger") with and into the Company, and (ii) the Agreement and Plan of
Merger, to be dated as of July 7, 2000 (the "Life Technologies Agreement" and
together with the Dexter Agreement, the "Merger Agreements"), by and between the
Company and Life Technologies, Inc. ("Life Technologies") pursuant to which Life
Technologies will be merged (the "Life Technologies Merger", and together with
the Dexter Merger, the "Transaction") with and into the Company.
Pursuant to the Dexter Agreement, each share of common stock of Dexter will
be converted into the right to receive, at the election of the holder thereof,
(i) the number of shares of common stock, par value $.01 per share of the
Company ("Company Common Stock"), equal to the Dexter Exchange Ratio (the
"Dexter Stock Consideration") or (ii) $62.50 in cash (the "Dexter Cash
Consideration" and together with the Dexter Stock Consideration, the "Dexter
Merger Consideration"); provided that such election shall be subject to
proration as set forth in the Dexter Agreement. The "Dexter Exchange Ratio"
shall be calculated by dividing $62.50 by the average closing sales price of the
Company Common Stock for the twenty (20) consecutive trading days ending on and
including the third trading day prior to the date of the Shareholder Meeting
("Average Trading Price"); provided, however, that if the quotient of $62.50
divided by the Average Trading Price exceeds 1.0417 then for all purposes the
Dexter Exchange Ratio shall be 1.0417, and if such quotient is less than 0.7813,
then for all purposes the Dexter Exchange Ratio shall be 0.7813.
Pursuant to the Life Technologies Agreement, each share of common stock of
Life Technologies that is not held by Dexter (the "Minority Interest") will be
converted into the right to receive, at the election of the holder thereof,
(i) the number of shares of Company Common Stock equal to the Life Technologies
Exchange Ratio (the "Life Technologies Stock Consideration") or (ii) $60.00 in
cash (the "Life Technologies Cash Consideration" and together with the Life
Technologies Stock Consideration, the "Life Technologies Merger Consideration")
(the Life Technologies Merger Consideration and the Dexter Merger Consideration
in the aggregate, the "Aggregate Consideration"); provided that such election
shall be subject to proration as set forth in the Life Technologies Agreement.
The "Life Technologies Exchange Ratio" shall be calculated by dividing $60.00 by
the Average Trading Price; provided, however, that if the quotient of $60.00
divided by the Average Trading Price exceeds 1.0000 then for all purposes the
Exchange Ratio shall be 1.0000, and if such quotient is less than 0.7500, then
for all purposes the Exchange Ratio shall be 0.7500.
In arriving at our opinion, we have reviewed the drafts dated July 6, 2000
of the Merger Agreements. We also have reviewed financial and other information
that was publicly available or furnished to us by the
C-1
<PAGE>
Company, Dexter and Life Technologies including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections of Dexter for the period beginning January 1, 2000 and
ending December 31, 2004 prepared by the management of Dexter, certain financial
projections of Life Technologies for the period beginning January 1, 2000 and
ending December 31, 2004 prepared by the management of Life Technologies, and
certain financial projections of the Company for the period beginning
January 1, 2000 and ending December 31, 2004 prepared by the management of the
Company. In addition, we have compared certain financial and securities data of
the Company, Dexter and Life Technologies with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of the Company, Dexter and Life
Technologies, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company, Dexter and Life
Technologies or their respective representatives, or that was otherwise reviewed
by us. With respect to the financial projections supplied to us, we have relied
on representations that they have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of the management of the
Company, Dexter and Life Technologies as to the future operating and financial
performance of the Company, Dexter and Life Technologies, respectively. We have
assumed that the Transaction will be consummated in accordance with the terms of
the Merger Agreements, including the consummation of the transactions
contemplated by the Loctite Acquisition Agreement and the Ahlstrom Acquisition
Agreement (as such terms are defined in the Dexter Agreement). We have not
assumed any responsibility for making any independent evaluation of any assets
or liabilities or for making any independent verification of any of the
information reviewed by us and we have made no such independent evaluation or
verification. We have relied as to certain legal matters on advice of counsel to
the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect the conclusion reached in this opinion, we do not have
any obligation to update, revise or reaffirm this opinion. Our opinion does not
address the relative merits of the Transaction and the other business strategies
being considered by the Company's Board of Directors, nor does it address the
Board's decision to proceed with the Transaction. Our opinion does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company in the past and has been compensated
for such services. Most recently, DLJ served as lead-manager of the Company's
$172.5 million Convertible Subordinated Note offering in February 2000, as
lead-manager of the Company's $147.5 million follow-on offering in October 1999
and as lead-manager of the Company's $52.5 million public offering of common
stock in February 1999. DLJ has also performed investment banking and other
services for Dexter in the past and has been compensated for such services. Most
recently, DLJ served as financial advisor in the $33 million sale of Dexter's
printing wiring board business in November 1999. DLJ has also performed
investment banking and other services for Life Technologies in the past and has
been compensated for such services.
C-2
<PAGE>
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Aggregate Consideration to be paid by the Company
pursuant to the Merger Agreements is fair to the Company from a financial point
of view.
<TABLE>
<S> <C> <C>
Very truly yours,
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By: /s/ JEFFREY A. RAICH
-----------------------------------------
Jeffrey A. Raich
Managing Director
</TABLE>
C-3
<PAGE>
ANNEX D
[LOGO]
[ADDRESS]
July 7, 2000
The Special Committee of the Board of Directors
Life Technologies, Inc.
9800 Medical Center Drive
Rockville, Maryland 20850
Members of the Special Committee:
You have asked us to advise you with respect to the fairness, from a financial
point of view, to the holders of the common stock of Life Technologies, Inc.
("Life Technologies"), other than Dexter Corporation ("Dexter") and its
subsidiaries, officers and directors, of the Merger Consideration (as defined
below) provided for in the Agreement and Plan of Merger, dated as of July 7,
2000 (the "Merger Agreement"), between Invitrogen Corporation ("Invitrogen") and
Life Technologies. The Merger Agreement provides for, among other things, the
merger of Life Technologies with and into Invitrogen (the "Merger") pursuant to
which each outstanding share of the common stock, par value $0.01 per share, of
Life Technologies ("Life Technologies Common Stock") will be converted into the
right to receive (A) at the election of the holder thereof and subject to
certain election and proration procedures specified in the Merger Agreement (as
to which we express no opinion), (i) $60.00 in cash (the "Cash Consideration")
or (ii) that number of shares of the common stock, par value $0.01 per share, of
Invitrogen ("Invitrogen Common Stock") equal to the quotient obtained by
dividing (x) $60.00 by (y) the average of the reported closing sales prices per
share of Invitrogen Common Stock for the 20 consecutive Nasdaq National Market
trading days ending on, and including, the third trading day prior to the date
of the Life Technologies shareholders' meeting in respect of the Merger (the
"Exchange Ratio"), provided that if such quotient exceeds 1.0, then the Exchange
Ratio will be 1.0, and if such quotient is less than 0.7500, then the Exchange
Ratio will be 0.7500 (the number of shares of Invitrogen Common Stock into which
each share of Life Technologies Common Stock will be so converted in the Merger,
the "Stock Consideration" and, together with the Cash Consideration, the
"Election Consideration"), or (B) if no such election is made, (i) $16.80 in
cash plus (ii) that number of shares of Invitrogen Common Stock equal to
(x) the Exchange Ratio multiplied by (y) 0.7200 (such cash amount and number of
shares of Invitrogen Common Stock into which shares of Life Technologies Common
Stock will be so converted in the Merger, collectively, the "Non-election
Consideration" and, together with the Election Consideration, the "Merger
Consideration").
In arriving at our opinion, we have reviewed the Merger Agreement and certain
related documents, as well as certain publicly available business and financial
information relating to Life Technologies and Invitrogen. We have also reviewed
certain other information relating to Life Technologies and Invitrogen,
including financial forecasts, provided to and discussed with us by Life
Technologies and Invitrogen, and have met with the managements of Life
Technologies and Invitrogen to discuss the businesses and prospects of Life
Technologies and Invitrogen. We have also considered certain financial and stock
market data of Life Technologies and Invitrogen, and we have compared those data
with similar data for other publicly held companies in businesses similar to
Life Technologies and Invitrogen, and we have considered, to the extent publicly
available, the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. With
respect to the financial forecasts, we have been advised, and have assumed, that
such forecasts have been
D-1
<PAGE>
[LOGO]
[LOGO]
The Special Committee of the Board of Directors
Life Technologies, Inc.
July 7, 2000
Page 2
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of Life Technologies and Invitrogen as to the
future financial performance of Life Technologies and Invitrogen. In addition,
we have relied, without independent verification, upon the assessments of the
managements of Life Technologies and Invitrogen as to the existing and future
technology and products of Life Technologies and Invitrogen and the risks
associated with such technology and products. We also have assumed, with your
consent, that the Merger will be treated as a tax-free reorganization for
federal income tax purposes. We have not been requested to make, and have not
made, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of Life Technologies or Invitrogen, nor have we been
furnished with any such evaluations or appraisals. Representatives of Life
Technologies have advised us that, concurrently with the consummation of the
Merger, Invitrogen intends to consummate a merger with Dexter, the controlling
stockholder of Life Technologies (the "Dexter Merger"). We have not been
requested to, and our opinion does not, address any aspects or implications of
the Dexter Merger. Our opinion is necessarily based upon information available
to us, and financial, economic, market and other conditions as they exist and
can be evaluated, on the date hereof. We are not expressing any opinion as to
the actual value of Invitrogen Common Stock when issued pursuant to the Merger
or the prices at which Invitrogen Common Stock will trade subsequent to the
Merger.
We were retained by the Special Committee of the Board of Directors of Life
Technologies solely for purposes of rendering this opinion. Accordingly, we were
not requested to, and we did not, solicit third party indications of interest in
the possible acquisition of all or a part of Life Technologies. We have been
advised, however, by representatives of Dexter that, in connection with Dexter's
public announcement of its plans to explore alternatives to maximize shareholder
value, including the possible sale of assets, Dexter solicited indications of
interest from, and held discussions with, third parties regarding the possible
acquisition of all or a part of Dexter, including Life Technologies.
We will receive a fee in connection with our services with respect to this
opinion, a significant portion of which is payable upon delivery of this
opinion. In the ordinary course of business, we and our affiliates may actively
trade the debt and equity securities of Life Technologies, Invitrogen and Dexter
for our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold long or short positions in such securities.
It is understood that this letter is for the information of the Special
Committee of the Board of Directors of Life Technologies in connection with its
evaluation of the Merger and does not constitute a recommendation to any
stockholder as to the form of Merger Consideration to be elected by such
stockholder or how such stockholder should vote with respect to any matter
relating to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration is fair to the holders of Life Technologies
Common Stock, other than Dexter and its subsidiaries, officers and directors,
from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
D-2
<PAGE>
ANNEX E
[LOGO]
[LOGO]
July 7, 2000
Board of Directors
Dexter Corporation
1 Elm Street
Windsor Locks, CT 06096
Members of the Board:
We understand that Dexter Corporation (the "Company") and Invitrogen
Corporation (the "Acquiror") have entered into an Agreement and Plan of Merger
dated as of July 7, 2000 (the "Agreement") pursuant to which the Company will be
merged (the "Merger") with and into the Acquiror. We further understand that,
immediately prior to the execution and delivery of the Agreement, the Acquiror
and Life Technologies, Inc., a company that is approximately 75% owned by the
Company ("Life Technologies"), have entered into an Agreement and Plan of Merger
dated as of July 7, 2000 (the "Life Technologies Agreement") pursuant to which
Life Technologies will be merged (the "Life Technologies Merger") with and into
the Acquiror simultaneously with the Merger.
Pursuant to the Merger, each outstanding share of the Company's common
stock, par value $1.00 per share (the "Company Shares"), other than Company
Shares owned by the Company or by the Acquiror or any of their subsidiaries, all
of which shall be canceled, will be converted, at the holder's election, into
the right to receive (i) a fraction of a share (the "Exchange Ratio") of the
Acquiror's common stock, par value $0.01 per share (the "Acquiror Shares"),
calculated by dividing (a) $62.50 by (b) the Average Acquiror Trading Price (as
defined below), rounded to four decimal places (a "Stock Election"),
(ii) (x) an amount in cash equal to $62.50 multiplied by the Cash Election
Proration Factor (as defined below) plus (y) if the Cash Election Proration
Factor is less than 1, a fraction of an Acquiror Share equal to the Exchange
Ratio multiplied by a fraction the numerator of which is $62.50 minus the cash
determined pursuant to clause (x) above and the denominator of which is $62.50
(a "Cash Election") or (iii) $17.50 in cash, plus a fraction of an Acquiror
Share equal to the Exchange Ratio multiplied by .7200 (a "Standard Election"),
subject to the terms, limitations and procedures set forth in the Agreement,
which include a limitation on the aggregate amount of cash available to be paid
in the Merger. The Agreement also provides that if the quotient obtained in
clause (i) above exceeds 1.0417, then the Exchange Ratio shall be 1.0417, and if
such quotient is less than 0.7813, then the Exchange Ratio shall be 0.7813. The
Acquiror Shares and cash offered to the holders of the Company Shares in the
Merger are collectively referred to herein as the "Consideration." The terms and
conditions of the Merger are more fully set forth in the Agreement.
For purposes of our opinion, the term "Average Acquiror Trading Price" means
the average of the reported closing sales prices per share of Acquiror Shares
for the 20 consecutive trading days ending on the third trading day prior to the
date of the shareholders meeting to be held by the Company in connection with
the Merger, and the term "Cash Election Proration Factor" means the lesser of
(x) 1.00 or (y) a fraction (i) the numerator of which is (1) the product of the
total number of Company Shares outstanding multiplied by $17.50 minus
(2) $17.50 multiplied by the number of Company Shares for which Standard
Elections have been effectively made and not revoked or lost and (ii) the
denominator of which is
LEHMAN BROTHERS INC.
3 WORLD FINANCIAL CENTER NEW YORK, NEW YORK 10285 TELEPHONE
212/526-7000 FACSIMILE 212/526-3738
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LEHMAN BROTHERS
Dexter Corporation
July 7, 2000
Page 2
the product of $62.50 multiplied by the number of Company Shares for which Cash
Elections have been effectively made and not revoked or lost.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, of the
Consideration to be received by the holders of the Company Shares pursuant to
the Merger to such holders. We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Merger.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Merger, (2) the Life Technologies Agreement and the
specific terms of the Life Technologies Merger, (3) publicly available
information concerning the Company, Life Technologies and Invitrogen that we
believe to be relevant to our analysis, (4) financial and operating information
with respect to the business, operations and prospects of the Company and Life
Technologies furnished to us by the Company, including, without limitation,
certain projections of future financial performance of the Company and Life
Technologies prepared by management of the Company and Life Technologies,
respectively, (5) financial and operating information with respect to the
business, operations and prospects of Invitrogen furnished to us by Invitrogen,
including, without limitation, certain projections of future financial
performance of Invitrogen prepared by management of Invitrogen, (6) a comparison
of the historical financial results and present financial condition of Life
Technologies and Invitrogen with those of other companies that we deemed
relevant, (7) a trading history of the common shares of Life Technologies and
Invitrogen and a comparison of that trading history with those of other
companies that we deemed relevant, (8) the pro forma impact of the Merger,
including strategic benefits expected by the management of the Company to result
from a combination of the businesses of the Company and the Acquiror, (9) the
relative contributions of the Company and the Acquiror to the combined company
following the consummation of the Merger, (10) a comparison of the financial
terms of the Merger with the financial terms of certain other recent
transactions that we deemed relevant, (11) the terms and conditions of the
recently announced sale of the Company's Electronic Materials, Adhesives and
Specialty Polymer Systems businesses, (12) the terms and conditions of the
recently announced sale of the Company's Nonwoven Materials business, and
(13) efforts to solicit potential buyers of the Company and the Company's
interest in Life Technologies. In addition, we have had discussions with the
managements of the Company, Life Technologies, and the Acquiror concerning their
respective businesses, operations, assets, financial conditions and prospects
and have undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without assuming
any responsibility for independent verification of such information and have
further relied upon the assurances of managements of the Company and the
Acquiror that they are not aware of any facts or circumstances that would make
such information inaccurate or misleading. With respect to the financial
projections of the Company, Life Technologies, and the Acquiror, upon advice of
the companies we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the managements of the Company, Life Technologies, and the
Acquiror, as the case may be, as to the future financial performance of the
Company, Life Technologies, and the Acquiror and that the Company, Life
Technologies, and the Acquiror will perform substantially in accordance with
such projections. In arriving
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LEHMAN BROTHERS
Dexter Corporation
July 7, 2000
Page 3
at our opinion, we have not conducted a physical inspection of the properties
and facilities of the Company, Life Technologies, or the Acquiror and have not
made or obtained any evaluations or appraisals of the assets or liabilities of
the Company, Life Technologies or the Acquiror. Our opinion necessarily is based
upon market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Consideration to be
received by the holders of the Company Shares pursuant to the Merger is fair to
such holders.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services which is contingent upon the
consummation of the Merger. In addition, the Company has agreed to indemnify us
for certain liabilities that may arise out of the rendering of this opinion. We
also have performed various investment banking services for the Company in the
past (including the pending sale of its Electronic Materials, Adhesives and
Specialty Polymer Systems businesses to Loctite Corporation and the pending sale
of its Nonwoven Materials business to Ahlstrom Paper Group Oy) and have received
customary fees for such services. In the ordinary course of our business, we may
actively trade in the debt and equity securities of the Company and Acquiror for
our own account and for the accounts of our customers and, accordingly, may at
any time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Merger. This opinion is not intended to be and does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote with respect to the Merger and whether such shareholder
should elect to receive the Stock Election, the Cash Election or the Standard
Election.
Very truly yours,
LEHMAN BROTHERS
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ANNEX F
DELAWARE GENERAL CORPORATION LAW
SECTION 262
Section262 APPRAISAL RIGHTS.- (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251 (other than a merger effected pursuant to
Section251 (g) of this title), Section252, Section254, Section257,
Section258, Section263 or Section264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange
or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
or (ii) held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (l) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
Section251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph;
or
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d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under Section253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such
a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting
of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights
are available pursuant to subsections (b) or (c) hereof that appraisal
rights are available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this section.
Each stockholder electing to demand the appraisal of his shares shall
deliver to the corporation, before the taking of the vote on the merger
or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing
to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to Section228 or
Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal
rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a
copy of this section; provided that, if the notice is given on or after
the effective date of the merger or consolidation, such notice shall be
given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after
the effective date of the merger or consolidation, shall, also notify
such stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days after
the date of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation,
either (i) each such constituent corporation shall
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send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following
the sending of the first notice, such second notice need only be sent to
each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer
agent of the corporation that is required to give either notice that such
notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the
effective date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after his written request for such
a statement is received by the surviving or resulting corporation or within
10 days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition shall
be accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also by given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper
of general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for
notation thereon of
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the pendency of the appraisal proceedings; and if any stockholder fails to
comply with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted his certificates of
stock to the Register in Chancery, if such is required, may participate
fully in all proceedings until it is finally determined that he is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the corporation
of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or
to receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided. however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of his demand for an appraisal and an acceptance of the
merger or consolidation, either within 60 days after the effective date of
the merger or consolidation as provided in subsection (e) of this section or
thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing,
no appraisal proceeding in the Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 120,
L. `97, eff. 7-1-97.)
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ANNEX G
CONNECTICUT BUSINESS CORPORATION ACT
PART XIII. DISSENTERS' RIGHTS
(A) RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
33-855 DEFINITIONS.--As used in sections 33-855 to 33-872, inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when and in
the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
33-856 RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party
(A) if shareholder approval is required for the merger by
section 33-817 or the certificate of incorporation and the shareholder is
entitled to vote on the merger or (B) if the corporation is a subsidiary
that is merged with its parent under section 33-818;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(4) An amendment of the certificate of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A)Alters or abolishes a preferential right of the shares; (B) creates, alters
or abolishes a right in respect of redemption, including a provision respecting
a sinking fund for the redemption or repurchase, of the shares; (C) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(E) reduces the number of shares owned by
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the shareholder to a fraction of a share if the fractional share so created is
to be acquired for cash under section 33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent
the certificate of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
33-857 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in his
name only if he dissents with respect to all shares beneficially owned by any
one person and notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over which he
has power to direct the vote.
33-858, 33-859 [Reserved for future use.]
(B) PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
33-860 NOTICE OF DISSENTERS' RIGHTS.--(a) If proposed corporate action
creating dissenters' rights under section 33-856 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders are or
may be entitled to assert dissenters' rights under sections 33-855 to 33-872,
inclusive, and be accompanied by a copy of said sections.
(b) If corporate action creating dissenters' rights under section 33-856 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in section 33-862.
33-861 NOTICE OF INTENT TO DEMAND PAYMENT.--(a) If proposed corporate action
creating dissenters' rights under section 33-856 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert dissenters' rights
(1) shall deliver to the corporation before the vote is taken written notice of
his intent to demand payment for his shares if the proposed action is
effectuated and (2) shall not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) of this section is not entitled to payment for his shares under sections
33-855 to 33-872, inclusive.
33-862 DISSENTERS' NOTICE.--(a) If proposed corporate action creating
dissenters' rights under section 33-856 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of section 33-861.
(b) The dissenters' notice shall be sent no later than ten days after the
corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
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(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the
date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive.
33-863 DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a dissenters' notice
described in section 33-862 must demand payment, certify whether he acquired
beneficial ownership of the shares before the date required to be set forth in
the dissenters' notice pursuant to subdivision (3) of subsection (b) of said
section and deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under sections 33-855 to 33-872,
inclusive.
33-864 SHARE RESTRICTIONS.--(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
section 33-866.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
33-865 PAYMENT.--(a) Except as provided in section 33-867, as soon as the
proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with section 33-863 the amount
the corporation estimates to be the fair value of his shares plus accrued
interest.
(b) The payment shall be accompanied by: (1) The corporation's balance sheet
as of the end of a fiscal year ending not more than sixteen months before the
date of payment, an income statement for that year, a statement of changes in
shareholders' equity for that year and the latest available interim financial
statements, if any; (2) a statement of the corporation's estimate of the fair
value of the shares; (3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand payment under
section 33-868; and (5) a copy of sections 33-855 to 33-872, inclusive.
33-866 FAILURE TO TAKE ACTION.--(a) If the corporation does not take the
proposed action within sixty days after the date set for demanding payment and
depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand procedure.
33-867 AFTER-ACQUIRED SHARES.--(a) A corporation may elect to withhold
payment required by section 33-865 from a dissenter unless he was the beneficial
owner of the shares before the date set forth in the dissenters' notice as the
date of the first announcement to news media or to shareholders of the terms of
the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the
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shares, an explanation of how the interest was calculated and a statement of the
dissenter's right to demand payment under section 33-868.
33-868 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--(a) A
dissenter may notify the corporation in writing of his own estimate of the fair
value of his shares and amount of interest due, and demand payment of his
estimate, less any payment under section 33-865, or reject the corporation's
offer under section 33-867 and demand payment of the fair value of his shares
and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865 or
offered under section 33-867 is less than the fair value of his shares or that
the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865 within sixty
days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty days after the date set for demanding
payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a) of
this section within thirty days after the corporation made or offered payment
for his shares.
33-869, 33-870 [Reserved for future use.]
(C) JUDICIAL APPRAISAL OF SHARES
33-871 COURT ACTION.--(a) If a demand for payment under section 33-868
remains unsettled, the corporation shall commence a proceeding within sixty days
after receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the sixty-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior court for
the judicial district where a corporation's principal office or, if none in this
state, its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the superior court for the judicial district where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under section 33-867.
33-872 COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under section 33-871 shall determine all costs of the
proceeding, including the reasonable
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compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable: (1) Against
the corporation and in favor of any or all dissenters if the court finds the
corporation did not substantially comply with the requirements of sections
33-860 to 33-868, inclusive; or (2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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ANNEX H
AMENDMENT TO
ARTICLE IV OF THE CERTIFICATE OF INCORPORATION OF
INVITROGEN CORPORATION
Proposed First Paragraph of the Article Four of the Certificate of Incorporation
of Invitrogen Corporation
The text of the proposed First Paragraph of Article Four is as follows:
The total number of shares of capital stock which the Corporation shall
have authority to issue is 131,405,884, of which (a) 6,405,884 shares shall
be preferred stock, par value $.01 per share ("Preferred Stock"), and
(b) 125,000,000 shares shall be common stock, par value $.01 per share.
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ANNEX I
INVITROGEN CORPORATION 1997 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Invitrogen Corporation 1997 Stock Option Plan
(the "PLAN") is hereby established effective as of May 28, 1997 (the
"EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an
incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to
the growth and profitability of the Participating Company Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of
Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the earlier of the
date the Plan is adopted by the Board or the date the Plan is duly approved
by the shareholders of the Company.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means the Compensation Committee or other committee
of the Board duly appointed to administer the Plan and having such powers
as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the
power to amend or terminate the Plan at any time, subject to the terms of
the Plan and any applicable limitations imposed by law.
(d) "COMPANY" means Invitrogen Corporation, a California corporation,
or any successor corporation thereto.
(e) "CONSULTANT" means any person, including an advisor, engaged by a
Participating Company to render services other than as an Employee or a
Director.
(f) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(g) "EMPLOYEE" means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records
of a Participating Company, and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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(i) "FAIR MARKET VALUE" means, as of any date, the value of a share
of Stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein, subject to
the following:
(i) If, on such date, there is a public market for the Stock, the
Fair Market Value of a share of Stock shall be the closing sale price
of a share of Stock (or the mean of the closing bid and asked prices
of a share of Stock if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, the Nasdaq Small-Cap Market or such other
national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in the
WALL STREET JOURNAL or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be the
last day on which the Stock was so traded prior to the relevant date,
or such other appropriate day as shall be determined by the Board, in
its sole discretion.
(ii) If, on such date, there is no public market for the Stock,
the Fair Market Value of a share of Stock shall be as determined by
the Board without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(j) "INCENTIVE STOCK OPTION" means an Option intended to be (as set
forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(k) "INSIDER" means an officer or a Director of the Company or any
other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
(l) "NONSTATUTORY STOCK OPTION" means an Option not intended to be
(as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.
(m) "OPTION" means a right to purchase Stock (subject to adjustment
as provided in Section 4.2) pursuant to the terms and conditions of the
Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.
(n) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee and any shares acquired upon the
exercise thereof.
(o) "OPTIONEE" means a person who has been granted one or more
Options.
(p) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(q) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(r) "PARTICIPATING COMPANY GROUP" means, at any point in time, all
corporations collectively which are then Participating Companies.
(s) "RULE 16b-3" means Rule 16b-3 under the Exchange Act, as amended
from time to time, or any successor rule or regulation.
(t) "STOCK" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.
(u) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code.
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(v) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at the time
an Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock
of a Participating Company within the meaning of Section 422(b)(6) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context
clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option. Any officer
of a Participating Company shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such
matter, right, obligation, determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if
any, of Rule 16b-3.
3.3 POWERS OF THE BOARD. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:
(a) to determine the persons to whom, and the time or times at which,
Options shall be granted and the number of shares of Stock to be subject
to each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;
(c) to determine the Fair Market Value of shares of Stock or other
property;
(d) to determine the terms, conditions and restrictions applicable to
each Option (which need not be identical) and any shares acquired upon
the exercise thereof, including, without limitation, (i) the exercise
price of the Option, (ii) the method of payment for shares purchased upon
the exercise of the Option, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with the Option or such
shares, including by the withholding or delivery of shares of stock,
(iv) the timing, terms and conditions of the exercisability of the Option
or the vesting of any shares acquired upon the exercise thereof, (v) the
time of the expiration of the Option, (vi) the effect of the Optionee's
termination of employment or service with the Participating Company Group
on any of the foregoing, and (vii) all other terms, conditions and
restrictions applicable to the Option or such shares not inconsistent
with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel, renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise
thereof;
(g) to accelerate, continue, extend or defer the exercisability of
any Option or the vesting of any shares acquired upon the exercise
thereof, including with respect to the period
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following an Optionee's termination of employment or service with the
Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions
of, the Plan, including, without limitation, as the Board deems necessary
or desirable to comply with the laws of, or to accommodate the tax policy
or custom of, foreign jurisdictions whose citizens may be granted
Options; and
(i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or
any Option as the Board may deem advisable to the extent consistent with
the Plan and applicable law.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be the sum of (a) six hundred nine
thousand six hundred eighty five (609,685) shares, and (b) the number of
shares of Stock, as of the Effective Date, subject to outstanding options or
reserved and available for grant pursuant to the Company's 1995 Stock Option
Plan (the "1995 PLAN OPTIONS") resulting in an aggregate total of three
million seven hundred thirty five thousand four hundred seventy nine
(3,735,479) shares (the "SHARE RESERVE") and shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof.
Notwithstanding the foregoing, the Share Reserve, determined at any time,
shall be reduced by (a) the number shares remaining subject to outstanding
1995 Plan Options, and (b) the number shares issued upon the exercise of
1995 Plan Options. If an outstanding Option for any reason expires or is
terminated or canceled, or if shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the Company,
the shares of Stock allocable to the unexercised portion of such Option or
such repurchased shares of Stock shall again be available for issuance under
the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of
the Company, appropriate adjustments shall be made in the number and class
of shares subject to the Plan and to any outstanding Options and in the
exercise price per share of any outstanding Options. If a majority of the
shares which are of the same class as the shares that are subject to
outstanding Options are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event, as defined in
Section 8.1) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number
of shares subject to, and the exercise price per share of, the outstanding
Options shall be adjusted in a fair and equitable manner as determined by
the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded up or down to the nearest whole number, as determined by
the Board, and in no event may the exercise price of any Option be decreased
to an amount less than the par value, if any, of the stock subject to the
Option. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants, and Directors. For purposes of the foregoing
sentence, "Employees," "Consultants," and "Directors" shall include
prospective Employees, prospective Consultants and prospective
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Directors to whom Options are granted in connection with written offers of
employment or other service relationship with the Participating Company
Group. Eligible persons may be granted more than one (1) Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted
only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person become an Employee
shall be deemed granted effective on the date such person commences service
as an Employee with a Participating Company, with an exercise price
determined as of such date in accordance with Section 6.1.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans
of the Participating Company Group, including the Plan) become exercisable
by an Optionee for the first time during any calendar year for stock having
an aggregate Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5.3,
options designated as Incentive Stock Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is
granted. If the Code is amended to provide for a different limitation from
that set forth in this Section 5.3, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such
Options as required or permitted by such amendment to the Code. If an Option
is treated as an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this Section 5.3,
the Optionee may designate which portion of such Option the Optionee is
exercising. In the absence of such designation, the Optionee shall be deemed
to have exercised the Incentive Stock Option portion of the Option first.
Separate certificates representing each such portion shall be issued upon
the exercise of the Option.
6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by Option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. No Option or purported
Option shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Option Agreement. Option Agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that
(a) the exercise price per share for an Incentive Stock Option shall be not
less than the Fair Market Value of a share of Stock on the effective date of
grant of the Option, (b) the exercise price per share for a Nonstatutory
Stock Option shall be not less than eighty-five percent (85%) of the Fair
Market Value of a share of Stock on the effective date of grant of the
Option, and (c) no Option granted to a Ten Percent Owner Optionee shall have
an exercise price per share less than one hundred ten percent (110%) of the
Fair Market Value of a share of Stock on the effective date of grant of the
Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a
manner qualifying under the provisions of Section 424(a) of the Code.
6.2 EXERCISE PERIOD. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board
and set forth in the Option Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years
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after the effective date of grant of such Option, (b) no Incentive Stock
Option granted to a Ten Percent Owner Optionee shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, and (c) no Option granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date
on which such person commences service with a Participating Company.
6.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value (as determined by
the Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws or
agreements with an underwriter for the Company) not less than the
exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve
System) (a "CASHLESS EXERCISE"), (iv) by the Optionee's promissory note
in a form approved by the Company, (v) by such other consideration as may
be approved by the Board from time to time to the extent permitted by
applicable law, or (vi) by any combination thereof. The Board may at any
time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 7, or by other means,
grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.
(b) TENDER OF STOCK. Notwithstanding the foregoing, an Option may not
be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of
any law, regulation or agreement restricting the redemption of the
Company's stock. Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company of shares of Stock unless such
shares either have been owned by the Optionee for more than six
(6) months or were not acquired, directly or indirectly, from the
Company.
(c) CASHLESS EXERCISE. The Company reserves, at any and all times,
the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.
(d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be permitted
if the exercise of an Option using a promissory note would be a violation
of any law. Any permitted promissory note shall be on such terms as the
Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral
acceptable to the Company. Unless otherwise provided by the Board, if the
Company at any time is subject to the regulations promulgated by the
Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with
the Company's securities, any promissory note shall comply with such
applicable regulations, and the Optionee shall pay the unpaid principal
and accrued interest, if any, to the extent necessary to comply with such
applicable regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as
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determined by the Company, equal to all or any part of the federal, state,
local and foreign taxes, if any, required by law to be withheld by the
Participating Company Group with respect to such Option or the shares
acquired upon the exercise thereof. Alternatively or in addition, in its
sole discretion, the Company shall have the right to require the Optionee,
through payroll withholding, cash payment or otherwise, including by means
of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in
connection with the Option or the shares acquired upon the exercise thereof.
The Company shall have no obligation to deliver shares of Stock or to
release shares of Stock from an escrow established pursuant to the Option
Agreement until the Participating Company Group's tax withholding
obligations have been satisfied by the Optionee.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board at
the time the Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set
forth in the form of Incentive Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by the Board
at the time the Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions
set forth in the form of Nonstatutory Stock Option Agreement adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.
7.3 STANDARD TERM OF OPTIONS. Except as otherwise provided in
Section 6.2 or by the Board in the grant of an Option, any Option granted
hereunder shall have a term of ten (10) years from the effective date of
grant of the Option.
7.4 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option
Agreement described in this Section 7 either in connection with the grant or
amendment of an individual Option or in connection with the authorization of
a new standard form or forms; provided, however, that the terms and
conditions of any such new, revised or amended standard form or forms of
Option Agreement are not inconsistent with the terms of the Plan.
8. TRANSFER OF CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or series
of related transactions by the shareholders of the Company of more
than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all
of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately before
the Transaction do not retain immediately
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after the Transaction, in substantially the same proportions as their
ownership of shares of the Company's voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding
voting stock of the Company or the corporation or corporations to which
the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of
one or more corporations which, as a result of the Transaction, own the
Company or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall
have the right to determine whether multiple sales or exchanges of the
voting stock of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock. For
purposes of this Section 8.2, an Option shall be deemed assumed if,
following the Transfer of Control, the Option confers the right to purchase
in accordance with its terms and conditions, for each share of Stock subject
to the Option immediately prior to the Transfer of Control, the
consideration (whether stock, cash or other securities or property) to which
a holder of a share of Stock on the effective date of the Transfer of
Control was entitled. Any Options which are neither assumed or substituted
for by the Acquiring Corporation in connection with the Transfer of Control
nor exercised as of the date of the Transfer of Control shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, shares acquired upon exercise of an Option
prior to the Transfer of Control and any consideration received pursuant to
the Transfer of Control with respect to such shares shall continue to be
subject to all applicable provisions of the Option Agreement evidencing such
Option except as otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is
subject to the outstanding Options immediately prior to an Ownership Change
Event described in Section 8.1(a)(i) constituting a Transfer of Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting
power of its voting stock is held by another corporation or by other
corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of
Section 1504(b) of the Code, the outstanding Options shall not terminate
unless the Board otherwise provides in its sole discretion.
9. PROVISION OF INFORMATION. At least annually, copies of the Company's
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchaser of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.
10. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
11. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
I-8
<PAGE>
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.
12. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend the
Plan at any time. However, subject to changes in applicable law, regulations or
rules that would permit otherwise, without the approval of the Company's
shareholders there shall be (a) no increase in the maximum aggregate number of
shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to
receive Incentive Stock Options, and (c) no other amendment of the Plan that
would require approval of the Company's shareholders under any applicable law,
regulation or rule. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.
13. SHAREHOLDER APPROVAL. The Plan or any increase in the maximum number
of shares of Stock issuable thereunder as provided in Section 4.1 (the "MAXIMUM
SHARES") shall be approved by the shareholders of the Company within twelve
(12) months of the date of adoption thereof by the Board. Options granted prior
to shareholder approval of the Plan or in excess of the Maximum Shares
previously approved by the shareholders shall become exercisable no earlier than
the date of shareholder approval of the Plan or such increase in the Maximum
Shares, as the case may be.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Invitrogen Corporation 1997 Stock Option Plan was duly adopted by
the Board on May 28, 1997. Additionally, the Secretary notes that the share
reserve set forth in section 4.1 of the Plan reflects the seven (7) for one
(1) stock split which became effective upon the Company's reincorporation into
Delaware on June 17, 1997.
/s/ JOSEPH FERNANDEZ
--------------------------------------
Joseph Fernandez
SECRETARY
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<PAGE>
FIRST AMENDMENT TO THE INVITROGEN CORPORATION 1997 STOCK OPTION PLAN
This First Amendment to Invitrogen Corporation 1997 Stock Option Plan (the
"Plan") is made pursuant to Section 12 of the Plan. Capitalized terms not
defined in this First Amendment shall have the meanings provided in the Plan.
WHEREAS, it has been determined to be in the best interests of the Company
that the aggregate number of shares of Stock that may be issued under the Plan
be increased by seven hundred fifty thousand (750,000);
WHEREAS, the Company wishes to provide options to acquire Stock to its
Nonemployee Directors to strengthen the incentives of such directors to act in
the best interests of the Company;
WHEREAS, the Company has determined to provide Optionees with additional
rights in the event of a Transfer in Control.
Now therefore, the Plan is hereby amended as follows:
1. SECTION 4.1 SHALL BE AMENDED TO STATE IN ITS ENTIRETY AS FOLLOWS:
"4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 4.2, the maximum
aggregate number of shares of Stock that may be issued
under the Plan shall be the sum of (a) one million three
hundred fifty-nine thousand six hundred eighty-five
(1,359,685) shares, and (b) the number of shares of Stock,
as of the date of this Amendment, subject to outstanding
options or reserved and available for grant pursuant to
the Company's 1995 Stock Option Plan (the "1995 PLAN
OPTIONS") resulting in an aggregate total of four million
four hundred eighty five thousand four hundred seventy
nine (4,485,479) shares (the "SHARE RESERVE") and shall
consist of authorized and unissued or reacquired shares of
Stock or any combination thereof. Notwithstanding the
foregoing, the Share Reserve, determined at any time,
shall be reduced by (a) the number of shares remaining
subject to outstanding 1995 Plan Options, and (b) the
number of shares issued upon the exercise of 1995 Plan
Options. If an outstanding option for any reason expires
or is terminated or canceled, or if the shares of Stock
acquired, subject to repurchase, upon the exercise of an
Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option or
such repurchased shares of Stock shall again be available
for issuance under the Plan."
2. A NEW SECTION 6.5 SHALL BE ADDED TO THE PLAN WHICH SHALL STATE IN ITS
ENTIRETY AS FOLLOWS:
"6.5 NONEMPLOYEE DIRECTOR OPTIONS
(a) AUTOMATIC GRANT. Subject to the execution by a Nonemployee Director
of an appropriate Option Agreement, Nonemployee Director Options shall be
granted automatically and without further action of the Board, as follows:
(i) INITIAL OPTION. Each person who first becomes a Nonemployee
Director on or after the date of this Amendment shall be granted on the
date such person first becomes a Nonemployee Director a Nonemployee
Director Option to purchase ten thousand (10,000) shares of Stock (an
"INITIAL OPTION"); provided, however, that an Initial Option shall not be
granted to a Director who previously did not qualify as a Nonemployee
Director but subsequently becomes a Nonemployee Director as a result of
the termination of his or her status as an Employee.
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<PAGE>
(ii) ANNUAL OPTION. Each Nonemployee Director (including any
Director who previously did not qualify as a Nonemployee Director but who
subsequently becomes a Nonemployee Director) shall be granted on the date
immediately following each annual meeting of the stockholders of the
Company which occurs on or after the date of this Amendment (an "ANNUAL
MEETING") a Nonemployee Director Option to purchase ten thousand (10,000)
shares of Stock (an "ANNUAL OPTION"); provided, however, that a
Nonemployee Director granted an Initial Option less than six months prior
to date of an Annual Meeting shall not be granted an Annual Option
pursuant to this Section on the date immediately following the same
Annual Meeting.
(iii) RIGHT TO DECLINE NONEMPLOYEE DIRECTOR OPTION. Notwithstanding
the foregoing, any person may elect not to receive a Nonemployee Director
Option by delivering written notice of such election to the Board no
later than the day prior to the date such Nonemployee Director Option
would otherwise be granted. A person so declining a Nonemployee Director
Option shall receive no payment or other consideration in lieu of such
declined Nonemployee Director Option. A person who has declined a
Nonemployee Director Option may revoke such election by delivering
written notice of such revocation to the Board no later than the day
prior to the date such Nonemployee Director Option would be granted
pursuant to Section 6.5(a)(i) or 6.5(a)(ii), as the case may be.
(b) EXERCISE PRICE. The exercise price per share of Stock subject to a
Nonemployee Director Option shall be the Fair Market Value of a share of
Stock on the date the Nonemployee Director Option is granted.
(c) EXERCISE PERIOD. Each Nonemployee Director Option shall terminate
and cease to be exercisable on the date ten (10) years after the date of
grant of the Nonemployee Director Option unless earlier terminated pursuant
to the terms of the Plan or the Option Agreement.
(d) RIGHT TO EXERCISE NONEMPLOYEE DIRECTOR OPTIONS.
(i) INITIAL OPTIONS. Except as otherwise provided in the Option
Agreement, each Initial Option shall become vested and exercisable
cumulatively for 1/3 of the shares of Stock initially subject to the
Option on each of the first three (3) anniversaries of the date on which
the Initial Option was granted, provided that the Optionee's Service has
not terminated prior to the relevant date.
(ii) ANNUAL OPTIONS. Except as otherwise provided in the Option
Agreement, each Annual Option shall become fully vested and exercisable
on the first anniversary of the date of grant, provided the Optionee's
Service has not terminated prior to such date.
(e) EFFECT OF TERMINATION OF SERVICE ON NONEMPLOYEE DIRECTOR OPTIONS.
(i) OPTION EXERCISABILITY. Subject to earlier termination of the
Nonemployee Director Option as otherwise provided herein, a Nonemployee
Director Option shall be exercisable after an Optionee's termination of
Service as follows:
(A) DISABILITY. If the Optionee's Service with the Participating
Company Group is terminated because of the Disability of the
Optionee, the Nonemployee Director Option, to the extent unexercised
and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee (or the Optionee's
guardian or legal representative) at any time prior to the expiration
of twelve (12) months after the date on which the Optionee's Service
terminated, but in any event no later than the date of expiration of
the Option Expiration Date.
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<PAGE>
(B) DEATH. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee, the
Nonemployee Director Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated,
may be exercised by the Optionee's legal representative or other
person who acquired the right to exercise the Nonemployee Director
Option by reason of the Optionee's death at any time prior to the
expiration of twelve (12) months after the date on which the
Optionee's Service terminated, but in any event no later than the
Option Expiration Date. The Optionee's Service shall be deemed to
have terminated on account of death if the Optionee dies within six
(6) months after the Optionee's termination of Service.
(C) OTHER TERMINATION OF SERVICE. If the Optionee's Service with
the Participating Company Group terminates for any reason, except
Disability or death, the Nonemployee Director Option, to the extent
unexercised and exercisable by the Optionee on the date on which the
Optionee's Service terminated, may be exercised by the Optionee
within six (6) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration
Date.
(ii) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in
Section 6.5(e)(i) of shares acquired upon the exercise of the Nonemployee
Director Option would subject the Optionee to suit under Section 16(b) of
the Exchange Act, the Nonemployee Director Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would
no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Optionee's termination of Service, and (iii) the
Option Expiration Date.
3. SECTION 8.2 SHALL BE AMENDED TO STATE IN ITS ENTIRETY AS FOLLOWS:
"8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the
event of a Transfer of Control, the percentage of the
Option that has vested shall be adjusted to 100% (if not
already at that percentage) on the date that the Company
mails the Optionee notice of the Transfer of Control at
the last address shown on the records of the Company for
such Optionee (the "NOTICE"), unless the surviving,
continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), either assumes the Company's rights and
obligations under outstanding Options or substitutes for
outstanding Options substantially equivalent options for
the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor
exercised as of the date fifteen days after the Notice of
the Transfer of Control shall terminate and cease to be
outstanding effective upon the later of (i) the date of
the Transfer of Control or (ii) fifteen days after mailing
of the Notice. For purposes of this Section 8.2, an Option
shall be deemed assumed if, following the Transfer of
Control, the Option confers the right to purchase in
accordance with its terms and conditions, for each share
of Stock subject to the Option immediately prior to the
Transfer of Control, the consideration (whether stock,
cash or other securities or property) to which a holder of
a share of Stock on the effective date of the Transfer of
Control was entitled. Notwithstanding the foregoing,
shares acquired upon exercise of an Option prior to the
Transfer of Control and any consideration received
pursuant to the Transfer of Control with respect to such
shares
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shall continue to be subject to all applicable provisions
of the Option Agreement evidencing such Option except as
otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the
stock of which is subject to the outstanding Options
immediately prior to an Ownership Change Event described
in Section 8.1(a)(i) constituting a Transfer of Control is
the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent
(50%) of the total combined voting power of its voting
stock is held by another corporation or by other
corporations that are members of an affiliated group
within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code,
the outstanding Options shall not terminate unless the
Board otherwise provides in its sole discretion.
4. ALL OTHER TERMS OF THE PLAN SHALL REMAIN THE SAME.
IN WITNESS WHEREOF, the undersigned Secretary of Invitrogen Corporation
certifies that the foregoing amendment to the 1997 Stock Option Plan was duly
adopted by the Board of Directors on November 20, 1998.
Dated: November 20, 1998
<TABLE>
<S> <C>
INVITROGEN CORPORATION
By: /s/ JOSEPH FERNANDEZ
-----------------------------------------
Joseph Fernandez
Its: SECRETARY
</TABLE>
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<PAGE>
SECOND AMENDMENT TO THE
INVITROGEN CORPORATION
1997 STOCK OPTION PLAN
Pursuant to Section 12 of the Invitrogen Corporation 1997 Stock Option Plan
(the "Plan"), said Plan is hereby amended as follows:
1. SECTION 4.1 SHALL BE AMENDED TO STATE IN ITS ENTIRETY AS FOLLOWS:
"4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 4.2, the maximum
aggregate number of shares of Stock that may be issued
under the Plan shall be the sum of (a) two million three
hundred fifty-nine thousand six hundred eighty-five
(2,359,685) shares, and (b) the number of shares of Stock,
as of the Effective Date, subject to outstanding options
or reserved and available for grant pursuant to the
Company's 1995 Stock Option Plan (the "1995 PLAN OPTIONS")
resulting in an aggregate total of five million four
hundred eight-five thousand four hundred seventy-nine
(5,485,479) shares (the "SHARE RESERVE") and shall consist
of authorized and unissued or reacquired shares of Stock
or any combination thereof. Notwithstanding the foregoing,
the Share Reserve, determined at any time, shall be
reduced by (a) the number of shares remaining subject to
outstanding 1995 Plan Options, and (b) the number of
shares issued upon the exercise of 1995 Plan Options. If
an outstanding option for any reason expires or is
terminated or canceled, or if the shares of Stock
acquired, subject to repurchase, upon the exercise of an
Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option or
such repurchased shares of Stock shall again be available
for issuance under the Plan."
IN WITNESS WHEREOF, the undersigned Secretary of Invitrogen Corporation
certifies that the foregoing amendment to the 1997 Stock Option Plan was duly
adopted by the Board of Directors on July 7, 1999.
Dated: July 12, 1999
<TABLE>
<S> <C>
INVITROGEN CORPORATION
By: /s/ WARNER R. BROADDUS
-----------------------------------------
Warner R. Broaddus
Its: SECRETARY
</TABLE>
I-14
<PAGE>
ANNEX J
INVITROGEN CORPORATION 1998 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. Invitrogen Corporation hereby establishes the 1998
Employee Stock Purchase Plan (the "PLAN"), effective as of the effective
date of the initial registration by the Company of its Stock under
Section 12 of the Securities Exchange Act of 1934, as amended (the
"EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its stockholders by providing an incentive to attract,
retain and reward Eligible Employees of the Participating Company Group and
by motivating such persons to contribute to the growth and profitability of
the Participating Company Group. The Plan provides such Eligible Employees
with an opportunity to acquire a proprietary interest in the Company through
the purchase of Stock. The Company intends that the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Code (including any
amendments or replacements of such section), and the Plan shall be so
construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of
Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same
definition herein. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means the Compensation Committee, or another
committee of the Board duly appointed to administer the Plan and having
such powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have all of
the powers of the Board granted herein, including, without limitation,
the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
(d) "COMPANY" means Invitrogen Corporation., a Delaware corporation,
or any successor corporation thereto.
(e) "COMPENSATION" means, with respect to any Offering Period, base
wages or salary, commissions, overtime, bonuses, annual awards, other
incentive payments, shift premiums, and all other compensation paid in
cash during such Offering Period before deduction for any contributions
to any plan maintained by a Participating Company and described in
Section 401(k) or Section 125 of the Code. Compensation shall not include
reimbursements of expenses, allowances, long-term disability, workers'
compensation or any amount deemed received without the actual transfer of
cash or any amounts directly or
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<PAGE>
indirectly paid pursuant to the Plan or any other stock purchase or stock
option plan, or any compensation other than base wages or salary.
(f) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements
set forth in Section 5 for eligibility to participate in the Plan.
(g) "EMPLOYEE" means a person treated as an employee of a
Participating Company for purposes of Section 423 of the Code. A
Participant shall be deemed to have ceased to be an Employee either upon
an actual termination of employment or upon the corporation employing the
Participant ceasing to be a Participating Company. For purposes of the
Plan, an individual shall not be deemed to have ceased to be an Employee
while such individual is on any military leave, sick leave, or other bona
fide leave of absence approved by the Company of ninety (90) days or
less. In the event an individual's leave of absence exceeds ninety (90)
days, the individual shall be deemed to have ceased to be an Employee on
the ninety-first (91st) day of such leave unless the individual's right
to reemployment with the Participating Company Group is guaranteed either
by statute or by contract. The Company shall determine in good faith and
in the exercise of its discretion whether an individual has become or has
ceased to be an Employee and the effective date of such individual's
employment or termination of employment, as the case may be. For purposes
of an individual's participation in or other rights, if any, under the
Plan as of the time of the Company's determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any governmental agency subsequently
makes a contrary determination.
(h) "FAIR MARKET VALUE" means, as of any date, if there is then a
public market for the Stock, the closing price of a share of Stock (or
the mean of the closing bid and asked prices if the Stock is so quoted
instead) as quoted on the Nasdaq National Market, the Nasdaq Small-Cap
Market or such other national or regional securities exchange or market
system constituting the primary market for the Stock, as reported in THE
WALL STREET JOURNAL or such other source as the Company deems reliable.
If the relevant date does not fall on a day on which the Stock has traded
on such securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which the
Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Board, in its sole discretion. If there
is then no public market for the Stock, the Fair Market Value on any
relevant date shall be as determined by the Board. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date
shall be deemed to be the public offering price set forth in the final
prospectus filed with the Securities and Exchange Commission in
connection with the public offering of the Stock on the Effective Date.
(i) "OFFERING" means an offering of Stock as provided in Section 6.
(j) "OFFERING DATE" means, for any Offering, the first day of the
Offering Period with respect to such Offering.
(k) "OFFERING PERIOD" means a period established in accordance with
Section 6.1.
(l) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(m) "PARTICIPANT" means an Eligible Employee who has become a
participant in an Offering Period in accordance with Section 7 and
remains a participant in accordance with the Plan.
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<PAGE>
(n) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation designated by the Board as a
corporation the Employees of which may, if Eligible Employees,
participate in the Plan. The Board shall have the sole and absolute
discretion to determine from time to time which Parent Corporations or
Subsidiary Corporations shall be Participating Companies. Invitrogen BV,
the Company's Netherlands subsidiary shall be a Participating Company
unless and until the Board decides otherwise.
(o) "PARTICIPATING COMPANY GROUP" means, at any point in time, the
Company and all other corporations collectively which are then
Participating Companies.
(p) "PURCHASE DATE" means, for any Purchase Period, the last day of
such period.
(q) "PURCHASE PERIOD" means a period, if any, established in
accordance with Section 6.2.
(r) "PURCHASE PRICE" means the price at which a share of Stock may be
purchased under the Plan, as determined in accordance with Section 9.
(s) "PURCHASE RIGHT" means an option granted to a Participant
pursuant to the Plan to purchase such shares of Stock as provided in
Section 8, which the Participant may or may not exercise during the
Offering Period in which such option is outstanding. Such option arises
from the right of a Participant to withdraw any accumulated payroll
deductions of the Participant not previously applied to the purchase of
Stock under the Plan and to terminate participation in the Plan at any
time during an Offering Period.
(t) "STOCK" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.
(u) "SUBSCRIPTION AGREEMENT" means a written agreement in such form
as specified by the Company, stating an Employee's election to
participate in the Plan and authorizing payroll deductions under the Plan
from the Employee's Compensation.
(v) "SUBSCRIPTION DATE" means the last business day prior to the
Offering Date of an Offering Period or such earlier date as the Company
shall establish.
(w) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context
clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of agreement
or other document employed by the Company in the administration of the Plan,
or of any Purchase Right shall be determined by the Board and shall be final
and binding upon all persons having an interest in the Plan or the Purchase
Right. Subject to the provisions of the Plan, the Board shall determine all
of the relevant terms and conditions of Purchase Rights granted pursuant to
the Plan; provided, however, that all Participants granted Purchase Rights
pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code. All expenses incurred in
connection with the administration of the Plan shall be paid by the Company.
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<PAGE>
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that
is allocated to the Company herein, provided that the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.
3.3 POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The Company
may, from time to time, consistent with the Plan and the requirements of
Section 423 of the Code, establish, change or terminate such rules,
guidelines, policies, procedures, limitations, or adjustments as deemed
advisable by the Company, in its sole discretion, for the proper
administration of the Plan, including, without limitation, (a) a minimum
payroll deduction amount required for participation in an Offering, (b) a
limitation on the frequency or number of changes permitted in the rate of
payroll deduction during an Offering, (c) an exchange ratio applicable to
amounts withheld in a currency other than United States dollars, (d) a
payroll deduction greater than or less than the amount designated by a
Participant in order to adjust for the Company's delay or mistake in
processing a Subscription Agreement or in otherwise effecting a
Participant's election under the Plan or as advisable to comply with the
requirements of Section 423 of the Code, and (e) determination of the date
and manner by which the Fair Market Value of a share of Stock is determined
for purposes of administration of the Plan.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be two hundred fifty thousand
(250,000) and shall consist of authorized but unissued or reacquired shares
of Stock, or any combination thereof. If an outstanding Purchase Right for
any reason expires or is terminated or canceled, the shares of Stock
allocable to the unexercised portion of such Purchase Right shall again be
available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of
the Company, or in the event of any merger (including a merger effected for
the purpose of changing the Company's domicile), sale of assets or other
reorganization in which the Company is a party, appropriate adjustments
shall be made in the number and class of shares subject to the Plan and each
Purchase Right and in the Purchase Price. If a majority of the shares which
are of the same class as the shares that are subject to outstanding Purchase
Rights are exchanged for, converted into, or otherwise become (whether or
not pursuant to an Ownership Change Event) shares of another corporation
(the "NEW SHARES"), the Board may unilaterally amend the outstanding
Purchase Rights to provide that such Purchase Rights are exercisable for New
Shares. In the event of any such amendment, the number of shares subject to,
and the Purchase Price of, the outstanding Purchase Rights shall be adjusted
in a fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section 4.2 shall be rounded down to the
nearest whole number, and in no event may the Purchase Price be decreased to
an amount less than the par value, if any, of the stock subject to the
Purchase Right. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.
5. ELIGIBILITY.
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a
Participating Company is eligible to participate in the Plan and shall be
deemed an Eligible Employee as of the first Offering Date following the
commencement of his/her service with a Participating Company.
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5.2 EXCLUSION OF CERTAIN STOCKHOLDERS. Notwithstanding any provision
of the Plan to the contrary, no Employee shall be granted a Purchase Right
under the Plan if, immediately after such grant, such Employee would own or
hold options to purchase stock of the Company or of any Parent Corporation
or Subsidiary Corporation possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of such corporation,
as determined in accordance with Section 423(b)(3) of the Code. For purposes
of this Section 5.2, the attribution rules of Section 424(d) of the Code
shall apply in determining the stock ownership of such Employee.
6. OFFERINGS.
6.1 OFFERING PERIODS. Except as otherwise set forth below, the Plan
shall be implemented by sequential Offerings of approximately twenty-four
(24) months duration (an "OFFERING PERIOD"). The first Offering Period shall
commence on the Effective Date and end on January 31, 2001. Subsequent
Offering Periods shall commence on the first day of February, May, August,
and November of each year and end on the last day of the 24th month of such
Offering Period. Notwithstanding the foregoing, the Board may establish a
different duration for one or more future Offering Periods or different
commencing or ending dates for such Offering Periods; provided, however,
that no Offering Period may have a duration exceeding twenty-seven
(27) months. If the first or last day of an Offering Period is not a day on
which the national or regional securities exchange or market system
constituting the primary market for the Stock is open for trading, the
Company shall specify the trading day that will be deemed the first or last
day, as the case may be, of the Offering Period.
6.2 PURCHASE PERIODS. Generally, each Offering Period will consist of
eight (8) quarterly Purchase Periods which begin on the first day of
February, May, August and November of each year and end on the last day of
the third month of each such Purchase Period (i.e. the following April,
July, October and January). The Purchase Period commencing on the Effective
Date shall end on the last day of April, 1999. The Board may establish
different Purchase Periods which may consist of two (2) or more consecutive
Purchase Periods having such duration as the Board shall specify. The last
day of each Purchase Period shall be a Purchase Date. If the first or last
day of a Purchase Period is not a day on which the national or regional
securities exchange or market system constituting the primary market for the
Stock is open for trading, the Company shall specify the trading day that
will be deemed the first or last day, as the case may be, of the Purchase
Period.
7. PARTICIPATION IN THE PLAN.
7.1 INITIAL PARTICIPATION. An Eligible Employee may become a
Participant in an Offering Period by delivering a properly completed
Subscription Agreement to the office designated by the Company not later
than the close of business for such office on the Subscription Date
established by the Company for such Offering Period. An Eligible Employee
who does not deliver a properly completed Subscription Agreement to the
Company's designated office on or before the Subscription Date for an
Offering Period shall not participate in the Plan for that Offering Period
or for any subsequent Offering Period unless such Eligible Employee
subsequently delivers a properly completed Subscription Agreement to the
appropriate office of the Company on or before the Subscription Date for
such subsequent Offering Period. An Employee who becomes an Eligible
Employee after the Offering Date of an Offering Period shall not be eligible
to participate in such Offering Period but may participate in any subsequent
Offering Period provided such Employee is still an Eligible Employee as of
the Offering Date of such subsequent Offering Period.
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7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the next Offering Period commencing immediately after the
final Purchase Date of each Offering Period in which the Participant
participates provided that such Participant remains an Eligible Employee on
the Offering Date of the new Offering Period and has not either
(a) withdrawn from the Plan pursuant to Section 12.1 or (b) terminated
employment as provided in Section 13. A Participant who may automatically
participate in a subsequent Offering Period, as provided in this Section, is
not required to deliver any additional Subscription Agreement for the
subsequent Offering Period in order to continue participation in the Plan.
However, a Participant may deliver a new Subscription Agreement for a
subsequent Offering Period in accordance with the procedures set forth in
Section 7.1 if the Participant desires to change any of the elections
contained in the Participant's then effective Subscription Agreement.
7.3 ONE OFFERING PERIOD PER PARTICIPANT. A Participant may participate
in only one Offering Period at any given time. A Participant's delivery to
the Company of a Subscription Agreement for any given Offering Period shall
constitute Participant's withdrawal from any concurrent Offering Period and
termination of any Purchase Right granted pursuant thereto.
8. RIGHT TO PURCHASE SHARES.
8.1 GRANT OF PURCHASE RIGHT. Except as set forth below, on the
Offering Date of each Offering Period, each Participant in such Offering
Period shall be granted automatically a Purchase Right consisting of an
option to purchase the lesser of (a) that number of whole shares of Stock
determined by dividing Fifty Thousand Dollars ($50,000) by the Fair Market
Value of a share of Stock on such Offering Date, reduced by the aggregate
purchase price of any Stock purchased during any concurrent Offering
Period(s) or (b) five thousand (5,000) shares of Stock, reduced by the
number of shares of Stock purchased during any concurrent Offering
Period(s). No Purchase Right shall be granted on an Offering Date to any
person who is not, on such Offering Date, an Eligible Employee.
8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding the
provisions of Section 8.1, if the Board establishes an Offering Period of
any duration other than twenty four months, then (a) the dollar amount in
Section 8.1 shall be determined by multiplying $2,083.33 by the number of
months (rounded to the nearest whole month) in the Offering Period and
rounding to the nearest whole dollar, and (b) the share amount in
Section 8.1 shall be determined by multiplying 208.33 shares by the number
of months (rounded to the nearest whole month) in the Offering Period and
rounding to the nearest whole share.
8.3 CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any provision
of the Plan to the contrary, no Participant shall be granted a Purchase
Right which permits his or her right to purchase shares of Stock under the
Plan to accrue at a rate which, when aggregated with such Participant's
rights to purchase shares under all other employee stock purchase plans of a
Participating Company intended to meet the requirements of Section 423 of
the Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market
Value (or such other limit, if any, as may be imposed by the Code) for each
calendar year in which such Purchase Right is outstanding at any time. For
purposes of the preceding sentence, the Fair Market Value of shares
purchased during a given Offering Period shall be determined as of the
Offering Date for such Offering Period. The limitation described in this
Section 8.3 shall be applied in conformance with applicable regulations
under Section 423(b)(8) of the Code.
9. PURCHASE PRICE.
The Purchase Price at which each share of Stock may be acquired in an
Offering Period upon the exercise of all or any portion of a Purchase Right
shall be established by the Board; provided, however,
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that the Purchase Price shall not be less than eighty-five percent (85%) of the
lesser of (a) the Fair Market Value of a share of Stock on the Offering Date of
the Offering Period or (b) the Fair Market Value of a share of Stock on the
Purchase Date. Unless otherwise provided by the Board prior to the commencement
of an Offering Period, the Purchase Price for that Offering Period shall be
eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a share
of Stock on the Offering Date of the Offering Period, or (b) the Fair Market
Value of a share of Stock on the Purchase Date.
10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.
Shares of Stock acquired pursuant to the exercise of all or any portion of a
Purchase Right may be paid for only by means of payroll deductions from the
Participant's Compensation accumulated during the Offering Period for which such
Purchase Right was granted, subject to the following:
10.1 AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided
herein, the amount to be deducted under the Plan from a Participant's
Compensation on each payday during an Offering Period shall be determined by
the Participant's Subscription Agreement. The Subscription Agreement shall
set forth the percentage of the Participant's Compensation to be deducted on
each payday during an Offering Period in whole percentages of not less than
one percent (1%) (except as a result of an election pursuant to
Section 10.3 to stop payroll deductions made effective following the first
payday during an Offering) or more than fifteen percent (15%).
Notwithstanding the foregoing, the Board may change the limits on payroll
deductions effective as of any future Offering Date.
10.2 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue
to the end of the Offering Period unless sooner altered or terminated as
provided herein.
10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an Offering
Period, a Participant may elect to increase or decrease the rate of or to
stop deductions from his or her Compensation by delivering to the Company's
designated office an amended Subscription Agreement authorizing such change
on or before the "Change Notice Date." The "CHANGE NOTICE DATE" shall be a
date prior to the beginning of the first pay period for which such election
is to be effective as established by the Company from time to time and
announced to the Participants. A Participant who elects to decrease the rate
of his or her payroll deductions to zero percent (0%) shall nevertheless
remain a Participant in the current Offering Period unless such Participant
withdraws from the Plan as provided in Section 12.1.
10.4 ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The Company may,
in its sole discretion, suspend a Participant's payroll deductions under the
Plan as the Company deems advisable to avoid accumulating payroll deductions
in excess of the amount that could reasonably be anticipated to purchase the
maximum number of shares of Stock permitted during a calendar year under the
limit set forth in Section 8.3. Payroll deductions shall be resumed at the
rate specified in the Participant's then effective Subscription Agreement at
the beginning of the next Purchase Period the Purchase Date of which falls
in the following calendar year.
10.5 PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such Participant's Plan account and shall
be deposited with the general funds of the Company. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.
10.6 NO INTEREST PAID. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.
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10.7 VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may
withdraw all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock by
delivering to the Company's designated office a written notice on a form
provided by the Company for such purpose. A Participant who withdraws the
entire remaining balance credited to his or her Plan account shall be deemed
to have withdrawn from the Plan in accordance with Section 12.1. Amounts
withdrawn shall be returned to the Participant as soon as practicable after
the withdrawal and may not be applied to the purchase of shares in any
Offering under the Plan. The Company may from time to time establish or
change limitations on the frequency of withdrawals permitted under this
Section, establish a minimum dollar amount that must be retained in the
Participant's Plan account, or terminate the withdrawal right provided by
this Section.
11. PURCHASE OF SHARES.
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Plan and whose
participation in the Offering has not terminated before such Purchase Date
shall automatically acquire pursuant to the exercise of the Participant's
Purchase Right the number of whole shares of Stock determined by dividing
(a) the total amount of the Participant's payroll deductions accumulated in
the Participant's Plan account during the Offering Period and not previously
applied toward the purchase of Stock by (b) the Purchase Price. However, in
no event shall the number of shares purchased by the Participant during an
Offering Period exceed the number of shares subject to the Participant's
Purchase Right. No shares of Stock shall be purchased on a Purchase Date on
behalf of a Participant whose participation in the Offering or the Plan has
terminated before such Purchase Date.
11.2 PRO RATA ALLOCATION OF SHARES. In the event that the number of
shares of Stock which might be purchased by all Participants in the Plan on
a Purchase Date exceeds the number of shares of Stock available in the Plan
as provided in Section 4.1, the Company shall make a pro rata allocation of
the remaining shares in as uniform a manner as shall be practicable and as
the Company shall determine to be equitable. Any fractional share resulting
from such pro rata allocation to any Participant shall be disregarded.
11.3 DELIVERY OF CERTIFICATES. As soon as practicable after each
Purchase Date, the Company shall arrange the delivery to each Participant,
as appropriate, of a certificate representing the shares acquired by the
Participant on such Purchase Date; provided that the Company may deliver
such shares to a broker that holds such shares in street name for the
benefit of the Participant. Shares to be delivered to a Participant under
the Plan shall be registered in the name of the Participant, or, if
requested by the Participant, in the name of the Participant and his or her
spouse, or, if applicable, in the names of the heirs of the Participant.
11.4 RETURN OF CASH BALANCE. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be refunded to
the Participant as soon as practicable after such Purchase Date. However, if
the cash to be returned to a Participant pursuant to the preceding sentence
is an amount less than the amount that would have been necessary to purchase
an additional whole share of Stock on such Purchase Date, the Company may
retain such amount in the Participant's Plan account to be applied toward
the purchase of shares of Stock in the subsequent Purchase Period or
Offering Period, as the case may be.
11.5 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant disposes of
some or all of the shares of Stock he or she acquires under the Plan, the
Participant shall make adequate provision for the foreign, federal, state
and local tax withholding obligations of the Participating Company Group, if
any, which arise
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upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be
obligated to, withhold from the Participant's compensation the amount
necessary to meet such withholding obligations.
11.6 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which the Purchase Right relates shall expire immediately upon the end of
the Offering Period.
11.7 REPORTS TO PARTICIPANTS. Each Participant who has exercised all
or part of his or her Purchase Right shall receive, as soon as practicable
after the Purchase Date, a report of such Participant's Plan account setting
forth the total payroll deductions accumulated prior to such exercise, the
number of shares of Stock purchased, the Purchase Price for such shares, the
date of purchase and the cash balance, if any, remaining immediately after
such purchase that is to be refunded or retained in the Participant's Plan
account pursuant to Section 11.4. The report required by this Section may be
delivered in such form and by such means, including by electronic
transmission, as the Company may determine.
12. WITHDRAWAL FROM THE PLAN.
12.1 VOLUNTARY WITHDRAWAL FROM THE PLAN. A Participant may withdraw
from the Plan by signing and delivering to the Company's designated office a
written notice of withdrawal on a form provided by the Company for such
purpose. Such withdrawal may be elected at any time prior to the end of an
Offering Period. A Participant who voluntarily withdraws from the Plan is
prohibited from resuming participation in the Plan in the same Offering from
which he or she withdrew, but may participate in any subsequent Offering by
again satisfying the requirements of Sections 5 and 7.1. The Company may
impose, from time to time, a requirement that the notice of withdrawal from
the Plan be on file with the Company's designated office for a reasonable
period prior to the effectiveness of the Participant's withdrawal.
12.2 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's voluntary
withdrawal from the Plan pursuant to Sections 12.1 or 10.7 or an automatic
withdrawal pursuant to Section 12.3, the Participant's accumulated payroll
deductions which have not been applied toward the purchase of shares of
Stock shall be refunded to the Participant as soon as practicable after the
withdrawal, without the payment of any interest, and the Participant's
interest in the Plan shall terminate. Such accumulated payroll deductions to
be refunded in accordance with this Section may not be applied to any other
Offering under the Plan.
12.3 AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the Fair Market Value
of a share of Stock on a Purchase Date (other than the final Purchase Date
of an Offering Period) is less that the Fair Market Value of a share of
Stock on the Offering Date for such Offering Period, then every Participant
shall automatically be (a) withdrawn from such Offering Period after the
acquisition of shares of Stock on the Purchase Date and (b) enrolled in the
new Offering Period effective on its Offering Date. A Participant may elect
not to be automatically withdrawn from an Offering Period pursuant to this
Section 12.2 by delivering to the Company's designated office not later than
the close of business on the Offering Date of the new Offering Period a
written notice indicating such decision.
13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.
Upon a Participant's ceasing, prior to a Purchase Date, to be an Employee of
the Participating Company Group for any reason, including retirement, disability
or death, or the failure of a Participant to remain an Eligible Employee, the
Participant's participation in the Plan shall terminate immediately. In such
event, the payroll deductions credited to the Participant's Plan account since
the last Purchase Date shall, as soon as practicable, be returned to the
Participant or, in the case of the Participant's
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death, to the Participant's legal representative, and all of the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned pursuant to this Section 13. A Participant whose participation has been
so terminated may again become eligible to participate in the Plan by again
satisfying the requirements of Sections 5 and 7.1.
14. CHANGE IN CONTROL.
14.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company: (i) the direct
or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty
percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; (iii) the sale, exchange,
or transfer of all or substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before
the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the
Company's voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the
Company were transferred (the "TRANSFEREE CORPORATION(S)"), as the case
may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting stock of one or more corporations which, as a
result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall
be final, binding and conclusive.
14.2 EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may assume the Company's rights and obligations
under the Plan. If the Acquiring Corporation elects not to assume the
Company's rights and obligations under outstanding Purchase Rights, the
Purchase Date of the then current Offering Period (or Purchase Period) shall
be accelerated to a date before the date of the Change in Control specified
by the Board, but the number of shares of Stock subject to outstanding
Purchase Rights shall not be adjusted. All Purchase Rights which are neither
assumed by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of the Change
in Control.
15. NONTRANSFERABILITY OF PURCHASE RIGHTS.
A Purchase Right may not be transferred in any manner otherwise than by will
or the laws of descent and distribution and shall be exercisable during the
lifetime of the Participant only by the Participant.
16. COMPLIANCE WITH SECURITIES LAW.
The issuance of shares under the Plan shall be subject to compliance with
all applicable requirements of federal, state and foreign law with respect to
such securities. A Purchase Right may
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not be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any securities exchange or market
system upon which the Stock may then be listed. In addition, no Purchase Right
may be exercised unless (a) a registration statement under the Securities Act of
1933, as amended, shall at the time of exercise of the Purchase Right be in
effect with respect to the shares issuable upon exercise of the Purchase Right,
or (b) in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the Purchase Right may be issued in accordance with the terms of an
applicable exemption from the registration requirements of said Act. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company's legal counsel to be necessary to
the lawful issuance and sale of any shares under the Plan shall relieve the
Company of any liability in respect of the failure to issue or sell such shares
as to which such requisite authority shall not have been obtained. As a
condition to the exercise of a Purchase Right, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.
17. RIGHTS AS A STOCKHOLDER AND EMPLOYEE.
A Participant shall have no rights as a stockholder by virtue of the
Participant's participation in the Plan until the date of the issuance of a
certificate for the shares purchased pursuant to the exercise of the
Participant's Purchase Right (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 4.2. Nothing herein shall confer upon a Participant any
right to continue in the employ of the Participating Company Group or interfere
in any way with any right of the Participating Company Group to terminate the
Participant's employment at any time.
18. LEGENDS.
The Company may at any time place legends or other identifying symbols
referencing any applicable federal, state or foreign securities law restrictions
or any provision convenient in the administration of the Plan on some or all of
the certificates representing shares of Stock issued under the Plan. The
Participant shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section.
19. NOTIFICATION OF SALE OF SHARES.
The Company may require the Participant to give the Company prompt notice of
any disposition of shares acquired by exercise of a Purchase Right within two
years from the date of granting such Purchase Right or one year from the date of
exercise of such Purchase Right. The Company may require that until such time as
a Participant disposes of shares acquired upon exercise of a Purchase Right, the
Participant shall hold all such shares in the Participant's name (or, if elected
by the Participant, in the name of the Participant and his or her spouse but not
in the name of any nominee) until the lapse of the time periods with respect to
such Purchase Right referred to in the preceding sentence. The Company may
direct that the certificates evidencing shares acquired by exercise of a
Purchase Right refer to such requirement to give prompt notice of disposition.
20. NOTICES.
All notices or other communications by a Participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
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21. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
22. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may at any time amend or terminate the Plan, except that (a) such
termination shall not affect Purchase Rights previously granted under the Plan,
except as permitted under the Plan, provided however that the Board may
terminate the Plan (and any Offerings and future Purchase Rights) on any
Purchase Date if the Board determines that such termination is in the best
interests of the Company and its stockholders; and (b) no amendment may
adversely affect a Purchase Right previously granted under the Plan (except to
the extent permitted by the Plan or as may be necessary to qualify the Plan as
an employee stock purchase plan pursuant to Section 423 of the Code or to obtain
qualification or registration of the shares of Stock under applicable federal,
state or foreign securities laws). In addition, an amendment to the Plan must be
approved by the stockholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the sale of more
shares than are authorized for issuance under the Plan or would change the
definition of the corporations that may be designated by the Board as
Participating Companies. In the event that the Board approves an amendment to
increase the number of shares authorized for issuance under the Plan (the
"ADDITIONAL SHARES"), the Board, in its sole discretion, may specify that such
Additional Shares may only be issued pursuant to Purchase Rights granted after
the date on which the stockholders of the Company approve such amendment, and
such designation by the Board shall not be deemed to have adversely affected any
Purchase Right granted prior to the date on which the stockholders approve the
amendment.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Invitrogen Corporation 1998 Employee Stock Purchase Plan was duly
adopted by the Board of Directors of the Company on January 15, 1999.
/s/ JOSEPH M. FERNANDEZ
--------------------------------------
Joseph M. Fernandez
PLAN HISTORY
November 20, 1998 Board adopts the Plan, with an initial reserve of 250,000
shares.
January 15, 1999 Stockholders approve Plan, with an initial reserve of 250,000
shares.
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FIRST AMENDMENT TO THE
INVITROGEN CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
Pursuant to Section 22 of the Invitrogen Corporation 1998 Employee Stock
Purchase Plan (the "Plan"), said Plan is hereby amended as follows:
1. SECTION 4.1 SHALL BE AMENDED TO STATE IN ITS ENTIRETY AS FOLLOWS:
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 4.2, the maximum
aggregate number of shares of Stock that may be issued
under the Plan shall be three hundred fifty thousand
(350,000) and shall consist of authorized but unissued or
reacquired shares of Stock, or any combination thereof. If
an outstanding Purchase Right for any reason expires or is
terminated or canceled, the shares of Stock allocable to
the unexercised portion of such Purchase Right shall again
be available for issuance under the Plan.
2. The additional 100,000 shares authorized for issuance under the Plan by
this Amendment may only be issued pursuant to Purchase Rights granted after the
date on which the stockholders of the Company approve this Amendment.
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INVITROGEN CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
NAME (Please print): ___________________________________________________________
(Last) (First) (Middle)
/ / Original Application for the Offering Period beginning _______, 199__.
/ / Change in Payroll Deduction rate effective with the pay period ending
_______________, 199__.
I hereby elect to participate in the 1998 Employee Stock Purchase Plan (the
"PLAN") of Invitrogen Corporation (the "COMPANY") and subscribe to purchase
shares of the Company's Stock in accordance with this Subscription Agreement and
the Plan.
I hereby authorize payroll deductions in the amount of ______ percent (in
whole percentages not less than 1% (unless an election to stop deductions is
being made) or more than 10%) of my "COMPENSATION" on each payday throughout the
"OFFERING PERIOD" in accordance with the Plan. I understand that these payroll
deductions will be accumulated for the purchase of shares of Stock at the
applicable purchase price determined in accordance with the Plan. I understand
that, except as otherwise provided by the Plan, I will automatically purchase
shares on each Purchase Date under the Plan unless I withdraw from the Plan by
giving written notice on a form provided by the Company or unless my employment
terminates.
I understand that I will automatically participate in each subsequent
Offering that commences immediately after the last day of an Offering in which I
am participating until I withdraw from the Plan by giving written notice on a
form provided by the Company or I cease to be eligible to participate in the
Plan.
Shares I purchase under the Plan should be issued in the name(s) set forth
below. (Shares may be issued in the participant's name alone or together with
the participant's spouse as community property or in joint tenancy.)
NAME(S): ___________________________________________________________________
ADDRESS: ___________________________________________________________________
MY SOCIAL SECURITY NUMBER: _________________________________________________
I agree to make adequate provision for the federal, state, local and foreign
tax withholding obligations, if any, which may arise upon my purchase of shares
under the Plan and/or my disposition of such shares. The Company may, but will
not be obligated to, withhold from my compensation the amount necessary to meet
such withholding obligations.
I agree that while I hold shares acquired under the Plan, unless otherwise
permitted by the Company, I will hold such shares in the name(s) entered above
(and not in the name of any nominee) for at least two years from the first day
of the Offering Period in which, and at least one year from the Purchase Date on
which, I acquired such shares (this restriction only applies to the name(s) in
which shares are held and does not affect the ability to dispose of Plan
shares).
I AGREE THAT I WILL NOTIFY THE CHIEF FINANCIAL OFFICER OF THE COMPANY IN
WRITING WITHIN 30 DAYS AFTER ANY SALE, GIFT, TRANSFER OR OTHER DISPOSITION OF
ANY KIND PRIOR TO THE END OF THE PERIODS REFERRED TO IN THE PRECEDING PARAGRAPH
(A "DISQUALIFYING DISPOSITION") OF ANY SHARES I PURCHASED UNDER THE PLAN. I
FURTHER AGREE THAT IF I DO NOT RESPOND WITHIN 30 DAYS OF THE DATE OF A
DISQUALIFYING DISPOSITION SURVEY DELIVERED TO ME, THE COMPANY MAY TREAT MY
NONRESPONSE AS MY NOTICE TO
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<PAGE>
THE COMPANY OF A DISQUALIFYING DISPOSITION AND MAY COMPUTE AND REPORT TO THE
INTERNAL REVENUE SERVICE THE ORDINARY INCOME I MUST RECOGNIZE UPON SUCH
DISQUALIFYING DISPOSITION.
I am familiar with the provisions of the Plan and agree to participate in
the Plan subject to all of its provisions. I understand that the Board of
Directors of the Company reserves the right to terminate the Plan or to amend
the Plan and my right to purchase stock under the Plan to the extent provided by
the Plan. I understand that the effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Plan.
Date: ______________ Signature: ___________________________________
J-15
<PAGE>
INVITROGEN CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
NAME (Please print): _______________________________________________________
(Last) (First) (Middle)
I hereby elect to withdraw from the Offering under Invitrogen Corporation
1998 Employee Stock Purchase Plan (the "PLAN") which began on ___________, 19___
and in which I am currently participating (the "CURRENT OFFERING").
ELECT EITHER A OR B BELOW:
<TABLE>
<S> <C>
/ / A. I elect to terminate immediately my participation in the
Current Offering and in the Plan.
I request that the Company cease all further payroll
deductions from my Compensation under the Plan (provided
that I have given sufficient notice prior to the next
payday). I request that all payroll deductions credited to
my account under the Plan (if any) not previously used to
purchase shares under the Plan shall not be used to purchase
shares on the next Purchase Date of the Current Offering.
Instead, I request that all such amounts be paid to me as
soon as practicable. I understand that this election
immediately terminates my interest in the Current Offering
and in the Plan.
/ / B. I elect to terminate my participation in the Current
Offering and in the Plan following my purchase of shares on
the next Purchase Date of the Current Offering.
I request that the Company cease all further payroll
deductions from my Compensation under the Plan (provided
that I have given sufficient notice prior to the next
payday). I request that all payroll deductions credited to
my account under the Plan (if any) not previously used to
purchase shares under the Plan shall be used to purchase
shares on the next Purchase Date of the Current Offering to
the extent permitted by the Plan. I understand that this
election will terminate my interest in the Current Offering
and in the Plan immediately following such purchase. I
request that any cash balance remaining in my account under
the Plan after my purchase of shares be paid to me as soon
as practicable.
</TABLE>
I understand that by making this election I am terminating my interest in
the Plan and that no further payroll deductions will be made (provided that I
have given sufficient notice prior to the next payday) unless I elect in
accordance with the Plan to become a participant in another Offering under the
Plan by filing a new Subscription Agreement with the Company.
Date: ______________________________ Signature: _____________________________
J-16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (DGCL) authorizes a
court to award, or a corporation's board of directors to grant indemnity to
directors and officers under certain circumstances for liabilities incurred in
connection with their activities in such capacities (including reimbursement for
expenses incurred). The Registrant's Restated Certificate of Incorporation
provides that the Registrant will indemnify its directors and officers to the
fullest extent permitted by law and that directors shall not be liable for
monetary damages to the Registrant or its stockholders for breach of fiduciary
duty, except to the extent that the DGCL prohibits elimination or limitation of
such liability.
The Registrant's Restated Certificate of Incorporation provides that no
director of the Registrant will be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Registrant or to its stockholders, (ii) for acts or omissions not made in good
faith or involving intentional misconduct or a knowing violation of the law,
(iii) under Section 174 of the DGCL, or (iv) for any transactions from which the
director derives an improper personal benefit. In addition, the Registrant's
Amended and Restated By-laws provide that any director or officer who was or is
a party or is threatened to be made a party to any action or proceeding by
reason of his or her services to the Registrant will be indemnified to the
fullest extent permitted by the DGCL.
Under the terms of various Directors and Officers Liability and Corporation
Reimbursement Liability Policies, the directors and officers of the Registrant
are insured, subject to applicable policy exclusions, limits and deductibles,
against any loss incurred in connection with any claim made against them or any
of them for any actual or alleged breach of duty, neglect, error, misstatement,
misleading statement, omission or other act done or wrongfully attempted, or any
matter not excluded by the terms and conditions of the policy, claimed against
them solely by reason of their being directors or officers of the Registrant.
The foregoing statements are subject to the detailed provisions of such
Policies.
The Registrant has entered into agreements with each of its executive
officers and directors under which the Registrant has agreed to indemnify each
of them against expenses and losses incurred for claims brought against them by
reason of their being an officer or director of the Registrant. Such expenses
and losses include, to the maximum extent permitted by law, attorneys' fees,
judgments, civil or criminal fines, settlement amounts, and other expenses
customarily incurred in connection with legal proceedings. Under each
indemnification agreement, a director or officer will not be indemnified if he
or she is found not to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Registrant. Each indemnification agreement provides a number of procedures and
presumptions used in the determination of the right to indemnification, as well
as a requirement that in order to receive an advancement of expenses, the
director or officer must submit an undertaking to repay any expenses advanced on
his or her behalf with respect to which it is later determined the director or
officer was not entitled to receive. Each indemnification agreement is effective
for actions arising out of acts or omissions which may have occurred before or
after the execution of such indemnification agreement. The foregoing statements
are subject to the detailed provisions of such indemnification agreements.
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<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of July 7, 2000,
between the Registrant and Life Technologies, Inc. (attached
as Annex A to the Proxy Statement/Prospectus included in
this Registration Statement).* The Registrant will furnish
supplementally a copy of all omitted Schedules to
Exhibit 2.1 upon the request of the Securities and Exchange
Commission.
2.2 Agreement and Plan of Merger, dated as of July 7, 2000,
between the Registrant and Dexter Corporation (attached as
Annex B to the Proxy Statement/Prospectus included in this
Registration Statement).* The Registrant will furnish
supplementally a copy of all omitted Schedules to
Exhibit 2.2 upon the request of the Securities and Exchange
Commission.
3.1 Restated Certificate of Incorporation of the Registrant as
currently in effect.(1)
3.2 Amended and Restated By-Laws of the Registrant.(1)
3.3 Certificate of Incorporation of Life Technologies, Inc. as
currently in effect.(2)
3.4 Amended and Restated By-laws of Life Technologies, Inc.(2)
3.5 Restated Certificate of Incorporation of Dexter Corporation
as currently in effect.(3)
3.6 By-laws of Dexter Corporation.(3)
5.1 Opinion of Gray Cary Ware & Freidenrich LLP regarding the
legality of the securities being registered.*
10.1 First Amendment to the Invitrogen Corporation 1998 Employee
Stock Purchase Plan.*
10.2 Second Amendment to the Invitrogen Corporation 1998 Employee
Stock Purchase Plan.*
10.3 Second Amendment to the Invitrogen Corporation 1997 Employee
Stock Option Plan.*
10.4 Third Amendment to the Invitrogen Corporation 1997 Employee
Stock Option Plan.*
15.1 Letter from PricewaterhouseCoopers LLP regarding unaudited
financial information for Life Technologies, Inc.*
15.2 Letter for PricewaterhouseCoopers LLP regarding unaudited
financial information for Dexter Corporation.*
23.1 Consent of Gray Cary Ware & Freidenrich LLP (included as
part of Exhibit 5.1).*
23.2 Consent of Arthur Andersen LLP in connection with the
audited financial information of Invitrogen Corporation.*
23.3 Consent of Arthur Andersen LLP in connection with the
audited financial information of Research Genetics, Inc.*
23.4 Consent of PricewaterhouseCoopers LLP in connection with the
audited financial information of Life Technologies, Inc.*
23.5 Consent of PricewaterhouseCoopers LLP in connection with the
audited financial information of Dexter Corporation.*
24.1 Powers of Attorney (set forth on signature page of the
Registration Statement).*
99.1 Consent of Credit Suisse First Boston Corporation.*
99.2 Consent of Lehman Brothers Inc.*
99.3 Form of Proxy for Invitrogen Corporation.*
99.4 Form of Proxy for Life Technologies, Inc.*
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------- -----------
<C> <S>
99.5 Form of Proxy for Dexter Corporation.*
</TABLE>
------------------------
* Filed herewith
(1) Incorporated herein by reference from Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 filed on March 14,
2000, File number 000-25317.
(2) Incorporated herein by reference from Life Technologies' Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 filed on March 15,
2000, File Number 000-14991.
(3) Incorporated herein by reference from Dexter's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, filed on March 15, 2000, File
Number 001-05542.
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required or are
inapplicable, and therefore have been omitted, or the required information is
disclosed in the Consolidated Financial Statements.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in the volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
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<PAGE>
(c) The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reoffering by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(d) The Registrant undertakes that every prospectus:
(i) that is filed pursuant to paragraph (b) immediately preceding, or
(ii) that purports to meet the requirements of Section 10(a)(3) of
the Act and is used in connection with an offering of securities subject
to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and
that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(f) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Carlsbad, State of
California on August 14, 2000.
<TABLE>
<S> <C> <C>
INVITROGEN CORPORATION
By: /s/ JAMES R. GLYNN
-----------------------------------------
James R. Glynn
Executive Vice President and
Chief Financial Officer
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James R. Glynn and Warner R. Broaddus, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<S> <C>
Date: August 14, 2000 /s/ LYLE C. TURNER
---------------------------------------------
Lyle C. Turner
Chief Executive Officer and Chairman of the
Board of Directors
Date: August 14, 2000 /s/ JAMES R. GLYNN
---------------------------------------------
James R. Glynn
Executive Vice President, Chief Financial
Officer and Director
Date: August 14, 2000 /s/ LEWIS J. SHUSTER
---------------------------------------------
Lewis J. Shuster
Chief Operating Officer and Director
Date: August 14, 2000 /s/ DAVID E. MCCARTY
---------------------------------------------
David E. McCarty
Director
</TABLE>
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<TABLE>
<S> <C>
Date: August 14, 2000 /s/ DONALD W. GRIMM
---------------------------------------------
Donald W. Grimm
Director
Date: August 14, 2000 /s/ KURT R. JAGGERS
---------------------------------------------
Kurt R. Jaggers
Director
Date: August 14, 2000 /s/ BRADLEY G. LORIMER
---------------------------------------------
Bradley G. Lorimer
Director
Date: August 14, 2000 /s/ JAY M. SHORT
---------------------------------------------
Jay M. Short
Director
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of July 7, 2000,
between the Registrant and Life Technologies, Inc. (attached
as Annex A to the Proxy Statement/Prospectus included in
this Registration Statement).* The Registrant will furnish
supplementally a copy of all omitted Schedules to
Exhibit 2.1 upon the request of the Securities and Exchange
Commission.
2.2 Agreement and Plan of Merger, dated as of July 7, 2000,
between the Registrant and Dexter Corporation (attached as
Annex B to the Proxy Statement/Prospectus included in this
Registration Statement).* The Registrant will furnish
supplementally a copy of all omitted Schedules to
Exhibit 2.2 upon the request of the Securities and Exchange
Commission.
3.1 Restated Certificate of Incorporation of the Registrant as
currently in effect.(1)
3.2 Amended and Restated By-Laws of the Registrant.(1)
3.3 Certificate of Incorporation of Life Technologies, Inc. as
currently in effect.(2)
3.4 Amended and Restated By-laws of Life Technologies, Inc.(2)
3.5 Restated Certificate of Incorporation of Dexter Corporation
as currently in effect.(3)
3.6 By-laws of Dexter Corporation.(3)
5.1 Opinion of Gray Cary Ware & Freidenrich LLP regarding the
legality of the securities being registered.*
10.1 First Amendment to the Invitrogen Corporation 1998 Employee
Stock Purchase Plan.*
10.2 Second Amendment to the Invitrogen Corporation 1998 Employee
Stock Purchase Plan.*
10.3 Second Amendment to the Invitrogen Corporation 1997 Employee
Stock Option Plan.*
10.4 Third Amendment to the Invitrogen Corporation 1997 Employee
Stock Option Plan.*
15.1 Letter from PricewaterhouseCoopers LLP regarding unaudited
financial information for Life Technologies, Inc.*
15.2 Letter for PricewaterhouseCoopers LLP regarding unaudited
financial information for Dexter Corporation.*
23.1 Consent of Gray Cary Ware & Freidenrich LLP (included as
part of Exhibit 5.1).*
23.2 Consent of Arthur Andersen LLP in connection with the
audited financial information of Invitrogen Corporation.*
23.3 Consent of Arthur Andersen LLP in connection with the
audited financial information of Research Genetics, Inc.*
23.4 Consent of PricewaterhouseCoopers LLP in connection with the
audited financial information of Life Technologies, Inc.*
23.5 Consent of PricewaterhouseCoopers LLP in connection with the
audited financial information of Dexter Corporation.*
24.1 Powers of Attorney (set forth on signature page of the
Registration Statement).*
99.1 Consent of Credit Suisse First Boston Corporation.*
99.2 Consent of Lehman Brothers Inc.*
99.3 Form of Proxy for Invitrogen Corporation.*
99.4 Form of Proxy for Life Technologies, Inc.*
99.5 Form of Proxy for Dexter Corporation.*
</TABLE>
------------------------
* Filed herewith
<PAGE>
(1) Incorporated herein by reference from Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 filed on March 14,
2000, File number 000-25317.
(2) Incorporated herein by reference from Life Technologies' Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 filed on March 15,
2000, File Number 000-14991.
(3) Incorporated herein by reference from Dexter's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, filed on March 15, 2000, File
Number 001-05542.
