<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For quarter ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 0-10961
QUIDEL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2573850
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10165 McKellar Court, San Diego, California 92121
(Address of principal executive offices)
Registrant's telephone number, including area code (619) 552-1100
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock as
of June 30, 1998 was 23,767,616.
1
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QUIDEL CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Numbers
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1998 and March 31, 1998.................................................3
Condensed Consolidated Statements of Operations
Three months ended June 30, 1998 and 1997........................................4
Condensed Consolidated Statements of Cash Flows
Three months ended June 30, 1998 and 1997........................................5
Notes to Unaudited Condensed Consolidated Financial Statements........................6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................................7
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings..........................................................11
ITEM 2. Changes in Securities......................................................11
ITEM 3. Defaults upon Senior Securities............................................11
ITEM 4. Submission of Matters to a Vote of Security Holders........................11
ITEM 5. Other Information..........................................................12
ITEM 6. Exhibits and Reports on Form 8-K...........................................12
Signatures ................................................................................13
</TABLE>
2
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QUIDEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1998 1998
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................... $ 9,712,000 $ 9,720,000
Accounts receivable, net ..................................... 6,289,000 8,524,000
Inventories, at lower of cost (first-in, first-out) or market:
Raw materials ........................................... 3,108,000 3,190,000
Work in process ......................................... 2,343,000 1,420,000
Finished goods .......................................... 1,284,000 1,287,000
------------- -------------
6,735,000 5,897,000
Prepaid expenses and other current assets .................... 374,000 540,000
------------- -------------
Total current assets ............................... 23,110,000 24,681,000
Property and equipment, net ........................................ 17,189,000 16,797,000
Deferred tax asset ................................................. 2,707,000 2,707,000
Intangible assets, net ............................................. 3,382,000 3,466,000
Other assets ....................................................... 245,000 131,000
------------- -------------
$ 46,633,000 $ 47,782,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 2,171,000 $ 3,246,000
Accrued payroll and related expenses ......................... 1,164,000 1,261,000
Current portion of long-term debt and obligations
under capital leases .................................... 193,000 199,000
Deferred contract research revenue ........................... 1,664,000 1,690,000
Accrued royalties ............................................ 496,000 622,000
Other current liabilities .................................... 1,064,000 873,000
------------- -------------
Total current liabilities .......................... 6,752,000 7,891,000
Long-term debt and obligations under capital leases ................ 2,960,000 3,002,000
Stockholders' equity:
Common stock ................................................. 24,000 24,000
Additional paid-in capital ................................... 116,578,000 116,564,000
Accumulated deficit .......................................... (79,681,000) (79,699,000)
------------- -------------
Total stockholders' equity .............................. 36,921,000 36,889,000
------------- -------------
$ 46,633,000 $ 47,782,000
============= =============
</TABLE>
See accompanying notes
3
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QUIDEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30, 1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Net sales .................................... $ 9,803,000 $ 8,747,000
Research contracts and royalties ............. 1,068,000 622,000
------------ ------------
Total revenues ..................... 10,871,000 9,369,000
Costs and expenses:
Cost of sales ................................ 5,025,000 4,717,000
Research and development ..................... 2,047,000 1,747,000
Sales and marketing .......................... 2,222,000 2,543,000
General and administrative ................... 1,205,000 1,157,000
Restructuring related to European subsidiaries 420,000 --
------------ ------------
Total costs and expenses ........... 10,919,000 10,164,000
Operating income (loss) ............................ (48,000) (795,000)
Other income and expense:
Interest and other income .................... 154,000 108,000
Interest and other expense ................... (88,000) (104,000)
------------ ------------
Net income (loss) .................................. $ 18,000 $ (791,000)
------------ ============
Basic and diluted earnings (loss) per share ........ $ -- $ (.03)
============ ============
Shares used in basic per share calculation ......... 23,754,000 23,552,000
============ ============
Shares used in diluted per share calculation ....... 23,825,000 23,552,000
============ ============
</TABLE>
See accompanying notes.
4
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QUIDEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30, 1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................................... $ 18,000 $ (791,000)
Adjustments to reconcile net income (loss) to net cash
flows provided by (used for) operating activities:
Depreciation and amortization ................................... 746,000 740,000
Changes in operating assets and liabilities:
Accounts receivable ........................................ 2,235,000 2,371,000
Inventories ................................................ (838,000) (606,000)
Prepaid expenses and other current assets .................. 166,000 413,000
Accounts payable ........................................... (1,075,000) 280,000
Accrued payroll and related expenses ....................... (97,000) (166,000)
Deferred contract research revenue ......................... (26,000) (187,000)
Accrued royalties .......................................... (126,000) 311,000
Other current liabilities .................................. 191,000 (234,000)
----------- -----------
Net cash flows provided by operating activities ............ 1,194,000 2,131,000
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Additions to equipment and improvements .............................. (1,007,000) (1,429,000)
Increase in intangible and other assets .............................. (161,000) (2,363,000)
----------- -----------
Net cash flows used for investing activities ............... (1,168,000) (3,792,000)
CASH FLOWS (USED FOR) PROVIDED BY FINANCING ACTIVITIES:
Net proceeds from issuance of common stock ........................... 14,000 6,000
Payments on notes payable, long term debt and
obligations under capital leases ................................ (48,000) (45,000)
----------- -----------
Net cash flows used for financing activities ............... (34,000) (39,000)
Net decrease in cash and cash equivalents .................................. (8,000) (1,700,000)
Cash and cash equivalents at beginning of period ........................... 9,720,000 10,096,0000
----------- -----------
Cash and cash equivalents at end of period ................................. $ 9,712,000 $ 8,396,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest ............................. $ 78,000 $ 80,000
=========== ===========
Income taxes paid during the period................................... $ 69,000 $ 22,000
=========== ===========
</TABLE>
See accompanying notes.
5
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QUIDEL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
QUIDEL Corporation ("QUIDEL" or the "Company") discovers, develops,
manufactures and markets diagnostic products for human health care.
The unaudited financial information included herein is condensed and
has been prepared in accordance with generally accepted accounting
principles applicable to interim periods; consequently it does not
include all generally accepted accounting disclosures required for
complete annual financial statements. The condensed financial
information contains, in the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary to state fairly
the financial position, results of operations and cash flows. The
results of operations for the three months ended June 30, 1998 are
not necessarily indicative of the results to be expected for the full
year.
Management suggests that these condensed financial statements be read
in conjunction with the financial statements and notes thereto for
the year ended March 31, 1998, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission.
NET INCOME (LOSS) PER SHARE - Effective December 31, 1997, the
Company adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share". In accordance with this statement, the Company
has changed the method used to calculate earnings per share for the
current and prior periods. The new requirements include a calculation
of basic earnings per share, from which the dilutive effect of stock
options and warrants are excluded, and the calculation of diluted
earnings per share, both of which did not differ from the previous
primary earnings per share calculation.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the matters discussed in
this report are by their nature forward-looking. For the reasons stated in this
report or in the Company's other Securities and Exchange Commission filings, or
for various unanticipated reasons, actual results may differ materially. The
Company's operating results may continue to fluctuate on a quarter-to-quarter
basis as a result of a number of factors, including seasonality, the competitive
and economic factors affecting the Company's domestic and international markets,
actions of our major distributors, manufacturing and production delays or
difficulties, adverse actions or delays in product reviews by United States Food
and Drug Administration ("FDA"), and the degree of acceptance that our new
products achieve during the year.
Results of Operations. The Company's financial results for the first quarter
ended June 30, 1998 were favorably impacted by a 12% increase in net sales. Net
income for the quarter was $18,000, compared to a loss of $791,000, $.03 per
share in the first quarter of the prior year.
NET SALES TRENDS BY MAJOR SALES CHANNELS
<TABLE>
<CAPTION>
INCREASE/
(DECREASE)
THREE MONTHS ENDED JUNE 30, (IN THOUSANDS) 1998 1997 AMOUNT PERCENT
------- ------- ------- -------
<S> <C> <C> <C> <C>
Domestic sales:
Professional sales $ 6,327 $ 5,523 $ 804 15%
OTC, OEM and Clinical lab sales 662 559 103 18%
------- ------- ------- -------
Total domestic sales 6,989 6,082 907 15%
Percent of total sales 71% 70%
------- ------- ------- -------
International sales:
Export sales 1,698 1,484 214 14%
European subsidiary sales 1,116 1,181 (65) (6%)
------- ------- ------- -------
Total international sales 2,814 2,665 149 6%
Percent of total sales 29% 30%
------- ------- ------- -------
Total net sales $ 9,803 $ 8,747 $ 1,056 12%
======= ======= ======= =======
</TABLE>
Overall sales for the first quarter increased $1,056,000 or 12% from the same
period of the prior year. U.S. Professional sales continue to account for the
majority of the sales growth as sales in the Company's core product areas of
pregnancy, Strep A and H. pylori each grew in excess of 20%.
International sales increased 6% over the prior year period. Export sales growth
in Latin America, Europe and Canada more than offset a decline in Asian sales,
which resulted from expiration of distribution agreements. European subsidiary
sales declined significantly in France, The Netherlands and Spain; however, this
was offset in part by our German subsidiary, which increased sales by 56% to
$683,000 in the quarter.
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The Company is in the process of closing its sales subsidiaries in France, The
Netherlands and Spain. Sales in these markets are expected to continue through
new distribution partners. This shift from direct to distributor sales will
initially result in lower sales and gross profit, due to reduced unit sales
prices to the distributor. The impact of this gross profit reduction is expected
to be offset by reduced subsidiary sales, marketing, and administrative
expenses.
Revenue from research contracts and royalties is principally related to revenue
from the Glaxo influenza and genital herpes diagnostic product development
programs which commenced in March 1996 and October 1997, respectively. If
successful, the products developed under these programs are expected to be
submitted to the FDA for marketing approval during the second half of calendar
year 1999. The amount of contract research revenue recognized is equal to the
sum of the direct program research cost (see Operating Expenses, below) and
allocated support service cost.
COST OF SALES AND GROSS PROFIT
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, (IN THOUSANDS) 1998 1997
-------- --------
<S> <C> <C>
Direct Costs - material, labor and other variable cost $ 2,987 $ 3,186
As a percentage of sales 30.5% 36.4%
Royalty Expense - patent licenses 471 395
As a percentage of sales 4.8% 4.5%
-------- --------
Total direct cost 3,458 3,581
As a percentage of sales 35.3% 40.9%
-------- --------
Direct Margin - contribution per sales dollar 64.7% 59.1%
Manufacturing overhead cost 1,567 1,136
As a percentage of sales 16.0% 13.0%
-------- --------
Total cost of sales 5,025 4,717
-------- --------
Gross profit $ 4,778 $ 4,030
As a percentage of sales 48.7% 46.1%
======== ========
</TABLE>
Gross profit as a percentage of sales improved to 48.7% of sales which
represents an increase of 2.6 percentage points from the prior year level. The
average direct margin percentage provided by products sold increased 5.6
percentage points to 64.7%. This increase resulted from a shift in sales mix
toward higher margin products and cost reductions in areas of scrap, unfavorable
production cost variances, and outbound freight. Manufacturing overhead cost was
increased as a result of expanded production capacity, production supervision to
cover multiple shift operations, and the addition of purchasing and engineering
support staff.
8
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OPERATING EXPENSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, (IN THOUSANDS) 1998 1997
------ ------
<S> <C> <C>
Research and development
Quidel research projects $1,158 $1,276
As a percentage of sales 12% 15%
Contract research -- direct costs 889 471
As a percentage of sales 9% 5%
------ ------
Total research and development 2,047 1,747
As a percentage of sales 21% 20%
------ ------
Sales and marketing
Domestic professional sales and marketing 1,506 1,598
Domestic OTC sales and marketing 56 55
International sales and marketing 660 890
------ ------
Total sales and marketing 2,222 2,543
As a percentage of sales 23% 29%
------ ------
General and administrative 1,205 1,157
As a percentage of sales 12% 13%
Restructuring costs related to European subsidiaries 420 --
As a percent of sales 4% --
------ ------
Total operating expenses $5,894 $5,447
As a percentage of sales 60% 62%
------ ------
Total operating expenses excluding contract research
and restructuring cost $4,585 $4,976
As a percentage of sales 47% 57%
====== ======
</TABLE>
Operating expenses increased $447,000 in the current quarter over the prior year
level, $420,000 of which is related to costs of closing the Company's sales
subsidiaries in France, The Netherlands and Spain.
Research and Development. Research and development expense reflects increased
contract research expense due to the October 1997 commencement of the second
program with Glaxo Wellcome for the development of the two point-of-care
diagnostic tests to detect genital herpes; this program was not present in the
prior year period.
Sales and Marketing. Sales and marketing efficiency improved in the quarter as
reflected by the decline in total expense as a percent of sales. Reduced fixed
cost associated with the Company's European subsidiaries provided the majority
of the international sales and marketing expense reduction.
9
<PAGE> 10
General and Administrative. General and administrative expense increased 4% in
the current quarter in part as a result of increased recruiting and consulting
costs.
Net Income (Loss). The net income for the quarter resulted from increased gross
profit, derived from a combination of higher sales volume and production cost
reductions, offset in part by the restructuring cost related to the Company's
European subsidiaries.
Liquidity and Capital Resources. At June 30, 1998, the Company had cash and cash
equivalents of $9,712,000, compared to $9,720,000 at March 31, 1998. During the
three months ended June 30, 1998 the Company generated $1,194,000 in cash from
operating activities. Net cash used as a result of the increase in inventory and
payment of accounts payable was more than offset by net income, non-cash
depreciation and amortization, and the reduction in accounts receivable.
Net cash used for investment activities of $1,168,000 related to $1,007,000 in
capital expenditures for equipment and improvements to increase production
capacity and reduce product manufacturing cost and $161,000 paid for capitalized
patent application costs.
Net cash used in financing activities totaled $34,000, primarily related to debt
repayment.
QUIDEL's principal capital requirements are currently for working capital. These
requirements fluctuate as a result of numerous factors, such as the extent to
which the Company uses or generates cash in operations, progress in research and
development projects, competition and technological developments and the time
and expenditures required to obtain governmental approval of its products. Based
on its current cash position and its current assessment of future operating
results, management believes that its existing sources of liquidity should be
adequate to meet its operating needs during fiscal 1999.
Except for the historical information contained herein, the matters discussed in
this report are by their nature forward-looking. For the reasons stated in this
report or in the Company's other Securities and Exchange Commission filings, or
for various unanticipated reasons, actual results may differ materially.
10
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS None
ITEM 2. CHANGES IN SECURITIES None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
(a) The Company's Annual Meeting of Stockholders was held on
July 28, 1998 at the Wyndham Garden Hotel in San Diego, California.
(b) The directors elected at the meeting were:
Andre de Bruin
John D. Diekman
Thomas A. Glaze
Margaret G. McGlynn
Richard C.E. Morgan
Mary Lake Polan
Faye Wattleton
(c) Matters voted upon at the meeting and the results of those
votes were as follows:
<TABLE>
<CAPTION>
1. Elected as director: For Against
--- -------
<S> <C> <C>
Andre de Bruin 19,416,529 160,749
John D. Diekman 19,417,049 160,229
Thomas A. Glaze 19,415,599 161,679
Margaret G. McGlynn 19,417,049 160,229
Richard C.E. Morgan 19,417,049 160,229
Mary Lake Polan 19,416,749 160,529
Faye Wattleton 19,416,649 160,629
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
2. Increase by 100,000 shares the total number of shares reserved for
issuance under the Company's 1983 Employee Stock
Purchase Plan. 10,024,504 1,380,101 150,573 8,022,100
---------- --------- ------- ---------
3. Increase by 80,000 shares the total number of shares reserved for
issuance under the Company's 1996 Non-Employee Directors
Stock Option Plan. 8,659,577 2,743,859 151,742 8,022,100
--------- --------- ------- ---------
4. Approve the adoption of the Quidel Corporation 1998 Stock Incentive
Plan under which a total of 3,000,000 shares are
reserved for issuance. 7,887,401 3,478,182 189,595 8,022,100
--------- --------- ------- ---------
5. Ratification of the selection of Ernst & Young LLP as independent
auditors for the Company for the
fiscal year ending March 31, 1999. 19,376,960 119,925 80,393
---------- ------- ------
</TABLE>
The foregoing matters are described in detail in the Company's proxy statement
dated July 8, 1998 for the 1998 Annual Meeting of Stockholders.
ITEM 5. OTHER INFORMATION None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
10.23* Employment agreement dated as of June 9, 1998
between the Registrant and Andre de Bruin.
10.24* Stock option agreement dated as of June 9, 1998
between the Registrant and Andre de Bruin.
27* Financial Data Schedule
* Attached hereto.
</TABLE>
(b) Reports on Form 8-K filed in the first quarter of
fiscal 1999 None
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUIDEL CORPORATION
(Registrant)
Date: August 13, 1998 /S/ STEVEN C. BURKE
--------------------------
Steven C. Burke
Chief Accounting Officer
Signed both as an officer duly authorized
to sign on behalf of the Registrant and
as Chief Accounting Officer
13
<PAGE> 1
Exhibit 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
as of June 9, 1998 (the "EFFECTIVE DATE"), by and between QUIDEL CORPORATION, a
Delaware corporation (the "COMPANY"), and ANDRE de BRUIN, an individual ("DE
BRUIN").
1. EMPLOYMENT. The Company hereby engages de Bruin as its President
and Chief Executive Officer and de Bruin accepts such employment upon the terms
and subject to the conditions set forth in this Agreement.
2. DUTIES AND RESPONSIBILITIES. de Bruin will report directly to the
Board of Directors (the "Board"). de Bruin shall perform such duties and
functions consistent with his role as President and Chief Executive Officer as
may from time to time be assigned to him by the Board. de Bruin agrees that
during the course of the Company's business hours throughout the term of this
Agreement, he will devote the whole of his time, attention and efforts to the
performance of his duties and obligations hereunder. de Bruin shall not, without
the prior written approval of the Board, and obtained in each instance, directly
or indirectly (i) accept employment or receive any compensation for the
performance of services from any business enterprise other than the Company or
(ii) enter into or be concerned or interested in any trade or business or public
or private work (whether for profit or otherwise and whether as partner,
principal, shareholder or otherwise), which may, in the reasonable discretion of
the Board, hinder or otherwise interfere with the performance by de Bruin of his
duties and obligations hereunder; provided, however, that de Bruin may serve on
the boards of directors of up to three for-profit corporations and such
non-profit organizations as he determines; so long as such commitments do not
unreasonably interfere with de Bruin's duties and responsibilities to the
Company and the Board of Directors does not object to de Bruin's directorship
based upon reasonable concerns relating to the nature of the company in question
or its business.
3. COMPENSATION.
(a) SALARY. For all services to be rendered by de Bruin
under this Agreement, the Company agrees to pay de Bruin, beginning July 6,
1998, a salary (the "Base Salary") equal to Three Hundred Seventy Thousand
Dollars ($370,000) per year, payable in the Company's normal payroll cycle, less
all amounts required by law to be withheld or deducted. The Compensation
Committee of the Board of Directors shall review de Bruin's Base Salary on about
April 1, 1999 and yearly thereafter. The Compensation Committee, in its sole and
absolute discretion from time to time, may increase (but not decrease without de
Bruin's prior written consent) de Bruin's Base Salary. From June 9, 1998 to July
6, 1998 de Bruin's compensation will continue and be paid as per de Bruin's
Employment Agreement dated June 23, 1997, as amended by Amendment No. 1 dated as
of March 3, 1998.
(b) STOCK OPTIONS. Pursuant to duly adopted Resolutions of
the Board of June 9, 1998, the Company approved the 1998 Stock Incentive Plan,
subject to shareholder approval at the next Annual Meeting of the Stockholders,
and granted to de Bruin incentive and nonstatutory stock options under the 1998
Stock Incentive Plan, if approved, to purchase up to
<PAGE> 2
Exhibit 10.23
1,428,420 shares of the Company's Common Stock, under the terms and conditions
set forth in that certain Stock Option Agreement executed by the Company and de
Bruin concurrently with this Agreement, a copy of which is attached hereto as
Exhibit A. Upon Shareholder approval of the 1998 Stock Incentive Plan, de Bruin
and the Board agreed to terminate all of de Bruin's existing stock options,
whether vested or not, granted pursuant to the terms of that certain Stock
Option Agreement dated as of June 23, 1997.
(c) BENEFITS.
During the Term of de Bruin's employment hereunder:
(1) de Bruin shall be entitled to four (4) weeks
annual vacation leave consistent with the Company's policies for
other senior executives of the Company.
(2) The Company shall pay or reimburse de Bruin
for all reasonable and necessary travel and other business expenses
incurred or paid by de Bruin in connection with the performance of
his services under this Agreement consistent with the Company's
policies for other senior executives of the Company as approved by
the Compensation Committee. Additionally, de Bruin shall be entitled
to receive an annual $2,500 tax consulting and preparation allowance.
(3) Commencing on the date of this Agreement, the
Company shall provide and pay for the annual cost of premiums for
health, dental and medical insurance coverage for de Bruin and de
Bruin's dependents consistent with the coverage generally made
available by the Company to senior executives of the Company.
(4) Provided that de Bruin meets the insurability
requirements of a reputable national life insurance company for a man
of his age in good health and is otherwise eligible for term life
insurance, the Company agrees (while de Bruin is employed by the
Company) to purchase and pay the commercially reasonable premiums for
term life insurance in a policy amount of $1,000,000 on the life of
de Bruin, payable to the estate of de Bruin, his heirs and assigns.
Such policy will be transferred to de Bruin upon the termination of
his employment.
(5) In addition to the benefits set forth above,
de Bruin shall be entitled to participate in any other policies,
programs and benefits which the Compensation Committee may, in its
sole and absolute discretion, make generally available to its other
senior executives from time to time including, but not limited to,
life insurance, disability insurance, pension and retirement plans,
stock plans, cash and/or other bonus programs, and other similar
programs.
4. RELOCATION: Promptly after the Effective Date de Bruin will list
his Boulder, Colorado home at a price no greater than the value determined by a
qualified independent appraisal as approved by the Board. In the event that the
actual sale price is less than the listing price, the Company will reimburse de
Bruin for the difference, up to a maximum of $100,000. Additionally, the Company
will (from July 6, 1998 to the earlier of July 6, 2000 or sale of de
2
<PAGE> 3
Exhibit 10.23
Bruin's Boulder residence) reimburse de Bruin for all mortgage interest,
property taxes, reasonable property maintenance costs and reasonable selling and
closing costs associated with de Bruin's Boulder residence. The Company shall
also reimburse de Bruin for all reasonable relocation, up to six (6) months
temporary living and moving costs from Boulder to San Diego including reasonable
costs associated with the purchase of a new home in San Diego (such as allocable
closing costs and up to one "point" in up-front financing costs, but excluding
real estate broker commissions and fees). To the extent that any of the
foregoing is taxable income to de Bruin, the Company will pay to de Bruin an
additional amount in cash (the "Gross-Up Payment") equal to the sum of (i) the
federal, state and local taxes payable by de Bruin as a result of the benefits
set forth in this Section 4, plus (ii) all "Attributable Taxes." For purposes
hereof, "Attributable Taxes" means all taxes payable by de Bruin as a result of
receipt of the Gross-Up Payment. de Bruin must submit customary and reasonable
documentation, including proof of payment, for any and all such reimbursements.
5. BRIDGE LOAN: The Company will provide an unsecured loan of up to a
maximum of $400,000 (principal amount) to enable de Bruin to purchase a
residence in San Diego. Interest shall accrue at 5% per annum (or, if greater,
the minimum amount required to avoid imputed interest income). All principal and
interest shall be immediately due and payable on the earlier of sale of de
Bruin's Boulder residence or July 6, 2000. Such loan will be unsecured unless
security is necessary to assure the deductibility of such interest as mortgage
interest, in which event any security granted by de Bruin to the Company would
be subordinated to the principal mortgage lender on de Bruin's San Diego
residence.
6. AT WILL EMPLOYMENT. The Company and de Bruin acknowledge and agree
that de Bruin's employment by the Company is expressly "at will" and not for a
specified term. This means that either party may terminate de Bruin's employment
at any time, with or without cause. Any termination of de Bruin's employment is,
however, subject to the terms and provisions of this Agreement.
7. INVENTIONS.
(a) DISCLOSURE. de Bruin will disclose promptly to the
Company each Invention (as defined below), whether or not reduced to practice,
that is conceived or learned by de Bruin (either alone or jointly with others)
during the term of his employment by the Company. Further, de Bruin will
disclose in confidence to the Company all patent applications filed by or on
behalf of de Bruin during the term of his employment and for a period of one (1)
year thereafter.
For purposes of this Agreement, the term "INVENTION"
includes, without limitation, any invention, discovery, know-how, idea, trade
secret, technique, formula, machine, method, process, use, apparatus, product,
device, composition, code, design, program, confidential information,
proprietary information, or configuration of any kind, that is discovered,
conceived, developed, made or produced by de Bruin (alone or in conjunction with
others) during the duration of de Bruin's employment and for a period of one (1)
year thereafter, and which:
3
<PAGE> 4
Exhibit 10.23
(1) relates at the time of conception or
reduction to practice of the invention, in any manner, to the
business of the Company, including actual or demonstrably anticipated
research or development;
(2) results from or is suggested by work
performed by de Bruin for or on behalf of the Company; or
(3) results from the use of equipment,
supplies, facilities, information, time or resources of the Company.
The term Invention will also include any improvements to an Invention, and will
not be limited to the definition of patentable or copyrightable invention as
contained in the United States patent or copyright laws.
(b) COMPANY PROPERTY; ASSIGNMENT. de Bruin acknowledges
and agrees that all Inventions will be the sole property of the Company,
including, without limitation, all domestic and foreign patent rights, rights of
registration or other protection under the copyright laws, or other rights,
pertaining to the Inventions. de Bruin hereby assigns all of his right, title
and interest in any such Inventions to the Company.
(c) EXCLUSION NOTICE. The assignment by de Bruin of
Inventions under this Agreement does not apply to any Inventions that are
expressly excluded from coverage pursuant to Section 2870 of the California
Labor Code. Accordingly, de Bruin is not required to assign an idea or invention
for which all of the following are applicable:
(1) No equipment, supplies, facility or trade
secret information of the Company was used and the
invention or idea was developed entirely on de Bruin's own
time;
(2) The invention or idea does not relate to
the business of the Company;
(3) The invention or idea does not relate to
the Company's actual or demonstrably anticipated research
or development; and
(4) The invention or idea does not result from
any work performed by de Bruin for the Company.
As used in this Section 7(c), "INVENTION" will have the same meaning as
"invention" as used in Section 2870 of the California Labor Code.
(d) PATENTS AND COPYRIGHTS; ATTORNEY-IN-FACT. de Bruin
agrees to assist the Company (at the Company's expense) in any way the Company
deems necessary or appropriate from time to time to apply for, obtain and
enforce patents on, and to apply for, obtain and enforce copyright protection
and registration of, Inventions in any and all countries. To that end, de Bruin
will (at the Company's expense), without limitation, testify in any suit or
other proceeding involving any Invention, execute all documents that the Company
reasonably determines to be
4
<PAGE> 5
Exhibit 10.23
necessary or convenient for use in applying for and obtaining patents or
copyright protection and registration thereon and enforcing same, and execute
all necessary assignments thereof to the Company or parties designated by it. de
Bruin's obligations to assist the Company in obtaining and enforcing patents or
copyright protection and registration for Inventions will continue beyond
termination of his employment, but the Company will compensate de Bruin at a
reasonable rate after such termination for the time actually spent by de Bruin
at the Company's request on such assistance. de Bruin hereby irrevocably
appoints the Company, and its duly authorized officers and agents, as de Bruin's
agent and attorney-in-fact to act for and on behalf of de Bruin in filing all
patent applications, applications for copyright protection and registration
amendments, renewals, and all other appropriate documents in any way related to
Inventions.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Except in the
performance of his duties hereunder, de Bruin will not disclose to any person or
entity or use for his own direct or indirect benefit any Confidential
Information (as defined below) pertaining to the Company obtained by de Bruin in
the course of his employment with the Company. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" will include all of the Company's confidential or
proprietary information, including, without limitation, any information
encompassed in all Inventions, and any trade secrets, reports, investigations,
experiments, research or developmental work, work in progress, drawings,
designs, plans, proposals, codes, marketing and sales programs, financial
projections, cost summaries, pricing formula, and all concepts or ideas,
materials or information related to the business, products or sales of the
Company or the Company's customers; provided, however, that Confidential
Information shall not include information, documents or data that (i) is or
subsequently becomes publicly available without de Bruin's breach of any
obligation of confidentiality owed to the Company; (ii) was known to de Bruin
prior to his original employment by the Company; (iii) becomes known to de Bruin
from a source other than the Company (which is not breaching an obligation to
the Company) and which de Bruin learns of outside the scope of his employment
with the Company; or (iv) is required to be disclosed by law or other
governmental authority.
9. RETURN OF MATERIALS AT TERMINATION. In the event of any
termination of de Bruin's employment for any reason whatsoever, de Bruin will
promptly deliver to the Company all documents, data, and other information
pertaining to Inventions and Confidential Information. de Bruin will not take
with him any documents or other information, or any reproduction or excerpt
thereof, containing or pertaining to any Inventions or Confidential Information.
10. NON-SOLICITATION. de Bruin agrees that so long as he is employed
by the Company and for a period of one (1) year after termination of his
employment for any reason, he will not (a) directly or indirectly solicit,
induce or attempt to solicit or induce any Company employee to discontinue his
or her employment with the Company; (b) usurp any opportunity of the Company of
which de Bruin became aware during his tenure at the Company; or (c) directly or
indirectly solicit or induce or attempt to influence any person or business that
is an account, customer or client of the Company to restrict or cancel the
business of any such account, customer or client with the Company.
5
<PAGE> 6
Exhibit 10.23
11. REMEDIES UPON BREACH. In the event of any breach by de Bruin of
Section 8 or 9 of this Agreement, the Company will be entitled, if it so elects,
to institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin de Bruin from violating such terms of this
Agreement, to enforce the specific performance by de Bruin of such terms of this
Agreement, and to obtain damages, or any of them, but nothing contained herein
will be construed to prevent such remedy or combination of remedies as the
Company may elect to invoke.
12. NO WAIVER. The waiver by either party of a breach of any
provision of this Agreement will not operate as or be construed as a waiver of
any subsequent breach thereof.
13. NOTICES. Any and all notices referred to herein will be
sufficiently furnished if in writing, and sent by registered or certified mail,
postage prepaid, to the respective parties at the following addresses or such
other address as either party may from time to time designate in writing:
To the Company: QUIDEL CORPORATION
10165 McKellar Court
San Diego, CA 92121
Attention: Chief Executive Officer
To de Bruin: ANDRE de BRUIN
50 Wildwood Lane
Boulder, CO 80304
14. ASSIGNMENT. This Agreement may not be assigned by de Bruin. This
Agreement will be binding upon the Company's successors and assigns.
15. ENTIRE AGREEMENT. This Agreement, together with the Stock Option
Agreement attached hereto as Exhibit A, supersedes any and all prior written or
oral agreements between de Bruin and the Company, including but not limited to
that certain Employment Agreement dated as of June 23, 1997 and that certain
Stock Option Agreement dated as of June 23, 1997, and contains the entire
understanding of the parties hereto with respect to the terms and conditions of
de Bruin's employment with the Company.
16. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the internal laws and decisions of the State of California.
6
<PAGE> 7
Exhibit 10.23
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement, in counterparts, each of which will be deemed an original, as of
the Effective Date.
QUIDEL CORPORATION, a Delaware corporation
By: /S/ RICHARD C.E. MORGAN
--------------------------------
Chairman of the Board
/S/ ANDRE de BRUIN
--------------------------------
ANDRE de BRUIN
7
<PAGE> 8
Exhibit 10.23
EXHIBIT A
Stock Option Agreement
8
<PAGE> 1
Exhibit 10.24
QUIDEL CORPORATION
1998 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "AGREEMENT") is made effective as
of June 9, 1998 (the "GRANT DATE"), by and between QUIDEL CORPORATION, a
Delaware corporation (the "COMPANY"), and ANDRE de BRUIN ("OPTIONEE"), with
reference to the following facts:
A. The Board of Directors of the Company (the "BOARD") has
established, by written resolutions, subject to stockholder approval at the next
Annual Meeting of Stockholders, the 1998 Stock Incentive Plan (the "PLAN"),
granted authority to the Compensation Committee of the Board (the "COMMITTEE")
to make grants under and to administer the Plan, and directly granted options to
purchase 1,428,420 shares of the Company's common stock (the "COMMON STOCK") to
Optionee in connection with recruiting and employing Optionee as the Company's
President and Chief Executive Officer and aligning Optionee's interests with
those of the stockholders of the Company.
B. By action taken on the Grant Date, the Board granted to Optionee
Incentive Stock Options and Nonqualified Stock Options (the "OPTION") to
purchase shares of the Common Stock on the terms and conditions set forth
herein. This Agreement is intended to memorialize the terms and conditions upon
which the Board granted the Option to Optionee.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
1. GRANT OF OPTION. Provided that the stockholders of the Company
approve the Plan at the next Annual Meeting of Stockholders, Optionee may, at
Optionee's election and upon the terms and conditions set forth herein, purchase
all or any part of an aggregate of 1,428,420 shares of Common Stock (the
"OPTIONED SHARES") at the price per share equal to $3.250 (the "OPTION PRICE").
The Option Price equals the closing price of the Common Stock on the Grant Date.
Provided that the stockholders of the Company approve the Plan as provided
hereinabove, all outstanding options granted to de Bruin pursuant to that
certain Stock Option Agreement dated as of June 23, 1997 shall be immediately
terminated and cancelled.
<PAGE> 2
Exhibit 10.24
2. VESTING SCHEDULE.
(a) Option A. This option is for 952,280 shares of Common
Stock of which 25,000 shares are vested immediately. The remaining 927,280
shares shall vest and become exercisable cumulatively at the rate of 6.25%
(i.e., 57,955 shares) for each full calendar quarter following the Grant Date.
The first such vesting date shall be September 9, 1998.
(1) Incentive Stock Options.
The first 30,769 stock options to vest in any
calendar year, until all Option A options are vested, will be
Incentive Stock Options. The remaining options vesting in a calendar
year will be nonstatutory or Nonqualified Stock Options.
(b) Option B. This option is for 476,140 shares. Unless
accelerated as provided below or in Section 6, the Option shall vest and become
exercisable as to all 476,140 shares upon the fourth anniversary of the Grant
Date or June 9, 2002. Part or all of the Option may vest earlier, upon the
satisfaction of the defined performance goals set forth below. The stated goals
are to be estimated by the Board no later than July 28, 1998 (or as soon as
practicable thereafter). The final performance targets will be attached to this
Agreement as Exhibit A, signed by the parties hereto.
25% - Attainment of the FY'99 Budget for Gross Revenues
25% - Attainment of FY'00 Target EBITDA
25% - Attainment of a market valuation greater than 15
times the FY'00 Target for EPS
25% - Attainment of the FY'01 Strategic Plan Target for
Gross Revenues
(c) Special Provisions Regarding Incentive Stock Options.
(1) Notwithstanding anything in this Section 2 to
the contrary, the exercise price and vesting period of any Stock
Option intended to qualify as an Incentive Stock Option shall comply
with the provisions of Section 422 of the Internal Revenue Code of
1986, as amended ("IRC") and the regulations thereunder. As of the
Grant Date, such provisions require, among other matters, that (A)
the exercise price must not be less than the fair market value as
required by the IRC (the "Fair Market Value") of the underlying stock
as of the date the Incentive Stock Option is granted; and (B) that
the Incentive Stock Option not be exercisable after the expiration of
ten years from the date of grant of such Incentive Stock Option.
(2) The aggregate Fair Market Value (determined
as of the respective date or dates of grant) of the Common Stock for
which one or more Stock Options granted to Optionee under this
Agreement (or any other option plan of the Company or any of its
subsidiaries of affiliates) may for the first time become exercisable
as Incentive
2
<PAGE> 3
Exhibit 10.24
Stock Options under the federal tax laws during any one calendar year
shall not exceed $100,000.
(3) Any Options granted as Incentive Stock
Options pursuant to this Agreement that for any reason fail or cease
to qualify as such shall be treated as Nonqualified Stock Options.
(4) Optionee is and will continue to be an
"eligible person" meeting the employment requirements of IRC Section
422.
(5) If Optionee's employment is terminated by the
Company or Optionee resigns his employment, all vested Incentive
Stock Options must be exercised within 90 days of the last day of
employment or revert to Nonqualified Options.
3. EXERCISE OF OPTION.
(a) Extent of Exercise. The Option may be exercised at the
time or after installments vest as specified in Section 2 with respect to all or
part of the Optioned Shares covered by such vested installments, subject to the
further restrictions contained in this Agreement. In the event that Optionee
exercises the Option for less than the full number of Optioned Shares included
within a vested installment, Optionee shall be entitled to exercise the Option
(in one or more subsequent increments) for the balance of the Optioned Shares
included in said vested installment; provided, however, that in no event shall
Optionee be entitled to exercise the Option for fractional shares of Common
Stock or for a number of shares exceeding the maximum number of Optioned Shares.
(b) Procedure. The Option shall be deemed to be exercised
when the Secretary of the Company receives written notice of exercise from or on
behalf of Optionee, together with payment of the Option Price and any amounts
required under Section 3(c). The Option Price shall be payable upon exercise in
(i) legal tender of the United States; or (ii) check; provided, however, that
the Company will permit exercise of the Option in a broker-assisted or similar
transaction in which the Option Price is not received by the Company until
promptly after exercise. Additionally, the Option Price may be paid to the
Company by de Bruin's delivery of Common Stock of the Company owned by de Bruin
(with the certificates duly endorsed or accompanied by stock powers duly
endorsed, with signatures guaranteed in accordance with the Securities Exchange
Act of 1934, as amended (the "Exchange Act") if required by the Company, and
with the Common Stock valued at Fair Market Value) if payment of the Option
Price in this manner does not, in the reasonable judgment of the Company, result
in an accounting expense or charge to earnings.
(c) Withholding Taxes. Whenever shares of Common Stock are
to be issued upon exercise of the Option, the Company shall have the right to
require Optionee to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements prior to such issuance.
3
<PAGE> 4
Exhibit 10.24
4. TERM OF OPTION AND EFFECT OF TERMINATION. No portion of the Option
shall vest after termination of Optionee's employment, regardless of the reason
for such termination. In the event that Optionee shall cease to be an employee
of the Company, the Option shall be exercisable, subject to Section 2(c)(5) as
to Incentive Stock Options, to the extent already exercisable at the date
Optionee ceases to be an employee and regardless of the reason Optionee ceases
to be an employee, for a period of 365 days after that date, and shall then
expire and terminate. In the event of the death of Optionee while he is an
employee of the Company or within the period after termination of such status
during which he is permitted to exercise the Option, the Option may be exercised
by any person or persons designated by Optionee on a beneficiary designation
form adopted by the administrator for such purpose or, if there is no effective
beneficiary designation form on file with the Company, by the executors or
administrators of Optionee's estate or by any person or persons who shall have
acquired the Option directly from Optionee by his will or the applicable laws of
descent and distribution. Unless earlier terminated as provided in this Section,
the Option shall automatically expire and terminate, and thereby become
unexercisable, on the tenth (10th) anniversary of the Grant Date.
5. ANTI-DILUTION ADJUSTMENTS. If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, upon authorization of the Board or the Committee an appropriate and
proportionate adjustment shall be made in the number or kind of Optioned Shares,
the Option Price, and the Pricing Milestones; provided, however, that no such
adjustment need be made if, upon the advice of counsel, the Board or the
Committee determines that such adjustment may result in the receipt of federally
taxable income to Optionee, to holders of other derivative securities of the
Company or holders of Common Stock or other classes of the Company's securities.
6. CHANGE IN CONTROL. If a Change in Control (as defined below) of
the Company occurs, then notwithstanding the vesting provisions of Section 2 or
anything else herein to the contrary, all Optioned Shares shall automatically
vest and become exercisable immediately prior to such Change in Control, if
Optionee is an employee of the Company at that time. For purposes of this
Agreement, a "CHANGE IN CONTROL" means the following and shall be deemed to
occur if any of the following events occurs:
(a) Any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding the Company and its
subsidiaries and any employee benefit or stock ownership plan of the Company or
its subsidiaries and also excluding an underwriter or underwriting syndicate
that has acquired the Company's securities solely in connection with a public
offering thereof (such person, entity or group being referred to herein as a
"PERSON"), becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the then
outstanding shares of Common Stock or the combined voting power of the Company's
then outstanding securities entitled to vote generally in the election of
directors; or
(b) Individuals who, as of the Effective Date, constitute
the Board (the "INCUMBENT BOARD") cease for any reason to constitute at least a
majority of the Board, provided
4
<PAGE> 5
Exhibit 10.24
that any individual who becomes a director after the Effective Date whose
election, or nomination for election by the Company's stockholders, is approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered to be a member of the Incumbent Board unless that
individual was nominated or elected by any Person having the power to exercise,
through beneficial ownership, voting agreement and/or proxy, 20% or more of
either the then outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities entitled to vote generally
in the election of directors, in which case that individual shall not be
considered to be a member of the Incumbent Board unless such individual's
election or nomination for election by the Company's stockholders is approved by
a vote of at least two-thirds of the directors then comprising the Incumbent
Board; or
(c) Consummation by the Company of the sale or other
disposition by the Company of all or substantially all of the Company's assets
or a reorganization or merger or consolidation of the Company with any other
person, entity or corporation, other than
(i) a reorganization or merger or consolidation
that would result in the voting securities of the Company outstanding
immediately prior thereto (or, in the case of a reorganization or
merger or consolidation that is preceded or accomplished by an
acquisition or series of related acquisitions by any Person, by
tender or exchange offer or otherwise, of voting securities
representing 5% or more of the combined voting power of all
securities of the Company, immediately prior to such acquisition or
the first acquisition in such series of acquisitions) continuing to
represent, either by remaining outstanding or by being converted into
voting securities of another entity, more than 50% of the combined
voting power of the voting securities of the Company or such other
entity outstanding immediately after such reorganization or merger or
consolidation (or series of related transactions involving such a
reorganization or merger or consolidation), or
(ii) a reorganization or merger or consolidation
effected to implement a recapitalization or reincorporation of the
Company (or similar transaction) that does not result in a material
change in beneficial ownership of the voting securities of the
Company or its successor; or
(d) Approval by the stockholders of the Company or an
order by a court of competent jurisdiction of a plan of liquidation of the
Company.
7. DELIVERY OF CERTIFICATES. As soon as practicable after any proper
exercise of the Option in accordance with the provisions of this Agreement, the
Company shall deliver to Optionee at the main office of the Company, or such
other place as shall be mutually acceptable, a certificate or certificates
representing such shares of Common Stock to which Optionee is entitled upon
exercise of the Option. Each such certificate representing shares acquired upon
exercise of a portion of the Option shall be endorsed with a legend, or
described below, in any unregistered transaction.
8. SECURITIES LAW REQUIREMENTS.
5
<PAGE> 6
Exhibit 10.24
(a) Registration on Form S-8. The Company undertakes to
register the Common Stock reserved for issuance under the Plan on Form S-8 as
soon as reasonably practicable following stockholder approval of the Plan at the
1998 Annual Meeting of Stockholders.
(b) Legality of Issuance. No shares shall be issued upon
the exercise of the Option unless and until the Company has determined that:
(i) it and Optionee have taken all actions
required to register the Shares under the Securities Act
of 1933, as amended (the "Act"), or to perfect an
exemption from the registration requirements thereof;
(ii) any applicable listing requirements of any
stock exchange on which the Common Stock is listed have
been satisfied; and
(iii) any other applicable provisions of state
federal law have been satisfied.
(c) Restrictions on Transfer; Representations of Optionee:
Legends. Regardless of whether the offering and sale of Shares under this
Agreement have been registered under the Act or have been registered or
qualified under the securities laws of any state, the Company may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates) and/or require a
legal opinion from counsel for Optionee if, in the judgment of the Company and
its counsel, such restrictions and/or legal opinion are necessary or desirable
in order to achieve compliance with the provisions of the Act, the securities
laws of any state or any other law. In the event that the Shares issued upon the
exercise of the Option under this Agreement are not registered under the Act but
an exemption is available which requires an investment representation or other
representation, Optionee shall be required to represent that such Shares are
being acquired for investment, and not with a view to the sale or distribution
thereof, and to make such other representations as are deemed necessary or
appropriate by the Company and its counsel. Stock certificates evidencing Shares
acquired under this Agreement pursuant to an unregistered transaction shall bear
the following restrictive legend and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR QUALIFIED UNDER THE CALIFORNIA SECURITIES LAW OF 1968, AS AMENDED
(THE "LAW"). IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THESE
SECURITIES, OR ANY INTEREST THEREIN, UNLESS SUCH SECURITIES ARE
EITHER REGISTERED UNDER THE ACT AND QUALIFIED UNDER THE LAW OR EXEMPT
FROM SUCH REGISTRATION AND QUALIFICATION.
6
<PAGE> 7
Exhibit 10.24
Any determination by the Company and its counsel in connection with
any of the matters set forth in this Section 8 shall be conclusive and binding
on all persons.
9. NO RIGHTS IN SHARES BEFORE ISSUANCE AND DELIVERY. Neither
Optionee, his estate nor his transferees by will or the laws of descent and
distribution shall be, or have any rights or privileges of, a stockholder of the
Company with respect to any shares issuable upon exercise of the Option, unless
and until certificates representing such shares shall have been issued and
delivered. No adjustment will be made for a dividend or their rights where the
record date is prior to the date such stock certificates are issued.
10. NONASSIGNABILITY. The Option is not assignable or transferable by
Optionee except by will, by the laws of descent and distribution, pursuant to a
qualified domestic relations order, or, in the discretion of the Company and
under circumstances that would not adversely affect the interests of the
Company, pursuant to a nominal transfer that does not result in a change in
beneficial ownership, or as otherwise permitted by rule or interpretation of the
Securities and Exchange Commission or its staff as an exception to the general
proscription on transfer of derivative securities set forth in Rule 16b-3 (or
any successor rule) under the Exchange Act or interpretation thereof. During the
lifetime of Optionee, the Option shall be exercisable only by Optionee (or
Optionee's permitted transferee) or his guardian or legal representative.
11. CERTAIN REPRESENTATIONS AND WARRANTIES. Optionee expressly
acknowledges, represents and agrees as follows:
(a) Optionee shall accept as binding, conclusive and final
all decisions or interpretations of the Board or the Committee upon any
questions arising under the Plan or this Agreement;
(b) Optionee has been advised to consult with a competent
tax advisor regarding the applicable tax consequences arising from exercise of
the Option; and
(c) If Optionee is (as expected) a person subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, Optionee has
been advised to consult with a competent federal securities law advisor as to
the reporting obligations and potential liability for profits under said Section
16 with respect to the granting and exercise of the Option.
12. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing in the Plan or in
this Agreement shall be construed to create or imply any contract of employment
between the Company and Optionee. Nothing in the Plan or in this Agreement shall
confer upon Optionee any right to continue in the employ of the Company or
confer upon the Company any right to require continued employment by Optionee.
Optionee acknowledges and agrees that the employment of Optionee by the Company
is expressly at the will of the Company, and the Company may terminate
Optionee's employment by the Company at any time for any reason or for no
reason. Similarly, Optionee may terminate his employment with the Company at any
time for any reason or for no reason. Any questions as to whether and when there
has been a termination of Optionee's employment, the reason (if any) for such
termination, and/or the
7
<PAGE> 8
Exhibit 10.24
consequences thereof under the terms of the Plan, shall be determined by the
Board in its sole discretion, and the Board's determination thereof shall be
final, binding and conclusive.
13. GOVERNING LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice or laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
14. AGREEMENT BINDING ON SUCCESSORS. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assigns of Optionee.
15. NECESSARY ACTS. Optionee agrees to perform all acts and execute
and deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities and/or tax
laws.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement effective as of the Grant Date.
QUIDEL CORPORATION, a
Delaware corporation
By: /S/ RICHARD C.E. MORGAN
------------------------------------
Chairman of the Board
/S/ ANDRE de BRUIN
------------------------------------
Andre de Bruin
8
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<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
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<CURRENT-LIABILITIES> 6,752
<BONDS> 2,960
0
0
<COMMON> 24
<OTHER-SE> 36,897
<TOTAL-LIABILITY-AND-EQUITY> 46,633
<SALES> 9,803
<TOTAL-REVENUES> 10,871
<CGS> 5,025
<TOTAL-COSTS> 10,919
<OTHER-EXPENSES> (154)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> 18
<INCOME-TAX> 0
<INCOME-CONTINUING> 18
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
