As filed with the Securities and Exchange Commission on February 25, 2000.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PE Corporation
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 3826 06-1534213
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
761 Main Avenue
Norwalk, Connecticut 06859
(203) 762-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
William B. Sawch, Esq.
Senior Vice President, General Counsel and Secretary
PE Corporation
50 Danbury Road
Wilton, Connecticut 06897
(203) 761-2900
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
<TABLE>
<CAPTION>
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Copies to:
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<S> <C> <C>
Richard A. Garvey, Esq. Ian Edvalson, Esq. Michael J. Kennedy, Esq.
Simpson Thacher & Bartlett Third Wave Technologies, Wilson Sonsini Goodrich & Rosati
425 Lexington Avenue Inc. One Market Street
New York, New York 10017 502 S. Rosa Road Spear Tower, Suite 1600
(212) 455-2000 Madison, Wisconsin 53719 San Francisco, California 94105
(608) 663-7046 (415) 947-2000
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</TABLE>
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effectiveness of this registration statement.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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 462(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. |_| _____________________________
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Title Of Each Class Of Proposed Maximum Proposed Maximum
Securities To Be Amount To Be Offering Price Per Aggregate Offering Amount Of
Registered Registered(1) Unit Price Registration Fee(2)
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<S> <C> <C> <C> <C>
PE Corporation--PE
Biosystems Group Common
Stock, par value $0.01
per share (including the
rights associated with 4,009,685 shares Not applicable 318,581,903.30 $84,106
those shares pursuant to
PE Corporation's
Shareholder Protection
Rights Agreement(3)
=======================================================================================================================
</TABLE>
(1) Represents the maximum number of shares of PE Corporation--PE Biosystems
Group Common Stock, par value $0.01 per share, including the rights
associated with those shares pursuant to PE Corporation's Shareholder
Protection Rights Agreement, issuable upon consummation of the merger
based upon the exchange ratio of 187.6578 shares of PE Biosystems common
stock to be exchanged for each outstanding share of common stock, par
value $1.00 per share, of Third Wave Technologies, Inc., and each
outstanding share of each series of preferred stock, par value of $10.00
per share, of Third Wave (other than shares of Third Wave common stock or
Third Wave preferred stock owned by Third Wave or Blue Acquisition Corp.
or held by PE Corporation, which shall be canceled in the merger), and
based upon (a) the number of shares of Third Wave common stock and Third
Wave preferred stock outstanding at February 24, 2000 plus (b) the number
of shares of Third Wave common stock and Third Wave preferred stock that
could be issued between February 24, 2000 and the effective time of the
merger.
(2) Pursuant to Rules 457(f) and 457(c) under the Securities Act, the
registration fee was calculated on the basis of $79.4531 per share, the
average of the high and low sales prices for shares of PE Biosystems
common stock on the New York Stock Exchange Composite Transactions Tape on
February 17, 2000 (after giving effect to the 100% stock dividend on the
PE Biosystems common stock distributed on February 18, 2000).
(3) Includes associated rights to purchase 1/1000th of a share of PE
Corporation's Series A participating junior preferred stock. Until the
occurrence of certain prescribed events, the rights are not exercisable,
are evidenced by the certificates representing PE Biosystems common stock
and will be transferred only with such shares of PE Biosystems common
stock.
The registrant amends this registration statement on the 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
shall become effective in accordance with Section 8(a) of the Securities Act or
until this registration statement shall become effective on a date that the SEC,
acting pursuant to Section 8(a), may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 2000
[THIRD WAVE LOGO]
YOUR VOTE ON OUR PROPOSED MERGER IS VERY IMPORTANT!
Dear Shareholder:
The boards of directors of PE Corporation and Third Wave Technologies,
Inc. have unanimously approved the acquisition of Third Wave by PE Corporation.
As a result of the merger, Third Wave will become a wholly owned subsidiary of
PE Corporation.
We believe that the merger is in the best interest of the Third Wave
shareholders. This is based upon, among other things, our belief that the
combination of Third Wave and PE Corporation will create a combined company with
significantly greater resources and more integrated multi-technology product
offerings which will enable us to access markets and more effectively meet the
needs of our customers.
If we complete the merger, Third Wave shareholders will receive 187.6578
shares of PE Corporation--PE Biosystems Group Common Stock for each share of
Third Wave common stock and each share of Third Wave preferred stock that they
own. This exchange ratio has been adjusted to give effect to the 100% stock
dividend on PE Biosystems common stock distributed on February 18, 2000. We
estimate that PE Corporation will issue approximately shares to Third
Wave shareholders in the merger and up to an additional shares to holders
of options to purchase Third Wave shares upon exercise of those options.
We are asking Third Wave shareholders to approve the merger, adopt the
merger agreement and form of escrow agreement and approve other items related to
the merger.
We cannot complete the merger unless the shareholders of Third Wave
approve the merger and adopt the merger agreement and form of escrow agreement.
The board of directors of Third Wave has scheduled a special meeting of
its shareholders to vote on this important matter.
The special meeting is being held on , 2000, at 10:00
a.m., CST, at the offices of Third Wave Technologies, Inc., in Madison,
Wisconsin.
This document provides you with detailed information about the proposed
merger. It also contains information about Third Wave and PE Corporation. We
encourage you to read this document carefully. In particular, you should read
the "Risk Factors" section beginning on page 11 for a description of the various
risks you should consider in evaluating the proposed transaction.
We are very enthusiastic about this merger and the strength and
capabilities we expect from Third Wave's combination with PE Corporation.
I join with all the other members of the Third Wave board of directors in
recommending that you vote in favor of the merger agreement, the form of escrow
agreement, the merger and the other related matters.
Sincerely,
Lance Fors
Chairman of the Board,
President and Chief
Executive Officer
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Neither the SEC nor any state securities commission has approved the securities
to be issued under this document or determined if this document is accurate or
adequate. Any representation to the contrary is a criminal offense.
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This prospectus is dated , 2000 and is first being mailed to the
shareholders of Third Wave Technologies, Inc. on or about , 2000.
<PAGE>
[THIRD WAVE LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
A special meeting of shareholders of Third Wave Technologies, Inc. will be
held at the offices of Third Wave Technologies, Inc., 502 S. Rosa Road, Madison,
Wisconsin, on , 2000 at 10:00 a.m. CST, to consider and vote on the
following matters described in this prospectus:
1. To approve and adopt together as one matter:
o an Agreement and Plan of Merger, dated as of January 23, 2000,
among PE Corporation, Third Wave Technologies, Inc. and Blue
Acquisition Corp., a subsidiary of PE Corporation, and the
merger contemplated by that agreement;
o a form of Escrow Agreement, to be entered into among PE
Corporation, a representative of the Third Wave shareholders
and an escrow agent, in connection with the merger; and
o the appointment of John Neis, Vice President of Venture
Investors of Wisconsin, Inc., as representative of the Third
Wave shareholders under the Escrow Agreement.
2. To transact other business that may properly come before the special
meeting.
The board of directors of Third Wave Technologies, Inc. has fixed the
close of business on , 2000 as the record date for the determination of
shareholders entitled to receive notice of and to vote at the special meeting. A
list of the shareholders entitled to vote will be open to the examination of
shareholders at Third Wave Technologies, Inc., 502 S. Rosa Road, Madison,
Wisconsin during ordinary business hours from , 2000 to the date of
the meeting.
By Order of the Board of Directors
Ian Edvalson
Vice President, Corporate Development
and General Counsel
, 2000
Third Wave Technologies, Inc.
502 S. Rosa Road
Madison, Wisconsin 53719
Your Vote is Important!
To be sure your shares are represented at the meeting,
please complete, date, sign and return your proxy card
in the enclosed postage-paid envelope as soon as possible.
You may vote in person at the meeting even if you
send in your proxy card.
<PAGE>
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERSABOUT THE PE CORPORATION/THIRD WAVE MERGER .......... 2
SUMMARY .................................................................. 4
RECENT STOCK PRICES ...................................................... 10
RISK FACTORS ............................................................. 11
Risks Related to the Merger ............................................ 11
Risks Related to the PE Biosystems Group ............................... 12
Risks Related to a Capital Structure with Two Separate
Classes of Common Stock .............................................. 13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ........................ 17
THE SPECIAL MEETING ...................................................... 17
Date, Time and Place ................................................... 17
Matters to Be Considered at the Special Meeting ........................ 17
Record Date; Stock Entitled to Vote; Quorum ............................ 17
Vote Required .......................................................... 18
Share Ownership of Management and Others................................ 18
Shares Subject to Voting Agreement ..................................... 19
Voting of Proxies ...................................................... 19
Revoking Proxies ....................................................... 20
Proxy Solicitation ..................................................... 20
THE COMPANIES ............................................................ 21
PE Corporation ......................................................... 21
Third Wave Technologies, Inc. .......................................... 21
Blue Acquisition Corp.--PE Corporation's Merger Subsidiary ............. 21
THE MERGER ............................................................... 22
General ................................................................ 22
Background of the Merger ............................................... 22
Reasons for the Merger ................................................. 24
Recommendation of the Third Wave Board of Directors .................... 27
Opinion of Financial Advisor to Third Wave ............................. 27
Structure of the Merger ................................................ 32
Closing Matters ........................................................ 32
Consideration to Be Received in the Merger; Treatment
of Stock Options ..................................................... 32
Exchange of Certificates in the Merger ................................. 33
Fractional Shares ...................................................... 33
Representations and Warranties ......................................... 34
Covenants .............................................................. 35
Conditions to the Merger ............................................... 37
Stock Exchange Listings ................................................ 39
Regulatory Approvals Required .......................................... 39
Termination of the Merger Agreement .................................... 39
Amendment and Waiver of the Merger Agreement ........................... 40
Expenses ............................................................... 40
Effect on Employee Benefits, Stock Plans and Stock Options ............. 40
Material United States Federal Income Tax Consequences ................. 41
Anticipated Accounting Treatment ....................................... 43
Interests of Certain Persons in the Merger ............................. 43
Resale of PE Biosystems Common Stock ................................... 44
Dissenters Rights ...................................................... 44
Voting Agreement ....................................................... 46
Escrow Agreement ....................................................... 46
Shareholder Representative ............................................. 47
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF PE CORPORATION ............ 48
DESCRIPTION OF PE CORPORATION CAPITAL STOCK .............................. 49
General ................................................................ 49
PE Biosystems Common Stock ............................................. 50
Celera Genomics Common Stock ........................................... 57
Rights Agreement ....................................................... 58
COMPARISON OF STOCKHOLDER RIGHTS ......................................... 60
Authorized Shares ...................................................... 60
Directors .............................................................. 61
Charter, Articles of Incorporation and Bylaw Amendments ................ 61
Cumulative Voting ...................................................... 62
Stockholder Meeting Procedures ......................................... 62
Voting by Stockholders ................................................. 63
Business Combinations Following a Change in Control .................... 63
Limitation on Directors' Liability ..................................... 64
Indemnification of Directors and Officers .............................. 65
Dissenters' Rights ..................................................... 65
Right to Examine Stockholder List; Right to Inspect
Corporate Records .................................................... 66
Interested Director Transactions ....................................... 66
EXPERTS .................................................................. 67
LEGAL OPINIONS ........................................................... 67
WHERE YOU CAN FIND MORE INFORMATION ...................................... 67
ANNEXES
Annex I Agreement and Plan of Merger
Annex II Voting Agreement
Annex III Form of Escrow Agreement
Annex IV Opinion of Lehman Brothers
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE PE CORPORATION/THIRD WAVE MERGER
Q: Why are the two companies proposing to merge?
A: The merger will create a combined company with significantly greater
resources, more integrated multi-technology product offerings and greater
management, sales, service and marketing capabilities than Third Wave has
alone, and will enable the combined company to access new markets and more
effectively meet the needs of its customers.
Q: What are the benefits of the merger?
A: By merging with PE Corporation, Third Wave will achieve a more competitive
position in the life sciences industry, by being able to take advantage of
the combined resources of Third Wave and PE Corporation and offer
customers integrated solutions for meeting their needs.
Q: How is this transaction being structured?
A: If all conditions to the merger are satisfied, Blue Acquisition Corp., a
wholly owned subsidiary of PE Corporation, will merge with and into Third
Wave, with Third Wave continuing as the surviving corporation. Following
the merger, Third Wave will be a wholly owned subsidiary of PE
Corporation.
Q: What will Third Wave shareholders receive for their Third Wave shares?
A: Third Wave shareholders will receive 187.6578 shares of PE Corporation--PE
Biosystems Group Common Stock in exchange for each of their shares of
Third Wave common stock and Third Wave preferred stock. This exchange
ratio has been adjusted to give effect to the 100% stock dividend on PE
Biosystems common stock distributed on February 18, 2000. PE Corporation
will not issue fractional shares in the merger. As a result, the total
number of shares of PE Biosystems common stock that Third Wave
shareholders will receive in the merger will be rounded down to the
nearest whole number, and Third Wave shareholders will receive a cash
payment for the value of the fraction of a share of PE Biosystems common
stock that they would otherwise receive, if any.
Example: If you currently own 200 shares of Third Wave common stock or
Third Wave preferred stock, then after the merger you will be entitled to
receive 37,531 shares of PE Biosystems common stock and a check for the
market value of the .56 fractional share.
Q: Will PE Corporation stockholders receive any shares as a result of the
merger?
A: No. PE Corporation stockholders will continue to hold the PE Corporation
shares they currently own.
Q: When do you expect the merger to be completed?
A: The merger agreement requires that the merger be completed by May 15,
2000. However, the closing date may be extended to June 15, 2000 if
specific conditions
2
<PAGE>
described in the merger agreement are satisfied.
Q: What are the tax consequences of the merger to shareholders?
A: Third Wave shareholders who exchange their shares of Third Wave common
stock and Third Wave preferred stock solely for shares of PE Biosystems
common stock pursuant to the merger will not recognize any gain or loss on
the exchange for United States federal income tax purposes, except with
respect to the cash, if any, received instead of fractional share
interests of PE Biosystems common stock. The merger will not have any tax
consequences for PE Corporation stockholders. To review the tax
consequences to shareholders in greater detail, see page 41.
Q: What will Third Wave shareholders' tax basis be in the PE Biosystems
common stock they receive in the merger?
A: Your tax basis in your total shares of PE Biosystems common stock will
equal your current tax basis in your Third Wave common stock or Third Wave
preferred stock reduced by the amount of basis allocable to fractional
shares for which you receive a cash payment.
Q: What do I need to do now?
A: After you have carefully read this document, indicate in your proxy card
how you want to vote and mail your signed proxy card in the enclosed
return envelope as soon as possible, so that your shares may be
represented at Third Wave's special meeting. The Third Wave special
meeting will take place on , 2000.
Q: Should I send in my stock certificates now?
A: No. After the merger is completed, we will send Third Wave shareholders
written instructions for exchanging their share certificates.
Q: Can I change my vote after I have mailed my proxy card?
A: Yes. You can change your vote at any time before your proxy is voted at
Third Wave's special meeting. You can do this in one of three ways. First,
you can send a written notice to the General Counsel of Third Wave stating
that you would like to revoke your proxy. Second, you can complete and
submit a new proxy card by following the instructions on the proxy card.
Third, you can attend Third Wave's special meeting and vote in person.
However, Third Wave shareholders who are parties to the voting agreement
with PE Corporation and Blue Acquisition Corp. may not revoke the proxies
they granted to the officers of Blue Acquisition Corp. under that
agreement.
Q: Who can help answer questions?
A: If you have more questions about the merger or need assistance in voting
your shares, you should contact:
Ian Edvalson
Vice President, Corporate Development
and General Counsel
Third Wave Technologies, Inc.
502 S. Rosa Road
Madison, Wisconsin 53719
(608) 663-7046
3
<PAGE>
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SUMMARY
This summary highlights selected information from this document and may
not contain all of the information that is important to you. To better
understand the merger and for a more complete description of the legal terms of
the merger, you should read carefully this entire document and the documents we
have referred you to. See "Where You Can Find More Information" on page 69.
The Companies (See Page 21)
PE CORPORATION
761 Main Avenue
Norwalk, Connecticut 06859
(203) 762-1000
Internet address: www.pecorporation.com
PE Corporation conducts its business through two groups: the PE Biosystems
group and the Celera Genomics group. Each of these two groups has its own class
of common stock.
The PE Biosystems group is a world leader in the development, manufacture,
sale and service of instrument systems and associated consumable products for
life science research and related applications. Its products are used in various
applications including the synthesis, amplification, purification, isolation,
analysis and sequencing of nucleic acids, proteins and other biological
molecules.
The Celera Genomics group is engaged principally in the generation, sale
and support of genomic information and related information management and
analysis software; discovery, validation and licensing of proprietary gene
products, genetic markers and information concerning genetic variability; and
related consulting and contract research and development services.
The information contained on PE Corporation's website is not incorporated
by reference in this prospectus.
THIRD WAVE TECHNOLOGIES, INC.
502 S. Rosa Road
Madison, Wisconsin 53719
(608) 663-8933
Internet address: www.twt.com
Third Wave develops, manufactures and markets technologies and products
for genetic analysis (both DNA and RNA) to the genetic research and clinical
diagnostic markets. Many of Third Wave's product offerings, including assays,
software and methods, are based on its proprietary Invader(R) development
platform, a novel operating system designed to reduce the cost and time of
accurately analyzing genetic information.
The information contained on Third Wave's website is not incorporated by
reference in this prospectus.
BLUE ACQUISITION CORP.
150 East Gilman Street, Suite 500
Madison, Wisconsin 53073
(608) 258-4232
Blue Acquisition Corp. is a wholly owned subsidiary of PE Corporation that
was organized solely for purposes of completing the merger.
The Special Meeting (See Page 17)
Date, Time and Place. The special meeting of shareholders of Third Wave
will be held at 10:00 a.m. CST, on , 2000 at the offices of Third Wave
Technologies, Inc., 502 S. Rosa Road, Madison, Wisconsin.
Matters to be Considered at the Special Meeting. At the special meeting,
we will ask the holders of shares of Third Wave common stock and Third Wave
preferred stock to:
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4
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o approve the merger and adopt the merger agreement providing for the
merger; and
o approve the form of escrow agreement and appoint a shareholder
representative.
Record Date; Stock Entitled to Vote; Quorum. The close of business in
Madison, Wisconsin on , , 2000 is the record date
for determining which holders of Third Wave common stock and Third Wave
preferred stock are entitled to vote at the special meeting. At the record date,
there were the following number of shares of Third Wave stock entitled to vote
at the special meeting:
o shares of Third Wave common stock;
o 943 shares of Third Wave Series A preferred stock;
o 500 shares of Third Wave Series B preferred stock;
o 467 shares of Third Wave Series C preferred stock;
o 988 shares of Third Wave Series D preferred stock; and
o 4,325 shares of Third Wave Series E preferred stock.
Holders of Third Wave common stock and Third Wave preferred stock as of
the record date are entitled to one vote per share on each matter to be voted on
at the special meeting.
For purposes of the special meeting, a quorum consists of a majority of
the shares entitled to vote at the special meeting on a class basis.
Vote Required (See Page 18)
The proposal to approve and adopt the merger, the merger agreement, the
form of escrow agreement and the appointment of the shareholder representative,
requires the affirmative vote of the following:
o a majority of the votes cast by the holders of Third Wave common stock,
voting separately as a single class, as long as a quorum is present at the
special meeting;
o a majority of the votes cast by the holders of Third Wave common stock and
Third Wave preferred stock, voting together as a single class, as long as
a quorum is present at the special meeting;
o holders of at least 66-2/3% of the outstanding shares of Third Wave Series
A preferred stock, voting separately as a single class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave Series
B preferred stock, voting separately as a single class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave Series
C preferred stock, voting separately as a single class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave Series
D preferred stock, voting separately as a single class; and
o a majority of the votes cast by the holders of Third Wave Series E
preferred stock, voting separately as a single class, as long as a quorum
is present at the special meeting.
Share Ownership of Management and Others (See Page 19)
As of the record date, directors and executive officers of Third Wave and
their affiliates beneficially owned and were entitled to vote shares of
Third Wave stock, representing approximately:
o % of the shares of Third Wave common stock outstanding on the record
date;
o none of the shares of Third Wave preferred stock outstanding on the record
date; and
o % of the combined shares of Third Wave common stock and Third Wave
preferred stock outstanding on the record date.
Shares Subject to Voting Agreement (See Page 19)
Pursuant to a voting agreement among PE Corporation, Blue Acquisition
Corp. and certain key shareholders of Third Wave that was entered into in
connection with the merger agreement, officers of Blue Acquisition Corp. hold
proxies to vote shares of Third Wave common stock and Third Wave preferred stock
equal to:
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5
<PAGE>
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o shares of Third Wave common stock, which represented approximately
% of the shares of Third Wave common stock outstanding on the record
date;
o 943 shares of Third Wave Series A preferred stock, which represented 100%
of the shares of Third Wave Series A preferred stock outstanding on the
record date;
o 500 shares of Third Wave Series B preferred stock, which represented 100%
of the shares of Third Wave Series B preferred stock outstanding on the
record date;
o 467 shares of Third Wave Series C preferred stock, which represented 100%
of the shares of Third Wave Series C preferred stock outstanding on the
record date;
o 988 shares of Third Wave Series D preferred stock, which represented 100%
of the shares of Third Wave Series D preferred stock outstanding on the
record date; and
o 3,089 shares of Third Wave Series E preferred stock, which represented
approximately 71.4% of the shares of Third Wave Series E preferred stock
outstanding on the record date.
The shares of Third Wave common stock and Third Wave preferred stock listed
above for which Blue Acquisition Corp. holds proxies represent % of the
shares of Third Wave common stock and each series of Third Wave preferred stock
outstanding on the record date.
Accordingly, the officers of Blue Acquisition Corp. currently hold proxies
sufficient to approve the proposed merger, the merger agreement and the form of
escrow agreement, and to appoint John Neis as shareholder representative under
the escrow agreement as described above under "--Vote Required" on page 18.
Recommendation of the Third Wave Board of Directors (See Page 27)
The Third Wave board of directors believes that the merger agreement, the
merger and the form of escrow agreement are fair to and in the best interests of
Third Wave and its shareholders and has approved and declared advisable the
merger agreement, the merger, the form of escrow agreement and the appointment
of John Neis as shareholder representative. The Third Wave board of directors
recommends that Third Wave shareholders vote FOR the approval and adoption of
the merger agreement, the merger, the form of escrow agreement and the
appointment of John Neis as shareholder representative under the escrow
agreement.
The Merger (See Page 22)
The merger agreement provides for the acquisition by PE Corporation of
Third Wave. Third Wave will merge with Blue Acquisition Corp. and become a
wholly owned subsidiary of PE Corporation.
The merger agreement is attached as Annex I to this prospectus. We
encourage you to read the merger agreement carefully because it is the legal
document that governs the merger.
Consideration to Be Received in the Merger (See Page 33)
As a result of the merger, each share of Third Wave common stock and Third
Wave preferred stock will be converted into the right to receive 187.6578 shares
of PE Corporation--PE Biosystems Group Common Stock. We refer to this ratio as
the "exchange ratio." This exchange ratio has been adjusted to give effect to
the 100% stock dividend on PE Biosystems common stock distributed on February
18, 2000.
PE Corporation will not issue fractional shares in the merger. As a
result, the total number of shares of PE Biosystems common stock that Third Wave
shareholders will receive in the merger will be rounded down to the nearest
whole number, and Third Wave shareholders will receive a cash payment for the
value of the fraction of a share of PE Biosystems common stock that they would
otherwise receive.
Reasons for the Merger (See Page 24)
The combination of Third Wave and PE Corporation will provide many
potential advantages, including, among others:
o integrated multi-technology product offerings providing customers with
more efficient and cost-effective solutions to their needs;
o complementary technologies, research and operations contributing to
product improvements, shorter development cycles and operating
efficiencies;
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6
<PAGE>
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o diversified product opportunities in both the clinical and research
markets;
o improved ability to pursue market and collaborative opportunities with
third parties; and
o increased financial, management, sales, service, marketing and other
resources together with increased access to additional resources to
support the combined enterprise.
Conditions to the Merger (See Page 38)
The completion of the merger depends upon the satisfaction of a number of
conditions, including the following:
o Third Wave shareholders' adoption and approval of the merger agreement,
the merger, the form of escrow agreement and appointment of a shareholder
representative;
o the absence of any injunction or restraint that prohibits the merger;
o clearance of the merger under antitrust laws and the receipt of other
required regulatory approvals;
o receipt of letters from Third Wave's management and accountants stating
that Third Wave is eligible to be acquired in a transaction that will
qualify for "pooling of interests" accounting treatment;
o execution of the escrow agreement;
o the material accuracy as of the closing of each party's representations
and warranties contained in the merger agreement;
o the performance by each party of its obligations under the merger
agreement;
o the absence of litigation which seeks to prohibit the merger or limit PE
Corporation's operation of Third Wave;
o receipt by PE Corporation of affiliate letters;
o receipt of legal opinions from counsel stating that the merger will
qualify as a tax-free reorganization;
o exercise of dissenters' rights by Third Wave shareholders entitled to
receive no more than 6-1/2% of PE Biosystems common stock issued in the
merger;
o execution of noncompete agreements between PE Corporation and three
founders of Third Wave; and
o repayment by Third Wave of outstanding debt specified in the merger
agreement.
Termination of the Merger Agreement (See Page 40)
Right to Terminate. We may mutually agree to terminate the merger
agreement at any time. In addition, either PE Corporation or Third Wave may
terminate the merger agreement if specified events do or do not occur. These
include:
o if a court or government regulator permanently prohibits the merger; and
o if the merger is not completed by May 15, 2000; this deadline will be
extended to June 15, 2000 if the completion of the merger is delayed only
because the Third Wave special meeting of shareholders to approve the
merger has not yet been held.
The merger agreement may also be terminated by PE Corporation if the Third
Wave shareholders fail to approve the merger agreement, the form of escrow
agreement, the merger and the appointment of a shareholder representative at the
special meeting.
Effect of Termination. The merger agreement requires Third Wave to grant a
license of some of its technology to PE Corporation if the merger agreement is
terminated as a result of:
o the failure of Third Wave to obtain shareholder approval; or
o the failure of Third Wave to perform in all material respects its
obligations under the merger agreement on or prior to the effective time
of the merger.
Material United States Federal Income Tax Consequences (See Page 41)
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We have structured the merger so that neither PE Corporation nor Third
Wave, nor their respective shareholders, will recognize any gain or loss for
United States federal income tax purposes as a result of the merger, except for
tax that may be payable by Third Wave shareholders because of cash received for
fractional shares. We have conditioned the merger on our receipt of legal
opinions that this is the case.
The tax consequences of the merger to Third Wave shareholders will depend
on the particular facts of each Third Wave shareholder's own situation.
Therefore, each Third Wave shareholder should consult his or her own tax advisor
for a full understanding of the merger's tax consequences.
Anticipated Accounting Treatment (See Page 43)
We expect the merger to qualify for "pooling of interests" accounting
treatment. This means that, for accounting and financial reporting purposes, we
will treat our companies as if they had always been combined. Qualification for
this accounting treatment, however, is not a condition to completing the merger.
Opinion of Financial Advisor to Third Wave (See Page 27)
In deciding to approve the merger, the board of directors of Third Wave
considered an opinion from its financial advisor, Lehman Brothers, to the effect
that, as of the date of the opinion and based upon and subject to various
qualifications and assumptions described in the opinion, the exchange ratio of
187.6578 shares of PE Biosystems common stock for each share of Third Wave
common stock and Third Wave preferred stock, adjusted for the 100% PE Biosystems
common stock dividend, was fair from a financial point of view to the Third Wave
shareholders. This opinion is attached as Annex IV to this prospectus. We
encourage you to read this opinion in its entirety.
Interests of Certain Persons in the Merger (See Page 44)
As a result of the merger, three founders of Third Wave will become
eligible for benefits in the event their employment or consulting arrangements
with Third Wave are terminated. In addition, PE Corporation and Third Wave have
agreed to indemnify, and maintain directors' and officers' insurance covering,
directors and officers of Third Wave following the merger.
Voting Agreement (See Page 47)
In connection with the merger agreement, PE Corporation, Blue Acquisition
Corp. and certain holders of Third Wave common stock and Third Wave preferred
stock have entered into a voting agreement, dated January 23, 2000, pursuant to
which those shareholders have agreed to vote their shares for approval of the
merger agreement, the form of escrow agreement and the merger, and appointment
of John Neis as shareholder representative under the escrow agreement, and have
granted irrevocable proxies to officers of Blue Acquisition Corp. to vote their
shares for this purpose. The voting agreement will remain in effect until the
termination of the merger agreement or the closing of the merger.
The voting agreement is attached as Annex II to this prospectus. We
encourage you to read the voting agreement carefully.
Escrow Agreement (See Page 47)
Before the effective time of the merger, PE Corporation, John Neis, as
representative for the Third Wave shareholders, and an escrow agent will enter
into an escrow agreement providing for 10% of the total PE Biosystems common
stock issued as merger consideration for Third Wave common stock and Third Wave
preferred stock in the merger to be delivered to the escrow agent upon the
closing of the merger. The escrowed shares of PE Biosystems common stock will be
held in an escrow account established as the exclusive source of indemnification
to PE Corporation for any losses arising from any breach by Third Wave of its
representations and warranties in the merger agreement or any failure by Third
Wave to perform its obligations under the merger agreement. The escrow agreement
is an integral part of the merger agreement.
The escrow agreement will be terminated when the last share of PE
Biosystems common stock held in the escrow account is distributed to the
stockholders or used to satisfy claims.
The form of escrow agreement is attached as Annex III to this prospectus.
We encourage you to read the form of escrow agreement carefully.
Shareholder Representative (See Page 48)
John Neis, Vice President of Venture Investors of Wisconsin, Inc., which
is a shareholder of Third Wave, has been recommended by the Third Wave board of
directors to serve as the shareholder representative under
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the escrow agreement. As shareholder representative, Mr. Neis would act on
behalf of the Third Wave shareholders on all matters under the escrow agreement.
At the special meeting, shareholders of Third Wave will be asked to appoint Mr.
Neis as the shareholder representative under the escrow agreement.
Dissenters Rights (See Page 45)
Under the Wisconsin Business Corporation Law, Third Wave shareholders may
dissent from the merger and demand the "fair value" of their shares in cash. To
exercise this right, Third Wave shareholders may not vote their shares in favor
of the merger and must take certain other actions that the Wisconsin Business
Corporation Law requires.
Comparison of Stockholder Rights (See Page 61)
Third Wave is a Wisconsin corporation and, therefore, the rights of
shareholders of Third Wave currently are determined by reference to the
Wisconsin Business Corporation Law and Third Wave's articles of incorporation
and bylaws. At the effective time of the merger, shareholders of Third Wave will
become stockholders of PE Corporation, which is a Delaware corporation. As a
result, their rights as stockholders will then be determined by reference to the
Delaware General Corporation Law and PE Corporation's certificate of
incorporation and bylaws. The laws of these jurisdictions vary. There are also
various differences between Third Wave's articles of incorporation and bylaws
and PE Corporation's certificate of incorporation and bylaws.
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RECENT STOCK PRICES
The PE Biosystems common stock is listed on the New York Stock Exchange
and the Pacific Stock Exchange (symbol: "PEB"). See "The Merger--Stock Exchange
Listings" on page 39.
The following table sets forth the range of high and low sale prices of
the PE Biosystems common stock as reported on the NYSE Composite Transactions
Tape since May 6, 1999, the effective date of the change of PE Corporation's
then outstanding common stock into PE Biosystems common stock and Celera
Genomics common stock, two new classes of common stock.
On June 17, 1999, PE Corporation announced a two-for-one split of the PE
Biosystems common stock to be effected in the form of a 100% dividend paid to
stockholders of record on July 12, 1999. The distribution date of the stock
dividend was July 26, 1999.
On January 20, 2000, PE Corporation announced a two-for-one split of the
PE Biosystems common stock to be effected in the form of a 100% stock dividend
paid to stockholders of record on February 4, 2000. The distribution date of the
stock dividend was February 18, 2000.
The table below gives effect to the stock splits:
FISCAL YEAR ENDED JUNE 30, 1999 HIGH LOW
Fourth Quarter (from May 6, 1999) ................... $30 5/16 $ 25
FISCAL YEAR ENDED JUNE 30, 2000
First Quarter ....................................... 38 5/16 26 9/16
Second Quarter ...................................... 62 15/16 30 5/8
Third Quarter (through February 23, 2000) ........... 94 5/8 50
On January 21, 2000, the last trading day before the public announcement
of the merger agreement, the closing price of the PE Biosystems common stock as
reported on the NYSE Composite Transactions Tape was $8315/16 per share.
On February 23, 2000, the closing price of the PE Biosystems common stock
as reported on the NYSE Composite Transactions Tape was $80 3/4 per share.
There is no established trading market for either the Third Wave common
stock or the Third Wave preferred stock.
Shareholders are urged to obtain current quotations for the market prices
of the PE Biosystems common stock. No assurance can be given as to the market
price of the PE Biosystems common stock at the effective time of the merger.
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RISK FACTORS
Third Wave shareholders should carefully consider the following factors,
in addition to those factors discussed in the documents that PE Corporation has
filed with the SEC which we have incorporated by reference into this document,
and the other information included in this prospectus, before voting on the
proposal to approve and adopt the merger agreement, the merger, the form of
escrow agreement and the appointment of the shareholder representative.
Risks Related to the Merger
The value of PE Biosystems common stock to be received in the merger will
fluctuate and will cause the value of the merger to the Third Wave shareholders
to vary. The number of shares of PE Biosystems common stock to be received in
the merger for each share of Third Wave common stock or Third Wave preferred
stock is fixed. However, the market price of PE Biosystems common stock when the
merger takes place may vary from its market price at the date of this document
and at the date of the special meeting of the shareholders of Third Wave. For
example, during the period commencing May 6, 1999 (the effective date of the
change of the then outstanding common stock into PE Biosystems common stock and
Celera Genomics common stock) and ending on , 2000, the most recent date prior
to the mailing of this prospectus, the closing price of PE Biosystems common
stock (adjusted for stock splits) varied from a low of $ to a high of $ and
ended that period at $ . See "Summary--Recent Stock Prices" on page 10 for more
detailed PE Biosystems common stock share price information. These variations
may be the result of various factors including:
o changes in the business, operations or prospects of the PE
Biosystems group;
o changes in the business, operations or prospects of PE Corporation;
and
o general market and economic conditions.
The merger may not be completed until a significant period of time has passed
after the Third Wave special meeting. Therefore, at the time of the special
meeting, Third Wave shareholders will not know the exact value of the PE
Biosystems common stock that will be issued in connection with the merger.
Shareholders of Third Wave are urged to obtain current market quotations for PE
Biosystems common stock.
The requirement for regulatory approvals may delay consummation of the
merger, increasing the risk that the value of the PE Biosystems common stock
will fluctuate over time. Consummation of the merger is conditioned upon the
receipt of all material governmental authorizations, consents, orders and
approvals, including the expiration or termination of the applicable waiting
periods, and any extension of the waiting periods, under the antitrust laws. PE
Corporation and Third Wave intend to vigorously pursue all required regulatory
approvals. No assurance can be given, however, that these approvals will be
obtained, or, if they are obtained, as to the terms, conditions and timing of
these approvals. The requirement for these approvals could delay the
consummation of the merger for a significant period of time after Third Wave
shareholders have approved the proposals relating to the merger at the special
meeting. See "The Merger--Conditions to the Merger" on page 38 for a discussion
of the conditions to the consummation of the merger and "The Merger--Regulatory
Approvals Required" on page 39 for a description of the regulatory approvals
necessary in connection with the merger.
The interests of management may be different from those of shareholders.
Some members of Third Wave's management and board of directors, including
individuals who will be executive officers of the surviving corporation, have
various interests in the merger that may be different from, or in addition to,
the interests of Third Wave shareholders. The merger will give rise to various
entitlements and benefits to some Third Wave senior executives under noncompete
agreements to be entered into in connection with the merger. See "The
Merger--Interests of Certain Persons in the Merger" on page 44 for more
information concerning matters relating to the employment and compensation of
the directors and executive officers of Third Wave.
PE Biosystems may encounter difficulties in the integration and
development of the business of Third Wave. PE Biosystems' strategy to integrate
and develop the businesses of PE Biosystems and Third Wave following the merger
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involves a number of elements that management may not be able to implement as
expected. For example, PE Biosystems may encounter operational difficulties in
the integration of manufacturing or other facilities of the two companies such
that expected cost savings may not be realized. In addition, technological
advances resulting from the integration of technologies of PE Biosystems and
Third Wave may not be achieved as successfully or as rapidly as currently
anticipated, if at all. The consolidation of operations, technologies and
marketing and distribution methods present significant managerial challenges.
There can be no assurance that these actions will be accomplished as
successfully or as rapidly as currently anticipated.
Risks Related to the PE Biosystems Group
Rapidly changing technology in life sciences could make PE Biosystems'
product line obsolete unless it continues to improve existing products and
develop new products. A significant portion of the net revenues for PE
Biosystems each year is derived from products that did not exist in the prior
year. PE Biosystems' future success will depend on its ability to continually
improve its current products and to develop and introduce, on a timely and
cost-effective basis, new products that address the evolving needs of its
customers. PE Biosystems' products are based on complex technology which is
subject to rapid change as new technologies are developed and introduced in the
marketplace. Unanticipated difficulties or delays in replacing existing products
with new products could adversely affect PE Biosystems' future operating
results.
A significant portion of sales depends on customers' capital spending
policies which may be subject to significant and unexpected decreases. A
significant portion of PE Biosystems' instrument product sales are capital
purchases by its customers. PE Biosystems' customers include pharmaceutical,
environmental, research and chemical companies, and the capital spending
policies of these companies can have a significant effect on the demand for PE
Biosystems' products. These policies are based on a wide variety of factors,
including the resources available to make purchases, the spending priorities
among various types of research equipment and policies regarding capital
expenditures during recessionary periods. Any decrease in capital spending or
change in spending policies of these companies could significantly reduce the
demand for PE Biosystems' products.
A substantial portion of PE Biosystems' sales is to customers at
universities or research laboratories whose funding is dependent on both the
level and timing of funding from government sources. As a result, the timing and
amount of revenues from these sources may vary significantly due to factors that
can be difficult to forecast. Although research funding has increased during the
past several years, grants have, in the past, been frozen for extended periods
or otherwise become unavailable to various institutions, sometimes without
advance notice. Budgetary pressures, particularly in the United States and
Japan, may result in reduced allocations to government agencies that fund
research and development activities. If government funding necessary to purchase
PE Biosystems' products were to become unavailable to researchers for any
extended period of time or if overall research funding were to decrease, the
business of PE Biosystems could be adversely affected.
Due to rapidly-developing technology and lack of legal precedents, PE
Biosystems' products could be subject to claims for patent infringement. PE
Biosystems' products are based on complex, rapidly-developing technologies.
These products could be developed without knowledge of previously filed but
unpublished patent applications that cover some aspect of these technologies. In
addition, there are relatively few decided court cases interpreting the scope of
patent claims in these technologies. PE Biosystems could be made a party to
litigation regarding intellectual property matters in the future. PE Biosystems
has from time to time been notified that it may be infringing certain patents
and other intellectual property rights of others. It may be necessary or
desirable in the future to obtain licenses relating to one or more products or
relating to current or future technologies, and we cannot assure you that PE
Biosystems will be able to obtain these licenses or other rights on commercially
reasonable terms.
Since PE Biosystems' business is dependent on foreign sales, fluctuating
currencies will make revenues and operating results more volatile. Approximately
50% of PE Biosystems' net revenues during fiscal 1999 were derived from sales to
customers outside of the United States. The majority of these sales was based on
the relevant customer's local currency. As a result, PE Biosystems' reported and
anticipated operating results and cash flows are subject to fluctuations due to
material changes in foreign currency exchange rates that are beyond PE
Biosystems' control.
Integrating acquired technologies may be costly and may not result in
technological advances. The future growth of PE Biosystems depends in part on
its ability to acquire complementary technologies through acquisitions and
investments.
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Since January 1, 1996, PE Biosystems has acquired a number of companies,
including PerSeptive Biosystems, Inc., Molecular Informatics, Inc., and Tropix,
Inc., and made investments in others. The consolidation of employees, operations
and marketing and distribution methods could present significant managerial
challenges. For example, PE Biosystems may encounter operational difficulties in
the integration of manufacturing or other facilities. In addition, technological
advances resulting from the integration of technologies may not be achieved as
successfully or rapidly as anticipated, if at all.
Earthquakes could disrupt operations in California. A significant portion
of PE Biosystems' operations is located near major California earthquake faults.
The ultimate impact of earthquakes on PE Biosystems, significant suppliers and
the general infrastructure is unknown, but operating results could be materially
affected in the event of a major earthquake.
Risks Related to a Capital Structure with Two Separate Classes of Common Stock
You will be stockholders of one company and, therefore, financial effects
on one group could adversely affect the other. Holders of PE Biosystems common
stock will be stockholders of PE Corporation, which consists of the PE
Biosystems group and the Celera Genomics group. The PE Biosystems group and the
Celera Genomics group are not separate legal entities. As a result, stockholders
will continue to be subject to all of the risks of an investment in PE
Corporation, including risks associated with the Celera Genomics group. The
risks and uncertainties that may affect the operations, performance, development
and results of Celera Genomics businesses include but are not limited to:
operating losses to date; a unique and expanding business plan; dependence on
the timely completion of the sequencing and assembly of the human genome;
uncertainty of revenue growth; unproven use of genomics information to develop
products; intense competition in the evolving genomics industry; dependence on
customers in and subject to the risks of the pharmaceutical and biotechnology
industries; heavy reliance on its strategic relationship with the PE Biosystems
group; potential product liability claims; liabilities related to use of
hazardous materials; lengthy sales cycle; dependence on the unique expertise of
its scientific and management staff; uncertainty of patent, copyright and
intellectual property protection; dependence on computer hardware, software and
internet applications; access to biological materials; legal, ethical and social
issues affecting demand for products; disruptions caused by rapid growth of the
business; government regulation of its products and services; and risks of
future acquisitions. The assets attributed to the PE Biosystems group could be
subject to the liabilities of the Celera Genomics group, whether such
liabilities arise from lawsuits, contracts or indebtedness that PE Corporation
attributes to the Celera Genomics group. If PE Corporation is unable to satisfy
the Celera Genomics group's liabilities out of the assets PE Corporation
attributes to it, PE Corporation may be required to satisfy those liabilities
with assets it has attributed to the PE Biosystems group.
Financial effects from the Celera Genomics group that affect PE
Corporation's consolidated results of operations or financial condition could,
if significant, affect the results of operations or financial condition of the
PE Biosystems group and the market price of the PE Biosystems common stock. In
addition, net losses of the Celera Genomics group and dividends or distributions
on, or repurchases of, Celera Genomics common stock or repurchases of certain
preferred stock will reduce the funds PE Corporation can pay as dividends on the
PE Biosystems common stock under Delaware law.
Holders of PE Biosystems common stock will have limited rights related to
the PE Biosystems group. Holders of PE Biosystems common stock have only the
rights customarily held by common stockholders. They will have only the
following rights related to the PE Biosystems group:
o certain rights with regard to dividends and liquidation;
o requirements for a mandatory dividend, redemption or conversion upon
the disposition of all or substantially all of the assets of the PE
Biosystems group; and
o a right to vote on matters as a separate voting class in the limited
circumstances provided under Delaware law, by stock exchange rules
or as determined by the PE Corporation board of directors.
PE Corporation will not hold separate meetings for holders of PE
Biosystems common stock and Celera Genomics common stock.
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Limits exist on the voting power of group common stock. A class of group
common stock with less than majority voting power can block an action if a class
vote is required by law. PE Biosystems common stock currently has a substantial
majority of the voting power of the total PE Corporation common stock. If
Delaware law, stock exchange rules or the PE Corporation board of directors
requires a separate vote on a matter by the holders of the Celera Genomics
common stock, holders of Celera Genomics common stock could prevent approval of
the matter--even if the holders of a majority of the total number of votes cast
or entitled to be cast, voting together as a class, were to vote in favor of the
matter.
Holders of PE Biosystems common stock cannot ensure that their voting
power will be sufficient to protect their interests. Since the relative voting
power per share of PE Biosystems common stock and Celera Genomics common stock
will fluctuate based on the market values of the two classes of common stock,
the relative voting power of PE Biosystems common stock could decrease. As a
result, holders of shares of PE Biosystems common stock cannot ensure that their
voting power will be sufficient to protect their interests.
Stockholders may not have any remedies for breach of fiduciary duties if
any action by directors and officers has a disadvantageous effect on either
class of common stock. Stockholders may not have any remedies if any action or
decision of PE Corporation's directors or officers has a disadvantageous effect
on the PE Biosystems common stock or the Celera Genomics common stock compared
to the other class of common stock. Recent cases in Delaware involving tracking
stocks have established that decisions by directors or officers involving
differing treatment of tracking stocks are judged under the principle known as
the "business judgment rule" unless self-interest is shown. In addition,
principles of Delaware law established in cases involving differing treatment of
two classes of capital stock or two groups of holders of the same class of
capital stock provide that a board of directors owed an equal duty to all
stockholders regardless of class or series. Under these principles of Delaware
law and the related principle known as the "business judgment rule," absent
abuse of discretion, a good faith business decision made by a disinterested and
adequately informed board of directors, board of directors' committee or officer
with respect to any matter having different effects on holders of PE Biosystems
common stock and holders of Celera Genomics common stock would be a defense to
any challenge to such determination made by or on behalf of the holders of
either class of common stock.
Stock ownership could cause directors and officers to favor one group over
the other. As a policy, PE Corporation's board of directors periodically
monitors the ownership of shares of PE Biosystems common stock and shares of
Celera Genomics common stock by its directors and senior officers as well as
their option holdings and other benefits so that their interests are not
misaligned with the two classes of common stock and with their duty to act in
the best interests of PE Corporation and its stockholders as a whole. However,
because the actual value of their interests in the PE Biosystems common stock
and the Celera Genomics common stock may vary significantly, it is possible that
they could favor one group over the other due to their stock and other benefits.
Numerous potential conflicts of interest exist between the classes of
common stock which may be difficult to resolve by PE Corporation's board of
directors or which may be resolved adversely to one of the classes.
o Allocation of corporate opportunities could favor one group over the
other. The PE Corporation board of directors may be required to
allocate corporate opportunities between the groups. In some cases,
the PE Corporation directors could determine that a corporate
opportunity, such as an acquisition or a new business, should be
shared by the groups or be allocated to one group over the other.
Any such decisions could favor one group to the detriment of the
other.
o The groups may compete with each other to the detriment of their
businesses. The existence of two separate classes of common stock
will not prevent the PE Biosystems group and the Celera Genomics
group from competing with each other. Any competition between the
groups could be detrimental to businesses of either or both of the
groups. Under a board of directors' policy, groups will generally
not engage in the principal businesses of the other, except for
joint transactions with each other. However, PE Corporation's Chief
Executive Officer and board of directors permit indirect competition
between the groups, such as one group doing business with a
competitor of the other group, based on his or its good faith
business judgment that such competition is in the best interests of
PE Corporation and all of its stockholders as a whole. In addition,
the groups may compete in a business that is not a principal
business of the other group.
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o PE Corporation's board of directors may pay more or less dividends
on a group's common stock than if that group were a separate
company. Subject to the limitations referred to below, PE
Corporation's board of directors has the authority to declare and
pay dividends on the PE Biosystems common stock and the Celera
Genomics common stock in any amount and could, in its sole
discretion, declare and pay dividends exclusively on the PE
Biosystems common stock, exclusively on the Celera Genomics common
stock, or on both, in equal or unequal amounts. PE Corporation's
board of directors is not required to consider the amount of
dividends previously declared on each class, the respective voting
or liquidation rights of each class or any other factor. The
performance of one group may cause PE Corporation's board of
directors to pay more or less dividends on the common stock relating
to the other group than if that other group was a stand-alone
corporation. In addition, Delaware law and PE Corporation's
certificate of incorporation impose limitations on the amount of
dividends which may be paid on each class of common stock.
o Proceeds of mergers or consolidations may be allocated unfavorably.
PE Corporation's board of directors will determine how consideration
to be received by holders of common stock in connection with a
merger or consolidation involving PE Corporation is to be allocated
among holders of each class of common stock. Such percentage may be
materially more or less than that which might have been allocated to
such holders had PE Corporation's board of directors chosen a
different method of allocation.
o Holders of either class of common stock may be adversely affected by
a conversion of group common stock. PE Corporation's board of
directors could, in its sole discretion and without stockholder
approval, determine to convert shares of Celera Genomics common
stock into shares of PE Biosystems common stock, or vice versa, at
any time, including when either or both classes of common stock may
be considered to be overvalued or undervalued. If PE Corporation's
board of directors chose to issue PE Biosystems common stock in
exchange for Celera Genomics common stock, such conversion would
dilute the interests in PE Corporation of the holders of PE
Biosystems common stock. If the board of directors were to choose to
issue Celera Genomics common stock in exchange for PE Biosystems
common stock, such conversion could give holders of shares of PE
Biosystems common stock a greater or lesser premium than any premium
that was paid or might be paid by a third-party buyer of all or
substantially all of the assets of the PE Biosystems group.
PE Corporation's board may change its management and allocation policies
without stockholder approval to the detriment of either group. PE Corporation's
board of directors may modify or rescind its policies with respect to the
allocation of corporate overhead, taxes, debt, interest and other matters, or
may adopt additional policies, in its sole discretion, without stockholder
approval. A decision to modify or rescind these policies, or adopt additional
policies, could have different effects on holders of PE Biosystems common stock
and holders of Celera Genomics common stock or could result in a benefit or
detriment to one class of stockholders compared to the other class. PE
Corporation's board of directors will make any such decision in accordance with
its good faith business judgment that the decision is in the best interests of
PE Corporation and all of its stockholders as a whole.
Either group may finance the other group on terms unfavorable to one of
the groups. PE Corporation anticipates that from time to time it will transfer
cash and other property between groups to finance their business activities.
When this occurs the group providing the financing will be subject to the risks
relating to the group receiving the financing. PE Corporation will account for
those transfers in one of the following ways:
o as a reallocation of pooled debt or preferred stock;
o as a short-term or long-term loan between groups or as a repayment
of a previous borrowing;
o as an increase or decrease in the PE Biosystems group's equity
interest, if any, in the Celera Genomics group; or
o as a sale of assets between groups.
PE Corporation's board of directors has not adopted specific criteria for
determining when it will transfer cash or other property as a loan or repayment,
an increase or decrease in equity interest or a sale of assets. These
determinations,
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including the terms of any transactions accounted for as debt, could be
unfavorable to either the group transferring or receiving the cash or other
property. PE Corporation's board of directors expects to make these
determinations, either in specific instances or by setting generally applicable
policies, after considering the financing requirements and objectives of the
receiving group, the investment objectives of the transferring group and the
availability, cost and time associated with alternative financing sources,
prevailing interest rates and general economic conditions.
There can be no assurance that any terms that PE Corporation fixes for
debt will approximate those that could have been obtained by the borrowing group
if it were a stand-alone corporation.
Holders of PE Biosystems common stock may receive less consideration upon
a sale of assets than if the PE Biosystems group were a separate company. PE
Corporation's certificate of incorporation provides that if a disposition of all
or substantially all of the assets of the PE Biosystems group occurs, PE
Corporation must, subject to certain exceptions:
o distribute to holders of the PE Biosystems common stock an amount
equal to the net proceeds of such disposition, or
o convert at a 10% premium the PE Biosystems common stock into shares
of Celera Genomics common stock.
If the PE Biosystems group were a separate, independent company and its shares
were acquired by another person, certain costs of that disposition, including
corporate level taxes, might not be payable in connection with that acquisition.
As a result, stockholders of the PE Biosystems group as a separate, independent
company might receive a greater amount than the net proceeds that would be
received by holders of PE Biosystems common stock if the assets of the PE
Biosystems group were sold. In addition, there can be no assurance that the net
proceeds per share of PE Biosystems common stock will be equal to or more than
the market value per share of PE Biosystems common stock prior to or after
announcement of a disposition.
PE Corporation's capital structure and variable vote per share may
encourage acquisitions of the PE Biosystems group or PE Biosystems common stock.
A potential acquiror could acquire control of PE Corporation by acquiring shares
of common stock having a majority of the voting power of all shares of common
stock outstanding. Such a majority could be obtained by acquiring a sufficient
number of shares of both classes of common stock or, if one class of common
stock has a majority of such voting power, only shares of that class. Currently,
the PE Biosystems common stock has a substantial majority of the voting power.
As a result, it might be possible for an acquiror to obtain control by
purchasing only shares of PE Biosystems common stock.
Decisions by directors and officers that affect market values could
adversely affect voting and conversion rights. The relative voting power per
share of each class of common stock and the number of shares of one class of
common stock issuable upon the conversion of the other class of common stock
will vary depending upon the relative market values of the PE Biosystems common
stock and the Celera Genomics common stock. The market value of either or both
classes of common stock could be adversely affected by market reaction to
decisions by PE Corporation's board of directors or its management that
investors perceive as affecting differently one class of common stock compared
to the other. These decisions could involve changes to PE Corporation's
management and allocation policies, transfers of assets between groups,
allocations of corporate opportunities and financing resources between groups
and changes in dividend policies.
Investors may not value PE Biosystems common stock based on the PE
Biosystems group's financial information and policies. There can be no assurance
that investors will value the PE Biosystems common stock based on the reported
financial results and prospects of the PE Biosystems group or the dividend
policies established by PE Corporation's board of directors with respect to the
PE Biosystems group.
A Recent Clinton Administration proposal could have adverse tax
consequences for PE Corporation or for holders of PE Biosystems common stock.
The Clinton Administration recently proposed legislation dealing with tracking
stock such as the PE Biosystems common stock. Such proposal would, among other
things, grant authority to the IRS to treat tracking stock as something other
than stock or as stock of another entity. If this proposal is enacted, it could
have adverse tax consequences for PE Corporation or for holders of PE Biosystems
common stock. A similar proposal was made in 1999.
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Congress did not act on the 1999 proposal, and it is impossible to predict
whether Congress will act upon this proposal or any other proposal relating to
tracking stock.
If there are adverse U.S. federal income tax law developments, PE
Corporation may convert the PE Biosystems common stock or the Celera Genomics
common stock into shares of the other class without any premium. The proposal of
the Clinton Administration would be such an adverse development if it is
implemented or receives certain legislative action.
Provisions governing common stock could discourage a change of control and
the payment of a premium for stockholders' shares. PE Corporation's stockholder
rights plan could prevent stockholders from profiting from an increase in the
market value of their shares as a result of a change in control of PE
Corporation by delaying or preventing such change in control. The existence of
two classes of common stock could also present complexities and could, in
certain circumstances, pose obstacles, financial and otherwise, to an acquiring
person. In addition, certain provisions of Delaware law, PE Corporation's
certificate of incorporation and bylaws may also deter hostile takeover
attempts.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus are forward-looking and
are subject to a variety of risks and uncertainties. These statements may be
identified by the use of forward-looking words or phrases such as "believe,"
"expect," "anticipate," "should," "planned," "estimated," and "potential," among
others. These forward-looking statements are based on our current expectations.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for such forward-looking statements. In order to comply with the terms of the
safe harbor, we note that a variety of factors could cause our actual results
and experience to differ materially from the anticipated results or other
expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of our businesses include, but are not limited to, those described under
"Risk Factors."
THE SPECIAL MEETING
We are furnishing this prospectus to shareholders of Third Wave in
connection with the solicitation of proxies by the board of directors of Third
Wave for use at the special meeting of its shareholders.
Date, Time and Place
The special meeting will be held at the offices of Third Wave
Technologies, Inc., 502 S. Rosa Road, Madison, Wisconsin, at 10:00 a.m. CST,
on , 2000.
Matters to Be Considered at the Special Meeting
At the special meeting, holders of Third Wave common stock and Third Wave
preferred stock will be asked to consider and vote upon the approval and
adoption of the merger agreement, the merger, the form of escrow agreement and
the appointment of John Neis as the representative of the Third Wave
shareholders under the escrow agreement, and such other matters as may properly
be brought before the special meeting.
The Third Wave board has, by unanimous vote of all directors, approved the
merger agreement, the form of escrow agreement and the transactions contemplated
thereby, and recommends a vote FOR approval of the merger, such agreements, and
the appointment of John Neis as shareholder representative under the escrow
agreement.
Record Date; Stock Entitled to Vote; Quorum
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Only holders of record of Third Wave common stock, Third Wave Series A
preferred stock, Third Wave Series B preferred stock, Third Wave Series C
preferred stock, Third Wave Series D preferred stock or Third Wave Series E
preferred stock at the close of business on , , 2000, the
record date for Third Wave's special meeting, are entitled to receive notice of
and to vote at Third Wave's special meeting. Third Wave common stock, Third Wave
Series A preferred stock, Third Wave Series B preferred stock, Third Wave Series
C preferred stock, Third Wave Series D preferred stock and Third Wave Series E
preferred stock constitute the only outstanding classes of voting securities of
Third Wave.
On the record date:
o shares of Third Wave common stock were issued and outstanding and
were held by holders of record;
o 943 shares of Third Wave Series A preferred stock were issued and
outstanding and were held by one holder of record;
o 500 shares of Third Wave Series B preferred stock were issued and
outstanding and were held by one holder of record;
o 467 shares of Third Wave Series C preferred stock were issued and
outstanding and were held by two holders of record;
o 988 shares of Third Wave Series D preferred stock were issued and
outstanding and were held by two holders of record; and
o 4,325 shares of Third Wave Series E preferred stock were issued and
outstanding and were held by six holders of record.
Holders of record of shares of Third Wave common stock and Third Wave
preferred stock on the record date are each entitled to one vote per share on
each matter to be considered at Third Wave's special meeting.
A quorum of each class of Third Wave shares is necessary to have a valid
meeting of shareholders. A majority of the shares of a class of Third Wave stock
issued and outstanding and entitled to vote on the record date and represented
in person or by proxy constitutes a quorum for that class. Shares held by Third
Wave in its treasury do not count toward a quorum.
Vote Required
As long as a quorum is present at the special meeting, the approval of the
merger, the merger agreement and the form of escrow agreement, and the
appointment of John Neis as the shareholder representative under the escrow
agreement, requires the affirmative vote or written consent of the following:
o holders of a majority of the shares of Third Wave common stock that
were cast at the special meeting, represented in person or by proxy,
voting separately as a single class;
o holders of a majority of the shares of Third Wave common stock and
Third Wave preferred stock that were cast at the special meeting,
represented in person or by proxy, voting together as a single
class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave
Series A preferred stock, represented in person or by proxy, voting
separately as a single class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave
Series B preferred stock, represented in person or by proxy, voting
separately as a single class;
o holders of at least 66-2/3% of the outstanding shares of Third Wave
Series C preferred stock, represented in person or by proxy, voting
separately as a single class;
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o holders of at least 66-2/3% of the outstanding shares of Third Wave
Series D preferred stock, represented in person or by proxy, voting
separately as a single class; and
o holders of a majority of the shares of Third Wave Series E preferred
stock that were cast at the special meeting, represented in person
or by proxy, voting separately as a single class.
Share Ownership of Management and Others
At the close of business on the record date, directors and executive
officers of Third Wave and their affiliates beneficially owned and were entitled
to vote approximately shares of Third Wave common stock and no shares of Third
Wave preferred stock, which represented approximately % of the shares of Third
Wave common stock, none of the shares of Third Wave preferred stock, and % of
the combined shares of Third Wave common stock and Third Wave preferred stock
outstanding on that date. Each of those directors and executive officers has
indicated his or her present intention to vote, or cause to be voted, the Third
Wave common stock or Third Wave preferred stock owned by him or her FOR the
approval and adoption of the merger, the merger agreement and the form of escrow
agreement, and the appointment of John Neis as shareholder representative under
the escrow agreement. Those members of Third Wave management who are parties to
the voting agreement between PE Corporation, Blue Acquisition Corp. and certain
shareholders of Third Wave are obligated to vote in favor of such matters.
Shares Subject to Voting Agreement
As an incentive to PE Corporation to enter into the merger agreement,
certain key shareholders of Third Wave entered into a voting agreement with PE
Corporation and Blue Acquisition Corp. to vote their shares of Third Wave common
stock and Third Wave preferred stock in favor of the merger agreement, the
merger, the form of escrow agreement and the other related matters brought for a
vote at the Third Wave special meeting. Pursuant to the voting agreement,
officers of Blue Acquisition Corp. hold proxies to vote shares of Third Wave
common stock and Third Wave preferred stock equal to:
o shares of Third Wave common stock, which represented
approximately % of the shares of Third Wave common stock outstanding
on the record date, and % of the combined shares of Third Wave
common stock and Third Wave preferred stock outstanding on the
record date;
o 943 shares of Third Wave Series A preferred stock, which represented
100% of the shares of Third Wave Series A preferred stock
outstanding on the record date, and % of the combined shares of
Third Wave common stock and Third Wave preferred stock outstanding
on the record date;
o 500 shares of Third Wave Series B preferred stock, which represented
100% of the shares of Third Wave Series B preferred stock
outstanding on the record date, and % of the combined shares of
Third Wave common stock and Third Wave preferred stock outstanding
on the record date;
o 467 shares of Third Wave Series C preferred stock, which represented
100% of the shares of Third Wave Series C preferred stock
outstanding on the record date, and % of the combined shares of
Third Wave common stock and Third Wave preferred stock outstanding
on the record date;
o 988 shares of Third Wave Series D preferred stock, which represented
100% of the shares of Third Wave Series D preferred stock
outstanding on the record date, and % of the combined shares of
Third Wave common stock and Third Wave preferred stock outstanding
on the record date;
o 3,089 shares of Third Wave Series E preferred stock, which
represented approximately 71.4% of the shares of Third Wave Series E
preferred stock outstanding on the record date, and % of the
combined shares of Third Wave common stock and Third Wave preferred
stock outstanding on the record date.
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The shares of Third Wave common stock and Third Wave preferred stock listed
above for which Blue Acquisition Corp. holds proxies represent at least % of the
shares of Third Wave common stock and each series of Third Wave preferred stock
outstanding on the record date. Accordingly, the officers of Blue Acquisition
Corp. currently hold proxies to vote shares of Third Wave common stock and Third
Wave preferred stock pursuant to the voting agreement sufficient to approve and
adopt the merger agreement, the merger, the form of escrow agreement and the
appointment of John Neis as shareholder representative under the escrow
agreement.
Voting of Proxies
Shares represented by all properly executed proxies received in time for
the special meeting will be voted at the special meeting in the manner specified
by the holders thereof. Properly executed proxies which do not contain voting
instructions will be voted in favor of the merger agreement, the merger, the
form of escrow agreement and the appointment of John Neis as shareholder
representative under the escrow agreement.
Third Wave intends to count shares of Third Wave common stock and Third
Wave preferred stock present in person at the special meeting but not voting,
and shares of Third Wave common stock and Third Wave preferred stock for which
we have received proxies but with respect to which holders of shares have
abstained on any matter, as present at the special meeting for purposes of
determining the presence or absence of a quorum for each class of shares for the
transaction of business.
For voting purposes at the special meeting, only shares affirmatively
voted in favor of approval and adoption of the merger agreement, the merger, the
form of escrow agreement and the appointment of John Neis as shareholder
representative under the escrow agreement will be counted as favorable votes for
such approval and adoption. The failure to submit a proxy (or to vote in person)
or the abstention from voting with respect to such approval and adoption will
have the same effect as a vote against approval and adoption of the merger
agreement, the merger, the form of escrow agreement and the appointment of John
Neis as shareholder representative under the escrow agreement.
It is not expected that any matter other than those referred to in this
prospectus will be brought before the special meeting. If, however, other
matters are properly presented for a vote, the persons named as proxies will
vote in accordance with their judgment with respect to those matters.
The persons named as proxies by a Third Wave shareholder may propose and
vote for one or more adjournments of the special meeting to permit further
solicitations of proxies in favor of approval and adoption of the merger
agreement, the merger, the form of escrow agreement and the appointment of John
Neis as shareholder representative under the escrow agreement; however, no proxy
which is voted against the approval and adoption of the merger agreement will be
voted in favor of such an adjournment.
Revoking Proxies
Third Wave shareholders of record may revoke their proxies at any time
prior to the time their proxies are voted at the special meeting. Proxies may be
revoked by written notice, including by telegram or facsimile, to the General
Counsel of Third Wave, by a later-dated proxy signed and returned by mail, or by
attending the special meeting and voting in person. Attendance at the special
meeting will not in and of itself constitute a revocation of a proxy. Any
written notice of a revocation of a proxy must be sent so as to be delivered
before the taking of the vote at the special meeting as follows:
Third Wave Technologies, Inc.
502 S. Rosa Road
Madison, Wisconsin 53719
Facsimile: (608) 663-7046
Attention: General Counsel
Proxies for shares held by shareholders who are party to the voting
agreement with PE Corporation and Blue Acquisition Corp. may not be revoked at
any time or under any circumstances.
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Proxy Solicitation
Third Wave will bear the cost of the solicitation of proxies from its
shareholders, except that PE Corporation and Third Wave will share equally the
cost of filing, printing and distributing the registration statement and this
prospectus. In addition to solicitation by mail, the directors, officers and
employees of Third Wave may solicit proxies from shareholders of Third Wave by
telephone or telegram or by other means of communication. Such directors,
officers and employees will not be additionally compensated but may be
reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation.
Do not send in any stock certificates with your proxy cards. PE
Corporation will send transmittal forms with instructions for the surrender of
certificates representing shares of PE Biosystems common stock to former Third
Wave shareholders shortly after the merger is completed.
THE COMPANIES
PE Corporation
PE Corporation was incorporated in 1998 under the laws of the state of
Delaware and conducts its business through two groups: the PE Biosystems group
and the Celera Genomics group. Each group has its own class of common stock. The
PE Biosystems common stock and the Celera Genomics common stock are intended to
provide stockholders of PE Corporation with separate securities reflecting the
relative performance of each separate group. For a fuller description of the
capital stock of PE Corporation, see "Description of PE Corporation Capital
Stock" on page 50.
The PE Biosystems group is a world leader in the development, manufacture,
sale and service of instrument systems and associated consumable products for
life science research and related applications. Its products are used in various
applications including the synthesis, amplification, purification, isolation,
analysis and sequencing of nucleic acids, proteins and other biological
molecules.
The PE Biosystems group currently consists of four business units and a
shared service organization consisting of human resources, finance, sales,
marketing communications, manufacturing, legal, quality control and advanced
research. PE Corporation provides the PE Biosystems group with general and
administrative services. The business units that make up the PE Biosystems group
are: Applied Biosystems, PerSeptive Biosystems, PE Informatics and Tropix. Each
unit is responsible for the development and marketing of products within its
particular area of business. The business units serve substantially the same
customer base but have little overlap in their product offerings. As a result,
the PE Biosystems group is able to enhance the operating efficiency of these
units through cross-selling and reduced administrative expenses.
The Celera Genomics group is engaged principally in the generation, sale
and support of genomic information and related information management and
analysis software; discovery, validation and licensing of proprietary gene
products, genetic markers and information concerning genetic variability; and
related consulting and contract research and development services.
PE Corporation's principal executive offices are located at 761 Main
Avenue, Norwalk, Connecticut 06859 and its telephone number is (203) 762-1000.
Third Wave Technologies, Inc.
Third Wave, a privately held Wisconsin corporation, develops, manufactures
and markets technologies and products for genetic analysis (both DNA and RNA) to
the genetic research and clinical diagnostic markets. Many of Third Wave's
product offerings, including assays, software and methods, are based on its
proprietary Invader(R) development platform, a
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novel operating system designed to reduce the cost and time of accurately
analyzing genetic information. Third Wave had revenues of $2.57 million in
calendar year 1999.
Third Wave's principal executive offices are located at 502 S. Rosa Road,
Madison, Wisconsin 53719 and its telephone number is (608) 273-8933.
The information concerning Third Wave in this prospectus has been
furnished by Third Wave. Although PE Corporation does not have any knowledge
that would indicate that any such information concerning Third Wave is untrue,
PE Corporation necessarily cannot assume any responsibility for the accuracy or
completeness of such information, or for any failure by Third Wave to disclose
events that may have occurred and may affect the significance or accuracy of any
information concerning Third Wave, but which are unknown to PE Corporation.
Blue Acquisition Corp.--PE Corporation's Merger Subsidiary
Blue Acquisition Corp. is a wholly owned subsidiary of PE Corporation
which was incorporated in Wisconsin for the sole purpose of effecting the merger
by merging with and into Third Wave. It engages in no other business. Its
principal executive offices are presently located at 150 East Gilman Street,
Suite 500, Madison, Wisconsin 53703 and its telephone number is (608) 258-4232.
THE MERGER
General
The following is a description of certain aspects of the proposed merger,
including the material terms of the merger agreement, the voting agreement and
the form of escrow agreement. The following summary is qualified in its entirety
by reference to the complete merger agreement, voting agreement and form of
escrow agreement, which are attached to this prospectus as Annex I, II and III,
respectively, and are incorporated in this prospectus by reference. All
shareholders of Third Wave are urged to read the merger agreement, the voting
agreement and the form of escrow agreement in their entirety.
Background of the Merger
In July 1999, Mr. Michael Lucero, Vice President of the Polymerase Chain
Reaction (PCR) Business Unit of the PE Biosystems group, Dr. Ken Livak,
Principal Scientist of the PCR Business Unit of the PE Biosystems group, and
Michael Rechsteiner, Director of Applied Genetic Analysis of the PE Biosystems
group, met with Dr. Lance Fors, President and CEO of Third Wave, Dr. Bruce Neri,
Senior Vice President of Research and Development of Third Wave, Mr. Rocky
Ganske, Vice President of Operations of Third Wave, and Mr. Shaun Lonergan, Vice
President of Corporate Development of Third Wave, to introduce themselves to
Third Wave and become acquainted with its business. Following this meeting, Mr.
Lucero and Dr. Fors discussed a possible business relationship between PE
Corporation and Third Wave, such as a technical collaboration or strategic
alliance. As a result of this meeting and subsequent discussions, PE Corporation
and Third Wave entered into a confidentiality and material transfer agreement
dated August 26, 1999 in order to further explore areas of mutual interest.
On August 26, 1999, senior members of the PE Biosystems group's PCR
Business Unit, including Mr. Lucero and Dr. Livak, and Dr. Michael Hunkapiller,
Senior Vice President of PE Corporation and President of the PE Biosystems
group, met with Dr. Fors, Dr. Neri, Mr. Ganske, Mr. Michael Treble, Chief
Operating Officer of Third Wave, Mr. David Sneider, Chief Financial Officer of
Third Wave, and Mr. Ian Edvalson, Vice President and General Counsel of Third
Wave, to further discuss a possible business relationship between the PE
Biosystems group and Third Wave and to evaluate Third Wave's
Invader(R)technology for genotyping applications.
On September 3, 1999, Dr. Fors and Mr. Edvalson presented Third Wave's
model for an alliance with PE Corporation to Mr. Lucero, Mr. Rechsteiner and Dr.
Elaine Heron, Vice President of PE Corporation and General Manager of the
Applied Biosystems Division of the PE Biosystems Group.
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In late September 1999, Dr. Fors approached Dr. Hunkapiller and Mr. Lucero
about a possible merger between PE Corporation and Third Wave.
At the regularly scheduled October 6, 1999, meeting of the Third Wave
board of directors, the board discussed the history of the discussions with PE
Corporation and the possibility of a merger between PE Corporation and Third
Wave. The Third Wave board of directors ratified the retention of Lehman
Brothers as its financial advisor in connection with its discussions with PE
Corporation. No other formal action was taken at this meeting.
On October 15, 1999, members of PE Corporation's senior management,
including Dr. Hunkapiller and Mr. Dennis Winger, Senior Vice President and Chief
Financial Officer of PE Corporation, met Dr. Fors, other members of the Third
Wave senior management team, and Mr. Peter Carroll and Mr. David Casimir of
Medlen and Carroll, Third Wave's intellectual property law firm, to discuss
Third Wave's intellectual property and its existing and pending strategic
relationships. As a follow up to this meeting, Dr. Fors sent Dr. Hunkapiller and
Mr. Winger Third Wave's audited financial statements and other financial
information for the fiscal years ended March 31, 1997, 1998 and 1999.
During the week of October 18, 1999, Mr. Fred Frank, Vice Chairman of
Lehman Brothers, discussed with Dr. Hunkapiller possible terms and structures
for a merger between PE Corporation and Third Wave.
At a meeting of the PE Corporation board of directors on October 21, 1999,
Drs. Hunkapiller and Heron presented a preliminary review of a possible
acquisition of Third Wave, including Third Wave's technologies, organization and
financial condition. Following such presentation, the board authorized
management to continue due diligence and analysis of Third Wave with the goal of
refining a possible transaction to be presented to the board for consideration
at a subsequent date.
On October 28, 1999, a PE Corporation management team led by Mr. Tony
White, Chairman, President and Chief Executive Officer of PE Corporation, met
with a Third Wave management team led by Dr. Fors and also with representatives
of Goldman, Sachs & Co., PE Corporation's financial advisors, and
representatives of Lehman Brothers. At that meeting, Mr. White proposed a PE
Biosystems stock-for-stock business combination with Third Wave valued at $250
million. No definitive understandings were reached at that meeting.
Between October 31, 1999 and November 2, 1999, Dr. Fors discussed the
price and terms proposed by Mr. White with each of the members of the Third Wave
board of directors, each of whom encouraged Dr. Fors to pursue discussions with
PE Corporation regarding the proposed merger.
On November 3, 1999, Dr. Fors spoke with Dr. Hunkapiller, Mr. Winger and
Mr. William Sawch, Senior Vice President, General Counsel and Secretary of PE
Corporation, to indicate Third Wave's interest in a merger. During this phone
conference, the principals agreed that each party should complete due diligence
and commence negotiation of a definitive merger agreement.
Throughout the next two months, representatives of and advisors to PE
Corporation and Third Wave conducted financial, accounting and legal due
diligence review, and commencing on November 9, 1999, the parties and their
respective counsels began negotiating the terms of the merger agreement.
On November 18, 1999, Dr. Fors and Mary Ann Brow, Director, Intellectual
Property & Technology Development for Third Wave, met with the Technology
Advisory Committee of the PE Corporation board of directors at a regular meeting
to discuss Third Wave's intellectual property and technology. Also on November
18, 1999, at a regular meeting of the PE Corporation board of directors, Dr.
Hunkapiller, Mr. Lucero and members of PE Corporation's management responsible
for technology and intellectual property made a presentation to the PE
Corporation board of directors regarding Third Wave's intellectual property and
discussed the status of PE Corporation's due diligence review.
On January 10, 2000, representatives of the respective senior managements
of PE Corporation and Third Wave and Goldman Sachs and Lehman Brothers met at PE
Corporation to complete Third Wave's due diligence on PE Corporation.
On January 12, 2000, Mr. White, Mr. Winger and Dr. Hunkapiller met with
Dr. Fors to further discuss the merger proposal and attempt to resolve
outstanding issues.
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On January 17 and 18, 2000, Dr. Fors and Mr. White had a number of
discussions regarding the exchange ratio and merger consideration to be received
by Third Wave's shareholders in the merger, and on January 18, 2000, Dr. Fors
and Mr. White agreed to use a 15-day trailing weighted average stock price
measured from January 18, 2000 in the calculation of the exchange ratio.
Between January 18, 2000 and January 23, 2000 the parties and their
advisors continued to negotiate the terms of the proposed merger.
On January 20, 2000, at a regular meeting of the PE Corporation board of
directors, the board discussed the status of the negotiations with Third Wave
and the terms of the merger agreement, the voting agreement and the form of
escrow agreement. At the conclusion of the meeting, the PE Corporation board of
directors unanimously approved all aspects of the merger with Third Wave,
subject to the final resolution by management of all outstanding issues.
The Third Wave board of directors discussed the status of negotiations at
a special meeting on January 20, 2000, and met again on January 22, 2000 with
Third Wave's legal counsel and representatives of Lehman Brothers. At the
January 22, 2000 meeting, representatives of Lehman Brothers presented their
financial analyses, reviewed at prior meetings of the Third Wave board of
directors, and indicated that, if requested, it would be in a position to
deliver Lehman Brothers' opinion to the effect that, as of such date, the merger
consideration to be received by holders of Third Wave common stock and Third
Wave preferred stock was fair, from a financial point of view, to the holders of
such stock. The Third Wave board of directors again discussed the potential
risks and benefits of the proposed merger to Third Wave's shareholders as well
as other long-term alternatives for Third Wave (see "--Reasons for the
Merger--Third Wave"). Following extensive discussion, the merger agreement, the
merger, the form of escrow agreement and the recommendation of John Neis as
shareholder representative under the escrow agreement were unanimously approved
by the Third Wave board of directors, subject to the delivery of the
above-referenced written opinion of Lehman Brothers. On January 23, 2000, Lehman
Brothers delivered its written opinion to the Third Wave board of directors to
the effect that, as of such date, the merger consideration to be received by
holders of Third Wave common stock and Third Wave preferred stock was fair, from
a financial point of view, and the merger agreement was signed by the parties
thereafter.
On January 24, 2000, PE Biosystems and Third Wave issued a press release
announcing the signing of the merger agreement.
Reasons for the Merger
PE Corporation. In evaluating the proposed merger, the PE Corporation
board of directors reviewed presentations from its management and advisors,
including the analyses prepared by its financial advisor, Goldman, Sachs & Co.
In reaching its determination to approve the merger agreement, the voting
agreement, the form of escrow agreement and the transactions contemplated
thereby, the PE Corporation board of directors considered a number of factors,
including the factors listed below.
o The PE Corporation board of directors' belief that the merger would
permit the PE Biosystems group to achieve its strategic goal of
accessing a new molecular diagnostic marketplace with the technology
acquired from Third Wave. Specifically, the belief that combining PE
Biosystems' technology platform with Third Wave's Invader(R)
technology could be a step towards making personalized medicine
possible by using these technologies for the detection of genetic
variations known as "SNPs," or single nucleotide polymorphisms.
o The PE Corporation board of directors' belief that the complementary
technology and products of PE Biosystems and Third Wave could be
combined in a manner that would expand the market applications of
the technologies from the genome research market to the clinical
research market. Specifically, the combined technologies would
enable entry into new markets through the development of gene
expression assays for high throughput screening.
o The PE Corporation board of directors' view that the combination of
Third Wave's Invader(R) technology with PE Biosystems' Sequence
Detection Systems instrumentation would enable the combined company
to
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provide an integrated platform that would ensure the continued
growth of the SDS research business unit by expanding the market for
SDS platform products through enlarged distribution channels and a
broader installed customer base.
o The PE Corporation board of directors' determination that the
combination of Third Wave's products and technologies with PE
Biosystems' sales, service and support infrastructure would provide
increased opportunities for revenue growth.
o The PE Corporation board of directors' determination that a business
combination with Third Wave would provide opportunities beyond those
reasonably available through internal growth by permitting PE
Biosystems to acquire a portfolio of products and technologies
providing a base from which the combined company could accelerate
development of advanced systems for the large scale analysis of
genetic variation.
o The terms and conditions of the merger agreement, the voting
agreement and the form of escrow agreement, including the form and
amount of consideration, and the representations, warranties,
covenants and conditions contained in such agreements.
o Current market conditions, historical market prices and trading
information with respect to the PE Biosystems common stock and the
analyses prepared by PE Corporation's financial advisor, Goldman
Sachs.
o The PE Corporation board of directors' expectation that the merger
would be accounted for as a pooling of interests for financial
accounting purposes, thereby minimizing the dilutive effect of the
merger on existing holders of PE Biosystems common stock.
None of the foregoing factors or groups of factors had particular
prominence in the decision of the PE Corporation board of directors to approve
the merger agreement, the voting agreement, the form of escrow agreement and the
other transactions contemplated thereby, and none was assigned any specific or
relative weight.
Third Wave. The Third Wave board of directors unanimously approved the
terms and provisions of the merger agreement, the form of escrow agreement and
the transactions contemplated thereby, including the merger, and the
recommendation of John Neis as shareholder representative under the escrow
agreement, at a special meeting held on January 22, 2000. In evaluating the
merger agreement, the form of escrow agreement and the transactions contemplated
thereby, and the recommendation of John Neis as shareholder representative under
the escrow agreement, and arriving at its approval, the Third Wave board of
directors considered a number of factors, including the factors listed below.
o The Third Wave board of directors' belief that the merger would
result in the creation of a combined company with significantly
greater resources, a more integrated multi-technology product
offering and greater management, sales, service and marketing
capabilities than those of Third Wave alone, and would enable the
combined company to access markets, service customers and compete
more effectively with competitors having greater resources and
broader product offerings than Third Wave could alone.
o The Third Wave board of directors' belief that the merger would
provide Third Wave with the potential to expand the market presence
of its products globally through PE Biosystems' existing sales force
and existing international sales and distribution channels and its
determination that, on its own, Third Wave would need to either
substantially invest in building its own sales force or enter into
potentially costly distribution arrangements.
o The Third Wave board of directors' belief that the merger would
provide increased access to capital needed for growth and technology
development.
o The Third Wave board of directors' determination that the combined
company's financial and management resources would facilitate
relationships and enhance credibility with existing and prospective
customers.
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o The Third Wave board of directors' belief that the combined
company's greater financial resources and stability and market
presence would allow it to enter into collaborative relationships
with third parties more easily than Third Wave could alone.
o The complementary nature of the product and technology offerings of
Third Wave and PE Biosystems, which the Third Wave board of
directors believed would improve the combined company's competitive
position by offering its customers a more fully integrated portfolio
of products than either company could offer alone or than its
competitors currently offer, thereby potentially enabling customers
to compress the time and reduce the costs of genetic analysis in
both the research and clinical markets.
o The Third Wave board of directors' view that the combined company's
greater financial stability and improved long-term prospects would
enable it to attract and retain talented employees more easily than
Third Wave could alone.
o The Third Wave board of directors' determination that the
combination of the complementary technologies and research and
development teams of Third Wave and PE Biosystems could lead to more
rapid product development cycles and to product development
improvements.
o The Third Wave board of directors' belief that cost and operating
efficiencies could be achieved through the integration of operations
of Third Wave and PE Biosystems.
o The Third Wave board of directors' belief that the combined
company's greater financial and technology resources would allow it
to more easily obtain licenses and rights from third parties
necessary for Third Wave to implement its business model than Third
Wave could obtain alone.
o The intent that the transaction qualify as a tax-free reorganization
so that no taxable gain or loss would be recognized by the Third
Wave shareholders on the exchange of their shares of Third Wave
common stock and Third Wave preferred stock for PE Biosystems common
stock.
o The potential future appreciation in the value of the PE Biosystems
common stock that Third Wave shareholders would receive in exchange
for their shares of Third Wave common stock and Third Wave preferred
stock, although there can be no assurance that any such appreciation
will materialize, or that the value of the PE Biosystems common
stock would not decline.
o Current market conditions, historical market prices and trading
information with respect to the PE Biosystems common stock.
o Other long-term alternatives for Third Wave, including the
possibility of selling shares of Third Wave common stock in a public
offering, pursuing other transaction structures or the potential of
being acquired by another company.
o The Third Wave board of directors' belief, based on its assessment
of the negotiations, that a higher exchange ratio or better terms
could not be achieved through continued negotiations with PE
Corporation.
o The Third Wave board of directors' belief that the results of
financial analyses performed by management and Lehman Brothers were
consistent with the consideration to be received by Third Wave
shareholders and the relative valuations of PE Biosystems and Third
Wave in the merger.
o The opinion of Lehman Brothers to the effect that, as of the date of
such opinion, the merger consideration (as defined in the merger
agreement) is fair, from a financial point of view, to the holders
of Third Wave common stock and Third Wave preferred stock.
None of the foregoing factors or groups of factors had particular
prominence in the decision of the Third Wave board of directors to approve the
merger agreement, the merger, the form of escrow agreement and the other
transactions
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<PAGE>
contemplated thereby, and the recommendation of John Neis as shareholder
representative under the escrow agreement, and none was assigned any specific or
relative weight.
The Third Wave board of directors also considered negative factors
relating to the merger, including:
o the risk that the benefits sought in the merger would not be fully
achieved;
o the risk that the merger would not be consummated;
o the risk that the value of the PE Biosystems common stock will not
appreciate or that it will decline;
o the effect of the public announcement of the merger on Third Wave's
sales, operating results and ability to enter into arrangements with
certain third parties; and
o other risks described above under "Risk Factors" on page 11.
The Third Wave board of directors believed that these risks were
outweighed by the potential benefits to be gained by the merger.
Recommendation of the Third Wave Board of Directors
The Third Wave board of directors believes that the merger agreement, the
merger, the form of escrow agreement and the appointment of John Neis as
shareholder representative under the escrow agreement are fair to and in the
best interests of Third Wave and its shareholders and has unanimously approved
and declared advisable the merger agreement, the merger, the form of escrow
agreement and the appointment of John Neis as shareholder representative under
the escrow agreement. The Third Wave board of directors recommends that Third
Wave shareholders vote FOR the proposal to approve and adopt the merger
agreement, the merger, the form of escrow agreement and the appointment of John
Neis as shareholder representative under the escrow agreement.
The Third Wave board of directors will be permitted to withdraw or change
its recommendation if it concludes in good faith and on the advice of its
counsel that making the recommendation would likely violate its legal duties to
the Third Wave shareholders. No such withdrawal or change, however, will affect
the obligations of holders of Third Wave stock under the voting agreement.
Opinion of Financial Advisor to Third Wave
Third Wave has retained Lehman Brothers to act as its financial advisor in
connection with the merger. As part of its role as financial advisor, Lehman
Brothers rendered its written opinion to the Third Wave board of directors on
January 23, 2000, that as of the date of such opinion, and subject to the
factors and assumptions set forth in that opinion, the exchange ratio to be
offered to the holders of Third Wave preferred stock and Third Wave common stock
by PE Corporation in the merger is fair from a financial point of view to such
shareholders. The full text of the Lehman Brothers opinion is attached hereto as
Annex IV. Third Wave's shareholders may read the Lehman Brothers opinion for a
discussion of assumptions made, matters considered and limits on the review
undertaken by Lehman Brothers in rendering its opinion. The summary set forth in
this prospectus of the opinion of Lehman Brothers is qualified in its entirety
by reference to the full text of the Lehman Brothers opinion attached hereto.
No limitations were imposed by Third Wave on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
its opinion, except as described below. Lehman Brothers was not requested and
did not make any recommendation to the Third Wave board of directors as to the
form or amount of consideration to be offered by PE Corporation to the Third
Wave shareholders in the merger, which was determined through arm's length
negotiations between the two parties. In arriving at its opinion, Lehman
Brothers did not ascribe a specific range of value to Third Wave or PE
Corporation, but rather made its determination as to the fairness, from a
financial point of view, of the exchange ratio to be offered by PE Corporation
to the Third Wave shareholders in the merger on the basis of the financial and
27
<PAGE>
comparative analyses described below. The Lehman Brothers opinion is for the use
and benefit of the Third Wave board of directors and was rendered to the Third
Wave board of directors in connection with its consideration of the merger. The
Lehman Brothers opinion is not intended to be and does not constitute a
recommendation to any shareholder of Third Wave as to how such shareholder
should vote with respect to the merger. Lehman Brothers was not requested to
opine as to, and its opinion does not address, Third Wave's underlying business
decision to proceed with or effect the merger.
In arriving at its opinion, Lehman Brothers reviewed and analyzed:
o the merger agreement and the specific terms of the merger;
o publicly available information concerning PE Corporation and the PE
Biosystems group that Lehman Brothers believed to be relevant to its
analysis, including the Annual Report on Form 10-K of PE Corporation
for the fiscal year ended June 30, 1999 and the Quarterly Report on
Form 10-Q of PE Corporation for the quarter ended September 30,
1999;
o financial and operating information with respect to the business,
operations and prospects of Third Wave furnished to Lehman Brothers
by Third Wave;
o financial and operating information with respect to the business,
operations and prospects of PE Corporation and the PE Biosystems
group furnished to Lehman Brothers by PE Corporation;
o a trading history of the PE Biosystems common stock from May 1999 to
the present and of PE Corporation's common stock from January 1999
to May 1999, and a comparison of those trading histories with those
of other companies that Lehman Brothers deemed relevant;
o a comparison of the historical financial results and present
financial condition of Third Wave with those of other companies that
Lehman Brothers deemed relevant;
o a comparison of the historical financial results and present
financial condition of PE Corporation with those of other companies
that Lehman Brothers deemed relevant;
o estimates of third party research analysts with respect to the
future financial performance of PE Corporation;
o a comparison of the financial terms of the merger with the financial
terms of certain other transactions that Lehman Brothers deemed
relevant;
o the potential pro forma financial effects of the merger, including
cost savings, operating synergies and other strategic benefits
expected by the management of Third Wave and PE Corporation to
result from a combination of the businesses of Third Wave and of PE
Corporation;
o the results of informal efforts to solicit indications of interest
from third parties with respect to a purchase of Third Wave; and
o alternatives available to Third Wave on a stand alone basis to fund
its future capital and operating requirements, including access to
public equity markets.
In addition, Lehman Brothers had discussions with the management of Third Wave
and the management of PE Corporation and the PE Biosystems group concerning
their respective businesses, operations, assets, financial conditions and
prospects and have undertaken 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 Third
Wave and PE Corporation that they are not aware of any facts that would make
such information inaccurate or misleading. With respect to the financial
forecasts of Third Wave, upon
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<PAGE>
advice of Third Wave, Lehman Brothers assumed that such forecasts have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of Third Wave as to the future financial
performance of Third Wave. However, for purposes of its analysis, Lehman
Brothers also considered certain somewhat more conservative assumptions and
estimates which resulted in certain adjustments to the projections of Third
Wave. Lehman Brothers discussed these adjusted projections with the management
of Third Wave and they have agreed with the appropriateness of the use of such
adjusted projections in performing its analysis. With respect to the future
financial performance of PE Corporation, Lehman Brothers has not been provided
with, and did not have any access to, financial projections of PE Corporation
prepared by management of PE Corporation. Accordingly, Lehman Brothers assumed
that the published estimates of third party research analysts are a reasonable
basis upon which to evaluate the future financial performance of PE Corporation
and that PE Corporation will perform substantially in accordance with such
estimates. In arriving at its opinion, Lehman Brothers conducted only a limited
physical inspection of the properties and facilities of Third Wave. It has not
conducted a physical inspection of the properties and facilities of PE
Corporation, and it has not made or obtained any evaluations or appraisals of
the assets or liabilities of Third Wave or PE Corporation. In addition, Third
Wave did not authorize Lehman Brothers to formally solicit, and Lehman Brothers
has not so solicited, any indications of interest from any third party with
respect to the purchase of Third Wave. Upon advice of Third Wave and its legal
and accounting advisors, Lehman Brothers assumed that the merger will qualify as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and therefore as a tax-free transaction to the holders
of Third Wave common stock and Third Wave preferred stock. Lehman Brothers'
opinion necessarily is based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of the opinion.
In connection with the preparation and delivery of its opinion to the
Third Wave board of directors, Lehman Brothers performed a variety of financial
and comparative 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
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 factors, without considering all
analyses and factors, could create a misleading or incomplete view of the
process underlying its 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 Third Wave
and PE Corporation. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future values or
results, 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 may
actually be sold.
Historical Stock Performance. Lehman Brothers reviewed trading prices for
the shares of PE Biosystems common stock (the PE Biosystems group began trading
under its current name on May 6, 1999). This stock performance review indicated
that for the period commencing May 6, 1999 and ended January 18, 2000, PE
Biosystems group's stock price increased 301.6%, compared to 114.4% for the S&P
400 Index and 152.6% for the following life sciences supply companies (the
"comparable life sciences supply group") deemed relevant by Lehman Brothers:
Beckman Coulter, Inc., Invitrogen Corporation, Millipore Corporation, Qiagen
N.V., Sigma-Aldrich Corporation, Techne Corporation and Waters Corporation.
Comparable Company Analysis. Using publicly available information, Lehman
Brothers reviewed the financial performance of Third Wave with the financial
performance and stock market valuation of the following selected biotechnology
companies (the "comparable biotechnology group") deemed relevant by Lehman
Brothers: Affymetrix, Inc., ArQule, Inc., Caliper Technologies Corporation, PE
Corporation-Celera Genomics Group, CuraGen Corporation, Gene Logic, Inc., Genome
Therapeutics Corporation, Genset SA, Hyseq, Inc., Incyte Pharmaceuticals, Inc.,
IGEN International Inc., Invitrogen Corporation, Myriad Genetics, Inc., Nanogen,
Inc. and Qiagen N.V. The analysis was performed using stock prices as of January
18, 2000. The following table uses the multiples of latest twelve months ("LTM")
revenue from select companies in the comparable biotechnology group to derive a
range of values based on Third Wave's historical and projected revenues
(projected revenue is based on the mean of three scenarios described in
"--Discounted Cash Flow" below: management forecast, one year delay scenario and
25% revenue reduction scenario). The derived equity values based on estimated
2000 and 2001 revenue are discounted at 30% to determine the present value.
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<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Range of Equity Values
Methodology Revenue ($ millions) Range of Multiples ($ millions)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Multiple of 1999 Revenue 4.2 16.9x-26.6x 86.5-126.9
Multiple of 2000E Revenue 11.8 16.9x-26.6x 169.1-257.4
Multiple of 2001E Revenue 34.7 16.9x-26.6x 362.2-561.4
-----------------------
Overall Range 205.9-315.2
</TABLE>
In addition, using publicly available information, Lehman Brothers
reviewed the financial performance and stock market valuation of the PE
Biosystems group with the comparable life sciences supply group. The analysis
was performed using stock prices as of January 18, 2000. EPS estimates are First
Call Consensus estimates as of January 18, 2000 and estimated five-year growth
rates are derived from Bloomberg as of January 18, 2000.
Lehman Brothers reviewed the following stock market trading statistics for
the comparable life sciences supply group. As of January 18, 2000, the market
values ranged from $1,148 million to $3,615 million (mean of $2,304 million);
the multiples of market value plus net debt over LTM revenue and LTM earnings
before interest and taxes ("EBIT") ranged from 1.5x to 26.6x and 12.6x to
159.7x, respectively (means of 10.0x and 54.8x, respectively); the share price
over calendar 1999, 2000 and 2001 estimated earnings per share ("EPS") ranged
from 14.9x to 233.3x, 13.2x to 156.7x and 11.8x to 106.1x, respectively (means
of 73.9x, 54.2x and 40.4x, respectively) ("estimated P/E multiple"); the
estimated P/E multiple to growth rate for calendar years 1999, 2000 and 2001
ranged from 1.1x to 6.1x, 0.9x to 4.1x and 0.8x to 2.8x, respectively (means of
2.7x, 2.0x and 1.6x, respectively); and the LTM gross margin, EBIT margin and
net margin ranged from 47.9% to 72.2%, 11.7% to 29.4% and 5.5% to 19.1%,
respectively (means of 61.2%, 19.2% and 11.9%, respectively).
Lehman Brothers also reviewed the same stock market trading statistics for
the PE Biosystems group. As of January 18, 2000, the PE Biosystems group's
market value was $17,094 million; the market value plus net debt over LTM
revenue and LTM EBIT multiples were 13.6x and 85.5x, respectively; the estimated
P/E multiples for calendar years 1999, 2001 and 2001 were 104.7x, 86.6x and
69.6x, respectively; the estimated P/E to growth rate multiples for calendar
years 1999, 2000 and 2001 were 4.6x, 3.8x and 3.0x, respectively; and the LTM
gross margin, EBIT margin and net margin was 53.4%, 15.9% and 12.4%,
respectively.
Because of the inherent differences in the businesses, operations,
financial conditions and prospects of Third Wave, PE Corporation and the PE
Biosystems group and the companies included in the comparable biotechnology
group and comparable life sciences supply group, Lehman Brothers believed that
it was inappropriate to, and therefore did not, rely solely on the quantitative
results of its analysis and, accordingly, also made qualitative judgments
concerning differences between Third Wave and PE Corporation and the PE
Biosystems group and the companies included in their respective comparable
groups which would affect the trading value of Third Wave and PE Corporation and
the PE Biosystems group and the respective comparable companies.
Comparable Transaction Analysis. Using publicly available information,
Lehman Brothers reviewed certain terms and financial characteristics, including
total equity value, total equity value less net cash and total equity value less
net cash as a multiple of LTM revenue, of ten biotechnology merger or
acquisition transactions (the "comparable biotechnology transactions group")
which Lehman Brothers deemed to be comparable to the present transaction. The
comparable biotechnology transactions group considered by Lehman Brothers in its
analysis consisted of the following (identified by acquiror/acquiree): E.I.
DuPont de Nemours and Company/CombiChem, Inc., Amersham Pharmacia Biotech (joint
venture between Nycomed Amersham plc and Pharmacia & Upjohn, Inc.)/Molecular
Dynamics, Pharmacopeia Inc./Molecular Simulations, Inc., Incyte
Pharmaceuticals/Synteni Inc., Arris Pharmaceutical/Sequana Therapeutics, PE
Corporation/PerSeptive Biosystems, Agouron Pharmaceuticals/Alanex Corporation,
Chiroscience Group plc/Darwin Molecular Corporation, Glaxo plc/Affymax N.V. and
Hoffman-La Roche/Cetus Corporation. The transactions were chosen because they
involved acquirees focused on the genomics or research tools segments of the
biotechnology market. In the table listed below, the first column sets forth the
total equity value, the second column sets forth the total equity value less net
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<PAGE>
cash and the third column sets forth the total equity value less net cash as a
multiple of LTM revenue. The mean, median, maximum and minimum data were
calculated based on a total of ten transactions.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Total Equity Value Total Equity Value Less Net Total Equity Value Less Net Cash as a
($ millions) Cash ($ millions) Multiple of LTM Revenue
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mean 205.2 183.4 13.37x
- -----------------------------------------------------------------------------------------------------------------
Median 146.3 120.3 5.85x
- -----------------------------------------------------------------------------------------------------------------
Maximum 536.3 466.7 46.53x
- -----------------------------------------------------------------------------------------------------------------
Minimum 62.0 63.3 2.03x
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
These values compare to values for Third Wave in the merger of $315.8
million, $300.6 million and 71.57x, based on the PE Biosystems common stock
closing stock price as of January 18, 2000. Because the market conditions,
rationale and circumstances surrounding each of the transactions analyzed were
specific to each transaction and because of the inherent differences in the
businesses, operations, financial conditions and prospects of Third Wave and the
acquiree companies included in the comparable biotechnology transactions group,
Lehman Brothers believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of its analysis and, accordingly, also
made qualitative judgments concerning differences between the characteristics of
these transactions and the merger that would affect the acquisition values of
Third Wave and such acquired companies.
Public Market Alternatives. Lehman Brothers reviewed five biotechnology
initial public offerings ("IPO's") which priced between November 10 and December
15, 1999. This IPO review showed a mean pre-money valuation of $321.6 million
and a mean amount raised of $91.6 million resulting in a mean post-money
valuation of $413.2 million. As of January 18, 2000, the mean market
capitalization for the five companies was $1.7 billion, a change of 318% since
the IPO.
Discounted Cash Flow Analysis. Lehman Brothers performed five-year and
ten-year discounted cash flow analyses to determine a range of present values
for Third Wave assuming Third Wave continued to operate as a stand-alone entity.
In connection with these analyses, Third Wave management provided Lehman
Brothers with financial projections of revenues through 2009 associated with
each of Third Wave's business areas. These projections were used to construct
the management case valuation analysis. The discounted cash flow analyses
determined the discounted present value of the unlevered, after-tax cash flows
generated over the five-year or ten-year period and then added a terminal value
based on a multiple of Third Wave's operating income for 2004 and 2009. The
multiple ranges selected for 2004 (15.0x-20.0x) and 2009 (12.5x-17.5x) were
based on consideration of the current EBIT multiples of biotechnology companies
with technology platforms and the expected maturity of Third Wave after five and
ten years. The unlevered, after-tax free cash flows and terminal value were
discounted using a range of discount rates from 25%-35%. Finally, two
sensitivity analyses were run on management's projections. In the first
analysis, Lehman Brothers assumed that all revenues and cost of goods sold were
delayed by one year, while fixed expenses remained constant. The second
sensitivity analysis applied a discount of 25% to the total revenues and cost of
goods sold.
The range of equity values for Third Wave derived from the discounted cash
flow analysis is $72.9 million to $864.6 million for a five-year holding period
and $186.8 million to $1,200.7 million for a ten-year holding period. The values
above include net cash as of September 30, 1999.
With respect to PE Corporation and the PE Biosystems group, Lehman
Brothers analyzed the PE Biosystems group based on an unlevered discounted cash
flow analysis. Lehman Brothers based its analysis on research analyst
projections covering fiscal years 2000 to 2002 and 22% revenue growth with
stable margins from fiscal years 2003 to 2004. The discounted cash flow analysis
determined the discounted present value of the unlevered after-tax cash flow
generated over the five-year period and then added a terminal value based upon a
range of terminal sales multiples from 11.0x to 15.0x. The unlevered, after-tax
cash flows and terminal values were discounted using a range of discount rates
from 10.0% to 20.0%.
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The range of equity values for the PE Biosystems group derived from the
discounted cash flow analysis is $12.9 billion to $26.8 billion, or $120.83 to
$250.94 per share (without giving effect to the 100% stock dividend on the PE
Biosystems common stock distributed on February 18, 2000). The values above
include net cash as of September 30, 1999.
Pro Forma Merger Analysis. Lehman Brothers analyzed the impact of the
merger on the PE Biosystems group estimated earnings per share based on the
published First Call estimates for the fourth quarter and full year for fiscal
years 2000 and 2001. Lehman Brothers utilized Third Wave management earnings
estimates for the fourth quarter and full year for fiscal years 2000 and 2001.
In connection with this analysis, management of Third Wave and PE Corporation
provided Lehman Brothers with estimated cost savings from the merger, which were
incorporated into Lehman Brothers' analysis. Lehman Brothers analyzed the merger
using two accounting scenarios, pooling-of-interests accounting and purchase
accounting. Based on such First Call estimates, management earnings forecasts,
management projections of cost savings and pooling-of-interests accounting,
Lehman Brothers concluded that the merger would be accretive to the PE
Biosystems group's earnings with cost savings and dilutive to the PE Biosystems
group earnings without cost savings in the fourth quarter of fiscal year 2000,
and accretive under either scenario in fiscal year 2001. Assuming that the
merger is accounted for as a purchase transaction, Lehman Brothers concluded
that it would be dilutive to the PE Biosystems group's earnings, with or without
cost savings, in the fourth quarter of fiscal year 2000 and fiscal year 2001.
Contribution Analysis. Lehman Brothers analyzed the respective
contributions of Third Wave and PE Corporation to the combined company's
estimated fiscal years 2000, 2001 and 2002 revenue, EBIT and net income. This
analysis is based on Third Wave management estimates and analyst research
reports for PE Corporation. This analysis showed that Third Wave is estimated to
contribute 0.5%, 2.2% and 4.2% of net revenue in fiscal years 2000, 2001 and
2002, respectively. Third Wave has negative EBIT in fiscal year 2000 and would
contribute 2.4% and 5.1% in fiscal years 2001 and 2002, respectively. Lastly,
Third Wave has negative net income in fiscal year 2000 and would contribute 3.3%
and 6.2% in fiscal years 2001 and 2002, respectively. Based upon the exchange
ratio, Third Wave shareholders would own an estimated 1.8% of the combined
company upon completion of the merger.
Lehman Brothers is an internationally recognized investment banking firm.
Lehman Brothers, as part of its investment banking business, is regularly
engaged in the valuation of businesses and 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 Third Wave board of directors
retained Lehman Brothers based upon Lehman Brothers' experience, expertise,
reputation and familiarity with Third Wave and the industry in general and
because its investment banking professionals have substantial experience in
transactions similar to the merger. Lehman Brothers is acting as financial
advisor to Third Wave in connection with the merger. As compensation for its
services, Third Wave has agreed to pay Lehman Brothers a transaction fee of
0.85% of the transaction value (as measured on the last trading day prior to
public announcement) up to $300 million and 1.25% of the transaction value above
$300 million, contingent upon and payable upon the completion of the merger. In
addition, Third Wave has agreed to reimburse Lehman Brothers for its
out-of-pocket expenses and indemnify Lehman Brothers and certain related persons
and entities against certain liabilities, including liabilities under securities
laws, incurred in connection with its services thereunder. Frederick Frank, a
Vice Chairman of Lehman Brothers, currently owns 53 shares of common stock of
Third Wave, which will be exchanged for 9,945.8 shares of PE Biosystems common
stock upon consummation of the merger. In the ordinary course of their business,
Lehman Brothers and its affiliates may actively trade the securities of PE
Corporation, including the PE Biosystems group, for their own account and for
the accounts of their customers and, accordingly, may at any time hold a long or
a short position in such securities.
Structure of the Merger
If all conditions to the merger are satisfied or waived in accordance with
the merger agreement, Blue Acquisition Corp., a direct, wholly owned subsidiary
of PE Corporation, will merge with and into Third Wave, with Third Wave
continuing as the surviving corporation. Following the merger, Third Wave will
be a wholly owned subsidiary of PE Corporation.
Closing Matters
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<PAGE>
Closing. The closing of the merger will take place no earlier than April
1, 2000, and on or after April 1, 2000, no later than the second business day
after all closing conditions have been satisfied or waived, unless the merger
agreement has been terminated or another time or date is agreed to in writing by
the parties. See "--Conditions to the Merger" on page 38 for a more complete
description of the conditions that must be satisfied prior to closing.
Effective Time. As soon as practicable after the satisfaction of the
conditions to the merger, PE Corporation and Third Wave will file articles of
merger with the Department of Financial Institutions of the State of Wisconsin
in accordance with the relevant provisions of the Wisconsin Business Corporation
Law and make all other required filings or recordings. The merger will become
effective when the articles of merger are duly filed or at such later time as is
permissible in accordance with the WBCL and as Third Wave and PE Corporation
agree and specify in the articles of merger.
Consideration to Be Received in the Merger; Treatment of Stock Options
The merger agreement provides that, at the effective time of the merger:
o each share of Third Wave common stock or Third Wave preferred stock
issued and outstanding immediately prior to the effective time of
the merger (excluding dissenters' shares) will be converted into
187.6578 shares of PE Biosystems common stock and associated rights.
This number is referred to as the "exchange ratio." This exchange
ratio has been adjusted to give effect to the 100% stock dividend on
PE Biosystems common stock distributed on February 18, 2000; and
o each outstanding and unexercised option to purchase shares of Third
Wave common stock granted under the Third Wave stock plans will be
assumed by PE Corporation and converted into an option to purchase
shares of PE Biosystems common stock under the same terms and
conditions as were applicable to the options as granted under the
Third Wave stock plans. The number of shares of PE Biosystems common
stock that the converted options will be exercisable for, and the
exercise price of the option, will be adjusted to reflect the
exchange ratio.
In addition, any shares of Third Wave common stock or Third Wave preferred
stock owned by PE Corporation, held by Third Wave as treasury stock or owned by
any of their respective subsidiaries will be automatically canceled, and we will
not exchange those shares for any shares of PE Biosystems common stock or other
consideration.
As soon as practicable after the effective time of the merger, PE
Corporation will deliver notices to the holders of Third Wave stock options.
Those notices will set forth each holder's rights pursuant to the Third Wave
stock plans, including that, in connection with the merger and pursuant to the
terms of the Third Wave stock plans, the agreements evidencing the grants of the
Third Wave stock options will continue in effect on the same terms and
conditions. To the extent permitted by law, PE Corporation will comply with the
terms of the Third Wave stock plans and will take reasonable steps to ensure
that the stock options which qualified as incentive stock options prior to the
effective time of the merger continue to qualify as incentive stock options
after the merger.
For a further discussion of the treatment of Third Wave stock options and
other employee benefit plans under the merger agreement, see "--Effect on
Employee Benefits, Stock Plans and Stock Options" on page 41.
Exchange of Certificates in the Merger
BankBoston, N.A., in its capacity as exchange agent, will handle the
exchange of Third Wave stock certificates for stock certificates of PE
Biosystems common stock and the payment of cash for fractional shares. Soon
after the closing of the merger, the exchange agent will send a letter of
transmittal, which is to be used to exchange Third Wave stock certificates for
stock certificates of PE Biosystems common stock, to each former Third Wave
shareholder. The letter of transmittal will contain instructions explaining the
procedure for surrendering Third Wave stock certificates. You should not return
certificates with the enclosed proxy card.
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Third Wave shareholders who surrender their stock certificates, together
with a properly completed letter of transmittal, will receive stock certificates
representing 90% of the shares of PE Biosystems common stock into which the
shares of Third Wave common stock or Third Wave preferred stock were converted
in the merger. Stock certificates representing the other 10% of the shares of PE
Biosystems common stock will be withheld from the exchange amount and delivered
by the exchange agent to the escrow agent pursuant to the escrow agreement. See
"--Escrow Agreement" on page 47.
After the merger, each certificate that previously represented shares of
Third Wave common stock or Third Wave preferred stock will only represent the
right to receive the shares of PE Biosystems common stock into which those
shares of Third Wave common stock or Third Wave preferred stock have been
converted.
PE Corporation will not pay dividends to holders of any Third Wave stock
certificates until the Third Wave stock certificates are surrendered. However,
once those certificates are surrendered, PE Corporation will pay to the holder,
without interest, any dividends that have been declared after the effective time
of the merger on the shares into which those Third Wave shares have been
converted.
After the effective time of the merger, Third Wave will not register any
transfers of shares of Third Wave common stock or Third Wave preferred stock.
Fractional Shares
No fractional shares of PE Biosystems common stock will be issued in the
merger. Instead, PE Corporation will pay each of those stockholders who would
have otherwise been entitled to a fractional share of PE Biosystems common stock
an amount in cash determined by multiplying the fractional share interest to
which such holder would otherwise be entitled by the weighted average of the
closing prices of a share of PE Biosystems common stock on the NYSE Composite
Transactions Tape during the 15 consecutive trading days ending on (and
excluding) the trading day immediately prior to the effective time of the
merger.
Representations and Warranties
The merger agreement contains substantially reciprocal customary
representations and warranties made by each of us to the other. These
representations and warranties relate to, among other things:
o due organization, qualification to conduct business and corporate
standing and power;
o capital structure;
o corporate authority to enter into, and carry out the obligations
under, the merger agreement, and enforceability of the merger
agreement;
o absence of a breach of the charter, bylaws, law or material
agreements as a result of the merger;
o accuracy of financial statements;
o absence of certain changes or events;
o litigation;
o compliance with laws;
o payment of fees to brokers in connection with the merger agreement;
o votes required for approval of the merger; and
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o accounting and tax matters.
The merger agreement also contains representations and warranties of Third
Wave relating to:
o ownership of subsidiaries;
o employee benefit plans;
o tax matters;
o title and property matters;
o insurance matters;
o environmental matters;
o material contracts with third parties;
o year 2000 compliance;
o absence of affiliate transactions;
o opinion of financial advisor;
o board of directors approval and recommendation;
o intellectual property matters;
o ownership of PE Corporation stock; and
o powers of attorney.
The merger agreement also contains representations and warranties of PE
Corporation which relate to:
o filings with the SEC;
o operations of Blue Acquisition Corp. prior to closing; and
o ownership of Third Wave stock.
The representations and warranties contained in the merger agreement do
not survive the effective time of the merger, other than as set forth in, and
for the purposes contemplated by, the escrow agreement.
Covenants
We have each undertaken certain covenants in the merger agreement. The
following summarizes the most significant of these covenants:
Conduct of Business by Third Wave Pending Closing. Third Wave has
undertaken a covenant that places restrictions on the conduct of its business
until either the effective time of the merger or the termination of the merger
agreement. In general, Third Wave is required to carry on its business in the
ordinary course of business consistent with past practice and use its reasonable
best efforts to preserve intact its present lines of business and relationships
with third parties. Third Wave has agreed to some specific restrictions that
prohibit it from:
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o declaring or paying dividends on, or making any other distributions
in respect of, any of its capital stock, other than any dividend
accrued in respect of its Series E preferred stock;
o making changes in its share capital, including, among other things,
stock splits, combinations or reclassifications;
o repurchasing or redeeming any of its capital stock;
o issuing, delivering or selling any shares of its capital stock or
other equity interests, other than in connection with the conversion
of Third Wave preferred stock into Third Wave common stock or in
connection with the exercise of stock options or the grant of stock
options in the ordinary course of business and consistent with past
practice;
o amending its articles of incorporation or bylaws;
o making acquisitions of, or investments in, other entities;
o disposing of properties or assets, beyond specified amounts;
o incurring debt, except short term borrowings in specified amounts;
o making loans, advances or capital contributions to, or investments
in, any other person other than Third Wave;
o acquiring or leasing assets other than inventory in specified
amounts;
o making any capital expenditures, beyond specified amounts;
o paying, discharging or satisfying any claims, liabilities or
obligations, except as specified by the merger agreement;
o waiving, releasing or transferring any rights of material value in
any existing license, lease, contract or other document;
o adopting a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or
reorganization;
o entering into or amending any collective bargaining agreement;
o changing any accounting principle used by it, except as required by
generally accepted accounting principles;
o settling or compromising any litigation or claim, other than those
within specified amounts that do not provide for injunctive or
similar relief;
o engaging in any transaction with, or entering into any agreement
with, any of Third Wave's affiliates;
o selling, assigning or licensing any Third Wave intellectual
property;
o entering into, terminating or amending any agreement under which a
third party is granted exclusive rights with respect to any of its
products or technology;
o making any material tax election other than in the ordinary course
of business consistent with past practice;
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o increasing the compensation of directors and executive officers or
increasing employee benefits other than in the ordinary course of
business and consistent with past practice;
o granting any new or modified severance or termination arrangement or
increasing or accelerating any benefits payable under its severance
or termination pay policies; and
o effectuating a "plant closing" or "mass layoff" affecting any site
of employment, facility, operating unit or employee of Third Wave
without notifying PE Corporation and complying with regulatory
requirements.
Conduct of Business by PE Corporation Pending Closing. PE Corporation has
undertaken a covenant that places restrictions on the conduct of its business
until either the effective time of the merger or the termination of the merger
agreement. PE Corporation has agreed to some specific restrictions that prohibit
it from:
o declaring or paying dividends on, or making any other distributions
in respect of, its PE Biosystems common stock, other than regular
quarterly cash dividends consistent with past practice;
o making changes in its PE Biosystems share capital, including, among
other things, splits, combinations, or reclassifications, other than
the split declared on January 20, 2000 and distributed on February
18, 2000 to holders of record on February 4, 2000; and
o amending its certificate of incorporation or bylaws in a manner that
would be materially adverse to the holders of PE Biosystems common
stock.
Additional Reciprocal Covenants Relating to Conduct of Business Pending
the Merger. Both Third Wave and PE Corporation have agreed to some specific
restrictions that prohibit them from:
o taking actions that would prevent or impede the merger from
qualifying as a "pooling of interests" for accounting purposes and
as a reorganization for tax purposes;
o taking actions that, if taken on or prior to the date of the merger
agreement, would have resulted in any of the representations and
warranties set forth in the merger agreement being untrue;
o taking actions that would or reasonably might be expected to result
in any of the conditions to closing not being satisfied; and
o taking actions that could reasonably be expected to materially delay
or impair the ability of either party to consummate the transactions
contemplated by the merger agreement.
No Solicitation. Third Wave has agreed that it will not (whether directly
or indirectly through advisors, agents or other intermediaries), nor will it
authorize or permit any of its officers, directors, agents, representatives,
advisors or subsidiaries to:
o solicit, initiate or take any action knowingly to facilitate the
submission of inquiries, proposals or offers with respect to a third
party "transaction proposal" of the type described below;
o agree to or endorse any transaction proposal;
o enter into or participate in any discussions or negotiations
regarding a transaction proposal;
o furnish to any third party any information with respect to its
business, properties or assets in connection with any transaction
proposal; or
o otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by
any third party to do any of the foregoing.
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A "transaction proposal" is any proposal or offer with respect to:
o any acquisition or purchase of 15% or more of the assets of Third
Wave or of over 15% of any class of equity securities of Third Wave;
o any tender offer, including a self tender offer, or exchange offer
that if consummated would result in any person beneficially owning
15% or more of any class of equity securities of Third Wave;
o any merger, consolidation, business combination, sale of
substantially all of the assets, recapitalization, liquidation,
dissolution or similar transaction involving Third Wave's assets,
individually or in the aggregate, constituting more than 15% of the
consolidated assets of Third Wave, other than the transactions
contemplated by the merger agreement; or
o any other transaction the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or
materially delay the merger.
Reasonable Best Efforts Covenant. We have agreed to cooperate with each
other and to use our reasonable best efforts to take all actions and do all
things advisable or necessary under the merger agreement and applicable laws to
complete the merger and the other transactions contemplated by the merger
agreement. This cooperation may include obtaining all regulatory consents
necessary to complete the merger and defending any lawsuits challenging the
merger agreement.
Registration Rights of Certain Third Wave Shareholders. Third Wave has
agreed that if, at any time before the effective time of the merger, it receives
a notice from the holders of Third Wave Series A preferred stock, Third Wave
Series B preferred stock or Third Wave Series C preferred stock requiring Third
Wave to file a registration statement pursuant to the terms of the shareholder
investment agreements between Third Wave and such shareholders, then Third Wave
will agree, and will use its best efforts to cause the requesting shareholder to
agree, that such registration will have an adverse effect on the merger.
Conditions
Our respective obligations to complete the merger are subject to the
satisfaction or, to the extent permissible, the waiver of various conditions
which include, in addition to other customary closing conditions:
o the adoption and approval of the merger agreement, the form of
escrow agreement and the merger, and the appointment of John Neis as
shareholder representative, by the Third Wave shareholders;
o the absence of any law, order, injunction or restraint prohibiting
completion of the merger;
o the expiration or termination of the applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act;
o the SEC having declared effective the PE Corporation registration
statement, of which this prospectus forms a part;
o the approval for listing by the NYSE and the Pacific Stock Exchange
of the PE Biosystems common stock to be issued in the merger,
subject to official notice of issuance;
o the receipt by Third Wave of letters from its management and its
independent accountants stating that Third Wave is eligible to be
acquired in a transaction that will qualify for "pooling of
interests" accounting treatment, and such letters shall not have
been withdrawn; and
o the execution of the escrow agreement.
In addition, each party's obligation to complete the merger is subject to
the satisfaction by the other party of the following conditions:
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o the representations and warranties of the other party contained in
the merger agreement being true and correct in all material respects
as of the closing date of the merger as if they were made on that
date, unless they were by their express provisions made as of
another particular date, in which case the statement must be true
and correct in all material respects as of that date;
o the other party having performed or complied in all material
respects with its obligations contained in the merger agreement;
o the receipt of all other governmental and regulatory consents,
approvals and authorizations necessary for the merger; and
o the receipt by the other party of an opinion of counsel to the
effect that the merger will qualify as a reorganization under the
Internal Revenue Code and that each of PE Corporation, Third Wave
and Blue Acquisition Corp. will be a party to the reorganization.
Additionally, PE Corporation's obligation to effect the merger and the
other transactions contemplated by the merger agreement is conditioned upon:
o the receipt of all other governmental and regulatory consents,
approvals and authorizations necessary for the merger, unless not
obtaining those consents or approvals would not reasonably be
expected to have a material adverse effect on Third Wave or prevent
or materially delay the ability of Third Wave to complete the
transactions contemplated by the merger agreement;
o the absence of any pending litigation or action which seeks to
restrain or prohibit the merger or limit PE Corporation's operation
of Third Wave, as to which there is a reasonable possibility of
success or that could reasonably be expected to have a material
adverse effect with respect to Third Wave;
o the receipt of affiliate letters from all people considered
affiliates of Third Wave;
o the exercise of dissenter's rights under the Wisconsin Business
Corporation Law by Third Wave shareholders entitled to receive no
more than 6-1/2% of the PE Biosystems common stock issued in the
merger;
o the execution of noncompete agreements between PE Corporation and
three founders of Third Wave; and
o the repayment by Third Wave of outstanding debt specified in the
merger agreement.
Stock Exchange Listings
PE Corporation shall use all reasonable efforts to cause the shares of PE
Biosystems common stock to be issued in the merger and the shares of PE
Biosystems common stock to be reserved for issuance upon conversion or exercise
of Third Wave stock options to be authorized for listing on the NYSE and the PSE
subject to official notice of issuance. Third Wave is a privately owned company
whose stock is not registered under the Securities Exchange Act of 1934 or
listed on any stock exchange.
Regulatory Approvals Required
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits us from
completing the merger until after we have filed the required notification and
report forms and furnished additional information and materials to the Antitrust
Division of the United States Department of Justice and the United States
Federal Trade Commission, if requested, and the required waiting period has
expired or terminated. The required notification and report forms were filed
under the HSR Act with the FTC and the Antitrust Division on February 22, 2000.
On , PE Corporation and Third Wave were notified
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that the waiting period had been terminated. There can be no assurance that a
challenge to the merger on antitrust grounds will not be made or, if a challenge
is made, that it would not be successful. A challenge could be brought by
governmental or private parties, and could seek to enjoin consummation of the
merger or to compel the divestiture of businesses conducted by Third Wave or PE
Corporation.
Termination of the Merger Agreement
Right to Terminate. We may mutually agree to terminate the merger
agreement at any time. In addition, either of us may terminate the merger
agreement if specified events do or do not occur. These include:
o if a court or government regulator permanently prohibits the merger;
or
o if the merger is not completed by May 15, 2000, except that a party
may not terminate the merger agreement if the cause of the merger
not being completed by that date is that party's failure to fulfill
its obligations under the merger agreement. This deadline will be
extended to June 15, 2000 if:
o the SEC has declared effective the PE Corporation registration
statement of which this prospectus is a part; and
o completion of the merger is delayed because the Third Wave
special meeting of shareholders to approve the merger has not
yet been held; and
o neither PE Corporation nor Third Wave is entitled to terminate
the merger agreement under any other provision.
The merger agreement may be also be terminated by PE Corporation if the
Third Wave shareholders fail to approve the merger agreement, the merger, the
form of escrow agreement and the appointment of John Neis as shareholder
representative under the escrow agreement.
Effect of Termination. Pursuant to the terms of the merger agreement, if
the merger agreement is terminated as a result of:
o the failure of Third Wave to obtain shareholder approval of the
merger agreement, the merger, the form of escrow agreement and the
appointment of John Neis as shareholder representative under the
escrow agreement; or C
o the failure of Third Wave to perform in all material respects its
obligations under the merger agreement on or prior to the closing
date of the merger;
then Third Wave will grant to PE Corporation, under terms set forth in an
exhibit to the merger agreement, a worldwide, nonexclusive license to use its
Invader(R) assay technology for applications outside the field of agriculture.
The license will be granted as of the date of termination of the merger
agreement and shall continue until the expiration of the last-to-expire of the
Invader(R) patents. Under the terms of the license, PE Corporation will pay
Third Wave quarterly a royalty fee of 5% of PE Corporation's net sales of the
technology subject to the license.
Amendment and Waiver of the Merger Agreement
The merger agreement may be amended by the parties at any time before or
after approval of the merger agreement by Third Wave's shareholders, but after
Third Wave's shareholder approval is obtained, no amendment of the merger
agreement may be effected that legally requires further approval by Third Wave's
shareholders without their subsequent approval. All amendments to the merger
agreement must be in a writing signed by PE Corporation, Blue Acquisition Corp.
and Third Wave.
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At any time prior to the effective time of the merger, the parties to the
merger agreement may, to the extent legally allowed:
o extend the time for the performance of any of the obligations or
other acts of the other parties to the merger agreement;
o waive any inaccuracies in the representations and warranties of the
other parties contained in the merger agreement or in any document
delivered pursuant to the merger agreement; and
o waive compliance by the other parties with any of the agreements or
conditions contained in the merger agreement.
All extensions and waivers must be in writing and signed by the party against
whom the waiver is to be effective.
Expenses
Except for certain expenses of the surviving corporation that PE
Corporation has agreed to pay in the event the merger is consummated, the
parties to the merger agreement have agreed that all costs and expenses incurred
in connection with the merger will be paid by the party incurring such expenses,
except that the cost of filing, printing and distributing the registration
statement and this prospectus will be borne equally by PE Corporation and Third
Wave.
Effect on Employee Benefits, Stock Plans and Stock Options
Benefit Plans. PE Corporation has agreed, during the one-year period
following the effective time of the merger, that employees of Third Wave will
participate in PE Corporation's employee benefit plans on a basis no less
favorable, in the aggregate, than similarly situated employees of PE Corporation
hired after July 1, 1999. PE Corporation has also agreed to waive limitations as
to preexisting conditions, exclusions and waiting periods with respect to
participation by Third Wave's employees in applicable PE Corporation benefit
plans following the effective time of the merger and to provide credit for
amounts paid by Third Wave employees prior to the effective time of the merger
in satisfying co-payments and deductibles under PE Corporation's welfare plans.
PE Corporation will give employees of Third Wave at the effective time of the
merger and who remain employees thereafter full credit for service under each
comparable Third Wave employee benefit plan maintained by Third Wave immediately
before the effective time of the merger for purposes of eligibility and vesting
under each PE Corporation employee benefit plan in which the employee may
participate and for purposes of vacation accrual.
Stock Options. The merger agreement provides that, after the effective
time of the merger, each outstanding option to purchase Third Wave common stock
granted prior to the effective time of the merger pursuant to Third Wave's stock
plans, whether vested or unvested, will be deemed to constitute an option to
acquire the same number of shares of PE Biosystems common stock as the holder of
such option would have been entitled to receive pursuant to the merger had such
holder exercised such option in full immediately prior to the effective time of
the merger, at a price per share equal to the aggregate exercise price for the
shares of Third Wave common stock otherwise purchasable pursuant to such option
divided by the number of full shares of PE Biosystems common stock deemed
purchasable pursuant to such option. In the case of incentive stock options, the
option price, number of shares purchasable and other terms and conditions of
such option will be determined in order to comply with applicable provisions of
the Internal Revenue Code.
Material United States Federal Income Tax Consequences
The following is a description of the material United States federal
income tax consequences of the merger. This discussion is not a comprehensive
description of all of the tax consequences that may be relevant to you. For
example, we have not described tax consequences that arise from rules that apply
generally to all taxpayers or to some classes of taxpayers. We have also not
described tax consequences that we assume to be generally known by investors.
This discussion is based upon the Internal Revenue Code, the regulations of the
U.S. Treasury Department and court and administrative rulings and decisions in
effect on the date of this prospectus. These laws may change, possibly
retroactively, and any change could affect
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the continuing validity of this discussion. In particular, legislation was
recently proposed by the Clinton Administration dealing with tracking stock such
as the PE Biosystems common stock. Such proposal would, among other things,
grant authority to the IRS to treat tracking stock as something other than stock
or as stock of another entity. If this proposal is enacted, it could have
adverse tax consequences for us or for holders of PE Biosystems common stock. A
similar proposal was made in 1999. Congress did not act on the 1999 proposal,
and it is impossible to predict whether Congress will act upon this proposal or
any other proposal relating to tracking stock.
Under its certificate of incorporation, PE Corporation may convert the PE
Biosystems common stock or the Celera Genomics common stock into shares of the
other class without any premium if, based on the legal opinion of its tax
counsel, it is more likely than not as a result of the enactment of legislative
changes or administrative proposals or changes that PE Corporation or its
stockholders will be subject to tax upon issuance of PE Biosystems common stock
or Celera Genomics common stock or that such stock will not be treated as stock
of PE Corporation. Under current law, such an exchange should qualify as a
tax-free recapitalization such that no gain or loss is required to be recognized
by PE Corporation or by holders of the stock to be exchanged.
This discussion assumes that you hold your shares of Third Wave common
stock or Third Wave preferred stock as a capital asset and does not address the
tax consequences that may be relevant to you in light of your particular
circumstances. In addition, it does not present a description of the United
States federal income tax laws applicable to you if you are subject to special
treatment under the United States federal income tax laws, including if you are:
o a bank;
o a tax-exempt organization;
o an S corporation or other pass-through entity;
o an insurance company;
o a dealer in securities or foreign currencies;
o a Third Wave shareholder who received your Third Wave common stock
or Third Wave preferred stock through the exercise of employee stock
options or otherwise as compensation;
o not a U.S. person; or
o a Third Wave shareholder who holds Third Wave common stock or Third
Wave preferred stock as part of a hedge, straddle or conversion
transaction.
This discussion also does not address any consequences arising under the
laws of any state, locality or foreign jurisdiction. PE Corporation and Third
Wave have not and will not seek any ruling from the Internal Revenue Service
regarding any matters relating to the merger. The IRS has announced that it will
not issue advance rulings on the classification of an instrument similar to the
PE Biosystems common stock that has certain voting and liquidation rights in an
issuing corporation but whose dividend rights are determined by reference to a
segregated portion of the issuing corporation's assets, including assets held by
a subsidiary. In addition, there are no court decisions or other authorities
bearing directly on the classification of instruments with characteristics
similar to those of PE Biosystems common stock.
It is a condition to the merger that each of PE Corporation and Third Wave
receive an opinion from its tax counsel that the merger qualifies as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and that PE Corporation, Blue Acquisition Corp. and Third Wave will each
be a party to that reorganization within the meaning of Section 368(b) of the
Internal Revenue Code. The opinions will be based on customary assumptions and
factual representations and will assume that the merger will be completed
according to the terms of the merger agreement. The following discussion of
United States federal income tax consequences of the merger assumes that, if
completed, the merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code and that PE Corporation, Blue
Acquisition Corp. and Third Wave will each be a party to that reorganization
within the meaning of Section 368(b) of the Internal Revenue Code for United
States federal income tax purposes. Accordingly, if we complete the merger:
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o PE Corporation and Third Wave will not recognize gain or loss;
o you will not recognize gain or loss when you exchange your Third
Wave common stock or Third Wave preferred stock solely for PE
Biosystems common stock;
o you will recognize capital gain or loss on any cash received in lieu
of a fractional share of PE Biosystems common stock equal to the
difference between the amount of cash received and the basis
allocated to such fractional share;
o the aggregate tax basis of PE Biosystems common stock you receive
will be the same as the aggregate tax basis of the Third Wave common
stock or Third Wave preferred stock you surrender in exchange,
decreased by the tax basis allocated to any fractional share
interest exchanged for cash;
o the holding period of PE Biosystems common stock you receive will
include the holding period of shares of Third Wave common stock or
Third Wave preferred stock you surrender in the exchange; and
o you must retain records and file with your United States federal
income tax returns a statement setting forth certain facts relating
to the merger.
Backup Withholding. If you are a noncorporate holder of Third Wave common
stock or Third Wave preferred stock you may be subject to backup withholding at
a 31% rate on any cash payments received in lieu of a fractional share interest
in PE Biosystems common stock. You will not be subject to backup withholding,
however, if you:
o furnish a correct taxpayer identification number and certify that
you are not subject to backup withholding on the substitute Form W-9
or successor form included in the letter of transmittal to be
delivered to you following the completion of the merger;
o provide a certification of foreign status on Form W-8 or a successor
form; or
o are otherwise exempt from backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or credit against your United States federal income tax liability,
provided you furnish the required information to the Internal Revenue Service.
Tax matters are very complicated, and the tax consequences of the merger
to you will depend upon the facts of your particular situation. We encourage you
to consult your own tax advisors regarding the specific tax consequences of the
merger, including tax return reporting requirements, the applicability of
federal, state, local and foreign tax laws and the effect of any proposed change
in the tax laws.
Anticipated Accounting Treatment
It is a condition to the closing of the merger that Third Wave receive
letters from its management and its independent accountants to the effect that
Third Wave is eligible to be acquired in a transaction to be accounted for using
"pooling of interests" accounting treatment and that, on the closing date of the
merger, such letters have not been withdrawn.
Under the "pooling of interests" method of accounting, the recorded assets
and liabilities of the PE Biosystems group and Third Wave will be carried
forward to the combined company at their historical recorded amounts. Results of
operations of the combined company will include the results of both the PE
Biosystems group and Third Wave for the entire fiscal year in which the merger
occurs. The reported balance sheet amounts and results of operations of the
separate companies for prior periods will be combined, reclassified and
conformed, as appropriate, to reflect the combined financial position and
results of operations for the combined company.
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We expect the merger to qualify for "pooling of interests" accounting
treatment. Qualification for this accounting treatment, however, is not a
condition to completing the merger.
Interests of Certain Persons in the Merger
Some members of the Third Wave board of directors and management have
interests in the merger in addition to their interests generally as shareholders
of Third Wave. The Third Wave board of directors was aware of these interests
and considered them, among other matters, in approving the merger agreement and
the transactions contemplated thereby.
Employment, Consulting and Noncompete Agreements. It is a condition to the
merger that the three founders of Third Wave: Lance Fors, James Dahlberg and
Lloyd Smith, each enter into new noncompete agreements with PE Corporation prior
to the effective time of the merger.
PE Corporation and Lance Fors will enter into a noncompete agreement, for
the benefit of PE Corporation, pursuant to which Dr. Fors will reaffirm the
noncompetition provisions contained in his current employment agreement with
Third Wave (which generally requires Dr. Fors to refrain from competing with
Third Wave during a period ending one year after the termination of his
employment). The noncompete agreement will further provide that if:
o during the first year after the effective time of the merger, the
surviving corporation terminates Dr. Fors' employment either without
cause or "constructively," as that term is customarily used in
employer-employee relationships; or
o after the first anniversary of the effective time of the merger, Dr.
Fors terminates his employment with the surviving corporation or the
surviving corporation terminates Dr. Fors' employment either without
cause or "constructively";
and during the period of time that Dr. Fors remains bound by the noncompete
agreement, he notifies the surviving corporation of an opportunity that might be
in violation of his noncompete agreement, then the surviving corporation shall
have the option to either:
o waive the provisions of the noncompete agreement as it relates to
the full extent of that opportunity; or
o pay Dr. Fors an amount equal to one year's salary at the most recent
prior rate, in which case the provisions of the noncompete agreement
will continue to apply.
PE Corporation and each of James Dahlberg and Lloyd Smith will enter into
new noncompete agreements, for the benefit of PE Corporation, pursuant to which
each of Dr. Dahlberg and Dr. Smith will reaffirm the noncompetition provisions
of his invention ownership, confidentiality and noncompete agreement with Third
Wave (which generally require each of Dr. Dahlberg and Dr. Smith to refrain from
competing with Third Wave during a period ending one year after the termination
of his employment). Dr. Dahlberg and Dr. Smith will be permitted to continue all
activities being conducted by them as of that date, including any and all
university-related activities, that might otherwise be restricted by the
noncompete agreements. The noncompete agreements will also provide that if:
o Dr. Dahlberg's or Dr. Smith's consulting arrangement is terminated
by the surviving corporation without cause during the term of his
noncompete agreement; and
o while Dr. Dahlberg or Dr. Smith remains bound by his noncompete
agreement, he notifies the surviving corporation of an opportunity
that might be in violation of his noncompete agreement;
then the surviving corporation shall have the option to either:
o waive the provisions of the noncompete agreement as it relates to
the full extent of that opportunity; or
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o pay Dr. Dahlberg or Dr. Smith an amount equal to one year's
consulting payment at the most recent prior rate, in which case the
provisions of the noncompete agreement will continue to apply.
Indemnification and Directors' and Officers' Insurance. The merger
agreement provides that the surviving corporation and PE Corporation will
indemnify each person who is or was or who becomes eligible for indemnification
pursuant to the Third Wave articles of incorporation and the Third Wave bylaws
pertaining to events occurring prior to the effective time of the merger or to
liabilities arising out of the merger agreement, in each case to the extent that
Third Wave would have been permitted under the Third Wave articles of
incorporation and the Third Wave bylaws to provide such indemnification.
Resale of PE Biosystems Common Stock
The PE Biosystems common stock, together with the related rights, issued
pursuant to the merger will not be subject to any restrictions on transfer
arising under the Securities Act, except for shares issued to any Third Wave
shareholder who may be deemed to be an "affiliate" of Third Wave for purposes of
Rule 145 under the Securities Act. This prospectus does not cover resales of PE
Biosystems common stock received by any person who may be deemed to be an
affiliate. In addition, it is expected that each affiliate of PE Corporation and
Third Wave (within the meaning of the SEC's Accounting Releases 130 and 135)
will enter into an agreement with PE Corporation providing that the affiliate
will not transfer any PE Biosystems common stock received in the merger except
in compliance with the Securities Act and, in order to preserve PE Corporation's
ability to account for the merger as a "pooling of interests", such affiliates
will further agree that they will make no disposition of any PE Biosystems or
Third Wave stock (or any interest therein) during the period commencing 30 days
prior to the effective time of the merger through the date on which financial
results covering at least 30 days of combined operations of PE Biosystems and
Third Wave after the merger have been published.
Dissenters Rights
The following discussion of dissenters' rights under the Wisconsin
Business Corporation Law (the "WBCL") does not purport to be complete and is
qualified in its entirety by reference to the provisions of Sections 180.1301 to
180.1331 of the WBCL. Third Wave will undertake to supply a complete copy of the
dissenters' rights provisions upon written request of its shareholders to Third
Wave Technologies, Inc., 502 S. Rosa Road, Madison, Wisconsin 53719, Attention:
Ian Edvalson, Esq.
Any holder of Third Wave common stock or Third Wave preferred stock who is
entitled to vote at the Third Wave special meeting of shareholders and who
objects to the merger may demand payment in cash of the fair value for his or
her shares of Third Wave common stock or Third Wave preferred stock. Any such
shareholder who elects to exercise such rights and wishes to do so must do the
following:
o before the vote is taken at the Third Wave special meeting regarding
approval of the merger, deliver to Third Wave written notice that
complies with Section 180. 0141 of the WBCL of such shareholder's
intent to demand payment for such shareholder's shares; and
o not vote such shares in favor of approval of the merger.
A shareholder may assert dissenters' rights as to fewer than all the
shares registered in such shareholder's name only if such shareholder dissents
with respect to all shares beneficially owned by any one person and notifies
Third Wave in writing of the name and address of each person on whose behalf
such record shareholder asserts dissenters' rights. The rights of a shareholder
asserting dissenters' rights as to fewer than all shares registered in such
shareholder's name are determined as if the shares as to which such shareholder
dissents and such shareholder's other shares were registered in the names of
different shareholders. Similarly, a beneficial owner of Third Wave common stock
or Third Wave preferred stock may assert dissenters' rights as to shares held on
the beneficial owner's behalf only if the beneficial owner submits to Third Wave
the record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights and the beneficial owner
does so with respect to all shares of which it is the beneficial owner or over
which it has power to direct the vote. All notices to Third Wave should be sent
or delivered to its address at the end of the first paragraph of this section.
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<PAGE>
Not more than ten days after approval of the merger by Third Wave
shareholders, Third Wave must send to each person who has satisfied the
foregoing requirements for asserting dissenters' rights a notice that complies
with Section 180.0141 of the WBCL which must, among other things:
o state where the demand for payment must be sent;
o state where and when share certificates must be deposited;
o state the extent to which the transfer of the shares will be
restricted after the demand for payment is received;
o supply a form for demanding payment that includes the date of the
first announcement to news media, which date was January 24, 2000,
or to shareholders of the terms of the proposed merger and requires
that the shareholder or beneficial shareholder asserting dissenters'
rights certify whether such shareholder acquired beneficial
ownership of its shares before that date;
o set a date (which must be at least 30 but not more that 60 days
after the date the dissenters' notice is delivered) by which Third
Wave must receive a demand for payment; and
o be accompanied by a copy of the dissenters' rights provisions of the
WBCL.
A shareholder or beneficial shareholder who receives a dissenters' notice
and wishes to exercise dissenters' rights must submit a written demand for
payment, must certify whether beneficial ownership was acquired prior to January
24, 2000, and must deposit the applicable share certificates in accordance with
the terms of the dissenters' notice. A shareholder or beneficial shareholder who
does not demand payment in the foregoing manner will not be entitled to payment
for his or her shares under Sections 180.1301 to 180.1331 of the WBCL. Upon
receipt of an appropriate demand for payment and the share certificates from a
dissenting shareholder who certified that beneficial ownership was acquired
before January 24, 2000, Third Wave will pay the dissenting shareholder,
provided such shareholder has complied with Section 180.1323 of the WBCL, Third
Wave's estimate of the fair value of the dissenting shareholder's shares plus
interest, if any, from the date the merger is consummated. Upon receipt of such
demand for payment and the share certificates from a dissenting shareholder who
did not certify that beneficial ownership was acquired prior to January 24,
2000, Third Wave may choose to withhold payment required by Section 180.1325 of
the WBCL from such dissenting shareholder. If Third Wave elects to withhold
payment in the foregoing manner, it still must offer to purchase the dissenting
shareholder's shares at a price based upon Third Wave's estimate of the fair
value of the dissenting shareholder's shares plus accrued interest, if any, but
it is not required to make payment until after the fair value of the shares is
agreed to or otherwise determined.
The payment must be accompanied by all of the following:
o Third Wave's latest available financial statements, audited and
including footnote disclosure, if available, including a balance
sheet as of the end of a fiscal year ended not more than 16 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; C
o an explanation of how interest was calculated;
o a statement of the dissenting shareholder's right to demand payment
under Section 180.1328 of the WBCL if dissatisfied with the payment;
o a copy of Sections 180.1301 to 180.1331 of the WBCL.
Within 30 days after receipt of such payment or offer, the dissenting
shareholder either must accept the payment or offer or must notify Third Wave in
writing of the shareholder's estimate of the fair value of the shares plus
accrued interest and demand payment of the shareholder's estimate, less any
payment previously received. In the event Third Wave fails to make payment to a
person within 60 days after the date set for demanding payment, such person may
notify Third Wave in
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<PAGE>
writing of his or her own estimate of the fair value of his or her shares (and
accrued interest) and demand payment of such shareholder's estimate. If a
dissenting shareholder and Third Wave cannot agree as to the fair value of such
dissenter's shares, Third Wave must, within 60 days after receiving the demand
for payment, commence a special proceeding in the Circuit Court of Dane County,
Wisconsin, to determine the fair value of such shares and accrued interest. If
Third Wave fails to commence such a proceeding within such 60-day time period,
Third Wave must pay to each dissenting shareholder whose demand remains
unsettled the amount each such dissenting shareholder demands as fair value.
Shareholders contemplating exercising dissenters' rights under Wisconsin
law are urged to read carefully the dissenters' rights provisions of the WBCL.
Voting Agreement
In connection with the merger agreement, PE Corporation, Blue Acquisition
Corp. and the holders of record of 16,059 combined shares of Third Wave common
stock and Third Wave preferred stock have entered into a voting agreement dated
January 23, 2000, pursuant to which those shareholders have agreed to vote their
shares in favor of the merger agreement, the merger, the form of escrow
agreement and the appointment of John Neis as the shareholder representative
under the escrow agreement, and have granted irrevocable proxies to the officers
of Blue Acquisition Corp. to vote their shares for this purpose. Such
shareholders have also agreed not to directly or indirectly solicit or encourage
any offer from any other party concerning the possible disposition of any
portion of Third Wave's business, assets or capital stock. Accordingly, the
officers of Blue Acquisition Corp. currently hold proxies sufficient to approve
and adopt the merger agreement, the merger, the form of escrow agreement and the
appointment of John Neis as shareholder representative under the escrow
agreement.
The voting agreement will remain in effect until the termination of merger
agreement or the closing of the merger.
Escrow Agreement
Before the effective time of the merger, PE Corporation, John Neis, as
representative for the Third Wave shareholders, and an escrow agent will enter
into an escrow agreement providing for 10% of the total PE Biosystems common
stock issued as merger consideration for Third Wave common stock and Third Wave
preferred stock in the merger to be delivered to the escrow agent upon the
closing of the merger. The escrowed shares of PE Biosystems common stock will be
held in an escrow account established as the exclusive source of indemnification
to PE Corporation for any losses arising from any breach by Third Wave of its
representations and warranties in the merger agreement or any failure by Third
Wave to perform its obligations under the merger agreement. None of the shares
held in the escrow account will be delivered to PE Corporation unless the
aggregate amount of claims from the escrow account exceeds $1 million, and then
the full amount of the claims will be released.
Stockholders of PE Biosystems common stock held in the escrow account:
o will receive payment of all cash dividends and other taxable
distributions made on such shares;
o will be entitled to exercise all voting rights with respect to such
shares; and
o will be permitted to sell or transfer such shares, as long as the
fixed value of the sold or transferred shares set forth in the
escrow agreement is deposited into the escrow account in cash.
Stockholders who sell or transfer their shares of PE Biosystems
common stock from the escrow account will receive customary interest
on the cash deposited in the escrow account in place of those
shares.
With the exception of shares reserved for claims still pending or used to settle
any claims, the escrowed shares will be released from escrow no later than one
year from the date of closing of the merger.
The escrow agreement is an integral part of the merger agreement and will
be terminated when the last share of PE Biosystems common stock held in the
escrow account is distributed to the stockholders.
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Shareholder Representative
John Neis, Vice President of Venture Investors of Wisconsin, Inc., which
is a shareholder of Third Wave, has been recommended by the Third Wave board of
directors to serve as the shareholder representative under the escrow agreement.
As shareholder representative, Mr. Neis would act on behalf of the Third Wave
shareholders on all matters under the escrow agreement. These matters include
the power to:
o waive any conditions of the escrow agreement;
o amend the escrow agreement under specified circumstances;
o receive notices or other communications;
o deliver any notices, certificates or other documents required; and
o retain professional advisors in connection with the performance of
his duties under the escrow agreement.
The shareholder representative will not have the power to vote on behalf of the
Third Wave shareholders on matters that require a vote of the stockholders of PE
Corporation, and the shareholder representative's powers will be limited to
those necessary for the purposes of administering the escrow agreement.
PE Corporation and the escrow agent will have the right to rely upon the
acts taken or omitted to be taken by the shareholder representative on behalf of
the Third Wave shareholders. By voting in favor of the merger agreement, the
form of escrow agreement, the merger and the appointment of John Neis as
shareholder representative under the escrow agreement, each of the shareholders
of Third Wave is agreeing that:
o any act or omission by the shareholder representative will be deemed
an act or omission by such shareholder;
o all deliveries to the shareholder representative will be deemed
deliveries to such shareholder; and
o any disclosure made to the shareholder representative by or on
behalf of PE Corporation will be deemed to be a disclosure made to
such shareholder.
All expenses of the shareholder representative will be paid out of the escrow
account.
John Neis is a co-founder and a senior member of Venture Investors
Management LLC, the manager of three early stage venture capital funds: Venture
Investors of Wisconsin, Inc., Venture Investors Early Stage Fund II Limited
Partnership and Advantage Capital Wisconsin Partners I Limited Partnership. Mr.
Neis has a B.S. in finance from the University of Utah, an M.S. in marketing and
finance from the University of Wisconsin-Madison, and is a chartered financial
analyst. He serves on the board of directors of Venture Investors of Wisconsin,
Inc., Third Wave Technologies, Inc., Gala Design LLC, TomoTherapy, Inc., and
BioInterface Technologies, Inc. He is a former member of the board of directors
of several companies, including Synthon Corporation and Extrel FTMS Corporation.
He serves on the advisory board of the Weinert Applied Ventures Entrepreneurship
Program at the University of Wisconsin-Madison School of Business.
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF PE CORPORATION
The following selected consolidated financial information has been derived
from the consolidated financial statements of PE Corporation for each of the
five fiscal years in the period ended June 30, 1999 and the six month periods
ended December 31, 1998 and 1999. The information set forth below should be read
in conjunction with the PE Corporation consolidated financial statements and
notes thereto contained in the PE Corporation Annual Report to Stockholders for
the
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<PAGE>
year ended June 30, 1999, and in the PE Corporation Quarterly Report on Form
10-Q for the quarterly period ended December 31, 1999, each incorporated herein
by reference. The data for the six month periods ended December 31, 1998 and
1999 have been derived from unaudited financial statements which, in the opinion
of management, reflect all adjustments necessary for a fair presentation of
results for the periods covered.
On May 6, 1999, PE Corporation recapitalized its former common stock into
PE Corporation--PE Biosystems Group Common Stock and PE Corporation--Celera
Genomics Group Common Stock. Therefore, neither the PE Biosystems common stock
nor the Celera Genomics common stock was issued or outstanding for the periods
prior to May 6, 1999.
On June 17, 1999, the board of directors announced a two-for-one split of
PE Biosystems common stock. The two-for-one stock split was effected in the form
of a 100% stock dividend paid to stockholders of record as of the close of
business on July 12, 1999. All PE Biosystems group share and per share data
reflect this split.
On January 20, 2000, the board of directors announced a two-for-one stock
split of PE Biosystems common stock and Celera Genomics common stock. The
two-for-one stock splits were effected in the form of 100% stock dividends
distributed on February 18, 2000 to stockholders of record as of the close of
business on February 4, 2000. All PE Biosystems group and Celera Genomics group
share and per share data reflect this split.
A number of items affect the comparability of this information. Before-tax
amounts include:
o Restructuring and other special charges of $15.5 million for fiscal
1995, $17.5 million for fiscal 1996, $48.1 million for fiscal 1998,
$6.1 million for fiscal 1999, and $2.0 million for the six months
ended December 31, 1998 (unaudited);
o A restructuring reserve adjustment of $9.2 million for fiscal 1999
relating to excess fiscal 1998 restructuring liabilities;
o Gains on investments of $20.8 million for fiscal 1995, $11.7 million
for fiscal 1996, $64.9 million for fiscal 1997, $1.6 million for
fiscal 1998, $6.1 million for fiscal 1999, and $25.8 million for the
six months ended December 31, 1999 (unaudited);
o Acquired research and development charges of $33.9 million for
fiscal 1996 and $26.8 million for fiscal 1997, and $28.9 million for
fiscal 1998;
o Charges for the impairment of assets of $9.9 million for fiscal
1996, $.7 million for fiscal 1997, and $14.5 million for fiscal
1999;
o Tax benefit and valuation allowance reductions of $22.2 million for
fiscal 1999;
o A charge of $3.5 million for a donation to PE Corporation's
charitable foundation for fiscal 1999;
o Charges of $9.2 million relating to the recapitalization of PE
Corporation for fiscal 1999 and $1.2 million for the six months
ended December 31, 1998 (unaudited); and
o Charges relating to the acceleration of certain long-term
compensation programs as a result of the attainment of performance
targets of $10.1 million for fiscal 1999 and $21.6 million for the
six months ended December 31, 1999 (unaudited).
49
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<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE FISCAL YEARS ENDED JUNE 30, DECEMBER 31,
(DOLLAR AMOUNTS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS) 1995 1996 1997 1998 1999 1998 1999
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net revenues ........................ $543,945 $642,218 $ 768,368 $ 944,306 $1,216,897 $ 543,238 $ 616,207
Income from continuing operations ... 38,569 1,310 102,492 15,694 96,797 36,095 29,254
Per share of common stock
Basic ............................. .87 .03 2.16 .32 .73
Diluted ........................... .85 .03 2.07 .31 .71
Income (loss) from discontinued
operations (net of income taxes) .. 7,738 (37,833) 27,906 40,694 79,058 (4,037) --
Net income (loss) ................... 46,307 (36,523) 130,398 56,388 175,855 32,058 29,254
Per share of common stock
Basic ............................. 1.04 (.80) 2.74 1.16 .65
Diluted ........................... 1.02 (.77) 2.63 1.12 .63
Dividends per share ................. .68 .68 .68 .68 .51 .34
PE BIOSYSTEMS GROUP
Income from continuing operations ... $148,365 $ 73,541
Per share of common stock
Basic ............................. .74 .36
Diluted ........................... .72 .34
Income from discontinued operations
(net of income taxes) ............. 79,058 --
Net income .......................... 227,423 73,541
Per share of common stock
Basic ............................. 1.13 .36
Diluted ........................... 1.10 .34
Dividends per share ................. .0425 .085
CELERA GENOMICS GROUP
Net loss ............................ $(44,894) $(43,676)
Per share of common stock Basic and
Diluted ........................... (.89) (.84)
OTHER INFORMATION
Cash and short-term investments ..... $103,826 $121,145 $ 217,222 $ 84,091 $ 308,021 $ 75,479 $ 349,481
Working capital ..................... 256,607 229,639 354,742 287,991 471,350 330,015 467,966
Capital expenditures ................ 33,891 28,198 58,057 71,820 176,035 49,984 51,107
Total assets ........................ 797,970 809,856 1,006,793 1,135,276 1,519,307 1,241,051 1,681,244
Long-term debt ...................... 64,524 33,694 59,152 33,726 31,452 35,548 37,102
Total debt .......................... 123,224 89,801 89,068 45,825 35,363 66,839 118,351
Stockholders' equity ................ 369,807 373,727 504,270 564,248 821,525 622,229 906,264
</TABLE>
DESCRIPTION OF PE CORPORATION CAPITAL STOCK
The following is a description of the terms of the capital stock of PE
Corporation. This description does not purport to be complete and is qualified
in its entirety by reference to PE Corporation's certificate of incorporation
which has been incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part.
General
PE Corporation's certificate of incorporation authorizes PE Corporation to
issue 735,000,000 shares of stock as follows: 500,000,000 shares of a class of
common stock, designated as PE Corporation--PE Biosystems Group Common Stock,
225,000,000 shares of a class of common stock, designated as PE
Corporation--Celera Genomics Group Common Stock, and 10,000,000 shares of
preferred stock. Shares of each class of stock have a par value of $.01 per
share. PE Corporation is able to issue shares of preferred stock in series,
without stockholder approval. Of the 10,000,000 authorized
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shares of preferred stock, PE Corporation's board of directors has designated a
total of 80,000 shares of two series of participating junior preferred stock in
connection with its stockholder rights plan. See "--Rights Agreement" on page
59.
As of , 2000, there were no shares of preferred stock, shares of
Celera Genomics common stock and shares of PE Biosystems common stock issued and
outstanding.
PE Biosystems Common Stock
Dividends
Dividends on the PE Biosystems common stock are limited to an amount not
greater than the "Available Dividend Amount" for the PE Biosystems group. The
"Available Dividend Amount" for the PE Biosystems group is intended to be
similar to the amount that would be legally available for the payment of
dividends on the PE Biosystems common stock if the group were a separate
company. In calculating the Available Dividend Amount for the PE Biosystems
group, the amount of net income or loss of PE Corporation that is attributed to
the PE Biosystems group in accordance with generally accepted accounting
principles will be increased by any federal tax benefits in excess of $75
million generated but not used by the Celera Genomics group from July 1, 1998
and used by PE Corporation.
Delaware law limits the amount of distributions on PE Corporation's
capital stock to its legally available funds, which are determined on the basis
of the entire company, and not only the respective groups. As a result, the
amount of legally available funds will reflect the amount of any net losses of
each group, any distributions on PE Biosystems common stock, Celera Genomics
common stock or any preferred stock and any repurchases of PE Biosystems common
stock, Celera Genomics common stock or preferred stock. Dividend payments on the
PE Biosystems common stock could be precluded because legally available funds of
PE Corporation are not available under Delaware law, even though the Available
Dividend Amount test for the PE Biosystems group was met. There can be no
assurance that there will be an Available Dividend Amount for the PE Biosystems
group or, if met, that PE Corporation will have available funds to pay such a
dividend.
Subject to the prior payment of dividends on any outstanding shares of
preferred stock and the limitations described above, PE Corporation's board of
directors is able, in its sole discretion, to declare and pay dividends
exclusively on the PE Biosystems common stock, exclusively on the Celera
Genomics common stock or on both, in equal or unequal amounts. In making its
dividend decisions, PE Corporation's board of directors is not required to take
into account the relative Available Dividend Amounts for the two groups, the
amount of prior dividends declared on either class, the respective voting or
liquidation rights of either class or any other factor.
Conversion and Redemption
Mandatory Dividend, Redemption or Conversion of Common Stock if
Disposition of PE Biosystems Group Assets Occurs. If PE Corporation sells,
transfers, assigns or otherwise disposes of, in one transaction or a series of
related transactions, all or substantially all of the properties and assets
attributed to the PE Biosystems group (a "disposition"), it is required, except
as described below, to:
o pay a dividend in cash and/or securities or other property to the
holders of shares of PE Biosystems common stock having a fair value
equal to the net proceeds of the disposition;
o if the disposition involves all, but not merely substantially all,
of such properties and assets, redeem all outstanding shares of PE
Biosystems common stock in exchange for cash and/or securities or
other property having a fair value equal to the net proceeds of the
disposition;
o if the disposition involves substantially all, but not all, of such
properties and assets, redeem that number of whole shares of PE
Biosystems common stock as have in the aggregate an average market
value, during the period of ten consecutive trading days beginning
on the 26th trading day immediately succeeding the consummation
date, closest to the net proceeds of the disposition; and the
redemption price will be cash and/or securities or other property
having a fair value equal to such net proceeds; or
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o convert each outstanding share of PE Biosystems common stock into a
number of shares of Celera Genomics common stock equal to 110% of
the ratio of the average market value of one share of PE Biosystems
common stock to the average market value of one share of Celera
Genomics common stock during the 10-trading day period beginning on
the 26th trading day following the disposition date. C
PE Corporation may only pay a dividend or redeem shares of PE Biosystems
common stock as set forth above if it has legally available funds under Delaware
law and the amount to be paid to holders is less than or equal to the Available
Dividend Amount for the PE Biosystems group. PE Corporation is required to pay
such dividend or complete such redemption or conversion on or prior to the 95th
trading day following the disposition.
For purposes of determining whether a disposition has occurred,
"substantially all of the properties and assets" attributed to the PE Biosystems
group means a portion of such properties and assets:
o that represents at least 80% of the then fair value of the
properties and assets attributed to the PE Biosystems group; or
o from which were derived at least 80% of the aggregate revenues of
the PE Biosystems group for the immediately preceding twelve fiscal
quarterly periods.
The "net proceeds" of a disposition means an amount equal to what remains
of the gross proceeds of the disposition after any payment of, or reasonable
provision is made as determined by PE Corporation's board of directors for:
o any taxes payable by PE Corporation, or which would have been
payable but for the utilization of tax benefits attributable to the
Celera Genomics group, in respect of the disposition or in respect
of any resulting dividend or redemption;
o any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses; and
o any liabilities of or attributed to the PE Biosystems group,
including, without limitation, any liabilities for deferred taxes,
any indemnity or guarantee obligations incurred in connection with
the disposition or otherwise, any liabilities for future purchase
price adjustments and any preferential amounts plus any accumulated
and unpaid dividends in respect of the preferred stock attributed to
the PE Biosystems group.
PE Corporation may elect to pay the dividend or redemption price in
connection with a disposition either in the same form as the proceeds of the
disposition were received or in any other combination of cash, securities or
other property that PE Corporation's board of directors or, in the case of
securities that have not been publicly traded for a period of at least 15
months, an independent investment banking firm, determines will have an
aggregate market value of not less than the fair value of the net proceeds.
The following illustration demonstrates the provisions requiring a
mandatory dividend, redemption or conversion if a disposition occurs. If:
o 200 million shares of PE Biosystems common stock and 50 million
shares of Celera Genomics common stock were outstanding,
o the net proceeds of the disposition of substantially all, but not
all, of the assets of the PE Biosystems group equals $2 billion, and
o the average market values of the PE Biosystems common stock and the
Celera Genomics common stock during the 10-trading day valuation
period were $75 and $100 per share, respectively,
then PE Corporation could do any of the following:
(1) pay a dividend to the holders of shares of PE Biosystems common stock
equal to:
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net proceeds
----------------------------- =
number of outstanding shares
of PE Biosystems common stock
$2 billion
------------------ = $10 per share
200 million shares
(2) redeem for $75 per share a number of shares of PE Biosystems common stock
equal to:
net proceeds
-------------------------- =
average market value
of PE Biosystems common stock
$2 billion
------------ = 26,666,667 shares
$75 per share
(3) convert each outstanding share of PE Biosystems common stock into a number
of shares of Celera Genomics common stock equal to:
average market value
of PE Biosystems common stock
1.1 x ------------------------------ =
average market value
of Celera Genomics common stock
$75 per share
1.1 x -------------- = .825 shares
$100 per share
Exceptions to the Dividend, Redemption or Conversion Requirement if a
Disposition Occurs. PE Corporation is not required to take any of the above
actions for any disposition of all or substantially all of the properties and
assets attributed to the PE Biosystems group in a transaction or series of
related transactions that results in PE Corporation receiving for such
properties and assets primarily equity securities of any entity which:
o acquires such properties or assets or succeeds to the business
conducted with such properties or assets or controls such acquirer
or successor; and
o is primarily engaged or proposes to engage primarily in one or more
businesses similar or complementary to the businesses conducted by
the PE Biosystems group prior to the disposition, as determined by
our board of directors.
The purpose of this exception is to enable PE Corporation technically to
"dispose" of properties or assets of the PE Biosystems group to other entities
engaged or proposing to engage in businesses similar or complementary to those
of the PE Biosystems group without requiring a dividend on, or a conversion or
redemption of, the PE Biosystems common stock, so long as PE Corporation holds
an equity interest in that entity. A joint venture in which PE Corporation owns
a direct or indirect equity interest is an example of such an acquiror. PE
Corporation is not required to control that entity, whether by ownership or
contract provisions.
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PE Corporation is also not required to effect a dividend, redemption or
conversion if the disposition is:
o of all or substantially all of PE Corporation's properties and
assets in one transaction or a series of related transactions in
connection with its dissolution, liquidation or winding up and the
distribution of its assets to stockholders;
o on a pro rata basis, such as in a spin-off, to the holders of all
outstanding shares of the PE Biosystems common stock; or
o made to any person or entity controlled by PE Corporation, as
determined by PE Corporation's board of directors.
Notices if Disposition of PE Biosystems Group Assets Occurs. Not later
than the 20th trading day after the consummation of a disposition, PE
Corporation will announce publicly by press release:
o the estimated net proceeds of the disposition;
o the number of shares outstanding of PE Biosystems common stock; and
o the number of shares of PE Biosystems common stock into or for which
convertible securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof.
Not earlier than the 36th trading day and not later than the 40th trading
day after the consummation of the disposition, PE Corporation will announce
publicly by press release whether we will pay a dividend or redeem shares of
common stock with the net proceeds of the disposition or convert the shares of
PE Biosystems common stock into Celera Genomics common stock.
PE Corporation is required to cause to be mailed to each holder of shares
of PE Biosystems common stock the additional notices and other information
required by its certificate of incorporation.
Conversion of PE Biosystems Common Stock at PE Corporation's Option at Any
Time. PE Corporation's board of directors may at any time convert each share of
PE Biosystems common stock into a number of shares of Celera Genomics common
stock equal to 110% of the ratio of the average market values of the PE
Biosystems common stock to the Celera Genomics common stock over a 20-trading
day period. PE Corporation will calculate the ratio as of the fifth trading day
prior to the date it mails the conversion notice to holders.
However, if a Tax Event occurs at any time, a factor of 100% rather than
110% will be applied to the ratio of the average market values. This means that
the holders of PE Biosystems common stock will not receive any premium in such
conversion.
"Tax Event" means the receipt by PE Corporation of an opinion of its tax
counsel that, as a result of:
o any amendment to, or change in, the laws or regulations interpreting
such laws of the United States or any political subdivision or
taxing authority, including any announced proposed change by an
applicable legislative committee or its chair in such laws or by an
administrative agency in such regulations, or
o any official or administrative pronouncement, action or judicial
decision interpreting or applying such laws or regulations,
it is more likely than not that for United States federal income tax purposes:
o PE Corporation or its stockholders are, or, at any time in the
future, will be subject to tax upon the issuance of shares of either
PE Biosystems common stock or Celera Genomics common stock, or
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o either PE Biosystems common stock or Celera Genomics common stock is
not or, at any time in the future, will not be treated solely as
stock of PE Corporation.
For purposes of rendering such an opinion, tax counsel will assume that any
legislative or administrative proposals will be adopted or enacted as proposed.
These provisions allow PE Corporation the flexibility to recapitalize the
two classes of common stock into one class of common stock that would, after
such recapitalization, represent an equity interest in all of PE Corporation's
businesses. The optional conversion or redemption could be exercised at any
future time if PE Corporation's board of directors determines that, under the
facts and circumstances then existing, an equity structure consisting of two
classes of common stock was no longer in the best interests of all of its
stockholders. Such exchange could be exercised, however, at a time that is
disadvantageous to the holders of one of the classes of common stock. See "Risk
Factors--Stockholders may not have any remedies for breach of fiduciary duties
if any action by directors and officers has a disadvantageous effect on either
class of common stock" and "Risk Factors--Numerous potential conflicts of
interest exist between the classes of common stock which may be difficult to
resolve by PE Corporation's board of directors or which may be resolved
adversely to one of the classes."
Many factors could affect the market values of the PE Biosystems common
stock or the Celera Genomics common stock, including PE Corporation's results of
operations and those of each of the groups, trading volume and general economic
and market conditions. Market values could also be affected by decisions by PE
Corporation's board of directors or management that investors perceive to affect
differently one class of common stock compared to the other. These decisions
could include changes to PE Corporation's management and allocation policies,
transfers of assets between groups, allocations of corporate opportunities and
financing resources between the groups and changes in dividend policies.
The following illustration demonstrates the calculation of the number of
shares issuable upon conversion of PE Biosystems common stock into shares of
Celera Genomics common stock at PE Corporation's option. If:
o a Tax Event has not occurred,
o 200 million shares of PE Biosystems common stock and 50 million
shares of Celera Genomics common stock were outstanding immediately
prior to a conversion, and
o the average market value of one share of the PE Biosystems common
stock and of one share of the Celera Genomics common stock over the
20-trading day valuation period was $75 and $100, respectively,
then each share of PE Biosystems common stock could be converted into .825
shares of Celera Genomics common stock based on the following calculation:
1.1 x $ 75
---- = .825 shares
$100
Redemption in Exchange for Stock of Subsidiary. PE Corporation's board of
directors may redeem on a pro rata basis all of the outstanding shares of PE
Biosystems common stock for shares of the common stock of one or more of its
wholly owned subsidiaries which own all of the assets and liabilities attributed
to the PE Biosystems group. If at the time of any such redemption of PE
Biosystems common stock, the PE Biosystems group is entitled to Celera Genomics
Designated Shares (as defined under "--Celera Genomics Common Stock--Celera
Genomics Designated Shares" below), PE Corporation will also issue an equal
number of shares of Celera Genomics common stock either to
o the holders of the PE Biosystems common stock; or
o one or more of those PE Biosystems group subsidiaries.
PE Corporation may redeem shares of common stock for subsidiary stock only if it
has legally available funds under Delaware law.
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These provisions are intended to give PE Corporation increased flexibility
with respect to spinning-off the assets of the PE Biosystems group by
transferring the assets of that group to one or more wholly owned subsidiaries
and redeeming the shares of PE Biosystems common stock in exchange for stock of
such subsidiary or subsidiaries. As a result of any such redemption, or a
redemption of the Celera Genomics common stock under a similar provision for
that stock, holders of each class of common stock would hold securities of
separate legal entities operating in distinct lines of business. Such a
redemption could be authorized by PE Corporation's board of directors at any
time in the future if it determines that, under the facts and circumstances then
existing, an equity structure comprised of the PE Biosystems common stock and
the Celera Genomics common stock is no longer in the best interests of all of PE
Corporation's stockholders as a whole.
Selection of Shares for Redemption. If less than all of the outstanding
shares of PE Biosystems common stock are to be redeemed, PE Corporation will
redeem such shares proportionately from among the holders of outstanding shares
of PE Biosystems common stock or by such method as may be determined by PE
Corporation's board of directors to be equitable.
Fractional Interests; Transfer Taxes. PE Corporation is not be required to
issue fractional shares of any capital stock or any fractional securities to any
holder of PE Biosystems common stock upon any conversion, redemption, dividend
or other distribution described above. If a fraction is not issued to a holder,
PE Corporation will pay cash instead of such fraction.
PE Corporation will pay all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of any
shares of capital stock and/or other securities on conversion or redemption of
shares.
Voting Rights
The entire voting power of PE Corporation's stockholders is vested in the
holders of common stock, who are entitled to vote on any matter on which its
stockholders are entitled to vote, except as otherwise required by PE
Corporation's board of directors or provided by law or stock exchange rules, by
the terms of any outstanding preferred stock or by any provision our certificate
of incorporation restricting the power to vote on a specified matter to other
stockholders.
Holders of PE Biosystems common stock and Celera Genomics common stock
vote as a single class on each matter on which holders of common stock are
generally entitled to vote. On all matters as to which both PE Biosystems common
stock and Celera Genomics common stock vote together as a single class:
o each share of PE Biosystems common stock will have one vote; and
o each share of Celera Genomics common stock will have a number of
votes equal to the quotient of the average market value of a share
of Celera Genomics common stock over the 20-trading day period
ending on the 10th trading day prior to the record date for
determining the holders of common stock entitled to vote, divided by
the average market value of a share of PE Biosystems common stock
over the same period.
Accordingly, the relative per share voting rights of the PE Biosystems
common stock and the Celera Genomics common stock will fluctuate depending on
changes in the relative market values of shares of such classes of common stock.
The PE Biosystems common stock currently has a substantial majority of the
voting power because the aggregate market value of the outstanding shares of PE
Biosystems common stock is substantially greater than the aggregate market value
of the outstanding shares of Celera Genomics common stock.
PE Corporation sets forth the number of outstanding shares of PE
Biosystems common stock and Celera Genomics common stock in its Annual Reports
on Form 10-K and its Quarterly Reports on Form 10-Q filed under the Securities
Exchange Act of 1934. PE Corporation will disclose in any proxy statement for a
stockholders' meeting the number of outstanding shares and per share voting
rights of the PE Biosystems common stock.
If shares of only PE Biosystems common stock are outstanding, each share
will have one vote. If PE Biosystems common stock is entitled to vote as a
separate class with respect to any matter, each share will, for purposes of such
vote, have one vote on such matter.
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Fluctuations in the relative voting rights of the PE Biosystems common
stock and the Celera Genomics common stock could influence an investor
interested in acquiring and maintaining a fixed percentage of the voting power
of PE Corporation's stock to acquire such percentage of both classes of common
stock, and would limit the ability of investors in one class to acquire for the
same consideration relatively more or less votes per share than investors in the
other class.
The holders of PE Biosystems common stock and Celera Genomics common stock
will not have any rights to vote separately as a class on any matter coming
before PE Corporation's stockholders, except for certain limited class voting
rights provided under Delaware law. In addition to the approval of the holders
of a majority of the voting power of all shares of common stock voting together
as a single class, the approval of a majority of the outstanding shares of the
PE Biosystems common stock or the Celera Genomics common stock, voting as a
separate class, would be required under Delaware law to approve any amendment to
PE Corporation's certificate of incorporation that would change the par value of
the shares of the class or alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely. As permitted
by Delaware law, PE Corporation's certificate of incorporation provides that an
amendment to its certificate of incorporation that increases or decreases the
number of authorized shares of PE Biosystems common stock or Celera Genomics
common stock will only require the approval of the holders of a majority of the
voting power of all shares of common stock, voting together as a single class,
and will not require the approval of the holders of the class of common stock
affected by such amendment, voting as a separate class.
The following illustration demonstrates the calculation of the number of
votes each share of Celera Genomics common stock would be entitled on all
matters on which holders of PE Biosystems common stock and Celera Genomics
common stock vote as a single class. If the average market value for the
20-trading day valuation period was $75 for the PE Biosystems common stock and
$100 for the Celera Genomics common stock, each share of PE Biosystems common
stock would have one vote and each share of Celera Genomics common stock would
have 1.333 votes based on the following calculation:
$100
---- = 1.333 votes
$75
Assuming 50 million shares of Celera Genomics common stock and 200 million
shares of PE Biosystems common stock were outstanding, the shares of Celera
Genomics common stock would represent approximately 25% of PE Corporation's
total voting power and the shares of PE Biosystems common stock would represent
approximately 75% of PE Corporation's total voting power.
Liquidation
Under PE Corporation's certificate of incorporation, in the event of its
dissolution, liquidation or winding up, after payment or provision for payment
of the debts and other liabilities and full preferential amounts to which
holders of any preferred stock are entitled, regardless of the group to which
such shares of preferred stock were attributed, the holders of PE Biosystems
common stock and Celera Genomics common stock will be entitled to receive PE
Corporation's assets remaining for distribution to holders of common stock on a
per share basis in proportion to the liquidation units per share of such class.
After giving effect to the two-for one stock splits on PE Biosystems common
stock and Celera Genomics common stock declared on January 20, 2000, each share
of PE Biosystems common stock will have 0.25 liquidation units and each share of
Celera Genomics common stock will have .0725 liquidation units.
The number of liquidation units to which each share of PE Biosystems
common stock is entitled will not be changed without the approval of holders of
the class of common stock adversely affected except as described below. As a
result, the liquidation rights of the holders of the respective classes of
common stock may not bear any relationship to the relative market values or the
relative voting rights of the two classes.
No holder of Celera Genomics common stock will have any special right to
receive specific assets of the Celera Genomics group and no holder of PE
Biosystems common stock will have any special right to receive specific assets
of the PE Biosystems group in the case of PE Corporation's dissolution,
liquidation or winding up.
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Neither a merger nor consolidation of PE Corporation into or with any
other corporation, nor any sale, transfer or lease of all or any part of our
assets, will, alone, be deemed a liquidation or winding up of PE Corporation, or
cause the dissolution of PE Corporation, for purposes of these liquidation
provisions.
Determinations by the Board of Directors
Any determinations made in good faith by PE Corporation's board of
directors under any provision described under this section, and any
determinations with respect to any group or the rights of holders of shares of
PE Biosystems common stock or Celera Genomics common stock, will be final and
binding on all of its stockholders, subject to the rights of stockholders under
applicable Delaware law and under the federal securities laws.
Preemptive Rights
The holders of the PE Biosystems common stock will not have any preemptive
rights or any rights to convert their shares into any other securities of PE
Corporation.
Celera Genomics Common Stock
Dividends
The holders of shares of Celera Genomics common stock will be paid
dividends in a manner similar to that described above under "PE Biosystems
Common Stock--Dividends." In calculating the Available Dividend Amount for the
Celera Genomics group, the amount of net income or loss of PE Corporation that
is attributed to the Celera Genomics group in accordance with generally accepted
accounting principles will be reduced by any unused federal tax benefits in
excess of $75 million generated but not used by the Celera Genomics group from
July 1, 1998 and used by PE Corporation.
Conversion and Redemption
The holders of shares of Celera Genomics common stock have conversion and
redemption rights similar to those described above under "PE Biosystems Common
Stock--Conversion and Redemption."
Voting Rights
The holders of shares of Celera Genomics common stock have the voting
rights described above under the caption "PE Biosystems Common Stock--Voting
Rights."
Liquidation
In the event of PE Corporation's liquidation, dissolution or termination,
the holders of shares of Celera Genomics common stock are entitled to receive
funds in the amounts described above under "PE Biosystems Common
Stock--Liquidation."
Celera Genomics Designated Shares
The PE Biosystems group may hold in the future an equity interest in the
Celera Genomics group in the form of "Celera Genomics Designated Shares" as a
result of future contributions of cash or property to the Celera Genomics group
described below. PE Corporation's board of directors could create Celera
Genomics Designated Shares if it determines that (1) the Celera Genomics group
requires additional equity capital to finance its business and (2) the PE
Biosystems group should supply that capital.
Celera Genomics Designated Shares are authorized shares of Celera Genomics
common stock that are not issued and outstanding, but which PE Corporation's
board of directors, pursuant to the management and allocation policies, may from
time to time issue without allocating the proceeds or other benefits of such
issuance to the PE Biosystems group. The Celera Genomics Designated Shares are
not eligible to receive dividends and can not be voted.
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The number of Celera Genomics Designated Shares are currently zero but
from time to time will be:
o increased by a number equal to the quotient obtained by dividing (1)
the fair value of all cash or other property that the PE Biosystems
group contributes to the Celera Genomics group by (2) the average
market value of Celera Genomics common stock over the 20-trading day
period immediately prior to the date of contribution;
o decreased by a number equal to the quotient obtained by dividing (1)
the fair value of all cash or other property that the Celera
Genomics group transfers to the PE Biosystems group to reduce the
number of Celera Genomics Designated Shares by (2) the average
market value of Celera Genomics common stock over the 20-trading day
period immediately prior to the date of transfer;
o decreased by the number of newly issued shares of Celera Genomics
common stock, the proceeds of which have been allocated to the
Celera Genomics group, or issued as a dividend or distribution or by
reclassification, exchange or otherwise to holders of PE Biosystems
common stock; and
o adjusted as appropriate to reflect subdivisions and combinations of
the Celera Genomics common stock and dividends or distributions of
shares of Celera Genomics common stock to holders of Celera Genomics
common stock and other reclassifications of Celera Genomics common
stock.
Preferred Stock
PE Corporation's board of directors is authorized to issue one or more
series of PE Corporation preferred stock without further authorization of its
stockholders (except as may be required under applicable stock exchange
requirements), and to fix the number of shares, the annual dividend rate, the
preferences, the voting rights, the redemption price, the right to be converted
and any other rights, preferences and limitations of such shares. Thus, any such
series may, if so determined by PE Corporation's board of directors, have full
voting rights with the PE Biosystems common stock and the Celera Genomics common
stock, or limited voting rights, be convertible into PE Biosystems common stock
and Celera Genomics common stock, or another security of PE Corporation, and
have the annual dividend rate, preferences, voting rights, redemption price,
right to be converted and any other relative rights, preferences and
limitations, as PE Corporation's board of directors shall determine. Except in
connection with PE Corporation's shareholder protection rights agreement, PE
Corporation's board of directors has not authorized the issuance of any shares
of preferred stock.
Rights Agreement
PE Corporation has issued participating preferred stock purchase rights
(the "existing rights") to all holders of PE Biosystems common stock and Celera
Genomics common stock under PE Corporation's shareholder protection rights
agreement dated as of April 28, 1999 with our rights agent, BankBoston, N.A.
Each existing right entitles the holder to purchase shares of participating
junior preferred stock as follows:
o one right for every four shares of PE Biosystems common stock (a "PE
Biosystems right"), which will allow holders to purchase shares of
Series A participating junior preferred stock of PE Corporation if a
"distribution date" occurs; and
o one right for every two shares of Celera Genomics common stock (a
"Celera Genomics right"), which will allow holders to purchase
shares of Series B participating junior preferred stock of PE
Corporation if a "distribution date" occurs.
The PE Biosystems rights and the Celera Genomics rights are referred to herein
as the "Rights."
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A "distribution date" will occur upon the earlier of:
o the tenth day after a public announcement that a person or group of
affiliated or associated persons other than us or our employee
benefit plans (an "acquiring person") has acquired beneficial
ownership of (1) 15% or more of the shares of PE Biosystems common
stock then outstanding or (2) 15% or more of the shares of Celera
Genomics common stock then outstanding; or
o the tenth business day or a later day determined by PE Corporation's
board of directors following the commencement of a tender or
exchange offer that would result in such person or group
beneficially owning such number of shares.
Until the distribution date, the Rights will be transferred only with the common
stock.
Following the distribution date, holders of the Rights will be entitled to
purchase from PE Corporation:
o in the case of a PE Biosystems right, one one-thousandth of a share
of Series A participating junior preferred stock at a purchase price
of $425, subject to adjustment (the "Series A purchase price"); and
o in the case of a Celera Genomics right, one one-thousandth of a
share of Series B participating junior preferred stock at a purchase
price of $125, subject to adjustment (the "Series B purchase
price").
If any person or group becomes an acquiring person:
o a PE Biosystems right will entitle its holder to purchase, at the
Series A purchase price, a number of shares of PE Biosystems stock
with a market value equal to twice the Series A purchase price; and
o a Celera Genomics right will entitle its holder to purchase, at the
Series B purchase price, a number of shares of Celera Genomics stock
with a market value equal to twice the Series B purchase price.
In certain circumstances after the Rights have been triggered, PE
Corporation may exchange the Rights, other than Rights owned by an acquiring
person, at an exchange ratio of one share of PE Biosystems common stock per PE
Biosystems right and one share of Celera Genomics common stock per Celera
Genomics right.
If, following the time a person becomes an acquiring person:
o PE Corporation is acquired in a merger or other business combination
transaction and PE Corporation is not the surviving corporation;
o any person consolidates or merges with PE Corporation and all or
part of the common stock is converted or exchanged for securities,
cash or property of another person; or
o 50% or more of PE Corporation's assets or earnings power is sold or
transferred,
each PE Biosystems right and each Celera Genomics right will entitle its holder
to purchase, for the Series A purchase price or the Series B purchase price, a
number of shares of common stock of the surviving entity in any such merger,
consolidation or other business combination or the purchaser in any such sale or
transfer with a market value equal to twice the Series A purchase price or
Series B purchase price.
The Rights will expire on April 28, 2009 unless PE Corporation extends or
terminates them as described below.
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At any time until a person becomes an acquiring person, PE Corporation's
board of directors may redeem all of the Rights at a price of $0.01 per Right.
On the redemption date, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive this price.
A holder of a Right will not have any rights as a stockholder of PE
Corporation, including the right to vote or receive dividends, until a Right is
exercised.
At any time prior to the time that any person becomes an acquiring person,
PE Corporation may, without the approval of any holders of Rights, supplement or
amend any provision of the rights agreement in any manner, whether or not such
supplement or amendment is adverse to any holders of the Rights. From and after
the time a person becomes an acquiring person, PE Corporation may, without the
approval of any holders of Rights, supplement or amend the rights agreement:
o to cure any ambiguity;
o to correct or supplement any provision that may be defective or
inconsistent; or
o in any manner that PE Corporation deems necessary or desirable and
which does not adversely affect the interests of the holders of
Rights, other than an acquiring person.
The rights agreement contains provisions designed to prevent the
inadvertent triggering of the Rights. For example, it gives a person who has
inadvertently acquired 15% or more of the outstanding shares of a class of
common stock and does not have any intention of changing or influencing the
control of PE Corporation the opportunity to sell a sufficient number of shares
so that such acquisition would not trigger the Rights. In addition, the Rights
will not be triggered and a divestiture of shares will not be required by our
repurchase of shares of common stock outstanding which could raise the
proportion of shares held by a person to over the applicable 15% threshold.
However, any person who exceeds such threshold as a result of our stock
repurchases will trigger the Rights if such person subsequently acquires any
additional shares of common stock.
COMPARISON OF STOCKHOLDER RIGHTS
If the merger is completed, all holders of Third Wave common stock and
Third Wave preferred stock will become holders of shares of PE Biosystems common
stock. The rights of a holder of PE Biosystems common stock are similar in some
respects and different in other respects from the rights of a holder of Third
Wave common stock or Third Wave preferred stock. The rights of PE Corporation
stockholders are currently governed by the Delaware General Corporation Law and
the certificate of incorporation and bylaws of PE Corporation. The rights of
Third Wave shareholders are currently governed by the Wisconsin Business
Corporation Law and the articles of incorporation and bylaws of Third Wave. The
following are summaries of the material differences between the current rights
of Third Wave shareholders and the rights they will have as PE Biosystems
stockholders following the merger.
The following comparison of stockholders' rights is necessarily a summary,
is not intended to be complete or to identify all differences that may, under
given situations, be material to stockholders and is subject, in all respects,
and is qualified by reference, to the Delaware General Corporation Law, the PE
Corporation certificate of incorporation, the PE Corporation bylaws, the
Wisconsin Business Corporation Law, the Third Wave articles of incorporation and
the Third Wave bylaws. Copies of the PE Corporation certificate of incorporation
and the PE Corporation bylaws are incorporated by reference in this prospectus.
Authorized Shares
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PE Corporation. The total number of authorized shares of capital stock of
PE Corporation is 735,000,000, consisting of 500,000,000 shares of PE Biosystems
common stock, 225,000,000 shares of Celera Genomics common stock and 10,000,000
shares of PE Corporation preferred stock, each having a par value of $.01 per
share.
PE Corporation's certificate of incorporation authorizes the PE
Corporation board of directors to issue shares of preferred stock in one or more
series, the terms of which will be determined by the board, as well as PE
Biosystems common stock and Celera Genomics common stock.
Third Wave. The total number of authorized shares of capital stock of
Third Wave is 32,717, consisting of 25,000 shares of Third Wave common stock,
par value $1.00 per share, and 7,717 shares of preferred stock, consisting of
943 shares of Third Wave Series A preferred stock, par value $10.00 per share,
500 shares of Third Wave Series B preferred stock, par value $10.00 per share,
467 shares of Third Wave Series C preferred stock, par value $10.00 per share,
988 shares of Third Wave Series D preferred stock, par value $10.00 per share,
and 4,819 shares of Third Wave Series E preferred stock, par value $10.00 per
share.
Under Wisconsin law, a shareholder of a corporation is generally not
personally liable for the acts and debts of the corporation. However, a
shareholder can be personally liable in an amount equal to the par value of the
shares owned by the shareholder (or the amount of consideration for which his or
her shares without par value was issued) for all debts owing to employees of the
corporation for services performed for such corporation, but not exceeding six
months of service in any one case. There are no similar provisions under
Delaware law.
Directors
Number of Directors. The PE Corporation certificate of incorporation
provides that the number of directors on the PE Corporation board shall be fixed
by the board of directors but will not be less than three and not more than
thirteen. The Third Wave articles of incorporation provide that the number of
directors on the Third Wave board shall be fixed, from time to time, by a
majority of the Third Wave board.
Classification of Board of Directors. The PE Corporation board of
directors is not divided into separate classes but consists of a single class
elected annually. The Third Wave board of directors also consists of a single
class elected annually.
Number of Directors Necessary to Constitute a Quorum. Under the PE
Corporation bylaws, a majority of the entire board of directors then in office
constitutes a quorum for the transaction of business by the PE Corporation
board. Under the Third Wave bylaws, the presence of a majority of the total
authorized number of directors constitutes a quorum for the transaction of
business by the Third Wave board.
Removal of Directors. Under Delaware law and the PE Corporation bylaws,
stockholders may remove any director with or without cause by the vote of the
holders entitled to cast a majority of the votes entitled to be cast by all
outstanding shares entitled to vote at an election of directors.
Under Wisconsin law and the Third Wave bylaws, a director may be removed
from office with or without cause by the vote of the majority of the shares
represented at any shareholder meeting called for that purpose, provided that a
quorum is present.
Filling Newly Created Directorships and Vacancies. Under Delaware law and
the PE Corporation bylaws, a majority of the directors then in office, even if
less than a quorum, may fill vacancies and newly created directorships. Under
Wisconsin law, a vacancy on the board of directors, including a vacancy created
by an increase in the number of directors, may be filled by the shareholders or
the board of directors, unless otherwise provided in the articles of
incorporation. The Third Wave bylaws provide that any vacancy occurring on the
Third Wave board of directors may be filled by the shareholders or, if the
shareholders fail to fill the vacancy, by the Third Wave board of directors.
Charter, Articles of Incorporation and Bylaw Amendments
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Amendments to Certificate of Incorporation. Under Delaware law, the board
of directors must propose an amendment to the certificate of incorporation and
then a majority of all outstanding shares entitled to vote must approve it.
Under Delaware law and the PE Corporation certificate of incorporation,
amendments which make changes regarding the capital stock by increasing or
decreasing the par value or the aggregate number of authorized shares of a
class, or otherwise adversely affecting the rights of a class, must be approved
by the majority vote of each class or series of stock affected, even if such
stock would not otherwise have such voting rights.
Amendments to Articles of Incorporation. Under Wisconsin law, the board of
directors must generally propose an amendment to the articles of incorporation
for approval by the shareholders. For any such amendment, the WBCL generally
requires the approval of a majority of the votes to be cast on the amendment by
each voting group with respect to which the amendment would create dissenters'
rights, and a majority of the votes cast by every other voting group entitled to
vote on the amendment at a meeting of the shareholders in which a quorum is
present, unless the articles of incorporation, bylaws adopted under the
authority granted in the articles of incorporation or the WBCL require a greater
proportion. If a proposed amendment to the Third Wave articles of incorporation
would not change any of the preferences, limitations, or relative rights of the
holders of Third Wave Series A preferred stock, Third Wave Series B preferred
stock, Third Wave Series C preferred stock or Third Wave Series D preferred
stock, then such amendment requires the affirmative vote of (i) a majority of
the shares of Third Wave common stock and Third Wave preferred stock voting
together as a single class, and (ii) a majority of the shares of Third Wave
Series E preferred stock.
If a proposed amendment to the Third Wave articles of incorporation would
change any of the preferences, limitations, or relative rights of the holders of
Third Wave Series A preferred stock, Third Wave Series B preferred stock, Third
Wave Series C preferred stock or Third Wave Series D preferred stock, then such
amendment requires the affirmative vote of:
o a majority of the shares of Third Wave common stock and Third Wave
preferred stock voting together as a single class;
o 66-2/3% of the outstanding shares of the series of preferred stock
which would have the preferences, limitations, or relative rights of
its holders changed by the proposed amendment; and
o a majority of the shares of Third Wave Series E preferred stock.
Amendment of Bylaws. Under Delaware law and the PE Corporation certificate
of incorporation and bylaws, the PE Corporation bylaws can be amended or
repealed by the affirmative vote of either:
o holders of a majority of the outstanding shares of capital stock
entitled to vote and present in person or by proxy at the meeting;
or
o a majority of the members of the PE Corporation board of directors.
Under Wisconsin law, the power to adopt, amend or repeal bylaws of a
corporation is generally vested in the authority of the board of directors,
unless the articles of incorporation provide otherwise. However, the
corporation's shareholders may adopt, amend or repeal bylaws even though the
board of directors has this power as well. The Third Wave bylaws provide that
they can be amended or repealed by the affirmative vote of:
o holders of a majority of the outstanding shares of capital stock
entitled to vote; or
o a majority of the entire Third Wave board, but no bylaw adopted or
amended by the shareholders can be amended or repealed by the board
if the bylaw adopted so provides.
Cumulative Voting
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Neither the PE Corporation certificate of incorporation nor the Third Wave
articles of incorporation provides for cumulative voting for directors.
Stockholder Meeting Procedures
Special Meetings of Stockholders. Under Delaware law, special meetings of
stockholders may be called by the board of directors or by such person or
persons as may be authorized by the certificate of incorporation or bylaws.
Under the PE Corporation certificate of incorporation and bylaws, only the PE
Corporation board of directors or its chairman, president or secretary may call
a special meeting of the stockholders.
Under Wisconsin law and the Third Wave bylaws, special meetings of
shareholders may be called by the president, by the board of directors or such
other officers as the board of directors may authorize from time to time, or by
the president or secretary upon the written request of the holders of record of
at least 10% of all shares entitled to vote on the matter set forth as the
purpose of the special meeting.
Provisions for Notices. Under the PE Corporation bylaws, PE Corporation
must give personally or by mail, not less than ten and not more than sixty days
before the date of any meeting of stockholders, to each stockholder entitled to
vote at such meeting, written notice stating the place, date, hour and purpose
or purposes of the meeting. Any and all notices of a meeting may be waived by a
stockholder by submitting a signed waiver either before or after the meeting.
The attendance of any stockholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, will constitute a waiver of notice.
Under the Third Wave bylaws, written notice, or oral notice confirmed in
writing within three days of the oral notice, of the place, date and hour of
each meeting of the shareholders, whether annual or special and, in the case of
a special meeting, the purpose or purposes for which such meeting is called,
must be given not less than ten and not more than sixty days prior to the
meeting to each shareholder of record entitled to vote at such meeting.
Stockholders Necessary to Constitute a Quorum. Under the PE Corporation
bylaws, the holders of record of a majority of the outstanding shares of PE
Biosystems common stock and Celera Genomics common stock entitled to cast a
majority of the votes entitled to be cast by the holders of all outstanding
shares of capital stock entitled to vote at such meeting, whether present in
person or represented by proxy, constitutes a quorum for the purposes of
transacting business at any stockholder meeting. Under the Third Wave bylaws,
the presence in person or by proxy of the holders of record of a majority of
shares entitled to vote at a meeting of shareholders constitutes a quorum for
the transaction of business at such meeting.
Stockholder Action Without a Meeting. Under Delaware law, unless a
corporation's certificate of incorporation states otherwise, stockholders may
take action without a meeting if such action is authorized by the written
consents of stockholders having not less than the minimum number of votes
necessary to take such action at a meeting at which all shares were present and
voting. Under PE Corporation's certificate of incorporation, the written consent
of all stockholders entitled to vote on an action must be obtained for the
consent to be effective.
Under Wisconsin law and the Third Wave bylaws, shareholders may take any
action required or permitted by the Third Wave articles of incorporation, the
Third Wave bylaws or Wisconsin law without a meeting by the written consent of
all the shareholders entitled to vote on the action. The written consent of
shareholders is effective when one or more written consents describing the
action taken, signed by the number of shareholders sufficient to take the
action, are delivered to Third Wave for inclusion in the corporate records. If
the action to be taken requires that written notice of the proposed action be
given to nonvoting shareholders, notice shall be given at least ten days before
the action is taken.
Voting by Stockholders
Business Combinations and Certain Other Transactions. Under Delaware law,
the affirmative vote of a majority of the outstanding shares entitled to vote is
required to approve mergers, consolidations, dissolutions and sales of all or
substantially all of a corporation's assets. Under Wisconsin law, a majority of
all of the votes entitled to be cast on the
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transaction by each voting group of outstanding shares entitled to vote thereon
is generally required for certain significant corporate actions, including a
merger or share exchange with another corporation, sale of all or substantially
all of the corporate property and assets or voluntary liquidation. Special
voting requirements apply to certain business combinations.
Issuance of Rights or Options to Directors. Under both Delaware law and
Wisconsin law, the issuance by a corporation to its directors, officers or
employees of rights or options to purchase from the corporation any of its
shares, as an incentive to service or continued service with the corporation, or
the adoption of a plan providing for such issuance, does not require
authorization by vote of its stockholders or shareholders, as applicable.
Loans to Directors. Under Delaware law, a corporation may make loans to or
guarantees on behalf of, or otherwise assist officers and employees of a
Delaware corporation, including those officers and employees who are also
directors of the corporation, without the authorization by vote of its
stockholders, if the board determines that the loan, guarantee or assistance may
reasonably be expected to benefit the corporation. Under Wisconsin law, a
corporation may lend money to or guarantee the obligation of a director, without
authorization by vote of its shareholders, if the board of directors determines
that the loan or guarantee benefits the corporation and the board of directors
approves either the specific loan or guarantee or a general plan authorizing
loans and guarantees. The material facts of the transaction and the director's
interest must be disclosed or known to the board of directors or the transaction
must be fair to the corporation. Also, the transaction is deemed approved by the
board of directors only if it also receives the affirmative vote of a majority
of the directors on the board acting on the transaction who have no direct or
indirect interest in the transaction.
Business Combinations Following a Change in Control
Under Section 203 of the Delaware General Corporation Law, an "interested
stockholder" is defined as a holder of 15% or more of the outstanding voting
stock. An interested stockholder may engage in a business combination
transaction with PE Corporation only if:
o PE Corporation's board of directors approved the transaction before
the stockholder became an interested stockholder or approved the
transaction in which the stockholder became an interested
stockholder;
o the interested stockholder acquired at least 85% of the voting stock
in the transaction in which it became an interested stockholder; or
o PE Corporation's board of directors and the holders of shares
entitled to cast two-thirds of the votes entitled to be cast by all
of the outstanding voting shares held by all disinterested
stockholders approve the transaction.
Section 180.1131 of the WBCL provides generally that, in addition to the
vote otherwise required by law or the articles of incorporation of an "issuing
public corporation," certain business combinations not meeting certain
adequacy-of-price standards specified in the statute must be approved by (1) the
holders of at least 80% of the votes entitled to be cast and (2) two-thirds of
the votes entitled to be cast by the corporation's outstanding voting shares
owned by persons other than a "significant shareholder" who is a party to the
transaction or an affiliate or associate thereof. Section 180.1130 defines
"business combination" to include, subject to certain exceptions, a merger or
share exchange of the issuing public corporation (or any subsidiary thereof)
with, or the sale or other disposition of substantially all the assets of the
issuing public corporation to, any significant shareholder or affiliate thereof.
"Significant shareholder" is defined generally to mean a person that is the
beneficial owner of 10% or more of the voting power of the outstanding voting
shares of the issuing public corporation. Third Wave believes that Sections
180.1130 through 180.1134 of the WBCL are not intended to apply to transactions
such as the present merger transaction because Third Wave does not qualify as an
issuing public corporation for such purposes.
Under Section 180.1140(8) of the WBCL, an "interested stockholder" is
defined as a beneficial owner or an affiliate thereof that owned at least 10% of
the outstanding voting stock at any time within the last 3 years. Certain
Wisconsin corporations are precluded under Section 180.1141 of the WBCL from
engaging in a business combination with an interested stockholder for a period
of three years after the interested stockholder first became a shareholder of
the corporation unless the
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Wisconsin corporation's board of directors approved the business combination
prior to the date that the interested stockholder became a shareholder. A
corporation, such as Third Wave, which does not have a class of voting stock
registered or traded on a national exchange is not subject to Section 180.1141
of the WBCL.
Limitation on Directors' Liability
As permitted by Delaware law, PE Corporation's certificate of
incorporation eliminates or limits the personal liability of a director of PE
Corporation to PE Corporation or its stockholders for money damages based upon
his or her breach of fiduciary duty. However, a director's liability is not
eliminated or limited for:
o any breach of the director's duty of loyalty to PE Corporation or
its stockholders;
o any acts or omissions made not in good faith;
o any acts which involve intentional misconduct or a knowing violation
of law;
o any transactions from which the director derived an improper
personal benefit; or
o any liability arising under Delaware law relating to unlawful
payment of dividends or unlawful stock purchase or redemption.
Under Wisconsin law, a director is not liable to the corporation or its
shareholders for monetary damages or liabilities arising from a breach of any
duty resulting solely from his or her status as a director, unless the breach
constitutes:
o a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a
material conflict of interest;
o a violation of criminal law, unless the director had reasonable
cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful;
o a transaction from which the director derived an improper personal
profit; or
o willful misconduct.
Indemnification of Directors and Officers
Delaware law permits a company's board of directors to indemnify any
person against expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement, actually incurred by him or her in connection with any
threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or agent
of the company, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Delaware law provides that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise.
PE Corporation's certificate of incorporation and bylaws provide for
indemnification of PE Corporation's directors and officers to the fullest extent
permitted by law.
The directors and officers of PE Corporation are covered by insurance
policies indemnifying against certain liabilities, including certain liabilities
arising under the Securities Act which might be incurred by them in such
capabilities and against which they cannot be indemnified by PE Corporation.
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Wisconsin law requires a corporation to indemnify a director to the extent
that he or she has been successful on the merits or otherwise in the defense of
a proceeding for all reasonable expenses that he or she incurred in the
proceeding if the director was a party because he or she is or was a director of
the corporation. Indemnification is also required in other instances unless the
director is personally liable as a result of breaching a duty to the
corporation. The WBCL also permits additional rights of indemnification for
directors pursuant to provisions in the corporation's articles of incorporation
or bylaws, a written agreement between the director and the corporation, a
resolution adopted by the board of directors or a resolution adopted by the
shareholders. Third Wave's bylaws provide for indemnification of its directors
to the fullest extent permitted by law.
Dissenters' Rights
PE Corporation. Generally, stockholders of a Delaware corporation who object to
certain mergers or a consolidation of the corporation are entitled to appraisal
rights, requiring the surviving corporation to pay the fair value of the
dissenting shares. There are, however, no statutory rights of appraisal with
respect to stockholders of a Delaware corporation whose shares of stock are
either:
o listed on a national securities exchange or designated as a national
market system by the National Association of Securities Dealers,
Inc.; or
o held of record by more than 2,000 stockholders.
However, appraisal rights will be available to holders of shares if they are
required by the merger terms to accept anything other than shares of the
survivor, listed or quoted shares or cash in lieu of fractional shares.
In addition, no appraisal rights are available for any shares of stock of
a surviving corporation in a merger if the merger did not require the approval
of the stockholders of such corporation. Further, Delaware law does not provide
appraisal rights to stockholders who dissent from the sale of all or
substantially all of the corporation's assets unless the certificate of
incorporation provides otherwise. PE Corporation's certificate of incorporation
does not provide for appraisal rights upon the sale of all or substantially all
of its assets.
Under Delaware law, the meaning of "fair value" in payment for shares upon
exercise of dissenters' rights does not include any element of value arising
from the completion or expectation of the transaction.
Third Wave. Under Wisconsin law, a shareholder may dissent from, and obtain
payment of the fair value of his or her shares in the event of certain mergers,
share exchanges and transactions involving the sale of all or substantially all
of the corporation's property other than in the usual and ordinary course of
business. However, dissenters' rights do not apply to holders of shares that are
registered on a national securities exchange or quoted on the National
Association of Securities Dealers, Inc. Automated Quotations System.
Under Wisconsin law, in the case of a business combination, "fair value"
is defined as the fair market value as determined in good faith by the
corporation's board of directors.
Right To Examine Stockholder List; Right to Inspect Corporate Records
Under Delaware law, each stockholder has the right:
o during normal business hours, for a period of at least ten days
prior to any stockholder meeting and during such meeting, to examine
an alphabetical list of stockholders for any purpose germane to the
meeting. The list will show the address of each stockholder and the
number of shares held by each stockholder; and
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o following a written request, to inspect for any proper purpose a
corporation's books and records, including the stockholder list,
during usual business hours.
Under Wisconsin law, each shareholder has the right:
o during regular business hours and at his or her expense, beginning
two business days after notice of a shareholders' meeting is given
and continuing through the meeting, to inspect and copy for proper
purposes a list of shareholders arranged by class or series of
shares and showing the address of and number of shares held by each
shareholder;
o following a written request, to inspect and copy for proper purposes
certain of the corporation's books and records, including the
corporation's bylaws, minutes of meetings, accounting records and
shareholders list, during regular business hours; and
o following a written request, to receive a copy of the corporation's
latest financial statements.
Interested Director Transactions
Under Delaware law, certain contracts or transactions in which a director
has an interest are not void or voidable solely by reason of that interest if
the contract or transaction:
o is approved by the stockholders or by a majority of the
disinterested directors if the material facts are disclosed in good
faith or known; or
o was fair and reasonable to the corporation at the time of approval.
Similarly, under Wisconsin law, a conflict of interest transaction is not
voidable by the corporation solely because of the director's interest in that
transaction as long as:
o the material facts of the transaction and the director's interest
were disclosed or known and the transaction was authorized, approved
or specifically ratified by either (a) the board of directors,
including a majority of the disinterested directors, or (b) the
shareholders, including a majority of the shares that are not
controlled or voted by the interested director; or
o the transaction was fair to the corporation.
EXPERTS
The consolidated financial statements of PE Corporation, the combined
financial statements of the PE Biosystems group and the combined financial
statements of the Celera Genomics group as of June 30, 1999 and 1998 and for
each of the three years in the period ended June 30, 1999, incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
June 30, 1999, have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL OPINIONS
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The legality of the shares of PE Biosystems common stock to be issued to
holders of shares of Third Wave common stock and Third Wave preferred stock
pursuant to the merger will be passed upon for PE Corporation by Simpson Thacher
& Bartlett, New York, New York.
Certain federal income tax matters related to the merger will be passed
upon for PE Corporation by Simpson Thacher & Bartlett, New York, New York, and
for Third Wave by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
San Francisco, California.
WHERE YOU CAN FIND MORE INFORMATION
PE Corporation files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the world wide web site maintained by the SEC at
http://www.sec.gov.
PE Corporation has filed a Form S-4 to register with the SEC the PE
Biosystems common stock to be issued to Third Wave shareholders in the merger.
This document is a part of the Form S-4 and constitutes a prospectus of PE
Corporation in addition to being a proxy statement for the Third Wave special
meeting. As allowed by SEC rules, this document does not contain all the
information you can find in the Form S-4 or the exhibits to the Form S-4.
The SEC allows PE Corporation to "incorporate by reference" information
into this document, which means that PE Corporation 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
document, except for any information superseded by information in this document.
PE Corporation incorporates by reference its documents listed below and any
future filings it makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, prior to the termination of this offering:
(a) Annual Report on Form 10-K for the fiscal year ended June 30, 1999;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
September 30, 1999 and December 31, 1999;
(c) the descriptions of PE Corporation's common stock and rights to
purchase participating junior preferred stock set forth in its registration
statements filed pursuant to Section 12 of the Exchange Act and any amendment or
report filed for the purpose of updating any of those descriptions.
If you are a shareholder of Third Wave, PE Corporation may have sent you
some of the documents incorporated by reference, but you can obtain any of them
through PE Corporation or the SEC. Documents incorporated by reference are
available from PE Corporation without charge, excluding all exhibits unless PE
Corporation has specifically incorporated by reference an exhibit in this
document. Shareholders of Third Wave may obtain documents incorporated by
reference in this document by requesting them in writing or by telephone from PE
Corporation at the following address:
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06897
Attention: Secretary
(203) 762-1000
If you would like to request documents from PE Corporation, please do so
by , 2000 to receive them prior to the special meeting.
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You should rely only on the information contained or incorporated by
reference in this document to vote on the proposals included in this document.
PE Corporation has not authorized anyone to provide you with information that is
different from what is contained in this document. This document is dated ,
2000. You should not assume that the information contained in this document is
accurate as of any date other than such date, and neither the mailing of this
document to shareholders of Third Wave nor the issuance of PE Biosystems common
stock in the merger shall create any implication to the contrary.
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PE CORPORATION
AND
THIRD WAVE TECHNOLOGIES, INC.
Annexes to the Prospectus
I. Agreement and Plan of Merger
II. Voting Agreement
III. Form of Escrow Agreement
IV. Opinion of Lehman Brothers
<PAGE>
Annex I
AGREEMENT AND PLAN OF MERGER
Dated as of January 23, 2000
Among
PE Corporation
Blue Acquisition Corp.
and
Third Wave Technologies, Inc.
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TABLE OF CONTENTS
Page
ARTICLE I The Merger...........................8
SECTION 1.01. The Merger....................................................8
SECTION 1.02. Closing.......................................................8
SECTION 1.03. Effective Time of the Merger..................................8
SECTION 1.04. Effects of the Merger.........................................9
SECTION 1.05. Articles of Incorporation; Bylaws.............................9
SECTION 1.06. Directors.....................................................9
SECTION 1.07. Officers......................................................9
ARTICLE II Effect of the Merger on the Capital
Stock of theConstituent Corporations...................9
SECTION 2.01. Effect on Capital Stock.......................................9
SECTION 2.02. Exchange of Certificates.....................................11
SECTION 2.03. Treatment of Options.........................................12
ARTICLE III Representations and Warranties................13
SECTION 3.01. Representations and Warranties of the Company................13
SECTION 3.02. Representations and Warranties of Parent and Sub.............29
ARTICLE IV Covenants Relating to Conduct of
Business Prior to Merger.........................33
SECTION 4.01. Conduct of Business..........................................33
ARTICLE V Additional Agreements.....................37
SECTION 5.01. Preparation of Form S-4; Shareholder Meeting.................37
SECTION 5.02. Access to Information; Confidentiality.......................38
SECTION 5.03. Reasonable Best Efforts......................................38
SECTION 5.04. Indemnification..............................................39
SECTION 5.05. Directorships................................................39
SECTION 5.06. Registration Rights..........................................40
SECTION 5.07. Public Announcements.........................................40
SECTION 5.08. Affiliates...................................................40
SECTION 5.09. No Solicitation..............................................40
SECTION 5.10. Benefit Matters..............................................41
SECTION 5.11. Stock Exchange Listing.......................................41
SECTION 5.12. Letters of the Company's Accountants.........................42
SECTION 5.13. Letters of Parent's Accountants..............................42
ARTICLE VI Conditions Precedent.....................42
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger...42
SECTION 6.02. Conditions to Obligations of Parent and Sub..................43
SECTION 6.03. Conditions to Obligation of the Company......................45
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ARTICLE VII Termination, Amendment and Waiver..............46
SECTION 7.01. Termination..................................................46
SECTION 7.02. Effect of Termination........................................47
SECTION 7.03. Amendment....................................................47
SECTION 7.04. Extension; Waiver............................................47
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver....47
ARTICLE VIII General Provisions.....................47
SECTION 8.01. Survival.....................................................47
SECTION 8.02. Expenses.....................................................48
SECTION 8.03. Notices......................................................48
SECTION 8.04. Definitions..................................................49
SECTION 8.05. Interpretation...............................................51
SECTION 8.06. Counterparts.................................................51
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries...............51
SECTION 8.08. GOVERNING LAW................................................51
SECTION 8.09. Assignment...................................................51
SECTION 8.10. Enforcement..................................................52
SCHEDULES
Company Disclosure Schedule
EXHIBITS
Exhibit A Voting Agreement
Exhibit B Escrow Agreement
Exhibit C-1 Form of Company Affiliate Letter
Exhibit C-2 Form of Parent Affiliate Letter
Exhibit D-1 Form of Opinion of Counsel to the Company
Exhibit D-2 Form of Opinion of Counsel to Parent and Sub
Exhibit E License Agreement Term Sheet
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<PAGE>
GLOSSARY OF DEFINED TERMS
affiliate.............................................................ss.8.04(a)
Articles..............................................................Preamble
Articles of Merger.......................................................ss.1.03
Bylaws................................................................ss.3.01(a)
Celera Genomics Stock..............................................ss.3.02(b)(i)
Certificates..........................................................ss.2.01(d)
Closing..................................................................ss.1.02
Closing Date.............................................................ss.1.02
Code..................................................................Preamble
Company...............................................................Preamble
Company Common Stock..................................................Preamble
Company Disclosure Schedule..............................................ss.3.01
Company IP.........................................................ss.3.01(u)(i)
Company Lease Agreements...........................................ss.3.01(j)(i)
Company Permits..................................................ss.3.01(g)(iii)
Company Plans......................................................ss.3.01(h)(i)
Company Preferred Stock...............................................Preamble
Company Stock.........................................................Preamble
Company Stock Option..................................................ss.2.03(a)
Company Stock Plans...................................................ss.2.03(a)
Company Shareholder Approval..........................................Preamble
Confidentiality Agreements............................................ss.5.02(a)
Controlled Group.................................................ss.3.01(h)(iii)
Default Date..........................................................ss.7.02(b)
Dissenting Shares..................................................ss.2.01(e)(i)
Effective Time of the Merger.............................................ss.1.03
Environmental Claim...................................................ss.8.04(b)
Environmental Laws....................................................ss.8.04(c)
Environmental Permits.................................................ss.8.04(d)
ERISA..............................................................ss.3.01(h)(i)
Escrow Agent..........................................................ss.2.02(f)
Escrow Agreement......................................................ss.2.02(f)
Exchange Act..........................................................ss.3.01(v)
Financial Statements...............................................ss.3.01(e)(i)
Form S-4..........................................................ss.3.01(d)(ii)
GAAP...............................................................ss.3.01(e)(i)
Goldman...............................................................ss.3.02(g)
Governmental Entity...............................................ss.3.01(d)(ii)
Hazardous Materials...................................................ss.8.04(e)
HSR Act...........................................................ss.3.01(d)(ii)
incentive stock options...............................................ss.2.03(a)
indebtedness..........................................................ss.8.04(f)
Indemnified Liabilities..................................................ss.5.04
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Indemnitees..............................................................ss.5.04
Intellectual Property.................................................ss.8.04(g)
IP Agreements...................................................ss.3.01(n)(i)(I)
knowledge.............................................................ss.8.04(h)
Lehman................................................................ss.3.01(p)
Liens.................................................................ss.8.04(i)
Litigation.........................................................ss.3.01(g)(i)
Material Adverse Change...............................................ss.8.04(j)
Material Adverse Effect...............................................ss.8.04(j)
Material Contract..................................................ss.3.01(n)(i)
Merger................................................................Preamble
Merger Consideration..................................................ss.2.01(c)
NYSE...............................................................ss.2.02(d)(i)
Order.............................................................ss.3.01(d)(ii)
Parent................................................................Preamble
Parent Common Stock...................................................ss.2.01(c)
Parent Common Stock Warrants.......................................ss.3.02(b)(i)
Parent Preferred Stock.............................................ss.3.02(b)(i)
Parent SEC Reports.................................................ss.3.02(d)(i)
Parent Stock Plans.................................................ss.3.02(b)(i)
Parent Subsidiaries...................................................ss.3.02(a)
person................................................................ss.8.04(k)
Principals............................................................ss.6.02(l)
Reference Balance Sheet...........................................ss.3.01(e)(ii)
SEC...............................................................ss.3.01(d)(ii)
Securities Act...................................................ss.3.01(c)(iii)
Series A Preferred Stock..............................................Preamble
Series B Preferred Stock..............................................Preamble
Series C Preferred Stock..............................................Preamble
Series D Preferred Stock..............................................Preamble
Series E Preferred Stock..............................................Preamble
Shareholders Meeting..................................................ss.5.01(c)
cSplit................................................................ss.2.01(c)
Sub...................................................................Preamble
subsidiary............................................................ss.8.04(l)
Surviving Corporation....................................................ss.1.04
Taxes............................................................ss.3.01(i)(xvi)
Tax Return.......................................................ss.3.01(i)(xvi)
Transaction Proposals....................................................ss.5.09
Voting Agreement......................................................Preamble
Voting Debt......................................................ss.3.01(c)(iii)
WARN..............................................................ss.3.01(g)(ii)
WBCL.....................................................................ss.1.01
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<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of January 23, 2000, among PE
Corporation, a Delaware corporation ("Parent"), Blue Acquisition Corp., a
Wisconsin corporation and a direct wholly owned subsidiary of Parent ("Sub"),
and Third Wave Technologies, Inc., a Wisconsin corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have determined that the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of their respective
shareholders;
WHEREAS, such Boards of Directors have approved the Merger, pursuant
to which each share of Common Stock, par value $1.00 per share, of the Company
(the "Company Common Stock") and each share of Company Preferred Stock, other
than shares owned, directly or indirectly, by the Company or any subsidiary of
the Company or by Parent, Sub or any other subsidiary of Parent, will be
converted into the right to receive the Merger Consideration;
WHEREAS, approval of the Merger and this Agreement require the vote
or written consent of the holders of (i) a majority of the outstanding shares of
each of (A) the Company Common Stock as a separate class (not including the
votes of the holders of any Company Preferred Stock outstanding on the record
date for such vote or, if no such record date is established, on the date such
vote is taken), as required by the WBCL, (B) the Company Common Stock (including
the votes of the holders of shares of each of the Series A Convertible Preferred
Stock, par value $10.00 per share, of the Company (the "Series A Preferred
Stock"), the Series B Convertible Preferred Stock, par value $10.00 per share,
of the Company (the "Series B Preferred Stock"), the Series C Convertible
Preferred Stock, par value $10.00 per share, of the Company (the "Series C
Preferred Stock"), the Series D Convertible Preferred Stock, par value $10.00
per share, of the Company (the "Series D Preferred Stock"), and the Series E
Convertible Preferred Stock, par value $10.00 per share, of the Company (the
"Series E Preferred Stock", and together with the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock, the "Company Preferred Stock"), as if such shares of Company
Preferred Stock were converted into shares of Company Common Stock pursuant to
the provisions of Sections 1.5, 2.5, 3.5, 4.5 and 5.5, as applicable, of Article
III of the Company's Amended and Restated Articles of Incorporation (the
"Articles"), on the record date for such vote or, if no such record date is
established, on the date such vote is taken or any written consent is
solicited), and (C) the Series E Preferred Stock, and (ii) 66-2/3% of the
outstanding shares of each of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
I - 6
<PAGE>
(collectively, the "Company Shareholder Approval");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition of, and inducement to, Parent's willingness to
enter into this Agreement, Parent and holders of Company Common Stock and
Company Preferred Stock (collectively, the "Company Stock") sufficient in amount
to provide the Company Shareholder Approval are entering into a voting
agreement, dated as of the date hereof, in the form of Exhibit A hereto (the
"Voting Agreement"), pursuant to which such holders of Company Stock are
agreeing, among other things, to vote their shares of Company Stock in favor of
the Merger;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Wisconsin
Business Corporation Law (the "WBCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger. At the Effective Time of the
Merger, the separate existence of Sub shall cease, and the Company shall
continue as the surviving corporation.
SECTION 1.02. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.01 (which are the only circumstances under which the
Merger may be abandoned under Section 180.1103(6) of the WBCL), and subject to
the satisfaction
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or waiver of the conditions set forth in Article VI, the closing of the Merger
(the "Closing") will take place at a time and date to be specified by the
parties, which shall be (i) no earlier than April 1, 2000 and (ii) on or after
April 1, 2000, no later than 10:00 a.m. on the second business day after
satisfaction of the conditions set forth in Section 6.01 (or as soon as
practicable thereafter following satisfaction or waiver of the conditions set
forth in Sections 6.02 and 6.03) (the "Closing Date"), at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time of the Merger. Upon the Closing, the
parties shall file with the Department of Financial Institutions of the State of
Wisconsin articles of merger (the "Articles of Merger") prepared in accordance
with the relevant provisions of the WBCL and shall make all other filings or
recordings required under the WBCL. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Department of Financial
Institutions of the State of Wisconsin, or at such other time as is permissible
in accordance with the WBCL and as Sub and the Company shall agree should be
specified in the Articles of Merger (the time the Merger becomes effective being
the "Effective Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in this Agreement and the applicable provisions of the WBCL.
As used herein, "Surviving Corporation" shall mean and refer to the Company, at
and after the Effective Time of the Merger, as the surviving corporation in the
Merger.
SECTION 1.05. Articles of Incorporation; Bylaws. (a) At the
Effective Time of the Merger, the Articles shall be amended and restated to be
the same in substance as the articles of incorporation of Sub immediately before
the Effective Time of the Merger, and said amended and restated articles of
incorporation shall be filed with the Department of Financial Institutions of
the State of Wisconsin and shall be the amended and restated articles of
incorporation of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.
(b) At the Effective Time of the Merger, and without any further
action on the part of the Company or Sub, the bylaws of Sub as in effect at the
Effective Time of the Merger shall be the bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
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SECTION 1.06. Directors. The directors of Sub at the Effective Time
of the Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company at the Effective
Time of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations
SECTION 2.01. Effect on Capital Stock. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
Company, Sub or any holder of any shares of Company Stock or any shares of
capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock of Sub issued
and outstanding immediately prior to the Effective Time of the Merger shall be
converted into one share of the common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Company Stock.
Each share of Company Stock that is owned by the Company or any subsidiary of
the Company, and each share of Company Stock that is owned by Parent, Sub or any
other subsidiary of Parent shall automatically be canceled and retired and shall
cease to exist, and no cash, Parent Common Stock or other consideration shall be
delivered or deliverable in exchange therefor.
(c) Conversion of Company Stock. Subject to Sections 2.02(b),
2.02(d) and 2.02(e), each issued and outstanding share of Company Stock (other
than shares canceled pursuant to Section 2.01(b) or Dissenting Shares) shall be
converted into 187.6578 shares of PE Corporation--PE Biosystems Group Common
Stock, par value $0.01 per share (including the rights associated with such
shares pursuant to Parent's Shareholders' Protection Rights Plan, the "Parent
Common Stock") (after giving effect to the 100% stock dividend on Parent Common
Stock (the "Split") declared on January
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20, 2000 for distribution on February 18, 2000 to holders of record on February
4, 2000) (the amount of Parent Common Stock into which each such share of
Company Stock is converted being referred to herein as the "Merger
Consideration").
(d) Cancellation and Retirement of Company Stock. At the Effective
Time of the Merger, all shares of Company Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Stock (collectively, the "Certificates") shall, to the extent such Certificate
represents such shares, cease to have any rights with respect thereto, except
the right to receive the Merger Consideration (and cash in lieu of fractional
shares of Parent Common Stock) to be issued or paid in consideration therefor
upon surrender of such Certificate in accordance with Section 2.02.
(e) Dissenting Shares. (i) Notwithstanding anything in this
Agreement to the contrary, shares of Company Stock that are issued and
outstanding immediately prior to the Effective Time of the Merger and which are
held by shareholders who have not voted in favor of the Merger and who shall
have delivered to the Company before the vote is taken written notice that
complies with Sections 180.0141 and 180.1103 of the WBCL of their intent to
demand payment for their shares if the Merger is effectuated, in the time and
manner specified in Sections 180.1301 through 180.1331 of the WBCL (the
"Dissenting Shares"), shall not be converted into the right to receive the
Merger Consideration, but shall be entitled to receive the consideration in the
time required by and as shall be determined pursuant to such sections of the
WBCL; provided, however, that if such holder shall have effectively withdrawn or
lost his, her or its right to demand payment under the WBCL, such holder's
shares of Company Stock shall thereupon be deemed to have been converted, at the
Effective Time of the Merger, into the right to receive the Merger Consideration
set forth in Section 2.01(c), without any interest thereon.
(ii) The Company shall give Parent (A) prompt notice of any notices or demands
for payment pursuant to Sections 180.1321 or 180.1323 of the WBCL received by
the Company, withdrawals of such demands, and any other instruments served
pursuant to the WBCL and received by the Company and (B) the opportunity to
direct all negotiations and proceedings with respect to demands for payment
under the WBCL. The Company shall not, except with the prior written consent of
Parent or as otherwise required by applicable law, make any payment with
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respect to any such demands for payment or offer to settle or settle any such
demands.
SECTION 2.02. Exchange of Certificates. (a) Exchange Procedures.
Upon surrender of a Certificate for cancellation to Parent, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate or
certificates representing that number of whole shares of Parent Common Stock
which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II (after taking into
account all shares of Company Stock then held by such holder), and the
Certificate so surrendered shall forthwith be canceled; provided, however, that
Parent shall be entitled to withhold from such exchange the amount of Parent
Common Stock delivered to the Escrow Agent pursuant to the Escrow Agreement. In
the event of a transfer of ownership of shares of Company Stock which is not
registered in the transfer records of the Company, a certificate or certificates
representing the proper number of shares of Parent Common Stock may be issued to
a transferee if the Certificate is presented to Parent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02 each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the Parent Common Stock
into which the shares of Company Stock represented by such Certificate have been
converted as provided in this Article II and the right to receive upon such
surrender cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.02.
(b) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.02(d), until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate or certificates representing whole shares
of Parent Common Stock issued in exchange therefor without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(d) and the amount of any dividends or other distributions with a
record date after the Effective Time of the Merger theretofore paid (but
withheld
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pursuant to the immediately preceding sentence) with respect to such whole
shares of Parent Common Stock, and (ii) at the appropriate payment date, the
amount of any dividends or other distributions with a record date after the
Effective Time of the Merger but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole shares of Parent
Common Stock.
(c) No Further Ownership Rights in Company Stock. All shares of
Parent Common Stock issued upon conversion of shares of Company Stock in
accordance with the terms hereof, and all cash paid pursuant to Sections 2.02(b)
and 2.02(d), shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Stock which were outstanding prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In lieu
of such issuance of fractional shares, Parent shall pay each holder of
Certificates 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 of Company Stock held immediately prior to the Effective Time of the
Merger by such holder) would otherwise be entitled by (b) the weighted average
of the closing prices of a share of Parent Common Stock on the New York Stock
Exchange ("NYSE") Composite Transaction Tape during the 15 consecutive trading
days ending on (and excluding) the trading day immediately prior to the
Effective Time of the Merger.
(ii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates with respect to
any fractional share interests, Parent shall make available such amounts to such
holders of Certificates, subject to and in accordance with the terms of Section
2.02(b).
(e) No Liability. None of Parent, Sub or the Company shall be liable
to any person in respect of any shares of Parent Common Stock (or dividends or
distributions with respect thereto)
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<PAGE>
or cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered prior to three years after the Effective Time of the Merger, or
immediately prior to such earlier date on which any Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock would otherwise escheat to or
become the property of any Governmental Entity, any such Merger Consideration or
cash shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto.
(f) Merger Consideration Held in Escrow. Prior to the Closing Date,
Parent and John Neis, as representative for the holders of Company Stock, shall
enter into an escrow agreement (the "Escrow Agreement"), a form of which is
attached hereto as Exhibit B and the terms of which shall be deemed to be a part
of and shall be read in conjunction with this Agreement, with a qualified escrow
agent (the "Escrow Agent") reasonably acceptable to Parent and the Company,
providing for 10% of the aggregate Merger Consideration to be delivered by
Parent into escrow at the Closing and held for disbursement as provided in the
Escrow Agreement.
SECTION 2.03. Treatment of Options. (a) At the Effective Time of the
Merger, each outstanding option to purchase Company Common Stock (a "Company
Stock Option") issued pursuant to the Company's Incentive Stock Option Plan,
1997 Incentive Stock Option Plan, 1997 Nonqualified Stock Option Plan, 1998
Incentive Stock Option Plan, 1999 Nonqualified Stock Option Plan and 1999
Incentive Stock Option Plan (collectively, the "Company Stock Plans"), whether
vested or unvested, shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Company Stock Option,
the same number of shares of Parent Common Stock as the holder of such Company
Stock Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective Time of
the Merger, at a price per share equal to (y) the aggregate exercise price for
the shares of Company Common Stock otherwise purchasable pursuant to such
Company Stock Option divided by (z) the number of full shares of Parent Common
Stock deemed purchasable pursuant to such Company Stock Option. It is intended
that all Company Stock Options assumed by Parent shall qualify following the
Effective Time of the Merger as incentive stock options as defined in Section
422 of the Code ("incentive stock options") to the extent that such Company
Stock Options qualified as such immediately
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prior to the Effective Time of the Merger, and the option price, the number of
shares purchasable pursuant to such options and the terms and conditions of
exercise of such options shall be determined in order to comply with Section
424(a) of the Code.
(b) As soon as practicable after the Effective Time of the Merger,
Parent shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the Company Stock Plans and the
agreements evidencing the grants of such Company Stock Options shall continue in
effect on the same terms and conditions (subject to adjustments required by this
Section 2.03 after giving effect to the Merger and the provisions set forth
above and until otherwise determined). If necessary, Parent shall comply with
the terms of the Company Stock Plans and ensure, to the extent required by, and
subject to the provisions of, the Company Stock Plans, that Company Stock
Options that qualified as incentive stock options prior to the Effective Time of
the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
(c) Prior to the Effective Time of the Merger, Parent shall have
taken all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of Company Stock
Options. As soon as practicable after the Effective Time of the Merger, Parent
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), or another appropriate form, with
respect to the shares of Parent Common Stock subject to such options and shall
use its reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth in the disclosure schedule of the Company dated as of the date
hereof and delivered herewith to Parent (the "Company Disclosure Schedule"),
which identifies the section and subsection to which each disclosure therein
relates, the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is duly
organized, validly existing and in good standing
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under the laws of the State of Wisconsin and has the requisite corporate power
and authority to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Attached as Section 3.01(a)
of the Company Disclosure Schedule are complete and correct copies of the
Articles and the Company's Amended and Restated Bylaws, as amended (the
"Bylaws"), as currently in effect. For purposes of this Agreement, as it relates
to the State of Wisconsin, the term "good standing" shall mean that the entity
has filed all of the annual and other reports required to be filed by it with
such jurisdiction, has not filed articles of dissolution with the Department of
Financial Institutions of the State of Wisconsin and has not been judicially or
administratively dissolved.
(b) Subsidiaries. The only direct or indirect subsidiaries of the
Company are those listed in Section 3.01(b) of the Company Disclosure Schedule.
Except for the ownership interests set forth in Section 3.01(b) of the Company
Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, limited liability
company, partnership, business association, joint venture or other entity.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 25,000 shares of Company Common Stock, 943 shares of Series
A Preferred Stock, 500 shares of Series B Preferred Stock, 467 shares of Series
C Preferred Stock, 988 shares of Series D Preferred Stock and 4,819 shares of
Series E Preferred Stock. As of the date hereof, there are: (A) 12,272 shares of
Company Common Stock issued and outstanding; (B) no shares of Company Common
Stock held in the treasury of the Company; (C) 1,522 shares of Company Common
Stock reserved for issuance upon exercise of outstanding Company Stock Options
(which Company Stock Options have exercise prices as specified in Section
3.01(c)(i)(C) of the Company Disclosure Schedule), and 436 shares of Company
Common Stock reserved for issuance pursuant to the Company Stock Plans (other
than upon exercise of outstanding Company Stock Options); (D) 7,223 shares of
Company Common Stock reserved for issuance upon conversion of outstanding
Company Preferred Stock; (E) 943 shares of Series A Preferred Stock issued and
outstanding; (F) 500 shares of Series B Preferred Stock issued and outstanding;
(G) 467 shares of Series
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C Preferred Stock issued and outstanding; (H) 988 shares of Series D Preferred
Stock issued and outstanding; and (I) 4,325 shares of Series E Preferred Stock
issued and outstanding. Except as set forth above, as of the date hereof, there
are no shares of capital stock or other equity securities of the Company issued,
reserved for issuance or outstanding.
(ii) Except as set forth in Section 3.01(c)(ii) of the Company
Disclosure Schedule, all outstanding shares of capital stock of the Company are,
and all shares of Company Common Stock which may be issued pursuant to the
Company Stock Plans or upon conversion of the Company Preferred Stock will be,
when issued, duly authorized, validly issued, fully paid and nonassessable
(except with respect to certain unpaid employee wage claims under Section
180.0622(2)(b) of the WBCL) and not subject to preemptive rights. All securities
issued by the Company were issued in compliance in all material respects with
all applicable federal and state securities laws and all applicable rules and
regulations promulgated thereunder. No shares of Company Stock are owned by any
subsidiary of the Company.
(iii) There are no outstanding bonds, debentures, notes or
other indebtedness or debt securities of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote (collectively,
"Voting Debt"). Except as set forth above and except as set forth in Section
3.01(c)(iii) of the Company Disclosure Schedule, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company is a party or by
which it is bound obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other equity
or voting securities of the Company or obligating the Company to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except as disclosed in
Section 3.01(c)(iii) of the Company Disclosure Schedule, (A) there are no
outstanding contractual obligations, commitments, understandings or arrangements
of the Company to repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of the Company and (B) to the knowledge
of the Company, there are no proxies with respect to shares of capital stock of
the Company, other than as contemplated by the Voting Agreement. Except as set
forth in Section 3.01(c)(iii) of the Company Disclosure Schedule, there are no
agreements or arrangements pursuant to which the Company
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is or could be required to register shares of Company Stock or other securities
under the Securities Act of 1933, as amended (the "Securities Act"), or other
agreements or arrangements with or, to the knowledge of the Company, among any
securityholders of the Company with respect to securities of the Company.
(iv) Since September 30, 1999, the Company has not (A) issued
or permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock, of the Company, other than (x)
the grant of any employee stock options prior to the date of this Agreement
pursuant to the Company Stock Plans, (y) the issuance of Company Common Stock
upon exercise of the options granted pursuant to the Company Stock Plans prior
to the date of this Agreement and (z) upon conversion of shares of Company
Preferred Stock outstanding on September 30, 1999; (B) repurchased, redeemed or
otherwise acquired any shares of capital stock of the Company; or (C) declared,
set aside, made or paid to the shareholders of the Company dividends or other
distributions on the outstanding shares of capital stock of the Company.
(d) Authority; Noncontravention. (i) The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to the
Company Shareholder Approval, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject to the Company Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by Parent and Sub) constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(ii) Except as set forth in Section 3.01(d)(ii) of the Company
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation by the Company of the transactions contemplated by this
Agreement and compliance by the Company with the provisions hereof will not,
conflict with, or result in any breach or violation of, or any default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of, or a
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"put" right with respect to any obligation under, or to a loss of a material
benefit under, or result in the creation of any Lien upon any of the properties
or assets of the Company under, (A) the Articles or Bylaws, (B) any loan or
credit agreement, note, note purchase agreement, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to the Company or its properties or assets or any other Material
Contract or (C) subject to the governmental filings and other matters referred
to in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule, regulation, settlement or arbitration award ("Order")
applicable to the Company or its properties or assets, other than, in the case
of clauses (B) and (C), any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect with respect to the
Company or prevent or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby or the
performance by the Company of its obligations hereunder, except for (w) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (x) the filing of the registration statement on Form S-4 to be filed with
the Securities and Exchange Commission (the "SEC") by Parent in connection with
the issuance of Parent Common Stock in the Merger (the "Form S-4") and (y) the
filing of the Articles of Merger with the Department of Financial Institutions
of the State of Wisconsin and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business.
(e) Financial Statements; Undisclosed Liabilities. (i) Set forth in
Section 3.01(e)(i) of the Company Disclosure Schedule are complete, true and
correct copies of: (A) the audited balance sheets of the Company as of March 31,
1999 and 1998, including the notes thereto, (B) the audited statements of
operations and cash flows of the Company for the fiscal years ended March 31,
1999 and 1998, including the notes thereto, (C) the unaudited balance sheet of
the Company as of September 30, 1999, and (D) the unaudited statements of
operations and cash flows of the Company for the six months ended September 30,
1999
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(collectively, the "Financial Statements"). Except as set forth in the notes
thereto and except, in the case of the unaudited statements, which do not
contain footnotes, for normal year-end audit adjustments and disclosures (none
of which is material), the Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP"), as in effect on the date
of such Financial Statements, and the unaudited Financial Statements have been
prepared on a basis consistent with the audited Financial Statements, and the
Financial Statements fairly present, in all material respects, the financial
position and results of operations and cash flows of the Company, in each case
as of the dates indicated and for the periods covered, as the case may be.
(ii) Other than the liabilities set forth in the unaudited
balance sheet of the Company as of September 30, 1999 included in the Financial
Statements or in the notes thereto (the "Reference Balance Sheet") or as set
forth on Section 3.01(e)(ii) of the Company Disclosure Schedule, the Company has
no liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise) that are of a nature required to be set forth on a
balance sheet (or in the notes thereto) in accordance with GAAP as in effect on
the date of this Agreement, except liabilities or obligations incurred
subsequent to the date of the Reference Balance Sheet in the ordinary course of
business consistent with past practice, none of which has had or could
reasonably be expected to have a Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as disclosed in
Section 3.01(f) of the Company Disclosure Schedule, since September 30, 1999,
the Company has conducted its business only in the ordinary course consistent
with past practice, and there is not and has not been: (1) any Material Adverse
Change with respect to the Company; (2) any condition, event or occurrence
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or give rise to a Material Adverse Change with respect
to the Company; (3) any action which, if it had been taken or occurred after the
execution of this Agreement, would have required the consent of Parent pursuant
to this Agreement; or (4) any condition, event or occurrence which, individually
or in the aggregate, could reasonably be expected to prevent or materially delay
the ability of the Company to consummate the transactions contemplated by this
Agreement or perform its obligations hereunder. Except as disclosed in Section
3.01(f) of the Company Disclosure Schedule, the Company has not since September
30, 1999:
(i) encumbered, transferred, leased, licensed
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or otherwise disposed of, or authorized or committed to the sale, encumbrance
of, transfer, lease, license or other disposition of any material assets other
than in the ordinary course of business;
(ii) (A) acquired (by merger, consolidation or acquisition of
stock or assets) any corporation, limited liability company, partnership or
other business organization or division thereof or substantially all of the
assets thereof or (B) incurred any indebtedness for borrowed money in excess of
up to $3.3 million outstanding at any one time under the Company's line of
credit with Transamerica Business Credit Corporation and up to $1.7 million of
other indebtedness incurred in the ordinary course of business consistent with
past practices, or issued any debt securities or assumed, guaranteed or
endorsed, or otherwise become responsible for, the obligations of any person, or
made any loans, advances or capital contributions to, or investments in, any
other person;
(iii) increased the compensation or fringe benefits of any of
its directors, officers or employees, except for increases in salary or wages of
employees of the Company who are not executive officers of the Company in the
ordinary course of business consistent with past practice, or entered into, or
amended, any employment, severance, or consulting agreement or arrangement with
any present or former director, officer or other employee of the Company; or
(iv) changed, in any material respect any of the accounting
practices or principles used by it.
(g) Litigation; Labor Matters; Compliance with Laws. (i) Except as
disclosed in Section 3.01(g)(i) of the Company Disclosure Schedule, there is (A)
no suit, action, claim, arbitration, inquiry, complaint, charge or other
proceeding ("Litigation") pending before any court, governmental agency,
administrative agency or commission, and (B) to the knowledge of the Company, no
Litigation threatened against or investigation or inquiry pending with respect
to the Company that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company or
prevent or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder, nor is there any judgment, decree, citation, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the Company
which, individually or in the aggregate, has or could reasonably be expected to
have, any such effect.
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<PAGE>
(ii) Except as disclosed in Section 3.01(g)(ii) of the Company
Disclosure Schedule, (A) the Company is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization nor is any such contract or agreement
presently being negotiated; (B) the Company is not the subject of any proceeding
asserting that the Company has committed an unfair labor practice or seeking to
compel it to bargain with any labor organization as to wages or conditions of
employment nor is any such proceeding threatened; (C) there is no strike, work
stoppage, slowdown or other similar labor dispute involving the Company pending
or, to the Company's knowledge, threatened; (D) no grievance is pending or, to
the knowledge of the Company, threatened against the Company; (E) no
representation question exists or has been raised respecting any of the
Company's employees within the past five years, nor to the best knowledge of the
Company are there any campaigns being conducted to authorize representation by
any labor organization; (F) the Company is in compliance with all applicable
laws, agreements, contracts, and policies relating to employment, employment
practices, wages, hours, and terms and conditions of employment except for
failures so to comply, if any, that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect with respect to the
Company; (G) the Company is not a party to, or otherwise bound by, any consent
decree with, or citation by, any government agency relating to employees or
employment practices; (H) the Company has complied in all material respects with
its payment obligations to all employees of the Company in respect of all wages,
salaries, commissions, bonuses, benefits and other compensation due and payable
to such employees under any Company policy, practice, agreement, plan, program
or any statute or other law; (I) the Company is not liable for any severance pay
or other payments to any employee or former employee arising from the
termination of employment under any benefit or severance policy, practice,
agreement, plan, or program of the Company, nor, to the Company's knowledge,
will the Company have any liability which exists or arises, or may be deemed to
exist or arise, under any applicable law or otherwise, as a result of or in
connection with the transactions contemplated hereunder or as a result of the
termination by the Company of any persons employed by the Company on or prior to
the Effective Time of the Merger; (J) the Company has not closed any plant or
facility, effectuated any layoffs of employees or implemented any early
retirement, separation or window program within the past five years, nor has the
Company planned or announced any such action or program for the future; and (K)
the Company is in compliance with its obligations pursuant to the Worker
Adjustment and Retraining Notification Act of 1988, as
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<PAGE>
amended ("WARN"), to the extent applicable, Sections 109.07 and 109.075 of the
Wisconsin Statutes, and all other employee notification and bargaining
obligations arising under any collective bargaining agreement or statute.
(iii) The Company holds all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are material
to the operation of the businesses of the Company, taken as a whole (the
"Company Permits"). The Company is in compliance in all material respects with
the terms of the Company Permits. Except as disclosed in Section 3.01(g)(iii) of
the Company Disclosure Schedule, the business of the Company is not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for any such violation, if any, that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(h) Employee Benefit Plans. (i) Section 3.01(h)(i) of the Company
Disclosure Schedule contains a true and complete list of each "employee benefit
plan" (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (including, without limitation,
multiemployer plans within the meaning of Section 3(37) of ERISA)), stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements relating to employment, benefits or entitlements, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of any action taken by the Company on or
prior to the Effective Time of the Merger as a result of or in connection with
the transactions contemplated by this Agreement or otherwise), whether formal or
informal, oral or written, legally binding or not under which any employee or
former employee of the Company has any present or future right to benefits or
under which the Company has any present or future liability. All such plans,
agreements, programs, policies and arrangements are herein collectively referred
to as the "Company Plans".
(ii) Except as set forth on Section 3.01(h)(ii) of the Company
Disclosure Schedule, with respect to each Company Plan, the Company has made
available to Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable, (A) any related trust agreement, annuity contract or other funding
instrument; (B) the most recent determination
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<PAGE>
letter, opinion, notification or advisory; (C) the current summary plan
description and other written communications (or a description of any oral
communications) by the Company to its employees concerning the extent of the
benefits provided under a Company Plan to the extent inconsistent with the
summary plan description; and (D) for the three most recent years (w) the Form
5500 and attached schedules; (x) audited financial statements; (y) actuarial
valuation reports; and (z) attorney's responses to auditors' requests for
information.
(iii) Except as disclosed in Section 3.01(h)(iii) of the
Company Disclosure Schedule: (A) Each Company Plan has been established and
administered in compliance with its terms and with the applicable provisions of
ERISA, the Code and other applicable laws, rules and regulations, in each case,
in all material respects; (B) each Company Plan which is intended to be
qualified within the meaning of Code Section 401(a) has received a favorable
determination letter, opinion, notification or advisory as to its qualification
and nothing has occurred, whether by action or failure to act, which would cause
the loss of such qualification; (C) with respect to any Company Plan, no
actions, suits or claims (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of the Company, threatened; no facts or
circumstances exist which could give rise to any such actions, suits or claims
and the Company will promptly notify Parent in writing of any pending claims or,
to the knowledge of the Company, any threatened claims arising between the date
hereof and the Effective Time of the Merger; (D) neither the Company nor, to the
knowledge of the Company, any other party has engaged in a prohibited
transaction, as such term is defined under Code Section 4975 or ERISA Section
406, which would subject the Company or Parent or their respective subsidiaries
to any material taxes, penalties or other liabilities under the Code or ERISA;
(E) no event has occurred and no condition exists that would subject the
Company, either directly or by reason of its affiliation with any member of its
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code Sections 414(b),
(c), (m) or (o)), to any material tax, fine or penalty imposed by ERISA, the
Code or other applicable laws, rules and regulations; (F) all insurance premiums
required to be paid and all contributions required to be made under the terms of
any Company Plan, the Code, ERISA or other applicable laws, rules and
regulations as of the Effective Time of the Merger have been or will be timely
paid or made prior thereto and adequate reserves have been provided for on the
Company's balance sheet for any premiums (or portions thereof) and for all
benefits attributable to service on or prior to the Effective Time of the
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<PAGE>
Merger; (G) for each Company Plan with respect to which a Form 5500 has been
filed, no material change has occurred with respect to the matters covered by
the most recent Form since the date thereof; (H) no Company Plan provides for an
increase in benefits, directly or indirectly, on account of the Merger; (I)
neither the Company nor any member of its Controlled Group has engaged in, or is
a successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA; and (J) the Company
has no current or projected liability in respect of post-employment or
post-retirement health or medical or life insurance benefits for retired, former
or current employees of the Company, except as required to avoid excise tax
under Section 4980B of the Code.
(iv) No Company Plan is subject to Title IV of ERISA, and no
Company Plan is a multiemployer plan as defined in Section 4001(A)(3) of ERISA.
Neither the Company nor any member of its Controlled Group has, within the past
six years, contributed to or sponsored any multiemployer plan or any plan
subject to Title IV of ERISA.
(v) Section 3.01(h)(v) of the Company Disclosure Schedule sets
forth, on a plan by plan basis, the present value of benefits payable presently
or in the future to present or former employees of the Company under each
unfunded Company Plan that must be accounted for in accordance with SFAS No. 87
or 112.
(vi) Except as set forth in Section 3.01(h)(vi) of the Company
Disclosure Schedule, (A) no Company Plan exists which could result in the
payment to any Company employee of any money or other property or rights or
accelerate or provide any other rights or benefits to any Company employee as a
result of the transaction contemplated by this Agreement, and (B) there is no
contract, plan or arrangement (written or otherwise) covering any employee or
former employee of the Company that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant to the
terms of Section 280G of the Code.
(i) Taxes. Except as disclosed in Section 3.01(i) of the Company
Disclosure Schedule:
(i) the Company has timely filed all Tax Returns required to
be filed by it and all such Tax Returns are true, complete and correct, or,
requests for extensions to file such Tax Returns have been timely filed, granted
and have not expired;
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<PAGE>
(ii) the Company has timely paid all Taxes due whether or not
shown on such Tax Returns, and has provided adequate reserves in its financial
statements (to the extent required by, and in accordance with, GAAP) for any
Taxes that have not been paid, whether or not shown on such Tax Returns;
(iii) no claim for unpaid Taxes has been asserted in writing
by a tax authority or has become a lien against the property of the Company;
(iv) there are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Company for any taxable period, and no power of attorney
granted relating to Taxes by or with respect to the Company is currently in
force;
(v) no audit or other proceeding by any Governmental Entity
has commenced and no notification has been given to the Company that such an
audit or other proceeding is pending or threatened with respect to any Taxes due
from or with respect to the Company or any Tax Return filed by or with respect
to the Company; no assessment of Tax has been proposed in writing to the Company
or against any of its assets or properties;
(vi) at the Effective Time of the Merger, the Company is not a
party to, is not bound by and has no obligation under, any Tax sharing agreement
or similar contract or arrangement;
(vii) there is no contract or agreement, plan or arrangement
by the Company covering any person that, individually or collectively, could
give rise to the payment of any amount that would not be deductible by the
Company by reason of Section 280G of the Code;
(viii) the Company (A) is not currently nor has ever been a
member of an affiliated group (other than a group the common parent of which is
the Company) filing a consolidated federal income tax return, and (B) has no
liability for the Taxes of any person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law), or as a
transferee or successor, by contract or otherwise;
(ix) no consent under Section 341(f) of the Code has been
filed with respect to the Company;
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<PAGE>
(x) all Taxes required to be withheld, collected or deposited
by or with respect to the Company have been timely withheld, collected or
deposited, as the case may be, and, to the extent required, have been paid to
the relevant taxing authority;
(xi) the Company has not agreed to make nor is required to
make any adjustment under Section 481(a) of the Code, by reason of a change in
accounting method or otherwise, except as might be required as a result of any
transaction contemplated by this Agreement;
(xii) no closing agreement pursuant to Section 7121 of the
Code (or any similar provision of state, local or foreign law) has been entered
into by or with respect to the Company;
(xiii) the Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(a)(ii) of the Code. None of
the assets of the Company constitutes "United States real property interests"
within the meaning of Section 897(c)(1)(A) of the Code;
(xiv) none of the assets or properties of the Company is an
asset or property that is or will be required to be treated as described in
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and as in
effect immediately before the enactment of the Tax Reform Act of 1986, or
tax-exempt use property within the meaning of Section 168(h)(1) of the Code;
(xv) the Company has not been a party to any distribution
occurring during the last two years in which the parties to such distribution
treated the distribution as one to which Section 355 of the Code is applicable;
and
(xvi) based solely on the advice of Ernst & Young LLP, as set
forth in a letter attached to Section 3.01(i)(xvi) of the Company Disclosure
Schedule, the Company believes that it had net operating loss carryforwards of
not less than $13.2 million at March 31, 1999.
As used herein, "Taxes" shall mean all taxes of any kind, including,
without limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment,
I - 26
<PAGE>
excise, severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority. As used herein,
"Tax Return" shall mean any return, declaration, report or similar statement
required to be filed with any governmental authority with respect to Taxes
(including any attached schedules) including, without limitation, any
information return, notice, form, claim for refund, amended return and
declaration of estimated Tax.
(j) Title Matters. (i) Section 3.01(j) of the Company Disclosure
Schedule lists all material leases of real property to which the Company is a
party as a lessee (the "Company Lease Agreements"). The Company does not own any
real properties. The Company has a valid and binding leasehold interest in all
of the property that is the subject of the Company Lease Agreements, free and
clear of all Liens, except for: (v) any Liens reflected in the Financial
Statements; (w) zoning laws and other land use restrictions that do not
materially impair the present or anticipated use or occupancy of the property
subject thereto; (x) any Liens for taxes, assessments and other governmental
charges not yet due and payable or due but not delinquent or due and being
contested in good faith; (y) any mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other similar Liens arising in the ordinary course
of business consistent with past practice that are not yet due and payable or
are being contested in good faith and (z) Liens which would not, individually or
in the aggregate, materially impair the use or value of the property.
(ii) The Company is not in default under any of the Company
Lease Agreements.
(iii) The Company has made available to Parent correct and
complete copies of the Company Lease Agreements. Except as disclosed in Section
3.01(j) of the Company Disclosure Schedule, (A) each Company Lease Agreement
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as (x) the enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing, and (y) such property
may be subject to mortgages, deeds of trust or other liens against the lessor's
interest in such
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<PAGE>
property, (B) the Company is not in material breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a material breach
or default by the Company or permit termination, modification or acceleration by
any third party thereunder, and (C) no person has the right to terminate or
repudiate on less than 30 days notice or, to the knowledge of the Company, has
repudiated (except for the termination rights set forth in the lease or
sublease) any provision thereof.
(k) Properties. (i) The Company has good title to, or in the case of
leased property and assets has valid leasehold interests in, all of its personal
property and assets (whether real (immovable), personal (movable), tangible or
intangible). None of such property or assets (whether real (immovable) or
personal (movable)) is subject to any Liens, except:
(A) encumbrances disclosed in Section 3.01(k) of the Company
Disclosure Schedule;
(B) encumbrances disclosed on the Financial Statements or securing
liabilities disclosed on the Financial Statements;
(C) encumbrances for taxes not yet due and payable or due but not
delinquent or due and being contested in good faith;
(D) mechanic's, materialman's, carrier's, repairer's and other
similar liens arising or incurred in the ordinary course of business or
that are not yet due and payable or are being contested in good faith; or
(E) Liens that would not, individually or in the aggregate,
materially impair the use or value of the property.
(ii) The equipment owned or used by the Company is in good
operating condition and repair, ordinary wear and tear excepted, is adequate and
suitable for its present and intended uses and, in the case of buildings and
other structures (including the roofs thereof), are, to the Company's knowledge,
structurally sound.
(l) Insurance. Section 3.01(l) of the Company Disclosure Schedule
contains a list, as of the date hereof, of all insurance policies and fidelity
bonds maintained by or for the benefit of the Company. There is no material
claim by the Company pending under any of such policies or bonds relating to the
assets, business, operations, employees, officers or
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<PAGE>
directors of the Company as to which coverage has been questioned, denied or
disputed by the underwriters of such policy or bond or in respect of which such
underwriters have reserved their rights. To the knowledge of the Company, there
has been no occurrence that may form the basis for a material claim by or on
behalf of the Company under any such policy or bond. All premiums payable under
all such policies and bonds have been paid timely in all material respects, and
the Company has otherwise complied in all material respects with the terms and
conditions of all such policies and bonds.
(m) Environmental Matters. Except as could not reasonably be
expected to result in any liability under Environmental Laws to the Company:
(i) the Company holds and is in compliance with all
Environmental Permits, and the Company is, and has been, otherwise in compliance
with all Environmental Laws and, to the knowledge of the Company, there are no
conditions that might prevent or interfere with such compliance in the future;
(ii) the Company has not received any written Environmental
Claim or has knowledge of any other Environmental Claim or threatened
Environmental Claim;
(iii) the Company has not entered into any consent decree,
order or agreement under any Environmental Law;
(iv) there are no (A) underground storage tanks, (B)
polychlorinated biphenyls, (C) asbestos or asbestos-containing materials, (D)
sumps, (E) surface impoundments, (F) landfills or (G) sewers or septic systems
present at any facility currently or, to the Company's knowledge, formerly
owned, leased, operated or otherwise used by the Company that could reasonably
be expected to give rise to liability of the Company under any Environmental
Laws;
(v) there are no present or, to the Company's knowledge, past
(including, without limitation, with respect to assets or businesses formerly
owned, leased or operated by the Company) actions, activities, events,
conditions or circumstances involving the Company, including without limitation
the release, threatened release, emission, discharge, generation, treatment,
storage or disposal or arranging for the disposal of Hazardous Materials, that
could reasonably be expected to give rise to liability of the Company under any
Environmental Laws;
(vi) no modification, revocation, reissuance,
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<PAGE>
alteration, transfer, or amendment of the Environmental Permits, or any review
by, or approval of, any third party of the Environmental Permits is required in
connection with the execution or delivery of this Agreement or the consummation
of the transactions contemplated hereby or the continuation of the business of
the Company following such consummation;
(vii) Hazardous Materials have not been generated,
transported, treated, stored, disposed of, arranged to be disposed of, released
or threatened to be released at, on, from or under any of the properties or
facilities currently or, to the Company's knowledge, formerly owned, leased or
otherwise used by the Company, in violation of, or so as could result in
liability under, any Environmental Laws; and
(viii) the Company has not contractually assumed any
liabilities or obligations under any Environmental Laws.
(n) Material Contracts. (i) There have been made available for
reasonable review by Parent copies of each of the contracts fitting a
description below to which the Company is a party or by which it or its
properties or assets is bound as of the date hereof (each such contract, a
"Material Contract"):
(A) leases of personal property providing for aggregate annual
rentals to one party of $10,000 or more;
(B) agreements (or series of related agreements) for the purchase of
materials, supplies, goods, services, equipment or other assets pursuant
to which (x) the Company has made aggregate annual payments of $10,000 or
more in the preceding twelve months, (y) the Company has made aggregate
payments of $25,000 or more that continue to be agreements that require
payment or the furnishing of goods or services, or (z) which by their
terms currently require annual payments of $10,000 or more;
(C) each agreement providing for the sale by the Company of
services, products, equipment or other assets of $50,000 or more;
provided, that in the case of agreements providing for the sale of assay
products in the ordinary course of business, the threshold shall be
$200,000 or more;
(D) partnership, limited partnership, limited liability company,
joint venture or other similar agreements or arrangements relating to the
formation, creation, operation, management or control of any corporation,
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<PAGE>
company, partnership or joint venture;
(E) agreements relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise);
(F) contracts for joint development of products, services or other
assets;
(G) agreements to market, promote, sell or distribute the Company's
products;
(H) agreements relating to indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset) or the guarantee of
indebtedness of any other person in excess of $100,000 in the aggregate;
(I) any licenses, consents, royalty, development, research or other
similar agreements concerning Intellectual Property, other than (i) any
sublicence implicit as a result of a sale or transfer to an end-user of
any Company products, and (ii) any confidentiality or non-disclosure
agreements, in each case entered into in the ordinary course of the
Company's business ("IP Agreements");
(J) material licenses, franchise or similar agreements which are
necessary for the Company to conduct its business;
(K) any agreement that limits the freedom of the Company to compete
in any line of business or with any person or in any area or which would
so limit the freedom of the Company, Parent or any of their respective
subsidiaries after the Effective Time of the Merger;
(L) employment, severance or consulting agreements; and
(M) any other contract or agreement, written or oral, which is
material to the business of the Company and not otherwise described in
this Section 3.01(n), other than those with vendors, suppliers and
customers entered into in the ordinary course of business consistent with
past practice.
Section 3.01(n)(i) of the Company Disclosure Schedule sets forth a list of each
of the Material Contracts.
(ii) Except as set forth on Section 3.01(n)(ii)
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<PAGE>
of the Company Disclosure Schedule, the Company is not, nor has it received any
notice or has any knowledge that any other party is or is alleged to be, in
breach or default in any respect under any Material Contract; and there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a breach or default or permit termination, modification or
acceleration or payment of fees by any third party thereunder. Except as
disclosed in Section 3.01(n)(ii) of the Company Disclosure Schedule, (A) each
Material Contract constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing and,
(B) no person has the right to terminate or repudiate on less than 30 days
notice or, to the knowledge of the Company, has repudiated (except for the
termination rights set forth in the contract) any provision of any Material
Contract.
(o) Year 2000 Compliance. Except as set forth in Section 3.01(o) of
the Company Disclosure Schedule, the change to the year 2000 has not caused, and
is not expected to cause, any material disruption or impairment to the operation
of the business of the Company or the provision by it of any products or
services, any liability or payments to third parties, or any material additional
expenses other than those reflected in the Reference Balance Sheet.
(p) Brokers. Except as disclosed in Section 3.01(p) of the Company
Disclosure Schedule, no broker, investment banker, financial advisor or other
person, other than Lehman Brothers Inc. ("Lehman"), the fees and expenses of
which will be paid by the Company (pursuant to fee agreements, copies of which
have been provided to Parent), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its affiliates.
(q) Affiliate Transactions. Except as set forth in Section 3.01(q)
of the Company Disclosure Schedule, there are no contracts, commitments,
agreements, arrangements or other transactions between the Company, on the one
hand, and any (i) officer or director of the Company (other than employment,
severance or consulting contracts, commitments, agreements or arrangements
disclosed on Section 3.01(n) of the Company
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Disclosure Schedule), (ii) record or beneficial owner of any of the voting
securities of the Company or (iii) any other affiliate of any such officer,
director or beneficial owner, on the other hand.
(r) Opinion of Financial Advisor. The Company has received as of the
date of this Agreement the opinion of Lehman to the effect that, as of such
date, the Merger Consideration is fair, from a financial point of view, to the
holders of Company Stock (other than Parent and its affiliates).
(s) Board Approval and Recommendation; State Antitakeover Law. The
Board of Directors of the Company, at a meeting duly called and held at which a
quorum of directors was present, has by majority vote of directors present (i)
approved this Agreement and the transactions contemplated hereby, including the
Merger, and determined that they are fair to and in the best interests of the
shareholders of the Company and has taken all actions necessary on the part of
the Company to render the restrictions on business combinations contained in
Sections 180.1140-180.1144 of the WBCL inapplicable to this Agreement and the
Merger, (ii) authorized and instructed the proper officers of the Company to
call a meeting of the Company's shareholders in accordance with the requirements
of the WBCL (including Section 180.1103 of the WBCL), the Articles and the
Bylaws for the purpose of approving the Merger, and (iii) resolved to recommend
that the holders of the shares of Company Stock approve this Agreement and the
transactions contemplated herein, including the Merger.
(t) Required Company Vote. The Company Shareholder Approval is the
only vote of the holders of any class or series of the Company's securities
necessary to approve this Agreement, the Merger and the other transactions
contemplated hereby.
(u) Intellectual Property. (i) Section 3.01(u)(i) of the Company
Disclosure Schedule sets forth, with respect to all Intellectual Property owned,
licensed or otherwise controlled or used by the Company ("Company IP"), any and
all Company IP that is registered or filed with any Governmental Entity and all
material unregistered Company IP.
(ii) The Company owns or has the valid right to use all
Intellectual Property necessary for the Company to conduct its business
substantially as it is conducted as of the date of this Agreement and consistent
with past practice.
(iii) Except as set forth on Section 3.01(u)(iii) of the
Company Disclosure Schedule: (A) all of the
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Company IP is subsisting and unexpired, has not been abandoned and, to the
Company's knowledge, does not infringe, misappropriate, dilute or otherwise
impair the Intellectual Property rights of any third party; (B) none of the
Company IP is the subject of any license, security interest, Lien or other
agreement granting rights therein to any third party other than licenses or
other interests listed on Schedule 3.01(n)(i)(I); (C) no Litigation or Order is
pending or outstanding, or to the knowledge of the Company, threatened or
imminent which would limit, cancel or question the validity, enforceability,
ownership or use of any Company IP, and to the Company's knowledge, there is no
valid basis for the same; and (D) the Company has taken all steps reasonably
necessary to protect, maintain and safeguard the Company IP (including any
confidential Company IP), and has executed all appropriate assignments or
nondisclosure agreements, made all appropriate filings and registrations
(including disclosures to the U.S. Patent and Trademark Office with regard to
all material prior art), and taken all appropriate actions in connection with
the foregoing.
(v) Ownership of Parent Common Stock. Neither the Company nor, to
its best knowledge, any of its affiliates or associates (as such terms are
defined under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), (i) beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of Parent, which
in the aggregate represent 5% or more of the outstanding shares of such capital
stock.
(w) Accounting and Tax Matters. To the Company's knowledge, neither
the Company nor any of its affiliates has taken or agreed to take any action
that would prevent Parent from accounting for the business combination to be
effected by the Merger as a "pooling of interests", or prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(x) Powers of Attorney. Except as set forth on Section 3.01(x) of
the Company Disclosure Schedule, there are no persons, firms, associations,
corporations or business organizations or entities holding general or special
powers of attorney from the Company.
(y) Business Combination Statute. On the date of this Agreement and
at all times prior to the Effective Time of the Merger, the Company did not and
will not have a class of voting stock registered or traded on a national
securities exchange or
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registered under Section 12(g) of the Exchange Act. Moreover, the Articles do
not require the application of Sections 180.1140 through 180.1144 of the WBCL to
this Agreement or the transactions contemplated hereby, including the Merger and
the execution and delivery of the Voting Agreement.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
and each of Parent's "significant subsidiaries" (within the meaning of Rule 1-02
of Regulation S-X of the SEC) (collectively, the "Parent Subsidiaries") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent, Sub
and the Parent Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction (domestic or foreign) in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) could
not reasonably be expected to have a Material Adverse Effect with respect to
Parent. Parent has made available to the Company complete and correct copies of
its certificate of incorporation and bylaws and the articles of incorporation
and bylaws of Sub.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Parent consists of 725,000,000 shares of common
stock of Parent (consisting of 500,000,000 shares of Parent Common Stock and
225,000,000 shares of PE Corporation--Celera Genomics Group Common Stock, par
value $0.01 per share (the "Celera Genomics Stock")) and 10,000,000 shares of
preferred stock of Parent, par value $0.01 per share (the "Parent Preferred
Stock"). As of January 18, 2000, there were: (A) 103,536,697 shares of Parent
Common Stock issued and outstanding; (B) 1,164 shares of Parent Common Stock
held in the treasury of Parent; (C) 17,788,320 shares of Parent Common Stock
reserved for issuance pursuant to Parent's stock option plans, Parent's employee
stock purchase plans and Parent's Director Stock Purchase and Deferred
Compensation Plan (such plans, the "Parent Stock Plans"); (D) 9,132,847 shares
of Parent Common Stock issuable upon exercise of awarded but unexercised stock
options; (E) 126,553 shares of Parent Common Stock issuable upon exercise of
currently outstanding warrants to purchase Parent Common Stock ("Parent Common
Stock Warrants"); (F) 26,040,734 shares of Celera
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Genomics Stock issued and outstanding; (G) 177 shares of Celera Genomics Stock
held in the treasury of Parent; (H) 8,103,023 shares of Celera Genomics Stock
reserved for issuance pursuant to the Parent Stock Plans; (I) 5,694,788 shares
of Celera Genomics Stock issuable upon exercise of awarded but unexercised stock
options; (J) 1,292,350 shares of Celera Genomics Stock issuable upon exercise of
an option held by a third party; (K) 31,545 shares of Celera Genomics Stock
issuable upon exercise of currently outstanding warrants to purchase Celera
Genomics Stock; and (L) no shares of Parent Preferred Stock outstanding.
(ii) Except as set forth above and except for shares of
participating junior preferred stock issuable pursuant to the Shareholders'
Protection Rights Plan, dated as of April 28, 1999, between Parent and
BankBoston, N.A., as of January 18, 2000, there were no shares of capital stock
or other equity securities of Parent issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of Parent are, and (A) all
shares which may be issued as described above, (B) all shares which may be
issued as Merger Consideration, and (C) all shares which may be issued in
respect of Company Stock Options, will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. All
securities issued by Parent as Merger Consideration or in respect of Company
Stock Options will be issued in compliance with all applicable federal and state
securities laws and all applicable rules and regulations promulgated thereunder.
There is no outstanding Voting Debt of Parent. Except as set forth above, there
are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent is a party
or by which it is bound obligating Parent to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of Parent Common Stock (other
than the Split) or obligating Parent to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking.
(iii) There are no outstanding contractual obligations,
commitments, understandings or arrangements of Parent to repurchase, redeem or
otherwise acquire or make any payment in respect of any shares of Parent Common
Stock. Since September 30, 1999, Parent did not (A) issue or permit to be issued
any shares of Parent Common Stock, or securities exercisable for or convertible
into shares of Parent Common Stock, other than pursuant to or as permitted by
the terms of the Parent Stock Plans and Parent Common Stock Warrants; (B)
repurchase, redeem or otherwise acquire, directly or indirectly
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through one or more subsidiaries, any shares of Parent Common Stock; or (C)
declare, set aside, make or pay to the stockholders of Parent dividends or other
distributions on the outstanding shares of Parent Common Stock (other than
regular quarterly cash dividends and the Split).
(iv) As of the date hereof, the authorized capital stock of
Sub consists of 1,000 shares of common stock, par value $.01 per share, all of
which have been validly issued, are fully paid and nonassessable (except with
respect to certain unpaid employee wage claims under Section 180.0622(2)(b) of
the WBCL) and are owned by Parent, free and clear of any Lien, and at the
Effective Time of the Merger, all the issued and outstanding shares of the
common stock of Sub will be owned by Parent free and clear of any Lien.
(c) Authority; Noncontravention. (i) Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by each of Parent and Sub and (assuming due
authorization, execution and delivery by the Company) constitutes the valid and
binding obligations of Parent and Sub, enforceable against each of them in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(ii) The execution and delivery of this Agreement does not,
and the consummation by Parent and Sub of the transactions contemplated by this
Agreement and compliance by Parent and Sub with the provisions of this Agreement
will not, conflict with, or result in any breach or violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of, or a "put" right with
respect to any obligation under, or to a loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent, Sub or any Parent Subsidiary under, (A) the certificate of incorporation
(or similar organizational document) or bylaws of Parent, Sub or such Parent
Subsidiary, (B) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other
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agreement, instrument, permit, concession, franchise or license applicable to
Parent, Sub, such Parent Subsidiaries or any of their respective properties or
assets or (C) subject to the governmental filings and other matters referred to
in the following sentence, any judgment or Order applicable to Parent, Sub, any
Parent Subsidiary or their respective properties or assets, other than, in the
case of clauses (B) and (C), any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect with respect to Parent
or prevent or materially delay the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement or perform their respective
obligations hereunder. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement or the consummation by Parent and Sub of any of
the transactions contemplated hereby, except for (v) the filing of a premerger
notification and report form under the HSR Act, (w) the filing with the SEC, the
NYSE and the Pacific Stock Exchange of (1) the Form S-4 and (2) such reports
under the Exchange Act as may be required in connection with this Agreement and
the transactions contemplated hereby, (x) the filing of the Articles of Merger
with the Department of Financial Institutions of the State of Wisconsin and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (y) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices as may be
required under the "takeover" or "blue sky" laws of various states and (z) such
other consents, approvals, orders, authorizations, registrations, declarations,
filings or notices the failure of which to make or obtain, individually or in
the aggregate, could not reasonably be expected to (1) prevent or materially
delay consummation of the Merger or the other transactions contemplated hereby
or performance of Parent's and Sub's obligations hereunder or (2) have a
Material Adverse Effect with respect to Parent.
(d) Parent SEC Reports; Financial Statements; Absence of Undisclosed
Liabilities. (i) Parent has filed all forms, reports, statements and documents
required to be filed with the SEC since July 1, 1996 (collectively with all
exhibits and schedules thereto and documents incorporated by reference therein,
the "Parent SEC Reports"). Except to the extent revised or superseded by a
subsequent filing with the SEC, none of the Parent SEC Reports filed prior to
the date hereof, as of their respective dates, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
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therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(ii) Each of the financial statements (including any related
notes thereto) included in the Parent SEC Reports complies as to form in all
material respects with the published rules and regulations of the SEC, has been
prepared in accordance with GAAP, as in effect on the date of such financial
statements (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q under the Exchange Act and GAAP) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and fairly presents in all material respects the consolidated
financial position of Parent and the Parent Subsidiaries at the respective dates
thereof and the consolidated results of its operations and changes in cash flows
for the periods indicated (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments).
(iii) Other than the liabilities set forth in the Parent SEC
Reports, neither Parent nor any Parent Subsidiary has material liabilities or
obligations (whether absolute, accrued, contingent or otherwise) that are of a
nature required to be set forth on a balance sheet (or in the notes thereto) in
accordance with GAAP as in effect on the date of this Agreement, except
liabilities or obligations incurred subsequent to the date of Parent's Form 10-Q
for the quarter ended September 30, 1999 in the ordinary course of business
consistent with past practice, none of which has had or could reasonably be
expected to have a Material Adverse Effect with respect to Parent.
(e) Absence of Certain Changes or Events. Since September 30, 1999,
there is not and has not been: (i) any Material Adverse Change with respect to
Parent; (ii) any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
give rise to a Material Adverse Change with respect to Parent; (iii) any action
which, if it had been taken or occurred after the execution of this Agreement,
would have required the consent of the Company pursuant to this Agreement; or
(iv) any condition, event or occurrence which, individually or in the aggregate,
could reasonably be expected to prevent or materially delay the ability of
Parent and Sub to consummate the transactions contemplated by this Agreement or
perform their obligations hereunder.
(f) Litigation; Compliance with Laws. (i) Except as
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disclosed in the Parent SEC Reports filed prior to the date hereof, there is (A)
no Litigation pending before any court, governmental agency or regulatory
authority, and (B) to the knowledge of Parent, no Litigation threatened against
or investigation or inquiry pending with respect to Parent or any Parent
Subsidiary that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect with respect to Parent or prevent or
materially delay the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement or to perform their obligations hereunder, nor is
there any judgment, decree, citation, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Parent or any Parent
Subsidiary which, individually or in the aggregate, has or could reasonably be
expected to have, any such effect.
(ii) The businesses of Parent and the Parent Subsidiaries are
not being conducted in violation of any applicable law (domestic or foreign),
ordinance or regulation of any Governmental Entity, except for possible
violations which, individually or in the aggregate, do not and could not
reasonably be expected to have a Material Adverse Effect with respect to Parent.
(g) Brokers. No broker, investment banker, financial advisor or
other person, other than Goldman, Sachs & Co. ("Goldman"), the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
(h) Interim Operations of Sub. Sub was formed on January 14, 2000
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
(i) Ownership of Company Stock. As of the date hereof, neither
Parent nor, to its best knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially owns, directly or
indirectly, or (ii) is party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, in each case, shares
of capital stock of the Company, which in the aggregate represent 5% or more of
the outstanding shares of such capital stock.
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(j) Accounting and Tax Matters. To Parent's knowledge, neither
Parent nor any of its affiliates has taken or agreed to take any action that
would prevent Parent from accounting for the business combination to be effected
by the Merger as a "pooling of interests", or prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.
(k) Required Vote. This Agreement has been approved by Parent, as
the sole shareholder of Sub. No other vote of holders of any class or series of
securities of Parent or Sub is necessary to approve this Agreement, the Merger
and the transactions contemplated hereby.
ARTICLE IV
Covenants Relating to Conduct of Business Prior to Merger.
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective Time
of the Merger (except as otherwise expressly contemplated by the terms of this
Agreement), and except as approved by Parent, which approval shall not be
unreasonably withheld or delayed, the Company shall act and carry on its
business in the ordinary course of business consistent with past practice and
use its reasonable best efforts to preserve substantially intact its current
business organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having significant business dealings with it.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the Effective Time of the Merger, except as described
in Section 4.01 of the Company Disclosure Schedule, the Company shall not:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than any
dividend accrued in respect of the Series E Preferred Stock pursuant to Section
5.2 of Article III of the Articles, (B) split, combine or reclassify any capital
stock of the Company or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of capital stock of the
Company, other than any issuance permitted by Section 4.01(a)(ii), or (C)
purchase, redeem or otherwise acquire any shares of capital stock of the Company
or any other securities thereof or any rights, warrants or options
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to acquire any such shares or other securities;
(ii) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities or any
other securities or equity equivalents (including without limitation stock
appreciation rights), other than the issuance of Company Common Stock upon (A)
conversion of Company Preferred Stock outstanding on the date of this Agreement
in accordance with the present terms thereof, (B) the exercise of Company Stock
Options awarded prior to the date of this Agreement but unexercised on the date
of this Agreement in accordance with their present terms, or (C) the grant of up
to 350 Company Stock Options in the ordinary course of business and consistent
with past practice; provided, however, that such Company Stock Options shall be
priced at the fair market value of the Company Common Stock on the date of
grant;
(iii) amend the Articles or Bylaws;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or by
any other manner, any business or any corporation, limited liability company,
partnership, joint venture, association or other business organization or
division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets,
other than any such properties or assets securing debt permitted to be issued
under Section 4.01(a)(vi);
(vi) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company, guarantee any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings (not exceeding $50,000 in the
aggregate), or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company;
(vii) (A) acquire or lease, or agree to
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acquire or lease, any assets other than inventory in the ordinary course of
business consistent with past practice not to exceed $25,000 in the aggregate,
or (B) make or agree to make any capital expenditures, except capital
expenditures which, individually or in the aggregate, do not exceed $25,000;
(viii) pay, discharge or satisfy any claims (including claims
of shareholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of claims settled or compromised to the extent permitted by Section
4.01(a)(xii) or required by Section 6.02(m), or waive, release, grant, or
transfer any rights of material value or modify or change in any material
respect any existing license, lease, contract or other document;
(ix) other than in connection with the transactions
contemplated by this Agreement, adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization;
(x) enter into or amend any collective bargaining agreement;
(xi) change any accounting principle used by it, except as
required by GAAP;
(xii) settle or compromise any litigation or claim (whether or
not commenced prior to the date of this Agreement), other than settlements or
compromises of litigation or claims that do not provide for injunctive or
similar relief and where the amount paid (after giving effect to insurance
proceeds actually received) in settlement or compromise does not exceed $50,000,
provided that the aggregate amount paid in connection with the settlement or
compromise of all such litigation matters shall not exceed $100,000;
(xiii) engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly, any of
the Company's affiliates, other than as contemplated by this Agreement and the
Voting Agreement;
(xiv) sell, assign, transfer, convey or license to any person
or entity, in whole or in part, any Company IP, other than (i) any sublicence
implicit as a result of a sale or transfer to an end-user of any Company
products, and (ii) any confidentiality or non-disclosure agreements, in each
case entered into in the ordinary course of the Company's business;
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(xv) enter into, terminate or amend any agreement pursuant to
which any other party is granted exclusive marketing or other exclusive rights
of any type or scope with respect to any of its products or technology;
(xvi) make or change any Tax election, change any annual Tax
accounting period, change any method of Tax accounting, file any amended Tax
Return, enter into any closing agreement relating to any Tax, settle any Tax
claim or assessment, surrender any right to claim a Tax refund or consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment;
(xvii) adopt or amend (except as may be required by law) any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any employee, director or
former director or employee or (ii) other than increases for individuals (other
than officers and directors) in the ordinary course of business consistent with
past practice, increase the compensation or fringe benefits of any director,
employee or former director or employee or pay any benefit not required by any
existing plan, arrangement or agreement;
(xviii) grant any new or modified severance or termination
arrangement or increase or accelerate any benefits payable under its severance
or termination pay policies in effect on the date hereof;
(xix) effectuate a "plant closing" or "mass layoff", as those
terms are defined in WARN, or similar event under Section 109.07 of the
Wisconsin Statutes, affecting in whole or in part any site of employment,
facility, operating unit or employee of the Company, without notifying Parent or
its affiliates in advance and without complying with the notice requirements and
other provisions of WARN or such statutes; or
(xx) authorize, or commit or agree to take, any of the
foregoing actions.
Notwithstanding the foregoing, the Company may enter into agreements
and take all other actions necessary and proper in connection with (i) the
expansion of its Madison, Wisconsin facilities, and (ii) the establishment of
its new manufacturing pod in Madison, Wisconsin, but in each case only to the
extent described in Section 4.01 of the Company Disclosure Schedule.
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(b) Conduct of Business by Parent. During the period from the date
of this Agreement to the Effective Time of the Merger (except as otherwise
expressly contemplated by the terms of this Agreement), and except as approved
by the Company, which approval shall not be unreasonably withheld or delayed,
Parent shall not:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, the Parent Common Stock, other than
regular quarterly cash dividends (in an amount determined in a manner consistent
with Parent's past practice) or (B) split, combine or reclassify the Parent
Common Stock or issue or authorize the issuance of any other securities in lieu
of or in substitution for shares of Parent Common Stock, other than the Split;
(ii) amend Parent's certificate of incorporation or bylaws in
a manner that would be materially adverse to the holders of Parent Common Stock
(it being understood that an amendment to the certificate of incorporation of
Parent increasing the number of authorized shares of Parent Common Stock or
other capital stock of Parent shall not be deemed to be materially adverse to
the holders of Parent Common Stock); or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
(c) Pooling and Tax-Free Reorganization Treatment. The Company and
Parent shall not, and Parent shall not permit any of the Parent Subsidiaries to,
intentionally take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code.
(d) Other Actions. The Company and Parent shall not, and Parent
shall not permit any of the Parent Subsidiaries to, (i) intentionally take any
action that, if taken on or prior to the date of this Agreement, would have
resulted in any of its representations and warranties set forth in this
Agreement being untrue, (ii) intentionally take any action that would or
reasonably might be expected to result in any of the conditions set forth in
Article VI not being satisfied, or (iii) intentionally take any action that
could reasonably be expected to materially delay or impair the ability of such
party to consummate the transactions contemplated by this Agreement. The Company
and Parent shall promptly advise the other party orally and in writing of (A)
any action of the type set forth in clause
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(i) above, (B) the failure by such party to comply with any covenant, condition
or agreement hereunder and (C) any event which could reasonably be expected to
cause the conditions set forth in Article VI not being satisfied; provided,
however, that no such notice shall affect the representations, warranties,
covenants and agreement of the parties or the conditions to their obligations
hereunder.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4; Shareholder Meeting. (a)
Promptly following the date of this Agreement, Parent shall prepare and file
with the SEC the Form S-4. Parent and the Company shall each use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Parent shall also take any action
(other than qualifying to do business in any state in which it is not now so
qualified or filing a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the
registration and qualification of the Parent Common Stock to be issued in the
Merger, and the Company shall furnish all information relating to the Company
and its shareholders as may be reasonably requested in connection with any such
action. The information provided and to be provided by Parent, Sub and the
Company, respectively, for use or incorporation by reference in the Form S-4 at
the time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented, and at the time it becomes effective, shall be true and accurate
in all material respects and shall not omit to state a material fact required to
be stated therein or necessary to make such information not misleading, and the
Company and Parent each agree to correct any information provided by it for use
in the Form S-4 which shall have become false or misleading.
(b) The information provided and to be provided by the Company,
Parent and Sub, respectively, for use or incorporation by reference in any
mailing to the Company's shareholders in connection with the Merger, at the time
of such mailing, shall be true and accurate in all material respects and shall
not omit to state a material fact required to be stated therein or necessary to
make such information not misleading, and the Company and Parent each agrees to
correct any information provided by it for use in any such mailing which shall
have become false or misleading. All mailings to the Company's shareholders in
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connection with the Merger shall be subject to the prior review, comment and
approval of Parent (such approval not to be unreasonably withheld or delayed).
(c) The Company will, as promptly as practicable following the date
of this Agreement and in consultation with Parent, duly call, give notice of,
convene and hold a meeting of its shareholders or solicit the written consent of
its shareholders (the "Shareholders Meeting") for the purpose of approving this
Agreement and the transactions contemplated by this Agreement to the extent
required by the WBCL. The Company will, through its Board of Directors,
recommend to its shareholders approval of the foregoing matters, as set forth in
Section 3.01(s); provided, however, that the Board of Directors of the Company
may fail to make or withdraw or modify such recommendation, but only to the
extent that the Board of Directors of the Company shall have concluded in good
faith on the basis of advice from outside counsel that the failure to take such
action would be reasonably likely to constitute a breach of the fiduciary duties
of the Board of Directors of the Company to the shareholders of the Company
under applicable law. The Company will use its best efforts to hold such meeting
as soon as practicable after the Form S-4 shall have been declared effective.
SECTION 5.02. Access to Information; Confidentiality. (a) Each of
the Company and Parent shall, and shall cause its respective subsidiaries,
officers, employees, counsel, financial advisors and other representatives to,
afford to the other party and its representatives reasonable access during
normal business hours, during the period prior to the Effective Time of the
Merger, to its properties, books, contracts, commitments, personnel and records,
and, during such period, each of the Company and Parent shall, and shall cause
its respective subsidiaries, officers, employees and representatives to, furnish
promptly to the other party (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties, financial condition, operations and
personnel as such other party may from time to time reasonably request. Each of
the Company and Parent will hold, and will cause its respective directors,
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in confidence
to the extent required by, and in accordance with, the provisions of each of the
confidentiality agreements, dated December 14, 1999, and December 15, 1999,
respectively, between Parent and the
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Company (collectively, the "Confidentiality Agreements").
(b) No investigation pursuant to this Section 5.02 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 5.03. Reasonable Best Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (a) obtaining all consents, approvals, waivers, licenses,
permits or authorizations as are required to be obtained (or, which if not
obtained, would result in an event of default, termination or acceleration of
any agreement or any "put" right under any agreement), and in the event that any
shares of Parent Common Stock issued in the Merger are deemed to have been
issued otherwise than pursuant to an effective registration statement under the
Securities Act, the Company shall effect all necessary registrations, under any
applicable law or regulation or from any Governmental Entities or third parties
in connection with the transactions contemplated by this Agreement for the
purpose of securing to the Company's shareholders the benefits contemplated by
this Agreement, (b) defending any lawsuits or other proceedings challenging this
Agreement and (c) accepting and delivering additional instruments necessary to
consummate the transactions contemplated by this Agreement. The Company agrees
that Parent, in consultation with the Company, shall have the opportunity to
negotiate and consult directly with all applicable Governmental Entities in
connection with their consideration of the transactions contemplated by this
Agreement.
SECTION 5.04. Indemnification. From and after the Effective Time of
the Merger, Parent and the Surviving Corporation shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time of the Merger eligible for
indemnification pursuant to the Articles and Bylaws (the "Indemnitees") against
(a) all losses, claims, damages, costs, expenses, liabilities or judgments or
amounts that are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is
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or was a director, officer or employee of the Company, arising as a result of
any act, or failure to act, at or prior to the Effective Time of the Merger,
whether asserted or claimed prior to, or at or after, the Effective Time of the
Merger ("Indemnified Liabilities") and (b) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case to the
extent the Company would have been permitted under the Articles and Bylaws to
indemnify such person. Nothing contained herein shall limit any rights to
indemnification which any director or officer of the Company may have under any
indemnification agreement or the Articles or Bylaws. In the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnitees (whether arising before or after the Effective Time of the Merger),
(i) any counsel retained by the Indemnitees for any period after the Effective
Time of the Merger shall be reasonably satisfactory to Parent and the Surviving
Corporation (it being understood that Wilson Sonsini Goodrich & Rosati is
acceptable to Parent and the Surviving Corporation); (ii) after the Effective
Time of the Merger, the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnitees promptly as statements therefor are
received; and (iii) after the Effective Time of the Merger, the Surviving
Corporation will cooperate in the defense of any such matter; provided, that the
Surviving Corporation shall not be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 5.04, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Parent and the Surviving Corporation
(but the failure so to notify the Surviving Corporation shall not relieve Parent
or the Surviving Corporation from any liability which they may have under this
Section 5.04 except to the extent such failure materially prejudices Parent and
the Surviving Corporation), and shall deliver to Parent and the Surviving
Corporation the undertaking, if any, required by Section 180.0853 of the WBCL.
Parent and the Surviving Corporation shall be liable for the reasonable fees and
expenses hereunder with respect to only one law firm to represent the
Indemnitees as a group with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict between the positions
of any two or more Indemnitees that would preclude or render inadvisable joint
or multiple representation of such parties.
SECTION 5.05. Directorships. Concurrent with the Effective Time of
the Merger, the Company shall deliver to Parent
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evidence satisfactory to Parent of the resignation of all directors of the
Company as of the Closing Date.
SECTION 5.06. Registration Rights. The Company agrees that if during
the period from the date hereof until the Effective Time of the Merger it
receives a notice from the holders of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock to require the Company to file a
registration statement pursuant to the terms of Article IX of any of the
Investment Agreements dated July 29, 1994, June 28, 1995, and January 12, 1996,
as the case may be, between the Company and such shareholders, then the Company
shall agree, and shall use its best efforts to cause the requesting shareholder
to agree, that such registration will have an adverse effect on the Merger.
SECTION 5.07. Public Announcements. Neither Parent and Sub, on the
one hand, nor the Company, on the other hand, will issue any press release or
public statement with respect to the transactions contemplated by this Agreement
and the Voting Agreement, including the Merger, without the other party's prior
consent (such consent not to be unreasonably withheld or delayed), except as may
be required by applicable law, court process or by obligations pursuant to any
agreement with any securities exchange or quotation system on which securities
of the disclosing party are listed or quoted. In addition to the foregoing,
Parent, Sub and the Company will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any such press
release or other public statements with respect to such transactions. The
parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 5.08. Affiliates. At least 40 days prior to the Closing
Date, (i) the Company shall deliver to Parent a letter identifying all persons
who are, at the time this Agreement is submitted for approval to the
shareholders of the Company, executive officers and directors of the Company and
all other persons that, to the knowledge of the Company, are "affiliates" of the
Company (as that term is used in Rule 145 under the Securities Act or SEC
Accounting Releases 130 and 135) and shall use all reasonable efforts to cause
each person named on the letter delivered by it to deliver to Parent at least 30
days prior to the Closing Date a written agreement, substantially in the form
attached as Exhibit C-1 and (ii) Parent shall deliver to Company a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the shareholders of the Company, executive officers of Parent and
all other persons that, to the knowledge of Parent are "affiliates" of Parent
(as
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that term is used in SEC Accounting Releases 130 and 135) and shall use all
reasonable efforts to cause each person named on the letter delivered by it to
deliver to Parent at least 30 days prior to the Closing Date a written
agreement, substantially in the form attached as Exhibit C-2.
SECTION 5.09. No Solicitation. The Company shall not (whether
directly or indirectly through advisors, agents or other intermediaries), nor
shall the Company authorize or permit any of its officers, directors, agents,
representatives, advisors or subsidiaries to, (a) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or offers
from any person (other than Sub or Parent) relating to (i) any acquisition or
purchase of 15% or more of the assets of the Company or of over 15% of any class
of equity securities of the Company, (ii) any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company, (iii) any merger, consolidation, business combination, sale of
substantially all of the assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company's assets, individually or in the
aggregate, constituting more than 15% of the consolidated assets of the Company
other than the transactions contemplated by this Agreement, or (iv) any other
transaction the consummation of which would or could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger (collectively,
"Transaction Proposals"), or agree to or endorse any Transaction Proposal, or
(b) enter into or participate in any discussions or negotiations regarding any
of the foregoing, or furnish to any other person any information with respect to
its business, properties or assets in connection with any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any other person (other than
Sub or Parent) to do or seek any of the foregoing. The Company will immediately
cease and cause its advisors, agents and other intermediaries to cease any and
all existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and shall use its reasonable
best efforts to cause any such parties in possession of confidential information
about the Company that was furnished by or on behalf of the Company to return or
destroy all such information in the possession of any such party or in the
possession of any agent or advisor of any such party.
SECTION 5.10. Benefit Matters. (a) During the period from the
Effective Time of the Merger until the first anniversary of the Effective Time
of the Merger, employees of the Company
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shall participate in employee benefit plans (including Parent's employee stock
purchase plan) maintained by Parent on a basis no less favorable, in the
aggregate, than similarly situated employees of Parent hired after July 1, 1999.
(b) Parent will cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the employees
of the Company under any Parent welfare plan that such employees may be eligible
to participate in after the Effective Time of the Merger and (ii) provide each
employee of the Company with credit for any co-payments and deductibles paid
prior to the Effective Time of the Merger in satisfying any applicable
deductible or out-of-pocket requirements under any Parent welfare plans that
such employees are eligible to participate in after the Effective Time of the
Merger.
(c) Parent shall cause the Surviving Corporation to give individuals
who are employed by the Company at the Effective Time of the Merger and who
remain employees of the Company following the Effective Time of the Merger full
credit to the extent each such employee has been credited with service under
each comparable employee benefit plan or arrangement maintained by the Company
immediately prior to the Effective Time of the Merger (i) for purposes of
eligibility and vesting under each employee benefit plan or arrangement
maintained by Parent or the Surviving Corporation in which such employee may
participate for such employees' service with the Company and (ii) for purposes
of vacation accrual.
SECTION 5.11. Stock Exchange Listing. Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and the shares of Parent Common Stock to be reserved for issuance
upon conversion or exercise of Company Stock Options to be approved for listing
on the NYSE and the Pacific Stock Exchange, subject to official notice of
issuance.
SECTION 5.12. Letters of the Company's Accountants. The Company
shall use its reasonable best efforts to cause to be delivered to Parent a
letter of Ernst & Young LLP, the Company's independent public accountants, dated
a date within two business days before the Form S-4 shall become effective and a
letter of Ernst & Young LLP dated a date within two business days before the
Closing Date, each addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants
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in connection with registration statements similar to the Form S-4.
SECTION 5.13. Letters of Parent's Accountants. Parent shall use its
reasonable best efforts to cause to be delivered to the Company a letter of
PricewaterhouseCoopers LLP, Parent's independent public accountants, dated a
date within two business days before the Form S-4 shall become effective and a
letter of PricewaterhouseCoopers LLP dated a date within two business days
before the Closing Date, each addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Company Shareholder Approval. The Company Shareholder Approval
shall have been duly obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties hereto shall use their best efforts to have any such injunction, order,
restraint or prohibition vacated.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any material "blue sky" and other state securities
laws applicable to the registration or qualification of the Parent Common Stock
issuable or required to be reserved for issuance pursuant to this Agreement
shall have been complied with.
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(e) Stock Exchange Listing. The shares of Parent Common Stock
issuable to Company shareholders pursuant to this Agreement and such other
shares of Parent Common Stock required to be reserved for issuance in connection
with the Merger shall have been authorized for listing on the NYSE and the
Pacific Stock Exchange upon official notice of issuance.
(f) Pooling. The Company shall have received letters from the
Company's management and Ernst & Young LLP, which letter from Ernst & Young LLP
shall be in customary form, to the effect that the Company is eligible to be
acquired in a transaction to be accounted for using "pooling of interests"
accounting treatment and such letters shall not have been withdrawn.
(g) Escrow Agreement. The Escrow Agreement shall have been executed
by all the parties thereto.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and also shall be true
and correct in all material respects as of the Closing Date (except for any
representation or warranty that is specifically limited to an earlier date,
which shall be true and correct as of such earlier date), except (i) that any
representation or warranty qualified as to materiality shall be true and correct
in all respects as of the applicable date and (ii) where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality or "material adverse effect" set forth
therein) does not have, and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent or on the Surviving
Corporation. Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer, the president and the chief financial
officer of the Company to the effect set forth in this paragraph.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date. Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer, the president and the chief financial officer of the Company to the
effect set forth in this paragraph.
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(c) Consents, etc. Parent and Sub shall have received evidence, in
form and substance reasonably satisfactory to it, that such licenses, permits,
consents, approvals, authorizations, qualifications and orders of (i) any United
States federal or state governmental authorities or (ii) any other governmental
authorities or third parties as are set forth on Section 3.01(d)(ii) of the
Company Disclosure Schedule have been obtained.
(d) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the Voting Agreement or seeking
to obtain from the Company, Parent, Sub or any of their affiliates any damages
that could reasonably be expected to have a Material Adverse Effect with respect
to the Company, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company taken as a whole or to
dispose of or hold separate any material portion of the business or assets of
the Company taken as a whole, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose limitations
on the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of the common stock of the Surviving Corporation,
including, without limitation, the right to vote such common stock on all
matters properly presented to the shareholders of the Surviving Corporation or
(iv) seeking to prohibit Parent from effectively controlling in any material
respect the business or operations of the Company taken as a whole. No suit,
action or proceeding by any other person shall be pending that seeks any of the
relief or remedies described in clauses (i) through (iv) of the immediately
preceding sentence as to which there is a reasonable possibility of success or
that otherwise could reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(e) Affiliate Letters. Parent shall have received the agreements
referred to in Section 5.08.
(f) Tax Opinion. Parent shall have received the opinion of Simpson
Thacher & Bartlett, counsel to Parent, dated the Closing Date, to the effect
that (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) Parent,
Sub and the Company will each be a party to that reorganization
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within the meaning of Section 368(b) of the Code. The parties to this Agreement
agree to make reasonable representations as requested by counsel for the purpose
of rendering such opinion.
(g) Good Standing. Parent shall have received a certificate issued
by the Department of Financial Institutions of the State of Wisconsin evidencing
the good standing of the Company in such jurisdiction as of a date not more than
10 days prior to the Closing Date.
(h) Secretary's Certificate. The Company shall have delivered to
Parent a certificate of the Secretary of the Company as to the incumbency of
officers executing this Agreement and the certificates set forth in paragraphs
(a) and (b) above, in form and substance reasonably satisfactory to Parent.
(i) Tax Certificate. The Company shall have delivered to Parent a
certificate or certificates, in form and substance satisfactory to Parent, duly
executed and acknowledged, certifying any facts that would exempt the
transactions contemplated hereby from withholding pursuant to Section 1445 of
the Code.
(j) Legal Opinion. Parent shall have received the opinions of Wilson
Sonsini Goodrich & Rosati and LaFollette Godfrey & Kahn, counsel to the Company,
dated the Closing Date, in the form attached hereto as Exhibit D-1.
(k) Dissenting Shares. The holders of Company Stock entitled to
receive shares of Parent Common Stock consisting of not more than 6-1/2% of the
Merger Consideration shall have demanded payment for their shares of Company
Stock pursuant to Sections 180.1301 through 180.1321 of the WBCL.
(l) Noncompete Agreements. Parent and each of Lance Fors, James
Dahlberg and Lloyd Smith (the "Principals") shall have entered into new
agreements in connection with the Merger, on terms specified in Section 6.02(l)
of the Company Disclosure Schedule and in conjunction with their receipt of
Merger Consideration and other consideration described in Section 6.02(l) of the
Company Disclosure Schedule, to reaffirm, for the benefit of Parent, the
provisions of the existing noncompete arrangements between each of the
Principals and the Company.
(m) Repayment of Debt. The Company shall have satisfactorily repaid
all of its outstanding indebtedness under the agreements described in Section
3.01(n)(i)(H) and listed on Section 3.01(n)(i) of the Company Disclosure
Schedule, or shall
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have obtained written confirmation from the applicable lender that the Merger
will not be considered a default under such agreements.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and also shall
be true and correct in all material respects as of the Closing Date (except for
any representation or warranty that is specifically limited to an earlier date,
which shall be true and correct as of such earlier date), except (i) that any
representation or warranty qualified as to materiality shall be true and correct
in all respects as of the applicable date and (ii) where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality or "material adverse effect" set forth
therein) does not have, and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent or on the Surviving
Corporation. The Company shall have received a certificate signed on behalf of
Parent and Sub by an authorized officer of Parent and Sub to the effect set
forth in this paragraph.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to be
performed by each of them under this Agreement at or prior to the Closing Date.
The Company shall have received a certificate signed on behalf of Parent and Sub
by an authorized officer of Parent and Sub to the effect set forth in this
paragraph.
(c) Tax Opinion. The Company shall have received the opinion of
Wilson Sonsini Goodrich & Rosati, counsel to the Company, dated the Closing
Date, to the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and (ii) Parent, Sub and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. The parties to this Agreement
agree to make reasonable representations as requested by counsel for the purpose
of rendering such opinion.
(d) Legal Opinion. The Company shall have received the opinions of
Simpson Thacher & Bartlett and Foley & Lardner,
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counsel to Parent and Sub, dated the Closing Date, in the form attached hereto
as Exhibit D-2.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time of the Merger, whether before
or after the Company Shareholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; or
(c) by either Parent or the Company if the Merger shall not have
been consummated on or before May 15, 2000 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Time of the
Merger); provided, however, that in the event that the Merger has not been
consummated by such time due to the failure to satisfy the condition specified
in Section 6.01(a), and as of such time (A) the condition specified in Section
6.01(d) shall have been satisfied, (B) the Shareholders Meeting shall not have
been held, and (C) neither Parent nor the Company shall be entitled to terminate
this Agreement under any other paragraph of this Section 7.01, then such date
shall be extended, without any action on the part of any party hereto, until
June 15, 2000; or
(d) by Parent if at the duly held meeting of the shareholders of the
Company (including any adjournment thereof) held for the purpose of voting on
the Merger, this Agreement and the consummation of the transactions contemplated
hereby, the holders of the requisite percentages of the outstanding shares of
Company Stock shall not have approved the Merger, this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 7.02. Effect of Termination. (a) In the event of termination
of this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall
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forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the provisions of Section
3.01(p), Section 3.02(g), the last sentence of Section 5.02(a), this Section
7.02, Section 8.02 and Section 8.07. Nothing contained in this Section shall
relieve any party for any breach of the covenants or agreements set forth in
this Agreement.
(b) If this Agreement is terminated and the Merger is not
consummated as a result of a failure to satisfy the conditions in Section
6.01(a) or Section 6.02(b) (the date of such termination, the "Default Date"),
then the Company shall grant Parent a license on the terms set forth on the term
sheet attached hereto as Exhibit E.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the shareholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such shareholders without the further approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time of the Merger, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
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ARTICLE VIII
General Provisions
SECTION 8.01. Survival. (a) The representations and warranties of
the Company, Parent and Sub contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall not
survive the Closing Date, other than as set forth in, and for the purposes
contemplated by, the Escrow Agreement.
(b) The covenants and agreements in this Agreement shall terminate
upon the termination of this Agreement pursuant to Section 7.01 or at the
Closing Date, except for those covenants and agreements contained herein that by
their terms apply or are to be performed in whole or in part after the Closing
Date or such termination.
(c) Nothing in this Section 8.01 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in this
Agreement occurring prior to termination.
SECTION 8.02. Expenses. (a) In the event that the Merger is
consummated, Parent shall pay, or shall cause the Surviving Corporation to pay,
all out-of-pocket costs, fees and expenses otherwise payable by the Surviving
Corporation (other than in respect of fees and expenses incurred by shareholders
of the Company, all of which shall be borne by such shareholders) in connection
with the transactions contemplated by this Agreement and the Voting Agreement.
(b) Except as provided otherwise in paragraph (a) above, all costs
and expenses incurred in connection with this Agreement and the Voting Agreement
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that the cost of filing, printing and
distributing the Form S-4 shall be borne equally by Parent and the Company.
SECTION 8.03. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by facsimile or by overnight
courier (providing proof of delivery) to the parties at the following addresses
and facsimile numbers (or at such other address or facsimile number for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
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PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0313
Facsimile: (203) 761-2893
Attention: Secretary
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2502
Attention: Richard A. Garvey, Esq.
(b) if to the Company, to
Third Wave Technologies, Inc.
502 S. Rosa Road
Madison, Wisconsin 53719
Facsimile: (608) 273-6989
Attention: Chief Executive Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Facsimile: (650) 493-6811
Attention: Michael J. Kennedy, Esq.
SECTION 8.04. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "Environmental Claim" means any written or oral notice, claim,
demand, action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental
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response costs, natural resource damages, property damage, personal injury,
fines or penalties) arising out of, relating to, based on or resulting from (i)
the presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, whether or not owned, leased or operated by
the Company or (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Law or Environmental Permit or (iii) otherwise
relating to obligations or liabilities under any Environmental Laws;
(c) "Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of human health
or the environment, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Solid Waste Disposal Act, the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state laws;
(d) "Environmental Permits" means all permits, licenses,
registrations and other governmental authorizations required under Environmental
Laws for the Company to conduct its operations and businesses on the date hereof
and consistent with past practices;
(e) "Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials, and substances regulated
pursuant to, or that could reasonably be expected to provide the basis of
liability under, any Environmental Law;
(f) "indebtedness" means, with respect to any person, without
duplication, (i) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (ii) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments,
(iii) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (iv) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (v) all capitalized lease obligations of such person,
(vi) all obligations of others
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<PAGE>
secured by any Lien on property or assets owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (vii) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof), (viii) all letters of credit issued
for the account of such person and (ix) all guarantees and arrangements having
the economic effect of a guarantee of such person of any indebtedness of any
other person;
(g) "Intellectual Property" means all rights, privileges and
priorities provided under federal, state, foreign and multinational law relating
to intellectual property, including without limitation all (i) (A) patents and
patent applications, inventions, discoveries, machines, manufactures,
compositions or matter, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, new and useful improvements
thereof and know-how relating thereto, whether or not patented or patentable;
(B) copyrights and works of authorship, including computer applications,
programs, software, hardware, files, mask works, compilations, databases,
documentation and related items; (C) trademarks, service marks, trade names,
domain names, URLs, email addresses, brand names, corporate names, logos and
trade dress and the goodwill of any business symbolized thereby; (D) trade
secrets, drawings, lists and all other proprietary, nonpublic or confidential
information, documents or materials in any media; and (ii) all registrations,
applications, recordings and other legal protections or rights related to the
foregoing;
(h) "knowledge" means, with respect to any matter, (i) in the case
of Parent, the knowledge of any director, executive officer or the General
Counsel of Parent after due inquiry into such matter and (ii) in the case of the
Company, the knowledge of any director, the President or any Vice President
after due inquiry into such matter;
(i) "Liens" means all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever;
(j) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company or Parent, any change, effect, event or
occurrence that either individually or in the aggregate with all other such
changes, effects, events and occurrences is materially adverse to the business,
properties, financial condition or results of operations of the Company or
Parent, as the case may be, and its respective subsidiaries taken as a whole,
other than the effects
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<PAGE>
of (i) any reaction to the public announcement of this Agreement and the
transactions contemplated hereby, including the disruption or loss of any or all
of the Company's existing or prospective customer relationships and the
corresponding impact on the Company's business, properties, financial condition
or results of operations, or (ii) general economic or industry conditions;
(k) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(l) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 8.05. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 8.06. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement is not intended to confer upon any person other than
the parties hereto any rights or remedies, other than Section 5.04, which will
be binding on Parent and the Surviving Corporation and their respective
successors and assigns, and will be enforceable by the officers and directors of
the Company.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE
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<PAGE>
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
WISCONSIN APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 8.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PE CORPORATION
By: /s/ MICHAEL W. HUNKAPILLER
-------------------------------------
Name: Michael W. Hunkapiller
Title: Senior Vice President
BLUE ACQUISITION CORP.
By: /s/ THOMAS P. LIVINGSTON
-------------------------------------
Name: Thomas P. Livingston
Title: Vice President
THIRD WAVE TECHNOLOGIES, INC.
By: /s/ LANCE FORS
-------------------------------------
Name: Lance Fors
Title: President and Chief Executive
Officer
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<PAGE>
Exhibit A
VOTING AGREEMENT
Included as Annex II to prospectus
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<PAGE>
Exhibit B
ESCROW AGREEMENT
Included as Annex III to prospectus
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<PAGE>
Exhibit C-1
FORM OF COMPANY AFFILIATE LETTER
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0313
Third Wave Technologies, Inc.
502 South Rosa Road
Madison, Wisconsin 53719
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of Third Wave Technologies, Inc., a Wisconsin corporation (the
"Company"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of January 23, 2000 (the "Agreement"), among PE Corporation, a Delaware
corporation ("Parent"), Blue Acquisition Corp., a Wisconsin Corporation and a
direct wholly owned subsidiary of Parent ("Sub"), and the Company, Sub will be
merged with and into the Company (the "Merger"). Capitalized terms used herein
and not defined have the meanings assigned to them in the Agreement.
As a result of the Merger, each outstanding share of Company Stock
would be converted into the right to receive shares of Parent Common Stock.
I represent, warrant and covenant to Parent and the Company that in
the event I receive any Parent Common Stock as a result of the Merger:
a. I shall not make any sale, transfer or other disposition of the Parent
Common Stock in violation of the Act or the Rules and Regulations.
b. I have carefully read this letter and the Agreement and discussed its
requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Parent Common Stock to the extent I felt
necessary, with my counsel or counsel for the Company.
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<PAGE>
c. I have been advised that the issuance of Parent Common Stock to me
pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that, because at the time the Merger was submitted for a vote of
the shareholders of the Company, (a) I may be deemed to have been an
affiliate of the Company and (b) the distribution by me of the Parent
Common Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of Parent Common Stock issued to me in the
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition is
made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
d. I understand that, except as provided in the Agreement in Sections
2.03(c), Parent is under no obligation to register the sale, transfer or
other disposition of the Parent Common Stock by me or on my behalf under
the Act or to take any other action necessary in order to make compliance
with an exemption from such registration available.
e. I also understand that stop transfer instructions will be given to
Parent's transfer agents with respect to the Parent Common Stock and that
there will be placed on the certificates for the Parent Common Stock
issued to me in the Merger, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this
certificate were issued in a transaction
to which Rule 145 promulgated under the
Securities Act of 1933, as amended,
applies. The shares represented by this
certificate may only be transferred in
accordance with the terms of an agreement
dated , 2000 between the registered holder
hereof and PE Corporation, a copy of which
agreement is on file at the principal
offices of PE Corporation."
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<PAGE>
f. I also understand that unless the transfer by me of my Parent Common Stock
has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, Parent reserves the right to put the following
legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
were acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933, as amended, applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning
of the Securities Act of 1933, as amended, and may not be
sold, pledged or otherwise transferred except in accordance
with an exemption from the registration requirements of the
Securities Act of 1933, as amended."
It is understood and agreed that the legends set forth in paragraphs
(e) or (f) above, as the case may be, shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have delivered to
Parent a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Parent, to the effect
that such legend is not required for purposes of the Act.
I further represent to and covenant with Parent and the Company that
I have not and will not, within the 30 days prior to the Effective Time of the
Merger (as defined in the Agreement), sell, transfer or otherwise dispose of any
shares of the capital stock of Parent or the Company held by me and that I will
not sell, transfer or otherwise dispose of any shares of Parent Common Stock
received by me in the Merger or other shares of the capital stock of Parent
until after such time as results covering at least 30 days of combined
operations of Parent and the Company have been published by Parent, in the form
of a quarterly earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any
other public filing or announcement which includes
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<PAGE>
the combined results of operations.
By its acceptance hereof, Parent agrees, for a period of two years
after the Effective Time of the Merger, that it will file on a timely basis all
reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 144(c) under the Act are satisfied and the resale provisions of Rules
145(d)(1) and (2) under the Act are therefore available to me in the event I
desire to transfer any Parent Common Stock issued to me in the Merger.
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<PAGE>
By signing this letter, without limiting or abrogating my agreements
set forth above, I do not admit that I am an "affiliate" of the Company within
the meaning of the Act or the Rules and Regulations, and I do not waive any
right I may have to object to any assertion that I am such an affiliate.
By:
------------------------
Name: Very truly yours,
-------------------------
Name:
Accepted this day of
, 2000, by
Third Wave Technologies, Inc.
By:
---------------------------
Name:
PE Corporation
By:
---------------------------
Name:
Title:
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<PAGE>
Exhibit C-2
FORM OF PARENT AFFILIATE LETTER
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0313
Third Wave Technologies, Inc.
502 South Rosa Road
Madison, Wisconsin 53719
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of PE Corporation, a Delaware corporation ("Parent"), as the term
"affiliate" is used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Securities and Exchange Commission (the "Commission").
Pursuant to the terms of the Agreement and Plan of Merger dated as of January
23, 2000 (the "Agreement"), among Parent, Blue Acquisition Corp., a Wisconsin
corporation and direct wholly owned subsidiary of Parent ("Sub"), and Third Wave
Technologies, Inc., a Wisconsin corporation (the "Company"), Sub will be merged
with and into the Company (the "Merger"). Capitalized terms used herein and not
defined have the meanings assigned to them in the Agreement.
I represent to and covenant with Parent and the Company that I have
not and will not, within the 30 days prior to the Effective Time of the Merger,
sell, transfer or otherwise dispose of any shares of the capital stock of Parent
and the Company held by me and that I will not sell, transfer or otherwise
dispose of any shares of Parent Common Stock received by me in the Merger or
other shares of the capital stock of Parent until after such time as results
covering at least 30 days of combined operations of Parent and the Company have
been published by Parent, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
By signing this letter, without limiting or abrogating my agreements
set forth above, I do not admit that I am an "affiliate" of Parent within the
meaning of the Securities Act of 1933, as amended, or the rules and regulations
of the Commission promulgated thereunder, and I do not waive any right I may
have to object to any assertion that I am such an affiliate.
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<PAGE>
Title: Very truly yours,
Third Wave Technologies, Inc.
By:
-------------------------
Name:
Accepted this day of
, 2000, by
PE Corporation
By:
-----------------------
Name:
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<PAGE>
Exhibit D-1
FORM OF OPINION OF COUNSEL TO THE COMPANY
[Terms are as defined in the Merger Agreement]
The following substantive opinion paragraphs will be subject to assumptions and
limitations customary with respect to transactions of this nature; opinions as
to Wisconsin law shall be provided by Wisconsin counsel:
1. The Company has been duly incorporated and is validly existing and in
good standing as a corporation under the laws of the State of Wisconsin.
2. The Company has the requisite corporate power and authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Merger Agreement by the Company and
the consummation by the Company of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Company. The Merger Agreement has been duly executed and delivered by the
Company and (assuming that the Merger Agreement is a valid and binding
obligation of Parent and Sub and that the Voting Agreement is a valid and
binding obligation of the parties thereto) the Merger Agreement constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, and the Voting Agreement constitutes the valid and
binding obligation of the shareholders of the Company party thereto (the
"Shareholders"), enforceable against each of them in accordance with its terms,
in each case subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
3. The execution and delivery by the Company of the Merger Agreement and
the Shareholders of the Voting Agreement, and compliance by the Company with all
of the provisions of the Merger Agreement and the Shareholders of the Voting
Agreement, will not violate the Articles or Bylaws, any federal or Wisconsin
statute, including the WBCL, or any rule or regulation issued pursuant to any
Wisconsin or federal statute or the WBCL or any order known to us issued by any
Wisconsin or federal court or governmental agency or body.
4. No consent, approval, authorization, order,
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<PAGE>
registration or qualification of or with any federal or Wisconsin governmental
agency or body, including any Wisconsin governmental agency or body acting
pursuant to the WBCL, is required for the execution and delivery by the Company
of the Merger Agreement and the Shareholders of the Voting Agreement, and
compliance by the Company with all of the provisions of the Merger Agreement and
the Shareholders of the Voting Agreement, except filings and consents, waivers,
approvals, filings and registrations described in Section 3.01(d)(ii) of the
Merger Agreement.
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<PAGE>
Exhibit D-2
FORM OF OPINION OF COUNSEL TO PARENT AND SUB
[Terms are as defined in the Merger Agreement]
The following substantive opinion paragraphs will be subject to assumptions and
limitations customary with respect to transactions of this nature; opinions as
to Wisconsin law shall be provided by Wisconsin counsel:
1. Parent has been duly incorporated and is validly existing and in good
standing as a corporation under the laws of the State of Delaware.
2. Sub has been duly incorporated and is validly existing and in good
standing as a corporation under the laws of the State of Wisconsin.
3. Each of Parent and Sub has the requisite corporate power and authority
to enter into the Merger Agreement and the Voting Agreement and to consummate
the transactions contemplated thereby. The execution and delivery of the Merger
Agreement and the Voting Agreement by Parent and Sub and the consummation by
Parent and Sub of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub. The
Merger Agreement and the Voting Agreement have been duly executed and delivered
by Parent and Sub and (assuming that the Merger Agreement is a valid and binding
obligation of the Company and that the Voting Agreement is a valid and binding
obligation of the shareholders of the Company party thereto) constitute the
valid and binding obligations of Parent and Sub, enforceable against them in
accordance with their respective terms, in each case subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4. The execution and delivery by Parent and Sub of the Merger Agreement
and the Voting Agreement and compliance by Parent and Sub with all of the
provisions of the Merger Agreement and the Voting Agreement will not violate the
certificate of incorporation or bylaws, or similar organizational documents, of
Parent or Sub, any federal or Wisconsin statute, including the WBCL, or the
Delaware General Corporation Law (the "DGCL"), or any rule or regulation issued
pursuant to any Wisconsin or
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<PAGE>
federal statute, including the WBCL, or the DGCL, or any order known to us
issued by any Delaware, Wisconsin or federal court or governmental agency or
body.
5. No consent, approval, authorization, order, registration or
qualification of or with any federal or Wisconsin governmental agency or body,
including any Wisconsin body acting pursuant to the WBCL, or any Delaware
governmental agency or body acting pursuant to the DGCL, is required for the
execution and delivery by Parent or Sub of the Merger Agreement and the Voting
Agreement and compliance by Parent and Sub with all of the provisions of the
Merger Agreement and the Voting Agreement, except filings and consents, waivers,
approvals, filings and registrations described in Section 3.02(c)(ii) of the
Merger Agreement.
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<PAGE>
Exhibit E
LICENSE AGREEMENT TERM SHEET
[Terms are as defined in the Merger Agreement]
License: The Company will grant to Parent a worldwide, nonexclusive license
under the Invader(R) Patents to (i) make, have made, use, sell, have
sold and import Products and components and (ii) perform Services or
practice any method, in each case solely for applications outside of
the Field of Agriculture.
"Invader Patents" means all worldwide patents and patent
applications which claim the Invader Technology, together with
all divisions, continuations, continuations-in-part, patents
of addition, and substitutions of, and all patents issuing on,
any of the foregoing, together with all registrations,
reissues, reexaminations or extensions of any kind with
respect to any of such patents, in each case to the extent the
same claim the Invader Technology and to the extent Controlled
by the Company. For avoidance of doubt, Invader Patents will
not include any patent or patent application licensed by the
Company after the Commencement Date (as defined below) or
claiming subject matter conceived after the Commencement Date
(except continuation-in-part patents taking priority prior to
the Commencement Date).
"Invader Technology" means the Company's Invader Assay and
Invader Squared Assay.
"Invader Assay" means a biochemical test for detecting and/or
quantifying a specific nucleic acid target sequence within a
nucleic acid mixture that is dependent upon the coordinate
actions of at least two (2) target-specific probes and a
structure-specific nuclease.
"Invader Squared Assay" means a biochemical test system which
uses one Invader Assay reaction to detect and amplify the
signal generated by the cleavage product of another (either
simultaneous or sequential) Invader Assay reaction for
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<PAGE>
detection and/or quantification of the nucleic acid target
sequence of interest.
"Control" means possession of the ability to grant a license
or sublicense as set forth above without violating the terms
of any agreement with a third party entered into prior to the
Commencement Date.
"Product" means any product the manufacture, sale or use of
which would infringe a claim of a patent (or a claim of a
patent application as if it was issued) within the Invader
Patents, but for the above license.
"Service" means any service or activity the performance of
which involves the use of a Product or a method the practice
of which would infringe a claim of a patent (or a claim of a
patent application as if it was issued) within the Invader
Patents, but for the above license.
"Field of Agriculture" means applications relating to (i)
cultivating, characterizing or modifying soil; (ii) producing,
growing, improving, protecting, treating or modifying crops or
forest products; (iii) raising, harvesting, improving,
protecting, treating or modifying livestock, poultry, fish or
shellfish; and (iv) the preparation, marketing or treatment of
products resulting from the activities described in (i)-(iii)
above. The Field of Agriculture includes applications
involving the improvement or modification of soil, crops,
livestock, poultry, fish or shellfish and their resulting
products as they relate to human health, as well as foods from
plants and animals designed or modified to enhance their
health attributes, in each case for nutraceutical applications
but not therapeutic applications in humans. The Field of
Agriculture also includes agricultural applications relating
to bacteria, fungi and viruses, as well as pest organisms with
respect to, and only to the extent of, such bacteria, fungi,
viruses or pest organisms' interaction with soil, plants,
livestock, poultry, fish or shellfish. For avoidance of doubt
it is acknowledged and understood that the Field of
Agriculture includes genes and gene-based or genetic
technologies
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<PAGE>
useful for achieving the above described activities, in
particular:
o Gene-based assays for pesticide discovery;
o Gene-based diagnostics of agricultural pests;
o Gene-based analysis of metabolism of pesticides in
plants and pest organisms;
o Gene-based analysis of metabolism and physiological
state of plants; livestock, poultry, fish, shellfish or
their pests;
o Genetic modification of pest organism for functional
analysis of pest-related properties;
o Genetic modification of pest, bacteria, fungi or viruses
for functional analysis and optimization as protectants
or growth stimulators of plants, livestock, poultry,
fish or shellfish;
o Functional genetic analysis of the genomes of plants,
livestock, poultry, fish or shellfish or their pests for
applications in agriculture;
o Genetic modification of plants, livestock, poultry, fish
or shellfish or their pests with the goal of enhancing
properties relevant to production and end-use (i.e.,
input and output traits);
o Gene-based diagnostics for determining seed and crop
composition and quality; and
o Gene-based markers for facilitation of the breeding of
plants, livestock, poultry, fish or shellfish or their
pests for applications in agriculture.
The Field of Agriculture further includes food safety
applications relating to crops or livestock up to the stage at
which the crops are processed into materials or food
ingredients for human consumption or the livestock are
slaughtered (i.e., unprocessed food safety applications).
Without limiting the foregoing, the Field of Agriculture does
not include any such application relating to crops or
livestock after the stage at which the crops are processed
into materials or food ingredients for human consumption or
the livestock are slaughtered (i.e., processed food safety
applications).
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<PAGE>
The Field of Agriculture excludes all applications not
expressly described above. For avoidance of doubt, the Field
of Agriculture shall in no case include human applications
(e.g., research, diagnostic or therapeutic) nor any
application for the discovery, production or development of
products for therapeutic applications in humans, including
without limitation, the discovery, development, use and
raising of animal models of human diseases or animals for
xenotransplantation applications in humans.
Term: The above license will commence upon the Default Date (as
defined in Section 7.02 of the Merger Agreement, the
"Commencement Date") and will remain in full force and effect
until the expiration of the last-to-expire patent within the
Invader Patents, unless earlier terminated by written notice
from the Company for Parent's failure to pay the royalties set
forth below after a 60-day cure period initiated by written
notice.
Royalty: Parent will pay the Company 5% of Net Sales, if any, within 60
days of the end of each calendar quarter. Such royalty will be
payable in U.S. Dollars.
"Net Sales" means the amount invoiced a end user on the sale
or other transfer of a Product or performance of a Service, in
each case by or under authority of Parent, less (i) normal and
customary rebates, and cash and trade discounts, actually
taken, (ii) sales, use and/or other excise taxes or duties
actually paid, (iii) the cost of any packages and packing,
(iv) insurance costs and outbound transportation charges
prepaid or allowed, (v) import and/or export duties actually
paid, and (vi) amounts allowed or credited due to returns (not
to exceed the original billing or invoice amount).
The Company will have reasonable access to the books of Parent
to audit the accuracy of the royalties payable for at least 3
years after the period to which the audit pertains.
Indemnity: Parent will indemnify, defend and hold harmless the Company
and its directors, officers and employees and the successors
and assigns of any of the foregoing (each an "Indemnitee")
from and against any and
I - 83
<PAGE>
all liabilities, damages,
losses, costs or expenses (including reasonable attorneys' and
professional fees and other expenses of litigation and/or
arbitration) resulting from a claim, suit or proceeding
brought by a third party against an Indemnitee, arising from
or occurring as a result of exercise or practice of the above
licenses.
I - 84
<PAGE>
Annex II
VOTING AGREEMENT
Voting Agreement, dated as of January 23, 2000 (the "Agreement"),
among the undersigned holders (the "Holders") of shares of the common stock,
$1.00 par value (the "Company Common Stock"), the Series A Convertible Preferred
Stock, $10.00 par value (the "Series A Preferred Stock"), the Series B
Convertible Preferred Stock, $10.00 par value (the "Series B Preferred Stock"),
the Series C Convertible Preferred Stock, $10.00 par value (the "Series C
Preferred Stock"), the Series D Convertible Preferred Stock, $10.00 par value
(the "Series D Preferred Stock"), and the Series E Convertible Preferred Stock,
$10.00 par value (the "Series E Preferred Stock", and all such share classes and
series of capital stock collectively, the "Company Stock") of Third Wave
Technologies, Inc., a Wisconsin corporation (the "Company"), PE Corporation, a
Delaware corporation ("Parent"), and Blue Acquisition Corp., a Wisconsin
corporation and a direct wholly owned subsidiary of Parent ("Sub").
The Company, Parent, and Sub propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized
terms not otherwise defined herein being used herein as therein defined),
pursuant to which Sub would be merged (the "Merger") with and into the Company,
and each outstanding share of Company Stock would be converted into the right to
receive shares of Parent Common Stock.
As a condition of its entering into the Merger Agreement, Parent has
requested each Holder to agree, and each Holder has agreed, to enter into this
Agreement, which is created and entered into under Section 180.0731 of the
Wisconsin Business Corporation Law (the "WBCL").
Prior to the date hereof, Parent and the Holders had no agreement,
arrangement or understanding (as defined in Section 180.1140 of the WBCL) for
the purpose of acquiring, holding, voting or disposing of shares of Company
Stock.
In consideration for the agreements contained herein, prior to the
date hereof, and prior to the time at and date on which Parent became an
"interested stockholder" for purposes of
<PAGE>
Section 180.1141 of the WBCL, the board of directors of the Company has approved
the agreement of the Holders to vote as provided in this Agreement.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. Representations and Warranties of the Holders. Each Holder
represents and warrants, severally and not jointly, to Parent and Sub as
follows:
(a) Ownership of Securities. Such Holder is the record and
beneficial owner of the number of shares of Company Stock (the "Existing
Securities") (together with any shares of Company Stock or other securities
hereafter acquired by such Holder, the "Subject Securities") set forth on the
signature page to this Agreement. Such Holder does not own any securities of the
Company on the date hereof other than such Holder's Existing Securities. Such
Holder has sole voting power and sole power to issue instructions with respect
to the voting of such Holder's Existing Securities, sole power of disposition,
sole power of exercise or conversion and the sole power to exercise dissenters'
rights, in each case with respect to all of such Holder's Existing Securities
and, on the date of the Company Shareholder Approval, will have sole voting
power and sole power to issue instructions with respect to the voting of all of
such Holder's Subject Securities, sole power of disposition, sole power of
exercise or conversion and sole power to exercise dissenters' rights, in each
case with respect to all of such Holder's Subject Securities.
(b) Power; Binding Agreement. Such Holder has full power and
authority to enter into and perform all of such Holder's obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by
such Holder and constitutes a valid and binding agreement of such Holder,
enforceable against such Holder in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Holder and the
consummation by such Holder of the transactions contemplated hereby (other than
(i) filings
<PAGE>
under the WBCL required to effect the Merger, (ii) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) the filing of the
registration statement on Form S-4 to be filed with the Securities and Exchange
Commission by Parent in connection with the issuance of Parent Common Stock in
the Merger, or (iv) as otherwise contemplated by the Merger Agreement) and
neither the execution and delivery of this Agreement by such Holder nor the
consummation by such Holder of the transactions contemplated hereby nor
compliance by such Holder with any of the provisions hereof shall conflict with
or result in any breach of any organizational documents applicable to such
Holder, result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third-party
right of termination, cancellation, material modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Holder is a party or
by which such Holder's properties or assets may be bound or violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Holder or any of such Holder's properties or assets.
(d) No Liens. Such Holder's Existing Securities are held by such
Holder, or by a nominee or custodian for the exclusive benefit of such Holder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any encumbrances arising hereunder and agreements
existing prior to the date hereof between such Holder and the Company, as the
same may be amended pursuant to this Agreement.
(e) Receipt of 1934 Act Documents. To the full satisfaction of such
Holder, such Holder has been furnished any materials such Holder has requested
relating to Parent, including copies of each of the documents filed by Parent
prior to the date hereof under the Securities Exchange Act of 1934, as amended
(the "1934 Act Documents"), with respect to Parent's most recently completed
fiscal year and any subsequent interim fiscal periods, and such Holder has been
afforded the opportunity to ask questions of representatives of Parent
concerning Parent's business.
2. Agreement to Vote Shares. At every meeting of the shareholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action
<PAGE>
or approval by written consent of the shareholders of the Company with respect
to any of the following, each Holder agrees that it shall vote all the Subject
Securities that it beneficially owns on the record date of any such vote in
favor of approval of the Merger Agreement and the Merger and any matter that
could reasonably be expected to facilitate the Merger, including the manner in
which the Escrow Fund under the Escrow Agreement is to be established as
contemplated by Section 2.02(f) of the Merger Agreement and the appointment of
the Shareholder Representative thereunder. Each Holder further agrees to use
such Holder's reasonable good faith efforts to cause the shareholders of the
Company to approve the Merger and the transactions and matters contemplated in
connection therewith and not, directly or indirectly, to solicit or encourage
any offer from any party concerning the possible disposition of all or any
substantial portion of the Company's business, assets or capital stock. In the
event the Company's board of directors does not call a meeting of the Company's
shareholders to approve the Merger and the transactions and matters contemplated
in connection therewith, each Holder agrees to take all action permitted under
the Articles and Bylaws and under Wisconsin law necessary to call a meeting of
the Company's shareholders to approve the Merger and the transactions and
matters contemplated in connection therewith or to approve the Merger and the
transactions and matters contemplated in connection therewith by written
consent.
3. Consent to Merger. Each Holder of Series D Preferred Stock
consents, pursuant to Article VI of the Investment Agreement dated as of October
16, 1998, by and among the Company, The Burrill Agbio Capital Fund, L.P., Third
Wave Agbio, Inc., Venture Investors Early Stage Fund II Limited Partnership
("VI"), and Dr. Lance Fors, Dr. James Dahlberg and Dr. Lloyd Smith (together,
the "Principals") (the "1998 Investment Agreement"), to the Merger and agrees
that the Merger and the discussions entered into by the Company in connection
with the Merger Agreement and any other matters related thereto will not
constitute a violation of the covenant in Section 6.3(b) of the 1998 Investment
Agreement.
4. Agreement to Elect a Share Conversion Option Under Articles.
(a) Series A Preferred Stock. Each Holder of Series A Preferred
Stock hereby elects in connection with the Merger not to have its shares treated
pursuant to the provisions of Section 1.3(b) of Article III of the Articles.
(b) Series B Preferred Stock. Each Holder of Series B Preferred
Stock hereby elects in connection with the Merger not to have its shares treated
pursuant to the provisions of Section 2.3(b) of Article III of the Articles.
(c) Series C Preferred Stock. Each Holder of Series C Preferred
Stock hereby elects in connection with the Merger not to have its shares treated
pursuant to the provisions of
<PAGE>
Section 3.3(b) of Article III of the Articles.
(d) Series D Preferred Stock. Each Holder of Series D Preferred
Stock hereby elects in connection with the Merger not to have its shares treated
pursuant to the provisions of Section 4.3(b) of Article III of the Articles.
5. Agreement to Deem Merger a Qualified Sale. Each Holder of Series
E Preferred Stock hereby agrees to deem the Merger a "Qualified Sale" pursuant
to the provisions of Section 5.5(b) of Article III of the Articles, and agrees
to treat the Merger as a "Qualified Sale" for all purposes under the Articles,
including in connection with the treatment of its shares of Series E Preferred
Stock in the Merger.
6. Agreement to Terminate Certain Investment Agreements. Each
Holder, to the extent applicable, hereby agrees that the Investment Agreement
dated as of July 29, 1994, among the Company, Venture Investors of Wisconsin,
Inc. ("VIW"), and the Principals (the "1994 Investment Agreement"), the
Investment Agreement dated as of June 28, 1995, among the Company, VIW and the
Principals (the "1995 Investment Agreement"), the Investment Agreement dated as
of January 12, 1996, among the Company, VIW, M & I Ventures, L.L.C. and the
Principals (the "1996 Investment Agreement"), the 1998 Investment Agreement (as
it relates to the Series D Preferred Stock, but not the Series A Convertible
Preferred Stock, par value $.01 per share, of Third Wave Agbio, Inc., which
shall remain subject to the terms of the 1998 Investment Agreement after the
Effective Time of the Merger), and the Investment Agreement dated as of July 21,
1999, by and among Schroder Ventures International Life Sciences Fund II,
Wellcome Trust Limited, as Trustee of the Wellcome Trust, UK Medical Ventures
Fund No. 1 LP, S.R. One, Limited, VI, the Company and the Principals (the "1999
Investment Agreement", and together with the 1994 Investment Agreement, the 1995
Investment Agreement, the 1996 Investment Agreement and the 1998 Investment
Agreement, the "Investment Agreements") shall be terminated as of the Effective
Time of the Merger. In the event the Merger Agreement is terminated and the
Merger is not consummated, then such termination shall be of no force and
effect, and all rights of the Holders under the Investment Agreements shall be
reinstated in full force and effect.
7. IRREVOCABLE PROXY. EACH HOLDER HEREBY GRANTS TO, AND APPOINTS SUB
AND THE PRESIDENT OF SUB AND THE TREASURER OF SUB, IN THEIR RESPECTIVE
CAPACITIES AS OFFICERS OF SUB, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO
ANY SUCH OFFICE OF SUB, AND ANY OTHER DESIGNEE OF SUB, EACH OF THEM
INDIVIDUALLY, SUCH HOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF
SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO SUCH HOLDER'S
SUBJECT SECURITIES IN ACCORDANCE WITH THIS AGREEMENT. THIS PROXY IS COUPLED WITH
AN INTEREST AND SHALL BE IRREVOCABLE, AND EACH HOLDER WILL TAKE SUCH FURTHER
ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE
INTENT OF THIS PROXY AND HEREBY
<PAGE>
REVOKES ANY PROXY PREVIOUSLY GRANTED BY IT WITH RESPECT TO THE SUBJECT
SECURITIES. THIS PROXY SHALL CONTINUE UNTIL THE CONSUMMATION OF THE MERGER OR
UNTIL THIS AGREEMENT IS TERMINATED, WHICH EVER IS EARLIER.
8. Representations and Warranties of Parent and Sub. Parent and Sub
jointly and severally represent and warrant to the Holders as follows:
(a) Power: Binding Agreement. Parent and Sub have full corporate
power and authority to enter into and perform all of their respective
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and Sub and constitutes a valid and binding
agreement of Parent and Sub, enforceable against each of them in accordance with
its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by Parent or Sub and the
consummation by Parent or Sub of the transactions contemplated hereby and
neither the execution and delivery of this Agreement by Parent or Sub nor the
consummation by Parent or Sub of the transactions contemplated hereby nor
compliance by Parent or Sub with any of the provisions hereof shall conflict
with or result in any breach of any organizational documents applicable to
Parent or Sub, as the case may be, result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third-party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which Parent or Sub is a party or by which Parent's or Sub's properties
or assets may be bound or violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to Parent or Sub or any of
Parent's or Sub's properties or assets.
9. Noninterference. Each Holder hereby agrees and covenants that
such Holder shall not, directly or indirectly, take any action that would make
any representation or warranty contained herein untrue or incorrect or have the
effect of preventing or disabling such Holder from performing its obligations
under this Agreement.
10. Transfer of Shares. Prior to transferring any of its Subject
Securities to a prospective purchaser, each Holder agrees that it shall submit
the certificates for such Subject Securities to Parent to enable Parent to print
a legend on each such certificate describing this Agreement and the obligations
set forth herein. Each Holder agrees to notify any prospective purchaser of such
Holder's Subject Securities of the obligations set forth in this Agreement with
respect to such Subject Securities.
<PAGE>
11. Assignment: Benefits. The rights (but not the obligations) of
Parent hereunder may be assigned, in whole or in part, to Sub or any other
direct wholly owned subsidiary of Parent, to the extent and for so long as it
remains a direct wholly owned subsidiary of Parent. Other than as permitted in
the preceding sentence, this Agreement may not be assigned (i) by any Holder
without the prior written consent of Parent, or (ii) by Parent without the prior
written consent of Holders entitled to receive at least two-thirds of the
aggregate number of shares of Parent Common Stock to which all Holders are
entitled to receive pursuant to the Merger Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the Holder, Parent, Sub and
their respective successors and permitted assigns.
12. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by facsimile or by overnight courier
(providing proof of delivery) to the parties at the following addresses and
facsimile numbers (or to such other address or facsimile number for a party as
shall be specified by like notice):
(a) if to any Holder, to it at the address set forth below such Holder's
name on the signature pages hereof,
with copies to:
Third Wave Technologies, Inc.
502 S. Rosa Road
Madison, Wisconsin 53719
Facsimile: (608) 663-7021
Attention: Chief Executive Officer
- and -
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Facsimile: (650) 493-6811
Attention: Michael J. Kennedy, Esq.
(b) if to Parent or Sub, to
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0313
Facsimile: (203) 761-2893
Attention: Secretary
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2502
Attention: Richard A. Garvey, Esq.
13. Specific Performance. The parties hereto agree that irreparable
harm would occur in the event that any of the provisions of this Agreement were
not performed in accordance with its specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
14. Amendment. This Agreement may not be amended or modified, except
by an instrument in writing signed by or on behalf of each of the parties
hereto. This Agreement may not be waived by any party hereto, except by an
instrument in writing signed by or on behalf of the party granting such waiver.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Wisconsin.
16. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
17. Termination. This Agreement shall terminate upon the
termination of the Merger Agreement pursuant to its terms. The date and time at
which this Agreement is terminated in accordance with this Section 17 is
referred to herein as the "Termination Date". Upon any termination of this
Agreement, this Agreement shall thereupon become void and of no further force
and effect, and there shall be no liability in respect of this Agreement or of
any transactions contemplated hereby on the part of any party hereto or any of
its directors, officers, partners, members, shareholders, employees, agents,
advisors, representatives or affiliates; provided, however, that nothing herein
shall relieve any party from any liability for such party's breach of this
Agreement; and provided further that nothing in this Section 17 shall limit,
restrict, impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
18. Miscellaneous. All of the recitals to this Agreement are true
and correct and are specifically incorporated by reference herein.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each of the parties hereto, all as of the date first above written.
PE CORPORATION
By: /s/ Michael W. Hunkapiller
------------------------------
Name: Michael W. Hunkapiller
Title: Senior Vice President
BLUE ACQUISITION CORP.
By: /s/ Thomas P. Livingston
------------------------------
Name: Thomas P. Livingston
Title: Vice President
VENTURE INVESTORS OF WISCONSIN
Address: 505 S. Rosa Road, Suite 100
Madison, Wisconsin 53711
Number of Shares
of Company Common Stock: 125
Number of Shares of
Series A Preferred Stock: 943
Number of Shares of
Series B Preferred Stock: 500
Number of Shares of
Series C Preferred Stock: 50
By:/s/ John Neis
------------------------------
Name: John Neis
Title: Partner
<PAGE>
M & I CAPITAL MARKETS GROUP, INC.
Address: 770 North Water Street
Milwaukee, Wisconsin 53202
Number of Shares of
Series C Preferred Stock: 417
By: /s/ James B. Wigdale
------------------------------
Name: James B. Wigdale
Title: President
VENTURE INVESTORS EARLY STAGE II
LIMITED PARTNERSHIP
Address: 505 S. Rosa Road, Suite 100
Madison, Wisconsin 53711
Number of Shares of
Series D Preferred Stock: 247
Number of Shares of
Series E Preferred Stock: 124
By: /s/ John Neis
------------------------------
Name: John Neis
Title: Partner
BURRILL AGBIO CAPITAL FUND
Address: 120 Montgomery Street, Suite 1370
San Francisco, California 94104
Number of Shares of
Series D Preferred Stock: 741
By: /s/ G. Steven Burrill
------------------------------
Name: G. Steven Burrill
Title: General Partner
<PAGE>
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND II LP1 by Schroder
Venture Managers Inc. as General Partner
Address: 22 Church Street
Hamilton HM 11 Bermuda
Number of Shares of
Series E Preferred Stock: 1,170
By: /s/ N. Lawson, G. Garr
-------------------------
Name: N. Lawson, G Garr
Title: Directors and Vice President
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND II LP2 by Schroder
Venture Managers Inc. as General Partner
Address: 22 Church Street
Hamilton HM 11 Bermuda
Number of Shares of
Series E Preferred Stock: 313
<PAGE>
By: /s/ N. Lawson, G. Garr
------------------------
Name: N. Lawson, G. Garr
Title: Directors and Vice President
UK MEDICAL VENTURES FUND NO. 1 LP
Address: 6 Henrietta Street
London UK WC2E 8LA
Number of Shares of
Series E Preferred Stock: 741
By: /s/ Stephen Reeders
------------------------------
Name: Stephen Reeders
Title: Partner
S.R. ONE, LIMITED
Address: Four Tower Bridge
200 Barr Harbor Drive, Suite 250
West Conshohocken, PA 19428
Number of Shares of
Series E Preferred Stock: 741
By: /s/ Barbara J. Dalton
-----------------------
Name: Barbara J. Dalton, Ph.D.
Title: Vice President
JAMES DAHLBERG
Address: 1119 Merrill Springs Road
Madison, Wisconsin 53705
Number of Shares of
Company Common Stock: 1,645
<PAGE>
By: /s/ James E. Dahlberg
------------------------------
Name: James Dahlberg
Title: Principal
LANCE FORS
Address: 502 S. Rosa Road
Madison, Wisconsin 53719
Number of Shares of
Company Common Stock: 1,645
By: /s/ Lance Fors
------------------------------
Name: Lance Fors
Title: Principal
KENNETH R. MCGUIRE
Address: Burbank Aeronautical Corporation
2850 N. Clybourn Avenue
Hangar 34
Burbank, California 91505
Number of Shares of
Company Common Stock: 5,012
By: /s/ Kenneth R. Mcguire
------------------------------
LLOYD SMITH, Ph.D.
Address: 1115 Amherst Dr.
Madison, Wisconsin 53705
Number of Shares of
Company Common Stock: 1,645
<PAGE>
By: /s/ Lloyd Smith
------------------------------
<PAGE>
Annex III
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of , 2000 (this "Escrow Agreement") among
PE Corporation, a Delaware corporation ("Parent"), John Neis, as representative
of the former shareholders of Third Wave Technologies, Inc., a Wisconsin
corporation and the surviving corporation in the merger referred to below (the
"Company"), and , a , as escrow agent (the "Escrow Agent").
Parent, the Company and Blue Acquisition Corp., a Wisconsin
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), entered into
an Agreement and Plan of Merger dated as of January 23, 2000 (the "Merger
Agreement"), pursuant to which, effective as of the date hereof, Merger Sub is
being merged with and into the Company, which thereupon shall become a wholly
owned subsidiary of Parent. Capitalized terms used herein without definition
have the meanings ascribed thereto in the Merger Agreement.
As required by the Merger Agreement, the parties are entering into
this Escrow Agreement for the purpose of establishing a means by which a portion
of the Merger Consideration otherwise payable to former shareholders of the
Company (the "Shareholders")
<PAGE>
shall serve, subject to the terms and conditions hereof, as the exclusive source
of indemnification to Parent and its affiliates (including the Company) and
their respective directors and officers and employees (collectively, the
"Indemnified Parties") with respect to "Losses," which, as used herein, shall
mean all liabilities (including liabilities for Taxes), obligations, losses,
damages, penalties, claims, actions, suits, judgments, settlements, reasonable
out-of-pocket costs, expenses and disbursements (including costs of
investigation and fees and expenses of attorneys, accountants and expert
witnesses) that may be imposed on or incurred by any of the Indemnified Parties
as a consequence of or in connection with (i) any inaccuracy or breach of any
representation or warranty of the Company contained in or made pursuant to the
Merger Agreement (a "Representation Loss") or (ii) the breach of or failure by
the Company to perform or discharge any obligation under the Merger Agreement
required to be performed or discharged at or prior to the Effective Time of the
Merger (a "Covenant Loss"); provided, that Losses shall not be limited to
matters asserted by third parties against an Indemnified Party and shall include
Losses incurred or sustained by an Indemnified Party in the absence of third
party claims; and provided further, that Losses of any Indemnified Party shall
be net of insurance proceeds or indemnity payments received by such Indemnified
Party from third parties.
By virtue of the Company Shareholder Approval, the Shareholders have
approved
<PAGE>
and authorized the execution, delivery and performance of this Escrow
Agreement, the provisions of which shall be deemed to be an integral part of the
Merger Agreement to the same extent as if fully set forth therein.
Accordingly, the parties hereby agree as follows:
1. ESCROW FUND
1.1 Establishment of Escrow Fund. (a) Simultaneously with the execution
and delivery of this Escrow Agreement, Parent is causing to be delivered to the
Escrow Agent for the account of each Shareholder, to be held in an escrow fund
(the "Escrow Fund") in accordance with the provisions of this Escrow Agreement,
certificates representing such number of shares of Parent Common Stock as is set
forth opposite the name of such Shareholder in Schedule A to this Escrow
Agreement, which number of shares of Parent Common Stock represents ten percent
of the number of shares of Parent Common Stock (rounded down to the nearest
whole share) into which such Shareholder's shares of Company Stock were
converted pursuant to Section 2.01 of the Merger Agreement. Such certificates
are registered in the names of the respective Shareholders for whose account
such certificates are being held in the Escrow Fund. Such shares of Parent
Common Stock, and any other property distributable with respect thereto or in
exchange therefor and held in the Escrow Fund as provided in Section 5.2 hereof,
are herein collectively referred to as the "Escrow Property". The Escrow Fund
shall be held by the Escrow Agent and shall be dealt with by the Escrow Agent in
accordance with the terms and conditions of this Escrow Agreement.
(b) Parent, the Shareholder Representative and the Shareholders
shall treat the escrow of Parent Common Stock as a grantor trust for tax
purposes, of which each of the Shareholders is the grantor. Subject to the
withholding contemplated by Section 5.1, each
<PAGE>
Shareholder shall be solely responsible for the payment of taxes imposed on or
measured by income that are attributable to income from the Escrow Property that
is distributed to such Shareholder for the time it is held in escrow hereunder,
and shall be solely responsible for the filing of all tax and information
returns applicable thereto.
2. PROCEDURES WITH RESPECT TO CLAIMS
2.1 Claims by Indemnified Parties. (a) Any claims against the Escrow Fund
are herein collectively called "Claims", and individually a "Claim". If an
Indemnified Party has a Claim, including a Claim arising from a suit, action,
proceeding or investigation by a third party, that may result in any Losses,
Parent shall give notice thereof (the "Claims Notice") to the Shareholder
Representative and to the Escrow Agent. The Claims Notice, which shall be signed
by an officer of Parent, shall describe the Claim in reasonable detail, shall
indicate the amount (estimated, if necessary, and to the extent feasible) of the
Losses that have been or may be suffered by Parent and/or any other applicable
Indemnified Party, as the case may be, and shall specify the representation,
warranty or covenant breached. The Claims Notice shall also include a statement
of the amount of Losses that Parent requests be satisfied by distribution to it
of Escrow Property from the Escrow Fund. The Losses shall be reimbursed solely
out of the Escrow Fund.
(b) Within 45 days after Parent shall give the Shareholder
Representative a Claims Notice, the Shareholder Representative, by notice to
Parent with a copy to the Escrow Agent (the "Shareholders' Notice"), either
shall (i) concede liability in whole with respect to such Claim, (ii) demand
arbitration of the matter pursuant to the provisions of Section 9 hereof (it
being agreed, however, if the amount of Losses is at issue in pending litigation
with a third party, the arbitration shall not be commenced until the amount of
Losses is ascertained upon final resolution of such litigation (whether by
binding settlement or final non-appealable judgment)
<PAGE>
unless otherwise agreed to in writing by the Shareholder Representative and
Parent) or (iii) concede liability in part and demand such arbitration in part,
subject, however, to the same qualifications in respect of commencing an
arbitration as set forth in the preceding clause (ii). The failure by the
Shareholder Representative to give the Shareholders' Notice within the specified
period shall be deemed a concession of liability in whole. The Shareholder
Representative shall be afforded reasonable access by Parent to (A) the
documentation relating to any Losses included in a Claims Notice as may under
the circumstances reasonably be required by the Shareholder Representative to
make a determination required to be made by the Shareholder Representative under
this Section 2.1 and (B) the officers and employees of Parent for purposes of
performing its duties and exercising its rights hereunder.
2.2 Final Claims for Reimbursement. All Claims for which the Shareholder
Representative shall have conceded liability, or shall have been deemed to have
conceded liability pursuant to the provisions of Section 2.1, or as to the
disposition of which the Shareholder Representative and Parent shall have agreed
in writing, shall be final and binding upon the Shareholders, the Shareholder
Representative and Parent. If the Shareholder Representative shall demand
arbitration as provided in Section 2.1, the Claim that was objected to shall
become final and binding upon the Shareholders, the Shareholder Representative
and Parent upon (a) a final decision in arbitration as provided in Section 9
hereof, or (b) upon the matter being otherwise agreed to in writing by Parent
and the Shareholder Representative. A Claim which is final and binding upon the
Shareholders, the Shareholder Representative and Parent as of any given time is
hereinafter called a "Final Claim for Reimbursement".
2.3 Limitation of Claims. (a) Notwithstanding anything to the contrary
herein, none of the Escrow Fund will be released and delivered to Parent
pursuant to any Claim in respect of which a Claims Notice is given after the
First Distribution Date, as hereinafter defined, it being agreed by the parties
hereto that the indemnification obligations of the Shareholders hereunder shall
be limited to Claims in respect of which Claims Notices are given on or before
the First Distribution Date.
<PAGE>
(b) Notwithstanding anything to the contrary herein, none of the
Escrow Fund will be released and delivered to Parent pursuant to any Claim
relating to a Loss except to the extent that the aggregate amount of all Final
Claims for Reimbursement relating to Losses exceeds the sum of $1,000,000, and
then the full amount thereof shall be released and delivered to Parent.
(c) As a Claim becomes a Final Claim for Reimbursement, Parent (or
the arbitrator, as the case may be) shall provide the Escrow Agent with a
certificate with respect to the compliance of the Final Claim for Reimbursement
with this Section 2.3.
2.4 Termination of Escrow Agreement. This Escrow Agreement shall remain in
full force and effect until, and shall terminate upon, the release of all of the
Escrow Fund pursuant to this Agreement.
3. DISTRIBUTIONS FROM ESCROW FUND
3.1 Definitions. As used herein: "First Distribution Date" shall mean the
business day next following the earlier of (i) the date, if any, upon which
audited results following the consummation of the Merger are first released in
Parent's annual report on Form 10-K, unless the results of operations and
financial position of the Company included in the post-consummation consolidated
results of Parent are substantially excluded from the scope of such audit due to
immateriality, or (ii) one year from the date hereof; and "Final Distribution
Date" shall mean the first business day on which all matters reserved against in
respect of Claims shall have been finally determined or settled. If no matters
are or remain reserved against on the First Distribution Date, the First
Distribution Date shall also be the Final Distribution Date. Parent shall give
prompt notice to the Escrow Agent, with a copy to the Shareholder
Representative, of the occurrence of the First Distribution Date.
3.2 Reimbursement of Final Claims for Reimbursement Before or On First
Distribution Date. From the date of this Escrow Agreement to and including the
First
<PAGE>
Distribution Date, the Escrow Agent from time to time shall (subject to
Section 2.3) transfer and deliver to Parent such amount of Escrow Property as
shall have a value (computed in accordance with Section 4.1 hereof) equal to the
Final Claims for Reimbursement which have not previously been paid to Parent.
3.3 Reservation of Amounts at First Distribution Date. As of the First
Distribution Date, the Escrow Agent shall reserve in the Escrow Fund such amount
of Escrow Property as shall have a value (computed in accordance with Section
4.1 hereof and subject to Section 2.3 hereof) equal to the sum of (i) the
aggregate amount claimed in all Claims Notices given pursuant to Section 2.1
hereof which have not become Final Claims for Reimbursement, but which are still
asserted by Parent and are then pending and undecided ("Pending Claims")
(notwithstanding that any matter in any Claims Notice may then be the subject of
arbitration as permitted by Section 2.1); and (ii) the aggregate amount of all
Final Claims for Reimbursement not theretofore paid to Parent; provided, that in
the case of amounts described in clause (ii) above, the Escrow Agent shall
provide notice to Parent of all such amounts as of the First Distribution Date
within 5 business days of the First Distribution Date.
3.4 Distribution at First Distribution Date. Within 10 business days
following the First Distribution Date, the Escrow Agent shall deliver to Parent
from the Escrow Fund any amount of Escrow Property reserved pursuant to Section
3.3(ii) and shall deliver to the Shareholders in accordance with their
respective interests that portion of the Escrow Fund equal to the entire amount
of the Escrow Fund as originally deposited in accordance with Section 1 hereof
(including any other property distributable with respect thereto or in exchange
therefor), less the sum of (a) all amounts theretofore delivered from the Escrow
Fund to Parent pursuant to Section 3.2 hereof or this Section 3.4 and (b) the
amount of the Escrow Fund reserved pursuant to Section 3.3(i) hereof. If the
foregoing calculation results in a negative amount, no portion of the Escrow
Fund shall be delivered to the Shareholders at the First Distribution Date.
3.5 Distributions as to Pending Claims After the First Distribution Date.
After the
<PAGE>
First Distribution Date, as each Pending Claim reserved for on the
First Distribution Date becomes a Final Claim for Reimbursement, the Escrow
Agent shall, subject to Section 2.3, deliver (a) to Parent, such amount of
Escrow Property as shall have a value (computed in accordance with Section 4.1
hereof) equal to the Final Claim for Reimbursement which results from the final
determination of such Pending Claim (and not previously paid to Parent), and (b)
to the Shareholders in accordance with their respective interests, such amount
of Escrow Property as shall have a value (computed in accordance with Section
4.1 hereof) equal to the amount, if any, of the excess of the reserve for such
Pending Claim over the Final Claim for Reimbursement, if any, with respect to
such Pending Claim; provided, however, that no delivery shall be made hereunder
to the Shareholders unless the aggregate amount reserved (after giving effect to
such delivery) for all Pending Claims is at least equal to the aggregate amount
of such Pending Claims.
3.6 Distribution at Final Distribution Date. On the Final Distribution
Date, the Escrow Agent shall deliver to Parent such amount of Escrow Property as
shall have a value (computed in accordance with Section 4.1 hereof and subject
to Section 2.3 hereof) equal to the Final Claims for Reimbursement which have
not previously been paid to Parent, and shall deliver to the Shareholders in
accordance with their respective interests the balance, if any, of the Escrow
Fund.
4. PROCEDURES WITH RESPECT TO DISTRIBUTION
4.1 Valuation. For all purposes of this Escrow Agreement, each share of
Parent Common Stock shall be valued at $ [Note: Insert dollar amount equal to
the average of the high and low values of a share of Parent Common Stock on the
Closing Date.]. If, at any time after the Effective Time of the Merger and prior
to the date of any distribution of Escrow Property, Parent shall effect a stock
dividend, stock split or combination of Parent Common
<PAGE>
Stock, or other recapitalization affecting Parent Common Stock, or shall effect
a distribution (other than a distribution of cash dividends as described in
Section 5.1 hereof) with respect to the Parent Common Stock, or if Parent shall
fix a record date falling on or prior to the date of any distribution of the
Escrow Property from the Escrow Fund for any such stock dividend, stock split,
combination, recapitalization, or distribution to take place after the date of
such distribution, the foregoing valuation shall be adjusted appropriately by
Parent (but subject to arbitration in accordance with Section 9 in the event of
a dispute).
4.2 Fractional Shares. No fractional shares of Parent Common Stock shall
be delivered pursuant to any provision of this Escrow Agreement. In making
delivery of Parent Common Stock to Parent or the Shareholders, the Escrow Agent
shall round off (up or down) any fractional share resulting from any calculation
hereunder to the nearest whole share.
4.3 Allocation. To the extent practicable all distributions made under
this Escrow Agreement, whether payable to Parent or to the Shareholders, shall
be taken proportionately from the Parent Common Stock registered in the name of
each Shareholder as specified on Schedule A hereto, or from cash deposited in
the Escrow Fund on behalf of each Shareholder in exchange therefor. To the
extent that any Shareholder has sold any of the shares of Parent Common Stock
registered in its name in the Escrow Fund pursuant to Section 5.4, such
Shareholder's proportionate share of distributions made under this Escrow
Agreement shall be allocated pro rata between shares of Parent Common Stock held
by such Shareholder and cash held by such Shareholder in the Escrow Fund.
4.4 Distribution Consent. Any other provision of this Escrow Agreement to
the contrary notwithstanding, the Escrow Agent shall distribute the Escrow Fund
in such manner at such time or times as Parent and the Shareholder
Representative may, in writing, jointly direct.
4.5 No Recourse. Anything contained in this Escrow Agreement to the
contrary notwithstanding, none of the Indemnified Parties shall have any
recourse for any Losses against past, present or future directors, officers or
employees of the Company or the Shareholders, nor
<PAGE>
shall any of such persons be personally liable for any such Losses, it being
expressly understood that the sole remedy of the Indemnified Parties for such
Losses shall be against the Escrow Fund in accordance with this Escrow
Agreement.
5. DIVIDENDS AND OTHER DISTRIBUTIONS; VOTING RIGHTS; INTEREST
5.1 Cash Dividends. All cash dividends in respect of the Parent Common
Stock still then held in escrow, and all other distributions in respect of the
Parent Common Stock still then held in escrow that are taxable dividends for
federal income tax purposes (net of any taxes required to be withheld from such
cash dividends or other distributions by Parent), shall be paid directly to the
applicable Shareholder and shall be the sole property of such Shareholder, and
the Escrow Agent shall have no duty, liability or obligation whatsoever with
respect thereto.
5.2 Distributions. Distributions of any kind, other than those described
in Section 5.1, shall be made by Parent, if practicable, directly to the Escrow
Agent or, if made to any Shareholder, shall be delivered by such Shareholder,
upon request from Parent, to the Escrow Agent. All such distributions shall be
held in escrow pursuant to the provisions of this Escrow Agreement, but the
Escrow Agent shall have no duty or obligation whatsoever to require that such
distributions be delivered to it. Any delivery of the Escrow Property to Parent
or the Shareholders after any and all such distributions shall be appropriately
adjusted so that the distributees will be in the same position as if such
distributees had been, on any record date for any such distribution with respect
to the Escrow Property, the holders of record of the number of shares of Parent
Common Stock distributable to them prior to any such distributions.
5.3 Voting. Each Shareholder shall be entitled to exercise all voting
rights with respect to the Parent Common Stock registered in such Shareholder's
name and constituting the Escrow Fund so long as such Parent Common Stock
continues to be held in escrow, and the Escrow Agent shall deliver to such
Shareholder any proxies with respect thereto which the Escrow Agent receives.
5.4 Sale of Shares. Each Shareholder shall be entitled to sell the Parent
Common Stock registered in such Shareholder's name and constituting the Escrow
Fund so long as the
<PAGE>
proceeds of such sale are deposited in the Escrow Fund; provided, that if the
proceeds from the sale of such Parent Common Stock are less than the value of
such Parent Common Stock as described in Section 4.1, the selling Shareholder
shall be obligated to deposit into the Escrow Fund cash in an additional amount
equal to the difference between the proceeds from the sale of such Parent Common
Stock and the value of such Parent Common Stock as described in Section 4.1; and
provided further, that if the proceeds from the sale of such Parent Common Stock
is more than the value of such Parent Common Stock as described in Section 4.1,
the selling Shareholder shall only be obligated to deposit into the Escrow Fund
cash in an amount equal to the value of such Parent Common Stock as described in
Section 4.1.
5.5 Interest on Cash in Escrow Fund. (a) So long as any cash is held in
the Escrow Fund, it shall be invested by the Escrow Agent, as specifically
directed in writing by the Shareholder Representative, in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service Inc. or Standard &
Poor's Ratings Services, respectively, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $500 million (collectively, the "Investments"); provided, it is
expressly agreed that any Investments may be purchased by the Escrow Agent
notwithstanding that an affiliate of the Escrow Agent has underwritten,
privately placed or made a market for any such Investments, or may in the future
underwrite, privately place or make a market in any such Investments. The Escrow
Agent shall have no responsibility to determine if the investments specified in
writing by the Shareholder Representative are the types of Investments described
in the preceding sentence, and neither the Escrow Agent, Parent nor the
Shareholder Representative nor the Shareholders shall be liable or responsible
for any loss resulting from any investment or reinvestment made pursuant to this
Section 5.5(a).
(b) All interest earned through investment of the cash in the Escrow
Fund
<PAGE>
pursuant to subsection (a) above (after payment of expenses incurred in
connection with the investment or reinvestment thereof) shall be for the account
of the Shareholders who have sold shares of Parent Common Stock pursuant to
Section 5.4 for cash, pro rata in accordance with their respective interests in
such cash and shall not be part of the Escrow Fund for federal, state and local
income tax purposes, and such Shareholders shall pay any federal, state and
local income taxes attributable to such interest. Such interest shall be
distributed to such Shareholders pro rata in accordance with their respective
interests in such cash from time to time in accordance with the written
instructions of the Shareholder Representative.
6. ESCROW AGENT'S DUTIES AND FEES
6.1 Duties Limited. The Escrow Agent undertakes to perform only such
duties as are expressly set forth herein, and shall not be required to refer to
the Merger Agreement (other than for purposes of defining certain capitalized
terms used herein) in carrying out its duties hereunder. The Escrow Agent shall
not be bound by, or have any responsibility with respect to, any other agreement
between any of the parties. The Escrow Agent shall have no duty or
responsibility with regard to any loss resulting from the decline in the market
value of the Escrow Fund in accordance with the terms of this Agreement. The
Escrow Agent need not maintain any insurance with respect to the Escrow Fund.
6.2 Reliance. The Escrow Agent, acting (or refraining from acting) in good
faith, shall not be liable for any mistake of fact or error of judgment by it or
for any acts or omissions by it of any kind unless caused by gross negligence or
willful misconduct, and the Escrow Agent may rely, and shall be protected in
acting or refraining from acting, upon any written notice, instruction or
request furnished to it hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties; provided, that, as set
forth below, modification
<PAGE>
of this Escrow Agreement shall be signed by all of the parties hereto. The
Escrow Agent is hereby authorized to comply with any judicial order or legal
process which stays, enjoins, directs or otherwise affects the transfer or
delivery of any part of the Escrow Fund to any party hereto and shall incur no
liability for any delay or loss which may occur as a result of such compliance.
6.3 Good Faith. Parent agrees to indemnify the Escrow Agent, its officers,
directors, agents or employees for, and to hold the Escrow Agent harmless
against, any loss, liability, expense (including reasonable attorneys' fees and
expenses), third party claim and demand, incurred by it without gross negligence
or willful misconduct on its part, arising out of or in connection with its
entering into this Escrow Agreement and the carrying out of its duties
hereunder. Anything in this Escrow Agreement to the contrary notwithstanding, in
no event shall the Escrow Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever. The Escrow Agent may consult with counsel
of its own choice, and shall have full and complete authorization and protection
for any action taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel. The foregoing indemnification shall survive
the resignation of the Escrow Agent or the termination of this Escrow Agreement.
6.4 Successor Escrow Agents. The Escrow Agent may resign and be discharged
from its duties or obligations hereunder at any time by giving 30 days' notice
in writing of such resignation to Parent and the Shareholder Representative.
Parent and the Shareholder Representative, together, shall have the right to
terminate the appointment of the Escrow Agent hereunder by giving to it notice
in writing of such termination specifying the date upon which such termination
shall take effect. In either such event, Parent and the Shareholder
Representative hereby agree to promptly appoint a successor escrow agent; if
Parent and the Shareholder Representative are unable to appoint a successor
escrow agent within 25 days after the Escrow Agent's notice of resignation, the
Escrow Agent may petition a court of competent jurisdiction to appoint a
successor. The parties hereto agree that, upon demand of such successor escrow
agent, all property held by the Escrow Agent hereunder shall be turned over and
<PAGE>
delivered to such successor escrow agent, which thereupon shall become bound by
all of the provisions hereof and shall be deemed the "Escrow Agent" for all
purposes of this Escrow Agreement thereafter.
>
6.5 Fees and Expenses. Parent agrees to pay to the Escrow Agent the fees
determined in accordance with, and payable as specified in, the Schedule of Fees
attached hereto as Schedule B (the "Fee Schedule") as compensation for the
services to be rendered by it hereunder and to pay to or reimburse the Escrow
Agent for all reasonable attorneys' fees incurred or made by it in connection
with the carrying out of its duties hereunder.
7. SHAREHOLDER REPRESENTATIVE
7.1 Appointment. By virtue of the Company Shareholder Approval, each
Shareholder shall be deemed to have irrevocably constituted and appointed John
Neis (the "Shareholder Representative") as its agent and true and lawful
attorney in fact with full power and discretion, in the name of and for and on
behalf of each Shareholder, in connection with all matters arising from,
contemplated by or relating to this Escrow Agreement or the transactions
contemplated hereby; provided, that the Shareholder Representative shall only
have the powers and be authorized to carry out the duties described in this
Escrow Agreement. The Shareholder Representative may resign as such at any time
by giving notice to Parent of such resignation. Upon such resignation, a
majority in interest of the Shareholders shall appoint a replacement Shareholder
Representative.
7.2 Powers. The powers of the Shareholder Representative shall include,
without limitation, the power to represent each Shareholder with respect to all
aspects of this Escrow Agreement and the transactions contemplated hereby, which
power shall include, without limitation, the power to (i) waive any conditions
of this Escrow Agreement, (ii) amend this
<PAGE>
Escrow Agreement and any agreement (other than the Merger Agreement) executed in
connection herewith; provided, that no amendment that by law requires approval
of the Shareholders may be made by the Shareholder Representative without the
approval of the Shareholders, (iii) receive notices or other communications,
(iv) deliver any notices, certificates or other documents required, (v) retain
professional advisors in connection with the performance of its duties hereunder
and (vi) take all such other actions and to do all such other things as the
Shareholder Representative deems necessary or advisable with respect to this
Escrow Agreement and the transactions contemplated hereby; provided, that the
Shareholder Representative shall not have the power to vote on behalf of the
Shareholders on matters that require a vote of the stockholders of Parent; and
provided further, that the Shareholder Representative's powers shall be limited
to those necessary in connection with and for the purposes of administering this
Escrow Agreement. Parent and the Escrow Agent shall have the right to rely upon
the acts taken or omitted to be taken by the Shareholder Representative on
behalf of Shareholders, and shall have no duty to inquire as to the acts and
omissions of the Shareholder Representative. By virtue of the Company
Shareholder Approval, each Shareholder shall be deemed to have acknowledged and
agreed that (i) any act taken or omitted to be taken by the Shareholder
Representative shall be deemed to have been taken or omitted to be taken by such
Shareholder, (ii) all deliveries by Parent or the Escrow Agent to the
Shareholder Representative shall be deemed deliveries to the Shareholders, (iii)
Parent and the Escrow Agent shall not have any liability with respect to any
aspect of the distribution or communication of such deliveries between the
Shareholder Representative and any Shareholder or among Shareholders, and (iv)
any disclosure made to the Shareholder Representative by or on behalf of Parent
shall be deemed to be a disclosure made to each Shareholder. The provisions of
this appointment shall be binding upon the successors and permitted assigns of
each Shareholder. Neither the Shareholder Representative nor any of its
employees, partners, agents, affiliates or other representatives shall incur any
liability to any Shareholder or any employees, partners, agents, affiliates or
other representatives of any Shareholder for any reason relating to the
performance of its duties hereunder, except for actions
<PAGE>
or omissions constituting gross negligence or willful misconduct.
7.3 Fees and Expenses. All expenses of the Shareholder Representative
(including the fees and expenses of the Shareholder Representative's
professional advisors) shall be submitted to Parent for payment; provided, that
each such payment shall automatically be deemed a Final Claim for Reimbursement
pursuant to the terms of Section 2.2 and Section 3.2 hereof.
8. NOTICES
Unless otherwise provided herein, any notice, request, instruction
or other document to be given hereunder shall be in writing and (unless
otherwise specifically provided herein) shall be deemed to have been given (i)
upon personal delivery, if delivered by hand, (ii) three days after the date of
deposit in the mails, postage prepaid, if mailed by certified or registered
mail, or (iii) the next business day if sent by facsimile transmission (if
receipt is electronically confirmed) or by a prepaid overnight courier service,
and in each case at the respective addresses or numbers specified below or such
other address or number as such party may have fixed by notice:
If to Parent, to it at:
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0313
Attention: Secretary
Facsimile:(203) 761-2893
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Richard A. Garvey, Esq.
<PAGE>
Facsimile: (212) 455-2502
If to the Shareholder Representative, to:
John Neis
Venture Investors of Wisconsin, Inc.
505 S. Rosa Road, Suite 100
Madison, Wisconsin 53711
Facsimile: (608) 441-2727
with a copy to:
Michael Best & Friedrich LLP
One South Pinckney Street, Suite 700
Madison, Wisconsin 53703
Attention: Tod B. Linstroth, Esq.
Facsimile: (608) 283-2275
If to the Shareholders, to them
as set forth on Schedule A hereto
And if to the Escrow Agent, to:
To Be Supplied
Any party may change the persons and addresses to which notices,
payments, instructions or other communications are to be sent to such party by
giving written notice of any such change in the manner provided herein for
giving notice. Notices sent by facsimile transmission shall be confirmed in
writing by registered or certified mail, return receipt requested.
9. ARBITRATION
If any demand shall be made for arbitration hereunder in respect of
any Claim or other matter in dispute hereunder between the Shareholder
Representative and Parent, such Claim or matter shall be settled by arbitration
in San Francisco, California, before one arbitrator
<PAGE>
chosen from the Commercial Panel in accordance with the Rules then pertaining of
the American Arbitration Association. The arbitrator shall consider only the
items in dispute and shall be instructed to act within thirty days of
appointment to resolve all items in dispute. The "final decision" of the
arbitrator shall be a conclusive determination of the matter and shall be
binding upon the Shareholders, the Shareholder Representative, Parent and the
Escrow Agent, and shall not be contested by any of them and shall be entered as
a judgment in a court of competent jurisdiction. The costs and expenses of the
arbitrator shall be borne by Parent and the Shareholder Representative, as the
case may be, in a proportion determined by the arbitrator based upon the
parties' asserted positions before the arbitrator and the aggregate resolutions
determined by the arbitrator.
10. JURY WAIVER
All parties to this Agreement waive any rights they may have to a
jury trial.
11. MISCELLANEOUS
(a) This Escrow Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin applicable to agreements
made and to be performed entirely within such State.
(b) This Escrow Agreement shall be binding upon, and inure to the
benefit of, each of the Shareholders (or such Shareholder's successor), the
Shareholder Representative, Parent, the Escrow Agent and the successors and
assigns of the Shareholder Representative, Parent and the Escrow Agent, but no
delegation of any obligations provided for herein may be
<PAGE>
made by any party hereto without the express written consent of the other
parties hereto. No interest of any Shareholder in this Escrow Agreement or in
the Escrow Fund may be assigned, transferred or otherwise disposed of otherwise
than pursuant to the laws of descent and distribution, and except as expressly
provided for in this Escrow Agreement, and any purported disposition in
violation of this provision shall be null and void.
(c) The section headings contained in this Escrow Agreement are
inserted for convenience of reference only, and shall not affect the meaning or
interpretation of this Escrow Agreement.
<PAGE>
WITNESS the execution of this Escrow Agreement as of the date first above
written.
PE CORPORATION
By:______________________________________
Name:
Title:
--------------------------------------
John Neis, as Shareholder Representative
[ESCROW AGENT]
By:______________________________________
Name:
Title:
<PAGE>
Schedule A
Shares Subject to Escrow Fund
Number of Shares
Per Tax Identification
Name and Address of Shareholder Certificate Numbers
- ------------------------------- ----------------- ------------------
To Be Supplied
<PAGE>
Schedule B
Escrow Agent Fee Schedule
To Be Supplied
<PAGE>
Annex IV
Lehman Brothers Letterhead
January 23, 2000
Board of Directors
Third Wave Technologies, Inc.
502 South Rosa Road
Madison, Wisconsin 53719
Members of the Board:
We understand that Third Wave Technologies, Inc. (the "Company") will be
entering into an Agreement and Plan of Merger dated January 23, 2000 by and
among the Company, PE Corporation ("PE Corp.") and Third Wave Technologies
Acquisition Corp., a newly-formed wholly owned subsidiary of PE Corp. (the
"Agreement"), pursuant to which Third Wave Technologies Acquisition Corp. will
merge with and into the Company (the "Merger") and, upon the effectiveness of
the Merger, each issued and outstanding share of the Company's Common Stock and
each share of each series of the Company's Preferred Stock (together, "Capital
Stock") shall be converted into approximately 187.6578 shares of common stock of
PE Corp.'s PE Biosystems business ("PE Biosystems"), a targeted stock of PE
Corp., after giving effect to the two-for-one stock split of PE Biosystems
common stock which will be effected in the form of a 100 percent stock dividend
payable to stockholders of record as of February 4, 2000 (the "Exchange Ratio").
The transaction described above is referred to as the "Proposed Transaction".
The terms and conditions of the Proposed Transaction are set forth in more
detail in the Agreement.
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, to the
holders of Capital Stock of the Exchange Ratio to be offered to such holders in
the Proposed Transaction. 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 Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement
and the specific
<PAGE>
terms of the Proposed Transaction, (2) publicly available information
concerning PE Biosystems and PE Corp. that we believe to be relevant to our
analysis, including Annual Reports on Form 10-K for the fiscal year ended June
30, 1999 and Quarterly Reports on Form 10-Q for the quarter ended September 30,
1999, (3) financial and operating information with respect to the business,
operations and prospects of the Company furnished to us by the Company, (4)
financial and operating information with respect to the business, operations and
prospects of PE Biosystems and PE Corp. furnished to us by PE Biosystems and PE
Corp., (5) a trading history of the PE Biosystems's Common Stock from May 1999
to the present and of PE Corp.'s common stock from January 1999 to May 1999 and
a comparison of those trading histories with those of other companies that we
deemed relevant, (6) a comparison of the historical financial results and
present financial condition of the Company with those of other companies that we
deemed relevant, (7) a comparison of the historical financial results and
present financial condition of PE Biosystems with those of other companies that
we deemed relevant, (8) estimates of third party research analysts with respect
to the future financial performance of PE Biosystems, (9) a comparison of the
financial terms of the Proposed Transaction with the financial terms of certain
other transactions that we deemed relevant, (10) the potential pro forma
financial effects of the Proposed Transaction, including cost savings, operating
synergies and other strategic benefits expected by the managements of the
Company and PE Biosystems and PE Corp. to result from a combination of the
businesses of the Company and of PE Corp., (11) the results of informal efforts
to solicit indications of interest from third parties with respect to a purchase
of the Company and (12) alternatives available to the Company on a stand-alone
basis to fund its future capital and operating requirements, including access to
public equity markets. In addition, we have had discussions with the management
of the Company and the management of PE Corp. and PE Biosystems 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 the managements of the Company,
PE Biosystems and PE Corp. that they are not aware of any facts that would make
such information inaccurate or misleading. With respect to the financial
forecasts of the Company, upon advice of the Company we have assumed that such
forecasts have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the management of the Company as to the
future financial performance of the Company. However, for purposes of our
analysis, we also have considered certain somewhat more conservative assumptions
and estimates which resulted in certain adjustments to the projections of the
Company. We have discussed these adjusted projections with the management of the
Company and they have agreed with the appropriateness of the use of such
adjusted projections in performing our analysis. With respect to the future
financial performance of PE Biosystems, we have not been provided with, and did
not have any access to, financial projections of PE Biosystems prepared by
management of PE Biosystems. Accordingly, upon advice of PE Biosystems, we have
assumed that the published estimates of
<PAGE>
third party research analysts are a reasonable basis upon which to evaluate the
future financial performance of PE Biosystems and that PE Biosystems will
perform substantially in accordance with such estimates. In arriving at our
opinion, we have conducted only a limited physical inspection of the properties
and facilities of the Company, we have not conducted a physical inspection of
the properties and facilities of PE Biosystems, and we have not made or obtained
any evaluations or appraisals of the assets or liabilities of the Company, PE
Biosystems or PE Corp. In addition, you have not authorized us to formally
solicit, and we have not so solicited, any indications of interest from any
third party with respect to the purchase of the Company. Upon advice of the
Company and its legal and accounting advisors, we have assumed that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and therefore as a tax-free
transaction to the holders of Capital Stock. 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 Exchange Ratio to be
offered to the holders of Capital Stock in the Proposed Transaction is fair to
such holders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. Fred Frank, a Vice Chairman of Lehman Brothers,
currently owns 53 shares of common stock of the Company. In the ordinary course
of our business, we may actively trade in the securities of PE Biosystems 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 solely for the use and benefit of the Board of Directors
of the Company and shall not be disclosed publicly or made available to, or
relied upon by, any third party without our prior approval. This opinion is not
intended to be and does not constitute a recommendation to any holder of Capital
Stock as to how such holder should vote with respect to the Proposed
Transaction.
Very truly yours,
LEHMAN BROTHERS
By: /s/ FRED FRANK
----------------
Vice Chairman
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
PE Corporation's board of directors to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with any
threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or agent
of the company, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. The DGCL provides that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise.
Our certificate of incorporation and bylaws provide for indemnification of
our directors and officers to the fullest extent permitted by law.
As permitted by sections 102 and 145 of the DGCL, our certificate of
incorporation eliminates a director's personal liability for monetary damages to
the company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to the company or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction
which the director derived an improper personal benefit.
The directors and officers of our company are covered by insurance
policies indemnifying against certain liabilities, including certain liabilities
arising under the Securities Act which might be incurred by them in such
capabilities and against which they cannot be indemnified by the company.
Item 21. Exhibits and Financial Statement Schedules.
Exhibit
Number Description
------ -----------
2.1 Agreement and Plan of Merger, dated as of January 23, 2000,
among PE Corporation, Blue Acquisition Corp. and Third Wave
Technologies, Inc. (included as Annex I to the Prospectus).
2.2 Voting Agreement, dated as of January 23, 2000, among Certain
Shareholders of Third Wave Technologies, Inc., PE Corporation
and Blue Acquisition Corp. (included as Annex II to the
Prospectus).
2.3 Form of Escrow Agreement among PE Corporation, John Neis, as
Representative of the Former Shareholders of Third Wave
Technologies, Inc., and the Surviving Corporation (included as
Annex III to the Prospectus).
3.1 Certificate of Incorporation of PE Corporation (incorporated
by reference to Exhibit 3.1 to PE Corporation's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1999 (Commission file number 1-4389)).
3.2 Bylaws of PE Corporation (incorporated by reference to Exhibit
3.2 to PE Corporation's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999 (Commission file number
1-4389)).
4 Shareholder Protection Rights Agreement, dated as of April 28,
1999, between PE Corporation and BankBoston, N.A.
(incorporated by reference to Exhibit 4.1 to PE Corporation's
Registration Statement on Form S-4 (No. 333-67797)).
5.1** Opinion of Simpson Thacher & Bartlett as to the legality of
the securities.
8.1** Opinion of Simpson Thacher & Bartlett regarding tax matters.
8.2** Opinion of Wilson Sonsini Goodrich & Rosati regarding tax
matters.
23.1* Consent of PricewaterhouseCoopers LLP.
23.2** Consent of Simpson Thacher & Bartlett (included in Exhibits
5.1 and 8.1).
<PAGE>
Exhibit
Number Description
------ -----------
23.3** Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 8.2)
23.4* Consent of Lehman Brothers.
24.1 Powers of Attorney (included on the signature page hereto).
99.1 Opinion of Lehman Brothers (included as Annex IV to the
Prospectus).
99.4** Form of Proxy for Special Meeting of Shareholders of Third
Wave Technologies, Inc.
- ----------
* Filed herewith.
** To be filed by amendment.
Item 22. Undertakings.
(a) 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 Section 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.
(b) 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 that 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.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registrant statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.
(d) 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.
(e) 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.
<PAGE>
SIGNATURES
Pursuant to the requirements 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 Norwalk, State of
Connecticut, on February 25, 2000.
PE CORPORATION
By: /s/ WILLIAM B. SAWCH
----------------------------------------
Name: William B. Sawch
Title: Senior Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
We, the undersigned directors and officers of the registrant, do hereby
constitute and appoint Tony L. White and William B. Sawch, or either of them,
our true and lawful attorneys and agents, to do any and all acts and things in
our name and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable the registrant to comply with the Securities
Act and any rules, regulations and requirements of the SEC, in connection with
this registration statement, including specifically, but without limitation,
power and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
- -------------------------------
/s/ TONY L. WHITE Chairman of the Board of Directors, February 25, 2000
Tony L. White President and Chief Executive Officer
(principal executive officer)
- -------------------------------
/s/ DENNIS L. WINGER Senior Vice President and Chief February 25, 2000
Dennis L. Winger Financial Officer (principal financial
officer)
- -------------------------------
/s/ VIKRAM JOG
Vikram Jog Corporate Controller (principal February 25, 2000
accounting officer)
- -------------------------------
/s/ RICHARD H. AYERS Director February 25, 2000
Richard H. Ayers
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
- -------------------------------
/s/ JEAN-LUC BELINGARD Director February 25, 2000
Jean-Luc Belingard
- -------------------------------
/s/ ROBERT H. HAYES Director February 25, 2000
Robert H. Hayes
- -------------------------------
/s/ ARNOLD J. LEVINE Director February 25, 2000
Arnold J. Levine
- -------------------------------
/s/ THEODORE E. MARTIN Director February 25, 2000
Theodore E. Martin
- -------------------------------
/s/ GEORGES C. ST. LAURENT, JR. Director February 25, 2000
Georges C. St. Laurent, Jr.
- -------------------------------
/s/ CAROLYN W. SLAYMAN Director February 25, 2000
Carolyn W. Slayman
- -------------------------------
/s/ ORIN R. SMITH Director February 25, 2000
Orin R. Smith
- -------------------------------
/s/ JAMES R. TOBIN Director February 25, 2000
James R. Tobin
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of PE Corporation of our reports dated July
30, 1999 relating to the combined financial statements of PE Biosystems Group,
the combined financial statements of Celera Genomics Group and the consolidated
financial statements of PE Corporation, which appear in the 1999 Annual Report
to Stockholders of PE Corporation, which is incorporated by reference in PE
Corporation's Annual Report on Form 10-K for the year ended June 30, 1999. We
also consent to the incorporation by reference of our reports dated July 30,
1999 relating to the Financial Statement Schedules, which appears in such Annual
Report on Form 10-K. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 25, 2000
Exhibit 23.4
CONSENT OF LEHMAN BROTHERS
We hereby consent to the use of our opinion letter dated January 23, 2000
to the Board of Directors of Third Wave Technologies, Inc. (the "Company")
attached as Annex IV to the Company's Joint Proxy Statement/Prospectus on Form
S-4 (the "Prospectus") and to the references to our firm in the Prospectus under
the headings: Summary; The Merger-Background of the Merger; The Merger-Reasons
for the Merger; The Merger-Opinion of Financial Advisor to Third Wave
Technologies, Inc.. In giving such consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder and we do not thereby admit that
we are experts with respect to any part of the Registration Statement under the
meaning of the term "expert" as used in the Securities Act.
LEHMAN BROTHERS INC.
By: /s/ Brian McCarthy
New York, New York
