<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
SYNTRO CORPORATION
(NAME OF SUBJECT COMPANY)
SYNTRO CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
871629101
(CUSIP NUMBER OF CLASS OF SECURITIES)
J. DONALD TODD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYNTRO CORPORATION
9669 LACKMAN ROAD
LENEXA, KANSAS 66219
(913) 888-8876
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
MARY ANNE O'CONNELL
HUSCH & EPPENBERGER
1200 MAIN ST., SUITE 1700
KANSAS CITY, MISSOURI 64105
(816) 421-4800
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Syntro Corporation, a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 9669 Lackman Road, Lenexa, Kansas 66219. The title of the class of
equity securities to which this statement relates is the common stock, par
value of $.01 per share, of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to a tender offer by Mallinckrodt Veterinary
Acquisitions, Inc., a corporation organized under the laws of the State of
Delaware (the "Offeror"), and a wholly-owned subsidiary of Mallinckrodt
Veterinary, Inc. ("Mallinckrodt Veterinary"), disclosed in a Tender Offer
Statement on Schedule 14D-1 dated September 29, 1995, to purchase all
outstanding shares of Common Stock at $3.55 per share (the "Offer Price"), net
to the seller in cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated September 29, 1995 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with the Offer to
Purchase and any amendments or supplements thereto, collectively constitute the
"Offer"). According to the Schedule 14D-1, the address of the principal
executive offices of Mallinckrodt Veterinary and Offeror is 421 East Hawley
Street, Mundelein, Illinois 60060.
The Offer is being made by the Offeror pursuant to an Agreement and Plan of
Merger, dated as of September 25, 1995 (the "Merger Agreement"), among the
Offeror, Mallinckrodt Veterinary and the Company. The Merger Agreement
provides, among other things, that as soon as practicable after the
satisfaction or waiver of the conditions set forth in Exhibit A of the Merger
Agreement, the Offeror will be merged with and into the Company (the "Merger"),
and the Company will continue as the surviving corporation (the "Surviving
Corporation").
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) Set forth below are descriptions of material contracts, agreements,
arrangements or understandings and any actual or potential conflict of interest
between the Company or its affiliates and the Company, its executive officers,
directors or affiliates:
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its directors and executive officers are described in
the sections entitled "Board of Directors," "Executive Compensation" and
"Approval of 1994 Stock Option Plan" in the Company's Proxy Statement for its
1995 annual meeting of stockholders (the "1995 Proxy Statement"). A copy of
those sections of the 1995 Proxy Statement is filed as EXHIBIT A and copies of
the agreements described therein are filed as EXHIBIT B-1, and are incorporated
herein by reference.
J. Donald Todd, William J. Davies, Susan H. Strobel, Janis K. McMillen, Mark
D. Cochran and Janice Katterhenry each have entered into an Executive
Employment Agreement with the Company scheduled to expire on February 28, 1997,
in the case of J. Donald Todd, and on February 20, 1997 in the case of each of
the others. Those agreements establish annual cash compensation and benefits
and provide that if the executive's employment is terminated by the Company
without cause or by the employee due to the Company's cause or such a
termination occurs within one year after a change in control of the Company,
the employee is entitled to receive severance benefits in the amount of one
year's base compensation and continuation of employee benefits for a period of
one year. Copies of each of those agreements are attached as EXHIBITS B-2 to B-
7, respectively.
<PAGE>
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
Such summary does not purport to be complete and is qualified by reference to
the full text of the Merger Agreement, a copy of which has been filed as
EXHIBIT C hereto and is incorporated herein by reference.
The Offer. Pursuant to the terms and conditions of the Merger Agreement,
Mallinckrodt Veterinary, the Offeror and the Company are required to use all
reasonable best efforts to take all action as may be necessary or appropriate
in order to effectuate the Offer and the Merger as promptly as possible and to
carry out the transactions provided for or contemplated by the Merger
Agreement.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c) of
the Exchange Act, any shares of Common Stock not theretofore accepted for
payment or paid for and may terminate or amend the Offer as to such shares
unless (i) there shall have been validly tendered and not withdrawn prior to
the expiration of the Offer that number of shares which would represent at
least a majority of the outstanding shares of Common Stock on a fully diluted
basis (the "Minimum Condition") and (ii) any waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 applicable to the purchase of
shares of Common Stock pursuant to the Offer shall have expired or been
terminated. Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement, the Offeror shall not be required to accept for payment or,
subject as aforesaid, to pay for any shares of Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer if at
any time on or after the date of the Merger Agreement and before the acceptance
of such shares for payment or the payment therefor, any of the following
conditions exist or shall occur and remain in effect:
(a) there shall have been instituted or pending any action or proceeding
by any governmental, regulatory or administrative agency or authority,
which (i) seeks to challenge the acquisition by the Offeror of shares of
Common Stock pursuant to the Offer, restrain, prohibit or delay the making
or consummation of the Offer or the Merger, or obtain any material damages
in connection therewith, (ii) seeks to make the purchase of or payment for
some or all of the shares of Common Stock pursuant to the Offer or the
Merger illegal, (iii) seeks to impose material limitations on the ability
of the Offeror (or any of its affiliates) effectively to acquire or hold,
or to require Mallinckrodt Veterinary or the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
material portion of the assets or the business of Mallinckrodt Veterinary
and its affiliates taken as a whole or the Company and its subsidiaries
taken as a whole, or (iv) seeks to impose material limitations on the
ability of the Offeror (or its affiliates) to exercise full rights of
ownership of the shares of Common Stock purchased by it, including, without
limitation, the right to vote the shares of Common Stock purchased by it on
all matters properly presented to the stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any state, federal or
foreign government or governmental authority or by any court, domestic or
foreign, any statute, rule, regulation, judgment, decree, order or
injunction, that could reasonably be expected to, in the judgment of
Mallinckrodt Veterinary, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a)
above; or
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United
States, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) the commencement
of a war, armed hostilities or other international
2
<PAGE>
or national calamity directly or indirectly involving the United States
which would reasonably be expected to have a Material Adverse Effect (as
defined below) on the Company or prevent (or materially delay) the
consummation of the Offer, (iv) any limitation (whether or not mandatory)
by any governmental or regulatory authority on, or any other event which,
in the reasonable judgment of Mallinckrodt Veterinary, has had a material
adverse effect on the extension of credit by banks or other lending
institutions in the United States, or (v) from the date of the Merger
Agreement through the date of termination or expiration of the Offer, a
decline of at least 25% in either the Dow Jones Industrial Average or the
Standard & Poor's 500 Index; or
(d) the Company and Mallinckrodt Veterinary shall have reached an
agreement or understanding that the Offer or the Merger Agreement be
terminated or the Merger Agreement shall have been terminated in accordance
with its terms; or
(e) any of the representations and warranties made by the Company in the
Merger Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in any material respect as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under the Merger Agreement, which failure to be true and correct or
such failure to perform or comply has not been cured within five business
days following the Company's receipt of notice from Mallinckrodt Veterinary
of notice of the breach and such failure to be true and correct or such
failure to perform or comply shall be reasonably expected to have a
Material Adverse Effect on the Company; provided, however, that all
references in the Merger Agreement to the phrases "knowledge of the
Company" and "to the best knowledge of the Company," and variants thereof,
shall be disregarded for the purposes of determining whether the Company
shall have breached its representations, warranties and covenants resulting
in the ability of Mallinckrodt Veterinary to terminate the Merger Agreement
pursuant to this clause (e); or
(f) the Company's Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Mallinckrodt
Veterinary or shall have withdrawn its recommendation of the Offer, or
shall have recommended acceptance of any Acquisition Proposal or shall have
resolved to do any of the foregoing, or shall have failed to reject any
Acquisition Proposal within ten business days after receipt by the Company
or public announcement thereof; or
(g) (i) any corporation, entity, person or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than Mallinckrodt Veterinary, shall
have acquired beneficial ownership of 50% or more of the outstanding shares
of Common Stock, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of 50% or more of the
outstanding shares of Common Stock; (ii) any new group shall have been
formed which beneficially owns 50% or more of the outstanding shares of
Common Stock; or (iii) any person (other than Mallinckrodt Veterinary or
one or more of its affiliates) shall have entered into an agreement in
principle or definitive agreement with the Company with respect to a tender
or exchange offer for any shares of Common Stock or a merger, consolidation
or other business combination with or involving the Company; or
(h) there shall have occurred a Material Adverse Change (as defined
below) to the Company.
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to Mallinckrodt Veterinary, the Offeror or the Company, as the case may
be, any change or effect, either individually or in the aggregate, that is or
can reasonably be expected to be materially adverse to the business, assets,
liabilities, properties, condition (financial or otherwise), results of
operations or prospects of all or any material part of Mallinckrodt Veterinary
and its subsidiaries taken as a whole, the Offeror, or the Company and its
subsidiaries taken as a whole, as the case may be, except as agreed.
3
<PAGE>
Company Actions. Pursuant to the Merger Agreement, the Company has agreed
that on the date of the commencement of the Offer, it will file with the
Securities and Exchange Commission (the "Commission") and mail to its
stockholders, a Solicitation/Recommendation Statement on Schedule 14D-9
containing the recommendation of the Board of Directors that the Company's
stockholders accept the Offer and approve the Merger and the Merger Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject to
the conditions of the Merger Agreement, and in accordance with the Delaware
General Corporation Law ("DGCL"), the Offeror shall be merged with and into the
Company at the effective time of the Merger (the "Effective Time"). At the
Effective Time, the separate corporate existence of the Offeror shall cease and
the Company shall continue as the Surviving Corporation and shall succeed to
and assume all the rights and obligations of the Offeror in accordance with the
DGCL. Also at the Effective Time, the Certificate of Incorporation of the
Company shall be amended to change the registered agent and registered office,
reduce the amount of authorized capital stock and to delete certain provisions
regarding interested party transactions. The Certificate of Incorporation, as
so amended, and the By-laws of the Company shall be the Certificate of
Incorporation and By-laws of the Surviving Corporation. The directors and
officers of the Offeror immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation as of the Effective Time.
Conversion of Securities. At the Effective Time, each share of Common Stock
issued and outstanding immediately prior thereto shall be cancelled and
extinguished and each share of Common Stock (other than shares held by the
Company as treasury shares, shares owned by any subsidiary of the Company,
shares owned by Mallinckrodt Veterinary, the Offeror or any other wholly owned
subsidiary of Mallinckrodt Veterinary, and any shares of Common Stock with
respect to which appraisal rights are exercised under the DGCL shall, by virtue
of the Merger and without any action on the part of any stockholder of the
Company or the Offeror be converted into and become the right to receive the
Offer Price. Each share of common stock of the Offeror issued and outstanding
immediately prior to the Effective Time shall, at the Effective Time, by virtue
of the Merger and without any action on the part of the Offeror, the Company or
the holders of Common Stock, be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
Dissenting Shares. If required by the DGCL, shares of Common Stock held by
holders who have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL will not be exchangeable for the right
to receive the Offer Price, and holders of such shares will be entitled to
receive payment of the appraised value of such shares unless such holders fail
to perfect or effectively withdraw or lose their right to appraisal and payment
under the DGCL. If, after the Effective Time, any such holder fails to perfect
or effectively withdraws or loses such right, such shares will be treated as if
they had been converted into and have become exchanged for the right to receive
the Offer Price, without any interest thereon.
Merger Without a Meeting of Stockholders. In the event that the Offeror shall
acquire at least 90% of the outstanding shares of Common Stock, the parties
agree to take all necessary and appropriate actions to cause the Merger to
become effective without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
Representations and Warranties. In the Merger Agreement, the Company has made
customary representations and warranties to the Offeror, including, but not
limited to, representations and warranties relating to the Company's
organization and qualification, capitalization, subsidiaries, its authority to
enter into the Merger Agreement and carry out the related actions, filings made
by the Company with the Commission under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (the "Exchange Act") (including financial
statements included in the documents filed by the Company under these acts),
required consents and approvals, compliance with applicable laws, employee
benefit plans, litigation, employment relations, contracts, intellectual
property, title to property, the payment of taxes, environmental matters and
the absence of certain material adverse changes or events.
4
<PAGE>
The Offeror and Mallinckrodt Veterinary have also made customary
representations and warranties to the Company, including, but not limited to,
representations and warranties relating to the Offeror's and Mallinckrodt
Veterinary's organization and qualification, authority to enter into the Merger
Agreement and required consents and approvals.
Covenants Relating to the Conduct of Business. The Company has agreed that it
will, and will cause its subsidiaries to, in all material respects, carry on
their respective businesses in, and not enter into any material transaction
other than in accordance with, the regular and ordinary course and, to the
extent consistent therewith, use their reasonable best efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them. The Company
has agreed that, except as contemplated by the Merger Agreement, it shall not,
and shall not permit any of its subsidiaries to, without the prior written
consent of Mallinckrodt Veterinary:
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the
Company in their capacity as such, other than dividends payable to the
Company declared by any of the Company's subsidiaries, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (z) except as disclosed by the Company to
Mallinckrodt Veterinary pursuant to the Merger Agreement, purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or equity equivalent (other than, in the case of the Company,
the issuance of shares of Common Stock during the period from the date of
the Merger Agreement through the Effective Time upon the exercise of
certain outstanding stock options of the Company issued pursuant to the
Company's 1984 Incentive Stock Option Plan, 1988 Executive Stock Option
Plan, 1988 Stock Option Plan and 1994 Stock Option Plan (collectively, the
"Stock Plans") and outstanding on the date of the Merger Agreement in
accordance with their current terms);
(c) amend its charter or bylaws;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, limited
liability company, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole;
(e) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or
in the aggregate, to the Company and its subsidiaries, taken as a whole,
except for sales of inventory or other assets in the ordinary course of
business;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice, or except as
disclosed by the Company to Mallinckrodt Veterinary pursuant to the Merger
Agreement, make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly
owned subsidiary of the Company and other than in the ordinary course of
business consistent with past practice;
(g) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any subsidiary
of the Company;
5
<PAGE>
(h) enter into or adopt, or amend any existing severance plan, agreement
or arrangement or, other than in the ordinary course of business, enter
into or amend any employee benefit plan (including without limitation the
Stock Plans of the Company) or employment or consulting agreement except,
(i) with respect to employees that are not executive officers or directors,
compensation increases associated with promotions and regular reviews in
the ordinary course of business consistent with past practices, (ii)
agreements with consultants of the Company of less than $20,000 to any
individual consultant and less than $75,000 in the aggregate to all
consultants, and (iii) after December 31, 1995, increases of not more than
10% to the base salary of executive officers of the Company;
(i) waive, amend or allow to lapse any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party;
(j) settle or compromise any suit, proceeding or claim or threatened
suit, proceeding or claim for an amount that is more than $20,000 in the
case of any individual suit, proceeding or claim or $100,000 for all suits,
proceedings or claims;
(k) knowingly violate or fail to perform any obligation or duty imposed
upon it by any applicable federal, state or local law, rule, regulation,
guideline or ordinance;
(l) change its credit policies, procedures or practices, or commit or
renew a prior commitment to lend money, purchase assets, issue a letter of
credit, guarantee or similar instrument or otherwise extend credit to any
person in a manner not in the ordinary course or in a manner inconsistent
with past practice;
(m) (i) modify, amend or terminate any contract, (ii) waive, release,
relinquish or assign any contract (including any insurance policy) or other
right or claim, (iii) prepay any indebtedness or (iv) cancel or forgive any
indebtedness owed to it, other than in each case in a manner in the
ordinary course of business consistent with past practice and which is not
material to the business of the Company and its subsidiaries;
(n) make any tax election or change any method of accounting for tax
purposes, in each case except to the extent required by law, or settle or
compromise any tax liability;
(o) change any of the accounting principles or practices used by it
except as required by the Commission or the Financial Accounting Standards
Board; or
(p) (i) enter into any research and development contract, (ii) enter into
any production contract or "tolling agreement," or (iii) grant any license
relating to its intellectual property except as required by existing
agreements of the Company; or
(q) authorize, recommend, announce, propose or agree to take any of the
foregoing actions.
During the period from the date of the Merger Agreement through the Effective
Time, (i) as reasonably requested by Mallinckrodt Veterinary, the Company shall
confer on a regular basis with one or more representatives of Mallinckrodt
Veterinary with respect to material operational matters; (ii) the Company
shall, within 25 days following each fiscal month, deliver to Mallinckrodt
Veterinary financial statements, including an income statement and balance
sheet for such month; and (iii) upon the knowledge of the Company of any
Material Adverse Change in the Company, any material litigation or material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in any material
respect of any representation or warranty contained therein, the Company shall
promptly notify Mallinckrodt Veterinary thereof.
During the period from the date of the Merger Agreement through the Effective
Time, the Offeror shall not engage in any activities of any nature except as
provided in or contemplated by the Merger Agreement.
6
<PAGE>
No Solicitation. The Company has agreed in the Merger Agreement that, from
the date of the Merger Agreement until the Effective Time, (a) neither the
Company nor its subsidiaries shall, and the Company shall not authorize or
permit its officers, directors, employees, authorized agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation any
proposal or offer to its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
its subsidiaries (an "Acquisition Proposal"), or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
substantive discussions with, any person relating to an Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) it will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore and will take the necessary steps to inform such parties of the
obligations undertaken in the Merger Agreement and (c) the Company will notify
Mallinckrodt Veterinary immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations
or discussions are sought to be initiated or continued with, it, including the
terms of its proposals; provided however, that nothing contained in the Merger
Agreement shall prohibit the Board of Directors of the Company from (i)
furnishing information to or entering into discussions or negotiations with,
any person or entity that indicates an interest in making a Superior Proposal
(as hereinafter defined) if, and only to the extent that (A) the Company's
Board of Directors determines in good faith after consultation with the
Company's outside counsel that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders imposed by laws
and (B) the Company keeps Mallinckrodt Veterinary informed of the status of any
such discussions or negotiations; and (ii) to the extent applicable, complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal. If any person or entity makes a Superior Proposal, upon
receipt thereof the Company shall provide written notice (a "Notice of a
Superior Proposal") to Mallinckrodt Veterinary of such Superior Proposal,
including the terms and structure thereof, and if within five business days
following the delivery of the Notice of a Superior Proposal the Superior
Proposal does not continue to be superior in terms of the aggregate value to be
received by the Company's stockholders in light of any improved transaction
proposed by Mallinckrodt Veterinary prior to the expiration of such five-day
period, the Company shall cease all discussions or negotiations with such
person or entity. For purposes of the Merger Agreement, "Superior Proposal"
means an unsolicited bona fide Acquisition Proposal in writing that the
Company's Board of Directors determines in its good faith judgment (based on
the advice of a nationally recognized investment banking firm) provides greater
aggregate value to the Company's stockholders than the transactions
contemplated by the Merger Agreement.
Options. Pursuant to the Merger Agreement, at the Effective Time all
outstanding stock options to purchase shares of Common Stock heretofore issued
under the Stock Plans or the Company's stock option agreements with consultants
that are then fully exercisable or vested pursuant to the terms of the
respective Stock Plan or the Merger Agreement (a "Vested Company Stock
Option"), shall, pursuant to the terms of the respective Stock Plans pursuant
to which they were issued and upon their surrender to the Company by the
holders thereof, be cancelled by the Company, and the holders thereof shall
receive a cash payment from the Company in an amount (if any) equal to the
number of shares of Common Stock subject to each surrendered option multiplied
by the difference (if positive) between the exercise price per share of Common
Stock covered by the option and the Offer Price. The Company shall use its best
efforts to cause each holder of Vested Company Stock Options to surrender their
Vested Company Stock Options in accordance with the prior sentence. At the
Effective Time, all outstanding stock options to purchase shares of Common
Stock issued under the Stock Plans or the stock option agreements with
consultants that are not then exercisable or vested shall be cancelled without
payment to the holders thereof and the Company shall use its best efforts to
cause such stock
7
<PAGE>
options to be surrendered to the Company. The directors and executive officers
of the Company as a group hold "in-the-money" Vested Company Stock Options to
purchase an aggregate of 558,343 shares of Common Stock, at prices ranging from
$.625 to $3.50.
Indemnification. For a period of not less than six years from and after the
Effective Time, Mallinckrodt Veterinary agrees to, and to cause the Surviving
Corporation to, indemnify and hold harmless all past and present officers,
directors and employees (the "Indemnified Parties") of the Company and of its
subsidiaries to the full extent such persons may be indemnified by the Company
pursuant to the Company's Certificate of Incorporation and Bylaws as in effect
as of the date of the execution of the Merger Agreement for acts and omissions
occurring at or prior to the Effective Time and shall advance reasonable
litigation expenses incurred by such persons in connection with defending any
action arising out of such acts or omissions, provided that such persons
provide the requisite affirmation and undertaking, as set forth in the
Company's Bylaws in effect at the date of the execution of the Merger
Agreement. Mallinckrodt Veterinary will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable than the
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Mallinckrodt
Veterinary and the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of two times the last annual premium
paid prior to the date of the execution of the Merger Agreement, but in such
case shall purchase as much such coverage as possible for such amount.
Employee Benefits. Until September 30, 1996, Mallinckrodt Veterinary has
agreed to maintain employee benefits and programs for officers and employees of
the Company and its subsidiaries that are no less favorable in the aggregate
than those being provided to such officers and employees on the date of the
execution of the Merger Agreement (it being understood that Mallinckrodt
Veterinary will not be obligated to continue any one or more employee benefits
or programs). For purposes of eligibility to participate in and vesting in all
benefits provided to officers and employees, such officers and employees of the
Company and its subsidiaries will be granted their years of service with the
Company and its subsidiaries. Amounts paid before the Effective Time by
officers and employees of the Company under any medical plans of the Company
shall after the Effective Time be taken into account in calculating balances
for deductibles and maximum out-of-pocket limits applicable under the medical
plan of Mallinckrodt Veterinary for the plan year during which the Effective
Time occurs as if such amounts had been paid under such medical plan of
Mallinckrodt Veterinary.
Mallinckrodt Veterinary has agreed to maintain an agreed upon severance
policy for a period of at least twelve months from the Effective Time.
Board Representation. The Merger Agreement provides that promptly upon the
purchase of shares of Common Stock pursuant to the Offer, Mallinckrodt
Veterinary shall be entitled to designate such number of members of the Board
of Directors of the Company, rounded up to the next whole number, as will give
Mallinckrodt Veterinary, subject to compliance with the provisions of Section
14(f) of the Exchange Act and the rules and regulations promulgated thereunder,
representation on the Board of Directors of the Company equal to the product of
(i) the total number of directors on such Board and (ii) the percentage that
the number of shares of the Common Stock purchased by the Offeror bears to the
number of outstanding shares of Common Stock. The Company has agreed, upon the
request of Mallinckrodt Veterinary, to promptly increase the size of the Board
of Directors of the Company and/or exercise its reasonable best efforts to
secure the resignations of such number of directors as is necessary to enable
Mallinckrodt Veterinary's designees to be elected to the Board of Directors and
shall cause Mallinckrodt Veterinary's designees to be so elected. The Company
has agreed to take, at its expense, all actions required pursuant to Section
14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder to effect any such election, including
the mailing to its
8
<PAGE>
stockholders of the information required to be disclosed pursuant thereto.
Mallinckrodt Veterinary will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Access to Information. The Company has agreed to, and to cause each of its
subsidiaries to, afford to Mallinckrodt Veterinary, and to Mallinckrodt
Veterinary's accountants, counsel, financial advisors and other
representatives, access and permit them to make such inspections as they may
require during normal business hours during the period from the date of the
Merger Agreement through the Effective Time to all their respective properties,
books, contracts, commitments and records and, during such period, the Company
shall, and shall cause each of its subsidiaries to, furnish promptly to
Mallinckrodt Veterinary (i) a copy of each report, schedule, negotiation
statement and other document filed by it during such period pursuant to the
requirements of federal or state laws and (ii) all other information concerning
its business, properties and personnel as Mallinckrodt Veterinary may
reasonably request.
Conditions Precedent. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions: (a) if required by applicable law, the Merger
Agreement shall have been approved by the requisite vote of the holders of
shares of Common Stock; and (b) no governmental entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree or injunction which prohibits or
has the effect of prohibiting the consummation of the Merger; provided,
however, that the Company, Mallinckrodt Veterinary and the Offeror shall use
their reasonable best efforts to have any such order, decree or injunction
vacated.
The respective obligations of Mallinckrodt Veterinary and the Offeror to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions: (a) the Company shall have
performed in all material respects each of its covenants and agreements
contained in the Merger Agreement required to be performed on or prior to the
Effective Time, and each of the representations and warranties of the Company
contained in the Merger Agreement shall be true and correct in all material
respects except as agreed by the parties pursuant to the Merger Agreement, in
each case, on and as of the Effective Time as if made on and as of such date,
except as contemplated or permitted by the Merger Agreement and except for such
failures to perform or such failures to be true and correct as have not had and
are not reasonably likely to have a Material Adverse Effect on the Company, and
Mallinckrodt Veterinary shall have received a certificate of the Company,
signed by the President or any Vice President of the Company, to that effect;
provided, however, that any references in the Merger Agreement to the phrases
"knowledge of the Company" and "to the best knowledge of the Company," and
variants thereof, shall be disregarded for the purposes of determining whether
the Company shall have breached its representations and warranties hereunder;
and (b) except as disclosed by the Company in accordance with the Merger
Agreement, all required authorizations, consents or approvals of any third
party, the failure to obtain which would have a Material Adverse Effect
(assuming the Merger had taken place), shall have been obtained.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether prior to or after approval by the
stockholders of the Company: (a) by mutual written consent of Mallinckrodt
Veterinary and the Company, (b) by the Company if: (i) the Offer has not been
timely commenced (except as a result of actions or omissions by the Company);
(ii) there is a Superior Proposal to acquire all of the shares of Common Stock;
or substantially all of the assets of the Company and the Board of Directors of
the Company determines in good faith after consultation with the Company's
outside counsel that the failure to approve such Superior Proposal would be
inconsistent with the fiduciary duties of the Board of Directors of the Company
to stockholders of the Company, provided, however that the right to terminate
the Merger Agreement pursuant to this clause (ii) will not be available (A) if
the Company has breached in any material respect its obligations concerning
Acquisition Proposals, (B) in respect of an offer involving consideration which
is not entirely cash, or does not permit stockholders to receive the payment of
the offered consideration in respect of all Shares at the same time, unless the
Board of Directors of the Company has been furnished with a
9
<PAGE>
written opinion of a nationally recognized investment banking firm to the
effect that such offer provides a higher value per share than the consideration
per share pursuant to the Offer or the Merger (as increased pursuant to any
revised proposal of Mallinckrodt Veterinary pursuant to its rights in the event
of a Superior Proposal) or (C) if, prior to or concurrently with any purported
termination pursuant to this clause (ii), the Company shall not have paid the
Termination Fee (as defined below); (iii) there has been a breach by
Mallinckrodt Veterinary or the Offeror of any representation or warranty that
would have a material adverse effect on Mallinckrodt Veterinary's or the
Offeror's ability to perform its obligations under the Merger Agreement, and
which is not cured within five business days following receipt by Mallinckrodt
Veterinary or the Offeror of notice from the Company of the breach; or (iv) if
Mallinckrodt Veterinary or the Offeror fails to comply in any material respect
with any of its material obligations or covenants contained in the Merger
Agreement, including, without limitation, the obligation of the Offeror to
purchase shares of Common Stock pursuant to the Offer, unless such a failure
results from a breach by the Company of any obligation, representation or
warranty under the Merger Agreement, which is not cured within five business
days following Mallinckrodt Veterinary's receipt of notice from the Company of
the breach; (c) by Mallinckrodt Veterinary if (i) the Board of Directors of the
Company shall have failed to recommend, or withdrawn, modified or amended in
any material respect its approval or recommendation of, the Offer or the Merger
or shall have resolved to do any of the foregoing, or shall have failed to
reject an Acquisition Proposal within ten business days after receipt by the
Company or public announcement thereof; or (ii) any of the representations or
warranties made by the Company in the Merger Agreement shall not have been true
and correct in all material respects when made, or shall thereafter cease to be
true and correct in any material respect as if made as of such later date
(other than representations and warranties made as of a specified date);
provided, however, that all references in the Merger Agreement to the phrases
"knowledge of the Company" and "to the best knowledge of the Company," and
variants thereof, shall be disregarded for the purposes of determining whether
the Company shall have breached its representations and warranties hereunder;
or (iii) the Company shall not in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it under the Merger Agreement, unless such failure results
from a breach of Mallinckrodt Veterinary or the Offeror of any obligation,
representation or warranty hereunder which has not been cured within five
business days following the Company's receipt of notice from Mallinckrodt
Veterinary of the breach; or (iv) the stockholders of the Company do not
approve the Merger in accordance with the DGCL, if such approval is required by
the DGCL; or (v) if the Offeror is entitled to terminate the Offer as a result
of the occurrence of any event described above in "The Offer"; or (d) by either
Mallinckrodt Veterinary or the Company if (i) the Merger has not been effected
on or prior to the close of business on April 30, 1996; provided, however, that
the right to terminate the Merger Agreement pursuant to this clause shall not
be available to any party whose failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or prior to the aforesaid date; or (ii) any court of
competent jurisdiction or any other governmental body 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 non-appealable; or (iii) upon a
vote at a duly held meeting or upon any adjournment thereof, the stockholders
of the Company shall have failed to give any required approval or (iv) as the
result of the failure of any of the conditions to the Offer as set forth in the
Offer to Purchase, the Offer shall have terminated or expired in accordance
with its terms without the Offeror having purchased any shares of Common Stock
pursuant to the Offer, provided, however, that the right to terminate the
Merger Agreement pursuant to this clause (iv) shall not be available to any
party whose failure to fulfill any of its obligations under the Merger
Agreement results in the failure of any such condition; or (v) Mallinckrodt
Veterinary or the Company shall have reasonably determined that any Offer
condition (other than the Minimum Condition) is not capable of being satisfied
at any time in the future; provided however, that the right to terminate the
Merger Agreement pursuant to this clause (v) shall not be available to any
party whose failure to fulfill any of its obligations under the Merger
Agreement has been the cause of, or resulted in, such Offer condition being
incapable of satisfaction. If the Merger Agreement is terminated, the Merger
Agreement will become void and there will be no
10
<PAGE>
liability or further obligation on the part of the Offeror, Mallinckrodt
Veterinary or the Company or their respective officers or directors, except for
the Company's obligations, under certain circumstances, to pay the Termination
Fee (as defined below) or to reimburse Mallinckrodt Veterinary for certain
expenses and except for the confidentiality obligations of the parties.
Fees and Expenses. Except as where otherwise provided in the Merger
Agreement, whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses. The Company has agreed in the Merger Agreement that, if (i) any
person (other than Mallinckrodt Veterinary or any of its affiliates) shall have
become, prior to the termination of the Merger Agreement, the beneficial owner
of 50% or more of the outstanding shares of Common Stock, (ii) the Offer shall
have expired at a time when the Minimum Condition shall not have been satisfied
and at any time on or prior to nine months after the date of the expiration of
the Offer any person (other than Mallinckrodt Veterinary or any of its
affiliates) shall acquire beneficial ownership of 50% or more of the
outstanding shares of Common Stock or shall consummate an Acquisition Proposal
at a price per share less than the sum of the Offer Price plus the amount
determined by dividing $1,500,000 by the number of shares of Common Stock
outstanding immediately prior thereto, (iii) at any time prior to the
termination of the Merger Agreement any person (other than the Offeror or any
of its affiliates) shall publicly announce any Acquisition Proposal and, at any
time on or prior to nine months after the date of the termination of the Merger
Agreement, shall become the beneficial owner of 50% or more of the outstanding
shares of Common Stock or shall consummate an Acquisition Proposal, or (iv) the
Company terminates the Merger Agreement in accordance with clause (b)(ii) set
forth above under "Termination", then the Company shall, in the case of clause
(i), (ii) or (iii) above, promptly, but in no event later than two business
days after the first of such events to occur, or, in the case of clause (iv),
at or prior to the time of such termination, pay Mallinckrodt Veterinary the
sum of $1,500,000 (the "Termination Fee"). If the Company fails to pay such
amount when due, which failure is finally determined by a court of competent
jurisdiction, Mallinckrodt Veterinary shall be entitled to the payment from the
Company, in addition to any such amount, of any legal fees and expenses
incurred in procuring such judicial determination.
If (i) the Merger Agreement is terminated pursuant to clause (b)(ii) set
forth above under "Termination" or clause (c)(i), (c)(ii) (but only if the
Merger Agreement is terminated because the representations or warranties of the
Company were not true and correct in all material respects when made (other
than those qualified by "knowledge of the Company" or "to the best knowledge of
the Company")), (c)(iii) or (c)(iv) as set forth above under "Termination" or
(ii) at any time prior to the termination of the Merger Agreement, any person
(other than Mallinckrodt Veterinary or any of its affiliates) shall publicly
announce any Acquisition Proposal and, at any time on or prior to six months
after the termination of the Merger Agreement, shall become the beneficial
owner of 50% or more of the outstanding shares of Common Stock or shall
consummate an Acquisition Proposal, the Company shall reimburse Mallinckrodt
Veterinary and the Offeror (not later than two business days after submission
of statements therefor) for all documented costs and expenses (including
without limitation, all legal, investment banking, printing, depositary and
related fees and expenses) (the "Expenses"); provided, however, that the amount
of Expenses to be paid to Mallinckrodt Veterinary and the Offeror shall not
exceed $750,000; provided, further, that the amount of the Expenses paid shall
be credited against the Termination Fee; and provided, further, that if the
Company has paid the Termination Fee prior to any payment of Expenses, then no
Expenses shall be payable.
CONFIDENTIALITY AGREEMENT
Pursuant to a Confidentiality Agreement dated March 27, 1995 between the
Company and Mallinckrodt Veterinary (the "Confidentiality Agreement"),
Mallinckrodt Veterinary agreed, among other things, to keep confidential
certain non-public confidential or proprietary information of the Company and
to use such materials solely to evaluate a possible transaction with the
Company. This summary of the Confidentiality Agreement is qualified by
reference to the entire agreement, a copy of which is filed as Exhibit F hereto
and incorporated herein by reference.
11
<PAGE>
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
At a meeting held on September 24, 1995, the Company's Board of Directors
unanimously (i) determined that the Merger was advisable and that the Merger
Agreement and the transactions contemplated thereby are fair to, and in the
best interests of, the holders of Common Stock; (ii) approved the Merger
Agreement and the transactions contemplated thereby; and (iii) recommended that
the stockholders of the Company accept the Offer and tender their shares
pursuant to the Offer and vote in favor of the Merger and approve the Merger
Agreement. Accordingly, the Company's Board of Directors hereby unanimously
recommends that the stockholders of the Company tender their shares of Common
Stock pursuant to the Offer. A press release announcing the Merger Agreement
and a form of the Company's letter dated September 29, 1995, to stockholders
communicating the Board of Directors' recommendation have been filed as
EXHIBITS D AND E, respectively, and are incorporated herein by reference.
(b) Background; Reasons for the Recommendations.
Beginning in mid-1994, the Company initiated an evaluation of its competitive
position and outlook in the biotechnology and animal health industries. At the
Company's annual meeting of stockholders on February 9, 1995, the Company
announced that it was exploring strategic alternatives for the Company. After
assessing various strategic alternatives, the Company focused on the
possibility of forming an alliance with a corporate partner that would provide
the resources and complementary expertise necessary to commercialize new
products based on the Company's technology. In early 1995, the Company
approached, or was contacted by, a number of companies on a confidential basis
to discuss their interest in a strategic transaction with the Company.
Shortly after the Company's stockholders meeting, James L. Bittle, a director
of the Company, contacted an officer of Mallinckrodt Veterinary to advise him
of the Company's interest in such an alliance. Thereafter, Paul D. Cottone, the
President and Chief Executive Officer of Mallinckrodt Veterinary, discussed
with J. Donald Todd, the President and Chief Executive Officer of the Company,
Mallinckrodt Veterinary's possible interest in a strategic transaction with the
Company.
On March 27, 1995, Mallinckrodt Veterinary entered into the Confidentiality
Agreement with the Company, and thereafter the Company provided certain
confidential information to Mallinckrodt Veterinary.
The Company engaged Piper Jaffray Inc. ("Piper Jaffray") as the Company's
financial advisor with respect to a possible sale of the Company. Between late
March 1995 and late June 1995, the Company, with the assistance of Piper
Jaffray, continued discussions with a limited number of companies, in addition
to Mallinckrodt Veterinary.
On April 19, 1995, Piper Jaffray sent a letter to senior management of
Mallinckrodt Veterinary inviting Mallinckrodt Veterinary to make an offer for
the purchase of the Company and setting forth the process to be followed in
connection with such an offer. In late April, May and early June 1995,
Mallinckrodt Veterinary continued its review of the Company, both through
meetings with representatives of the Company and pursuant to the review of
documents provided by the Company.
On June 8, 1995, Mr. Cottone sent a letter to Dr. Todd expressing possible
interest in a merger transaction, in which a newly created subsidiary of
Mallinckrodt Veterinary would be merged into the Company, at a purchase price
in the range of $2.35 to $2.45 cash per share of Common Stock, subject to
execution of a definitive agreement, completion of due diligence and other
conditions. On June 9, 1995, Dr. Todd indicated to Mr. Cottone that such range
was not acceptable. On June 12, 1995, a representative of Piper Jaffray
contacted senior management of Mallinckrodt Veterinary and indicated that
although the price contained in Mallinckrodt Veterinary's proposal was, in the
Company's view,
12
<PAGE>
inadequate, the Company wished to keep the lines of communication between the
Company and Mallinckrodt Veterinary open. On June 23, 1995, Mr. Cottone sent a
letter to Dr. Todd indicating that Mallinckrodt Veterinary might be willing to
increase the purchase price range over that contained in the June 8, 1995
letter.
On July 11, 1995, the Company's Board of Directors received an update from
Dr. Todd on the progress of discussions with Mallinckrodt Veterinary. Following
this update, Mallinckrodt Veterinary was informed by the Company that a
substantial increase in Mallinckrodt Veterinary's proposed purchase price would
be necessary before further discussions could proceed. Mallinckrodt Veterinary
indicated that it would not be able to do so unless it was permitted to perform
additional due diligence on the Company. The Company agreed to permit this and
in late July and August 1995, representatives of Mallinckrodt Veterinary
conducted due diligence with respect to the Company, with the cooperation of
the Company and its advisors.
On August 28, 1995, Mr. Cottone sent a letter to Dr. Todd expressing interest
in a possible merger transaction at a purchase price of $3.25 per share in
cash, subject to certain conditions, including completion of final due
diligence. During a telephone conversation on August 29, 1995, Mr. Cottone
indicated to Dr. Todd that Mallinckrodt Veterinary was willing to increase the
proposed purchase price to $3.55 per share.
On August 29, 1995, the Board of Directors of the Company convened by
telephone to consider the latest proposal from Mallinckrodt Veterinary. After
discussions with Piper Jaffray and the Company's legal advisors, the Board of
Directors of the Company authorized management to proceed to negotiate a merger
agreement with Mallinckrodt Veterinary at $3.55 per share, subject to final
Board approval.
On September 6, 1995, Mallinckrodt Veterinary sent an initial draft merger
agreement to the Company and its advisors. On September 13, 1995, legal
advisors for the Company and Mallinckrodt Veterinary discussed the draft
agreement. On September 20, 1995, the Board of Directors of Mallinckrodt Group,
Inc. (Mallinckrodt Veterinary's parent company), approved the merger agreement,
subject to certain conditions. Also on that date, the Company's Board of
Directors met to consider the draft agreement. Following presentations relating
to, among other things, the Company's operations, developments in the
biotechnology and animal health industries, the Company's various strategic
options and the terms of the proposed transaction, and a presentation by
representatives of Piper Jaffray relating to the financial aspects of the draft
agreement, the Company's Board of Directors unanimously authorized the
Company's officers to pursue a transaction substantially as set forth in the
draft agreement, subject to negotiation of certain provisions.
On September 23, 1995, representatives of the Company and Mallinckrodt
Veterinary and their respective legal counsel met to negotiate the final terms
of the merger agreement, including termination rights, termination fee, payment
of expenses and offer conditions. A revised merger agreement was delivered to
the directors of the Company and of Mallinckrodt Veterinary early on September
24, 1995.
On September 24, 1995, the Company's Board of Directors convened by
telephone. The Company's Board of Directors reviewed the revised agreement.
Piper Jaffray delivered its opinion as to the fairness, from a financial point
of view, of the cash consideration to be received by the Company's stockholders
under the terms of the Merger Agreement. After significant discussion, the
Company's Board of Directors unanimously approved the Merger Agreement and the
Offer and Merger contemplated by the Merger Agreement. The Merger Agreement was
executed and delivered on September 25, 1995. Public disclosure of the Merger
Agreement was made on the morning of September 25, 1995, prior to the opening
of trading of the Common Stock on the Nasdaq National Market.
13
<PAGE>
In approving the Merger Agreement and the transactions contemplated thereby
and voting to recommend that all stockholders tender their shares pursuant to
the Offer, the Board of Directors of the Company considered a number of
factors, including:
(i) The Company's and Mallinckrodt Veterinary's respective businesses,
assets, managements, strategic objectives, competitive positions, prospects
and complementary strengths.
(ii) The Company's historical financial data as well as the Company's
preliminary financial results for the fiscal year ended September 30, 1995.
(iii) The Company's financial outlook.
(iv) Current industry, economic and marketing conditions, including
acquisitions and consolidations taking place in the biotechnology and
animal health industries.
(v) Historical market prices and trading information with respect to the
Company's Common Stock.
(vi) Publicly available information concerning other companies comparable
to the Company and the trading history of each such company.
(vii) The opinion dated September 24, 1995, of Piper Jaffray that, based
upon and subject to the matters set forth in the opinion, the cash
consideration to be received by the holders of Common Stock pursuant to the
Offer and the Merger is fair to such holders from a financial point of
view. A copy of such opinion is attached hereto as EXHIBIT G and is
incorporated herein by reference. Stockholders are urged to read the
opinion carefully in its entirety.
(viii) The fact that the $3.55 per share price to be paid in the Offer
and Merger represents a premium of 42% over $2.50, the closing price of the
Common Stock on the Nasdaq National Market on September 22, 1995, the last
full trading day prior to the approval by the Company's Board of Directors
of the Merger Agreement.
(ix) The fact that the terms of the Merger Agreement, including the price
paid, compare favorably to the terms and to the prices paid in other recent
acquisition transactions.
(x) The economic effects that the Merger would have on the employees of
the Company and its subsidiaries.
(xi) The limited likelihood, based upon discussions with a large number
of unrelated parties other than Mallinckrodt Veterinary, that a more
favorable definitive agreement with another party could be reached, and the
risk, time and cost that would be incurred as the result of such
negotiations.
(xii) The fact that, subject to the terms and conditions set forth in the
Merger Agreement, the Company may furnish information to, or enter into
discussions or negotiations with, any person or entity that expresses an
interest in making an unsolicited Superior Proposal.
(xiii) Possible alternatives to the Merger and the Offer that might be
available to the Company and its stockholders.
(xiv) The provisions of the Merger Agreement relating to termination
events and payment of fees and expenses.
The Company's Board of Directors did not assign relative weight to the
foregoing factors or determine that any factor was of particular importance.
Rather, the Board of Directors viewed its position and recommendations as being
based on the totality of information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Piper Jaffray is acting as the Company's financial adviser in connection with
the Offer and the Merger pursuant to a letter agreement dated April 6, 1995,
between the Company and Piper Jaffray (the "Engagement Letter"), a copy of
which is included as EXHIBIT H. Under the terms of the
14
<PAGE>
Engagement Letter, in the event that the Company consummates one of a number of
specified business combination transactions, which would include the Offer and
the Merger, the Company will pay Piper Jaffray, upon the acquisition of more
than twenty percent (20%) of the outstanding shares of Common Stock of the
Company, a fee in an amount equal to $500,000. In addition, whether or not any
such transaction is consummated, the Company will reimburse Piper Jaffray for
its out-of-pocket and incidental expenses, including the fees and disbursements
of its counsel, and will indemnify Piper Jaffray against certain liabilities
incurred in connection with its engagement, including liabilities under federal
securities laws. The engagement letter also provides, among other things, that
Piper Jaffray will render an opinion as to the fairness, from a financial point
of view, of the consideration to be received by the Company's stockholders in
any such transaction. Piper Jaffray is entitled to receive a fee of $100,000
for such opinion, which amount will be credited against the $500,000 total fee.
The Company selected Piper Jaffray primarily due to Piper Jaffray's
reputation and experience in investment banking and mergers and acquisitions in
general, as well as its expertise in the biotechnology industry, and
particularly in agri-biotechnology. The Company also believes that Piper
Jaffray's knowledge of and familiarity with the Company, as the result of Piper
Jaffray's underwriting of the Company's public offering in April of 1992,
offers additional benefits.
Except as set forth above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders of the Company on its
behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) No transactions in the Common Stock of the Company have been effected in
the past 60 days by the Company or any affiliate or subsidiary of the Company,
or to the best knowledge of the Company, any executive office or director of
the Company.
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender, pursuant to
the Offer, all shares of Common Stock held of record or beneficially owned by
them (other than shares issuable upon exercise of stock options which options
will be cancelled at the Effective Time of the Merger, in exchange, in the case
of "in-the-money" options, for the cash payment due.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY
(a) Except as set forth in Item 3(b) above (the provisions of which are
hereby incorporated herein by reference), no negotiation is being undertaken or
is underway by the Company in response to the Offer which relates to or would
result in (1) an extraordinary transaction such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (2) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (3) a tender offer for or other acquisition of securities by or of the
Company; or (4) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described in Item 3(b) above (the provisions of which are
hereby incorporated herein by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to
in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to Section 203 of the DGCL.
Section 203 prohibits an "interested stockholder" (generally defined as a
person beneficially owning 15% or more of a corporation's voting stock) from
engaging in a "business combination" (as defined in Section 203)
15
<PAGE>
with a Delaware corporation for three years following the date such person
became an interested stockholder, unless (i) before such person became an
interested stockholder, the board of directors of the corporation approved the
transaction in which the interested stockholder became an interested
stockholder, or approved the business combination, (ii) upon consummation of
the transaction which resulted in the interested stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of stockholders by the affirmative vote of the holders of at least
two-thirds of the outstanding voting stock of the corporation not owned by the
interested stockholder.
In accordance with Section 203, the Company's Board of Directors has
approved, to the extent required, the transactions contemplated by the Merger
Agreement, including the Offeror's acquisition of Common Stock pursuant to the
Offer. Accordingly, the transactions contemplated by the Merger Agreement,
including the Offeror's acquisition of Common Stock pursuant to the Offer, are
exempt from the provisions of Section 203.
(b) Certificate of Incorporation
Paragraph 3 of Article Fifth of the Company's Certificate of Incorporation
requires the approval of the holders of not less than sixty percent (60%) of
the stock of the Company entitled to vote for the following acts or
transactions, if such act or transaction has not been approved by at least
sixty percent (60%) of the directors of the Company: (a) the amendment of the
Certificate of Incorporation to modify the voting rights of any shares of stock
of the Company, to increase the number of authorized shares of Common or
Preferred Stock, or to modify Article Fifth; (b) an acquisition of all of the
Company's stock in exchange for consideration the value of which is less than
the highest price paid by a stockholder for the same class or series of stock
of the Company during the previous two years; or (c) the acquisition by the
Company of any of its stock from any person or group of persons owning, in the
aggregate, ten percent (10%) or more of the stock of the Company entitled to
vote in an election of directors. Because the Board has unanimously approved
the Offer and Merger and the Merger Agreement, the 60% stockholder vote
requirement does not apply to these transactions.
16
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
Exhibit A Excerpts from 1995 Proxy Statement
Exhibit B-1 Lowell Thomas Consultancy Agreement with Syntro Corporation dated
as of August 14, 1991, as amended
Exhibit B-2 J. Donald Todd Executive Employment Agreement with Syntro
Corporation dated as of October 1, 1992, as amended
Exhibit B-3 William J. Davies Executive Employment Agreement with Syntro
Corporation dated as of February 21, 1995
Exhibit B-4 Susan H. Strobel Executive Employment Agreement with Syntro
Corporation dated as of February 21, 1995
Exhibit B-5 Janis K. McMillen Executive Employment Agreement with Syntro
Corporation dated as of March 3, 1995
Exhibit B-6 Mark D. Cochran Executive Employment Agreement with Syntro
Corporation dated as of February 21, 1995
Exhibit B-7 Janice Katterhenry Executive Employment Agreement with Syntro
Corporation dated as of February 21, 1995
Exhibit C Agreement and Plan of Merger dated as of September 25, 1995 (the
"Merger Agreement")
Exhibit D Joint press release announcing Merger Agreement
Exhibit E Form of Company's letter to stockholders dated September 29, 1995*
Exhibit F Confidentiality Agreement dated as of March 27, 1995
Exhibit G Piper Jaffray Inc. opinion dated September 24, 1995*
Exhibit H Engagement letter between Company and Piper Jaffray Inc. dated as
of April 6, 1995
</TABLE>
- --------
*Included in copies mailed to Stockholders.
17
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SYNTRO CORPORATION
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Dated: September 29, 1995
18
<PAGE>
EXHIBIT A
BOARD OF DIRECTORS
BOARD MEETINGS
The Company's Board of Directors met or otherwise acted by consent five times
during the fiscal year ended September 30, 1994 ("fiscal 1994"). All directors
attended at least 75% of the meetings of the Board of Directors and committees
of which they were members in fiscal 1994.
COMMITTEES
To assist in the discharge of its responsibilities, the Board of Directors
has designated standing Audit and Compensation Committees. The Board does not
have a standing nominating committee. The biographical information included in
this proxy statement identifies committee memberships held by each director.
The Audit Committee held two meetings in fiscal 1994. During fiscal 1994, it
consisted of three non-employee directors. The Audit Committee reviews and
makes recommendations to the Board of Directors regarding the engagement of the
Company's independent auditors and reviews with the auditors the scope and
results of the annual audit as well as the auditors' recommendations with
respect to the adequacy of the Company's accounting procedures and internal
controls. The Audit Committee also reviews the non-audit services provided by
the auditors.
The Compensation Committee met or acted two times during fiscal 1994. It
consists of three non-employee directors. The Compensation Committee reviews,
approves and monitors compensation guidelines for the Company's executive
officers and sets corporate policy with respect to the Company's employee
benefit plans. The Compensation Committee also administers the Company's 1984
Incentive Stock Option Plan, the 1988 Executive Stock Option Plan and, if
approved by the stockholders, the 1994 Stock Option Plan (see COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION).
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company are compensated at the rate of
$1,000 for each Board of Directors' meeting attended and are reimbursed for
their travel and lodging expenses; except that $200 is the rate of compensation
for each telephonic Board meeting attended at which substantive actions are
taken. Officers of the Company do not receive additional compensation for
attendance at Board of Directors' meetings or committee meetings.
Under its 1988 Stock Option Plan, the Company grants to non-employee
directors options to purchase shares of Common Stock with exercise prices no
less than the fair market value of the underlying common stock on the date of
grant. Options automatically are granted to non-employee directors as follows:
3,000 shares upon first election to the Board by the stockholders, 1,000 shares
upon re-election to the Board by the stockholders and 1,000 shares upon being
appointed to the Board to fill a vacancy. If the nominees for election as
directors are elected for 1994, re-elected directors Bittle, O'Neil, Stern and
Thomas each will be granted options to purchase 1,000 shares of Common Stock.
Options granted to previously elected directors vest and become fully
exercisable after the respective director both (a) attends or participates at
two regularly scheduled Board of Directors meetings during the term for which
the option is granted and (b) completes six months of service as a director of
the Company. Options granted to newly elected directors vest and become fully
exercisable after one full year of service. All options must be exercised
within one year after the optionee's death or within ten years after the date
of grant.
1
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 22, 1993, the Company sold 483,755 shares of the common stock of
Protein Polymer Technologies, Inc. ("PPT") in a private transaction to twelve
individuals, most of whom were officers, directors or shareholders of PPT.
PPT's common stock trades on the Nasdaq Small-Cap Market. During the 30 days
preceding the transaction, the high and low closing bid prices for the common
stock, between dealers, without retail mark-ups, markdowns or commissions, were
$1.00 and $0.625, respectively, and daily volume averaged 16,096 shares. The
Company sold its PPT holdings, which represented approximately 8.3% of the
total number of shares of PPT stock issued and outstanding, for $0.65 per share
(net), or $314,441 in the aggregate. In this transaction, Russell T. Stern,
Jr., a director of Syntro and of PPT, and his son, William C. Stern, purchased
a total of 100,855 shares of PPT stock from the Company for $65,556.
H. Lowell Thomas, a director of Syntro, has been engaged by Syntro to provide
marketing, financial and business consulting services on an as-needed basis
pursuant to a consulting agreement. The Company is to pay fees to Mr. Thomas at
a per diem rate of $600. The consulting agreement may be terminated by either
party upon 30 days' notice. Mr. Thomas received no consulting fees from the
Company in fiscal 1994.
J. Donald Todd is serving as President and Chief Executive Officer of the
Company pursuant to an employment agreement. Please refer to EXECUTIVE
COMPENSATION--"Employment Contracts, Termination of Employment and Change in
Control Arrangements" for a description of the terms of that agreement.
Patrick Owen Burns, a director of Syntro during fiscal 1994, is an officer of
R&D Funding Corp., the general partner of Prutech Research & Development
Partnership ("Prutech") and Prutech Research & Development Partnership II
("Prutech II"), both public limited partnerships. Pursuant to license
agreements entered into in 1984 and 1986, the Company licenses from Prutech and
Prutech II certain technology and products developed by the Company for those
partnerships and pays royalties, at rates of 12% or less, on sales and
licensing income derived from the licensed products. The royalties earned by
Prutech for fiscal 1994 were $364,843. No royalties were paid or payable to
Prutech II in fiscal 1994.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid or accrued by the Company
during fiscal 1994, 1993 and 1992 to or on behalf of the named executives.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- -----------------
NAME AND PRINCIPAL FISCAL SHARES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS AWARDS(#) COMPENSATION(A)
- ------------------ ------ ---------- --------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
J. Donald Todd.......... 1994 $ 165,100 -- -- $3,425(b)
President & CEO 1993 165,100 -- 45,000 3,060(c)
1992 155,100 $ 25,000 -- 500
William J. Davies....... 1994 $ 110,100 -- 15,000 $ 500
Vice President, 1993 104,267 -- 15,000 500
Animal Health 1992 87,350 $ 10,000 5,000 500
</TABLE>
- --------
(a) Amounts reflect Company contributions under the Company's 401(k) Plan to
match a portion of contributions made by the respective named executive.
(b) Includes $2,925 in premiums paid by the Company for term life insurance.
(c) Includes $2,560 in premiums paid by the Company for term life insurance.
2
<PAGE>
OPTIONS GRANTED IN FISCAL 1994
The following table sets forth certain information concerning options granted
during fiscal 1994 to the named executives:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PRICE APPRECIATION
INDIVIDUAL GRANTS(A) OPTION TERM(B)
-------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
STOCK FOR NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- -------------- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Davies............. 15,000 12.4% $2.938 12/28/03 $ 27,780 $ 70,230
</TABLE>
- --------
(a) The options were granted on December 28, 1993 at an exercise price equal to
the market price on the date of grant. All of Mr. Davies' options were
granted under the 1988 Executive Stock Option Plan. All options granted
vest in equal annual installments over a three year period and must be
exercised within three months after termination of the optionee's
employment for reasons other than death or disability, or within one year
after the optionee's death or disability, or within ten years after the
date of grant. See "Employment Contracts, Termination of Employment and
Change in Control Arrangements" for a description of certain change of
control provisions contained in the 1988 Executive Stock Option Plan.
(b) Potential realizable value is based on the assumption that the Common Stock
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the ten-year option term. The price at the end of
the term would be as follows: assuming 5% appreciation, $4.79 per share,
and assuming 10% appreciation, $7.62 per share. The actual value, if any, a
named executive may realize will depend on the excess of the stock price
over the exercise price on the date the option is exercised (if the
executive were to sell the shares on the date of exercise). There can be no
assurance that the value realized will be at or near the potential
realizable value as calculated in this table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to (a) the exercise
of options held by named executives during fiscal 1994 and (b) the value of
unexercised options held by the named executives at the end of fiscal 1994.
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(B)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Donald Todd.......... -- -- 207,500 15,000 $332,813 $ 0
William J. Davies....... -- -- 71,938 16,666 84,996 0
</TABLE>
- --------
(a) Value realized is the difference between the closing price of the Company's
stock on the date of exercise and the exercise price of the options,
multiplied by the number of shares.
(b) Value of unexercised in-the-money options is the difference between the
closing price of the Company's stock on the last trading day of fiscal 1994
and the weighted average exercise price of in-the-money options, multiplied
by the number of shares subject to in-the-money options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
J. Donald Todd is serving as President and Chief Executive Officer of the
Company pursuant to an employment agreement with the Company dated as of
October 1, 1992 (the "Employment Agreement") that is scheduled to expire on
September 30, 1995. Pursuant to the Employment Agreement, Dr. Todd is entitled
to receive an annual salary of $165,000 (subject to increase on October 1 of
each year). Dr. Todd also is entitled to cash bonuses during the term of his
employment. If Dr. Todd's employment
3
<PAGE>
is terminated either (i) by the Company or its successor without cause or (ii)
by Dr. Todd due to a Syntro cause, then Dr. Todd would be entitled to receive
severance benefits equal to one year's compensation based on the total annual
rate of base compensation, and a continuation of one year of various employee
benefits. The current employment agreement superseded and replaced an
employment agreement dated May 31, 1989 under which Dr. Todd was serving as
President.
Under the terms of the Company's 1988 Stock Option Plan (the "Executive
Plan"), in the event of any extraordinary corporate proceeding affecting the
Company (as determined by the Board of Directors) pursuant to which Syntro is
not to survive immediately following such proceeding, and/or which results in a
"change of control" of Syntro (by merger, consolidation, sale or acquisition of
assets or stock or otherwise), provided the optionee is then employed by the
Company, all non-vested installments of outstanding options issued pursuant to
the Executive Plan automatically will be accelerated and exercisable in full. A
"change of control" is deemed to occur at the time when any person who
theretofore owned 50% or less of the stock then outstanding acquires stock in a
transaction or series of transactions that result in such person directly or
indirectly becoming the beneficial owner of more than 50% of the outstanding
shares of stock as determined by the Compensation Committee.
APPROVAL OF 1994 STOCK OPTION PLAN
On November 15, 1994, the Board of Directors adopted, subject to stockholder
approval, the Syntro Corporation 1994 Stock Option Plan (the "1994 Plan"). The
1994 Plan permits the Company to award options to purchase shares of the Common
Stock or stock appreciation rights ("SARs") to employees, advisors and
consultants, as more fully described below. The 1994 Plan is intended to
replace the 1984 Incentive Stock Option Plan, which recently expired with
554,745 shares of Common Stock reserved for grant but not granted. The
aggregate number of shares of Common Stock which may be sold to all optionees
pursuant to the 1994 Plan may not exceed 1,200,000. The 1994 Plan will expire
on November 15, 2004.
PURPOSE
The purpose of the 1994 Plan is to enable Syntro to offer incentives and
awards that will (1) attract and retain quality key employees, advisors and
consultants and (2) align the interests of those personnel with the long-term
interests of the stockholders.
ADMINISTRATION
The 1994 Plan provides that a committee of Directors of the Company who are
"disinterested persons," as that term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, will administer the 1994 Plan. The Board of
Directors has designated the Compensation Committee to serve as this committee.
The Compensation Committee will determine the number of shares of Common Stock
issuable under an option as well as the form of the option and the exercise
price. However, the exercise price of an option may not be less than the fair
market value of the Common Stock on the date such option is granted, and the
term of an option may not exceed ten years from the date of grant. At the
discretion of the Compensation Committee, SARs may be granted in tandem with
options.
Syntro will pay all costs of administration of the 1994 Plan. The cash
proceeds received from the issuance of shares pursuant to the 1994 Plan will be
used for general purposes.
ELIGIBILITY
Employees of Syntro and its subsidiaries, including employees who are
directors or corporate officers, are eligible to receive awards under the 1994
Plan of (1) incentive stock options ("incentive
4
<PAGE>
stock options") which satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), (2) options which are not
intended to satisfy the requirements of the Code ("non-statutory options") and
(3) SARs in tandem with options. Advisors and consultants to Syntro and its
subsidiaries, and employees of such advisors and consultants, are eligible to
receive awards only of non-statutory options and SARs in tandem therewith. In
order to be eligible for participation in the 1994 Plan, an advisor or
consultant must render bona fide services to the Company that are not connected
with the offer or sale of securities in a capital raising transaction. As of
December 12, 1994, approximately 56 employees and 10 consultants were eligible
to participate in the 1994 Plan.
GRANTS
The 1994 Plan does not limit the number of shares of Common Stock that may be
awarded to any one optionee, except that the aggregate fair market value
(determined as of the date of grant) of shares with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year under all incentive stock option plans of the Company or its
subsidiaries may not exceed $100,000. Currently, such incentive stock option
plans include only the 1994 Plan and the 1984 Incentive Stock Option Plan.
Pursuant to the form adopted by the Board of Directors for use under the 1994
Plan and consistent with practices under the 1984 Incentive Stock Option Plan,
options generally will accrue or vest in three equal annual cumulative
installments, with the first installment accruing approximately one year after
the date of grant. Options and SARs granted to employees may not be exercised
by an optionee more than 45 days after termination of the optionee's employment
unless termination of employment occurs by reason of the optionee's death or
permanent disability, in which event the option or SAR may be exercised within
one year of the date of death or permanent disability. Options and SARs granted
to consultants and advisors (or their employees) may be exercised by the
optionee up to one year after completion of the consulting or advisory
agreement. If an optionee's employment is terminated for cause, all options and
SARs granted to the optionee under the 1994 Plan, to the extent not previously
exercised, will be forfeited. In no event may an option or SAR be exercised
later than its expiration date.
EXERCISE OF OPTIONS AND SARS
An option may be exercised in whole or in part in accordance with procedures
to be established by the Board of Directors. Common Stock purchased upon
exercise of an option must be paid for in full at the time of purchase, in cash
or, at the discretion of the Board of Directors, in shares of Common Stock,
valued at market value on the date of exercise. Upon exercise of an option, the
optionee will be entitled to receive the full number of shares of Common Stock
for which payment was made.
SARs are exercisable only to the extent that the related option is
exercisable. Upon surrender of an SAR (and the related unexercised option), the
optionee will be entitled to receive shares of Common Stock having an aggregate
fair market value (on the date of surrender) equal to the market value of the
shares subject to the unexercised option, less the aggregate option price
specified in the option. The Board of Directors, at its discretion, may cause
all or part of a payment upon a surrendered SAR to be made in cash in lieu of
Common Stock. Any fractional shares resulting from the exercise of an SAR will
be paid in cash. Upon the exercise of all or part of an SAR, the related option
will be cancelled with respect to an equal number of shares of Common Stock.
Similarly, upon exercise of all or part of an option, any related SAR will be
cancelled with respect to an equal number of shares of Common Stock.
SHARES
The common stock subject to awards granted under the 1994 Plan is Syntro's
authorized but unissued or reacquired Common Stock. The aggregate number of
shares of Common Stock which may
5
<PAGE>
be sold to all optionees pursuant to the 1994 Plan may not exceed 1,200,000. To
the extent that an option expires or is terminated, or is canceled or forfeited
without having been exercised in full for any reason other than surrender for
an SAR payment, any remaining shares allocable to the unexercised portion of
such option again will become available for subsequent grants under the 1994
Plan. Shares attributable to a payment of cash following the surrender of a
stock option and the exercise of a related SAR will not be available for
subsequent grants under the 1994 Plan.
ADJUSTMENTS
In the event of changes in the outstanding stock due to a change in the
corporate or capital structure of the Company (i.e., stock dividends or stock
splits), the Board of Directors shall make any adjustments it determines to be
appropriate and equitable with respect to the number of unpurchased shares
subject to the 1994 Plan, the number of shares subject to options outstanding
under the 1994 Plan, the exercise price specified in options outstanding under
the 1994 Plan and the number of shares subject to SARs outstanding under the
1994 Plan.
CORPORATE TRANSACTIONS
In the event of a merger, consolidation, reorganization or dissolution of the
Company, or the sale or exchange of all or substantially all of the Company's
assets, (1) the rights under options and SARs outstanding under the 1994 Plan
will terminate, except to the extent and subject to such adjustments as may be
provided by the Board of Directors or by the terms of the plan or agreement of
merger, consolidation, reorganization, dissolution or sale or exchange of such
assets, and (2) the Company will notify the holders of outstanding options of
such event at least 30 days prior to the effective date of such event.
AMENDMENT
The Board of Directors may in its discretion prescribe such provisions and
interpretations not inconsistent with the 1994 Plan as it deems necessary or
advisable for carrying out the purposes of the 1994 Plan. The Board of
Directors may amend the 1994 Plan without stockholder approval, except that
stockholder approval must be received for any amendment that would (1)
materially increase the benefits accruing to participants under the 1994 Plan,
(2) materially increase the number of shares of Common Stock that may be issued
under the 1994 Plan or (3) materially modify the requirements as to eligibility
for participation under the 1994 Plan.
FINANCIAL ACCOUNTING TREATMENT
Under generally accepted accounting principles currently in effect, the
Company's net income is not affected by the grant or exercise of an option
under the Company's Stock Option Plans if the option does not include SARs. The
exercise of an option that includes SARs, in general, results in a charge to
income based on the amount actually paid under the SAR, less the applicable tax
benefit.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of certain federal income tax
consequences of the 1994 Plan. This description does not purport to be
complete.
The grant of an option or SAR under the 1994 Plan will have no federal income
tax consequence to the Company. The Company will not be entitled to a federal
income tax deduction if the individual optionee qualifies for capital gain
treatment upon the exercise of an incentive stock option. In other cases, with
respect to incentive stock options, non-statutory options and SARs, the Company
will receive a federal income tax deduction at the same time and in the same
amount that the employee recognizes ordinary income for income tax purposes.
6
<PAGE>
Under current law, upon the grant and exercise of an incentive stock option,
an optionee will not recognize taxable income for federal income tax purposes.
However, the amount by which the fair market value of the shares at the time of
exercise exceeds the related option price will be treated as an adjustment to
taxable income for alternative minimum tax purposes. If the optionee does not
dispose of the shares acquired upon exercise until more than one year after
their receipt (and more than two years after the option was granted), gain or
loss recognized on the disposition of the shares will be treated as long-term
capital gain or loss. The gain or loss will be computed as the difference
between the exercise price and the sales price. If the shares are disposed of
prior to those times, the optionee will recognize compensation income taxable
as ordinary income for federal income tax purposes in an amount equal to the
lesser of (1) the excess of the fair market value of the shares of Common Stock
on the dated of exercise over the option price or (2) the amount of gain
recognized in the disposition; and will recognize short-term or long-term
capital gain to the extent of any excess of the amount realized upon
disposition over the fair market value of the shares of Common Stock on the
date of exercise.
An optionee will not recognize taxable income for federal income tax purposes
upon the grant of a non-statutory option or SAR. However, upon the exercise of
a non-statutory option, the optionee will recognize compensation income,
taxable as ordinary income, in an amount equal to the excess of the fair market
value of the shares of Common Stock acquired (determined at the time of
exercise) over the option price. Upon receipt of payment from the exercise of
an SAR, the optionee will recognize compensation income, taxable as ordinary
income for federal income tax purposes, in an amount equal to the sum of any
cash payment and the fair market value of any shares of Common Stock received.
Special rules govern the recognition of income by optionees subject to Section
16(b) of the Securities Exchange Act of 1934, as amended.
In certain cases, an optionee may be required to remit to the Company an
income tax withholding payment in connection with the exercise of an option or
SAR. Pursuant to the terms of the 1994 Plan, the Company, in its sole
discretion, may permit the employee to satisfy that obligation by electing to
have the Company withhold shares of Common Stock having a value equal to the
amount required to be remitted. Any shares withheld in lieu of tax payments
will be valued at fair market value on the date the tax to be remitted is
determined.
STOCKHOLDER APPROVAL REQUIRED
Since 1982, the Board of Directors has used stock options to recruit and
retain key employees, consultants and advisors. Because companies competing
directly with Syntro and its subsidiaries to recruit personnel use stock option
programs to attract, retain and motivate quality employees, consultants and
advisors, the Board of Directors believes that the continuation of such a
program is crucial to the Company. The Board of Directors also believes that
such a program is important in aligning the interests of key employees with the
long-term interests of the stockholders.
Approval of the 1994 Plan requires the affirmative vote of a majority of the
shares of the Common Stock represented in person or by proxy at the annual
meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE 1994 STOCK OPTION PLAN.
7
<PAGE>
[ON SYNTRO CORPORATION LETTERHEAD]
EXHIBIT B-1
CONSULTANCY AGREEMENT
This Agreement, effective August 14, 1991, is by and between Syntro
Corporation, a corporation of the State of Delaware, having its principal place
of business at 9669 Lackman Road, Lenexa, Kansas 66219, hereinafter referred to
as Syntro, and H. Lowell Thomas, 9800 W. 106th Street, Overland Park, Kansas
66212, hereinafter referred to as Consultant.
1. CONSULTANCY APPOINTMENT
Syntro hereby retains the services of Consultant as a consultant to assist
Syntro personnel in the Field of Services hereinafter defined, and Consultant
agrees to accept the retainer. Consultant is retained as an independent
contractor, and not as an agent, and he shall be responsible for payment of
self-employment and social security taxes incurred on his behalf with respect
to remuneration for services under this Agreement. Consultant shall be
available at mutually agreeable times and locations for such consultation and
assistance as deemed needed by Syntro.
2. FIELD OF SERVICES
The Field of Services to which this Agreement applies involves consulting
with Syntro personnel involved in sales, marketing, business and general
management regarding Syntro operations, strategies and programs. Consultant may
also be involved in program planning and implementation, and may interact
directly with outside parties as requested by Syntro.
It is understood by Syntro and Consultant that the Field of Services does not
include any activity that is in conflict with any confidentiality commitment
made in conjunction with or separate from any prior employment contract or
other legal agreement to which Consultant is a party.
3. REMUNERATION
Syntro shall pay Consultant $400.00 per day for services provided under this
Agreement. Payment shall be made at the end of each calendar month, based on a
written statement from Consultant regarding the number of days devoted to
consulting activities under this Agreement.
Consultant is hereby granted a non-qualified option to acquire 1,000 shares
of Syntro common stock at an exercise price of $3.50, such shares to vest in
six (6) months from the date of grant.
4. EXPENSES
Syntro will reimburse Consultant for all expenses that are approved in
advance by Syntro as reasonably incurred by Consultant in connection with the
performance of his duties hereunder, upon the presentation by Consultant, from
time to time, of itemized accounts of such expenditures.
5. CONFIDENTIALITY AND NON-USE
The Consultant shall not, directly or indirectly, at any time during or for a
period of five (5) years after the expiration of this Agreement, disclose to
others except with the prior written consent of Syntro, any confidential data
or information obtained from Syntro under this Agreement, or use the same for
purposes other than those of this Agreement. The obligation of confidentiality
shall be waived as to information that (a) is in the public domain; (b) comes
into the public domain through no fault of Consultant; or (c) with respect to
information furnished by Syntro, can be evidenced in writing to have been known
to Consultant prior to its disclosure by Syntro.
1
<PAGE>
6. CONFLICT OF INTEREST
The Consultant represents that he is not presently and will not knowingly
become party to any agreement, understanding or arrangement that would cause a
conflict of interest to exist by his becoming a party to this Agreement, or
that would preclude his strict compliance with preceding Section 5.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Kansas.
8. COMMUNICATION
All communications from the Consultant to Syntro regarding this Agreement
shall be made to J. Donald Todd, Janice E. Katterhenry or William J. Davies,
or to such other person(s) whom they may designate in writing.
9. ENTIRE AGREEMENT
The terms and conditions herein contained constitute the entire Agreement
between Syntro and the Consultant, and said terms and conditions may not be
waived or amended, except by a written instrument duly executed by Syntro and
the Consultant.
10. DURATION AND TERMINATION
The Consultant's appointment and retention shall continue from the effective
date of this Agreement until terminated as provided hereinafter. Syntro may
terminate the Consultant's appointment and retention with or without cause
upon not less than thirty (30) days written notice. The Consultant may
terminate his appointment and retention with or without cause upon not less
than thirty (30) days written notice. The Consultant's obligation set forth in
Paragraphs 5 and 6 hereof shall survive the termination of the Consultant's
appointment and retention.
Syntro Corporation
Consultant
/s/ J. Donald Todd /s/ H. Lowell Thomas
- ------------------------------------- -------------------------------------
J. Donald Todd, H. Lowell Thomas
President
September 9, 1991 October 28, 1991
Date: ______________________________ Date: _______________________________
2
<PAGE>
AMENDMENT TO CONSULTANCY AGREEMENT
The Consulting Agreement, effective August 14, 1991, by and between Syntro
Corporation and H. Lowell Thomas is hereby amended as follows:
The first sentence of numbered Section 3, Remuneration, of the above
referenced Agreement is amended as follows:
"Syntro shall pay consultant $800.00 per day for services provided
under this Agreement."
The effective date of this Amendment is February 1, 1995.
Syntro Corporation
Consultant
/s/ J. Donald Todd /s/ H. Lowell Thomas
_____________________________________ _____________________________________
J. Donald Todd, H. Lowell Thomas
President
3
<PAGE>
EXHIBIT B-2
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the first day of October,
1992, between Syntro Corporation, a Delaware corporation ("Syntro"), and Judson
D. Todd, a resident of Leawood, Kansas (the "Executive").
witnesseth:
Whereas, the Executive has been serving as President and Chief Executive
Officer of Syntro and President of SyntroVet Incorporated ("SyntroVet"), a
wholly-owned subsidiary of Syntro, under that certain Executive Employment
Agreement dated as of May 31, 1989; and
Whereas, Syntro desires to continue the services of the Executive as
President and Chief Executive Officer of Syntro and as President of SyntroVet,
and the Executive is willing to continue as such on the terms and conditions
hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
capacities of President and Chief Executive Officer of Syntro, and in the
capacity of President of SyntroVet, and the Executive hereby accepts said
engagement upon the terms and conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of October 1, 1992, and shall expire on
September 30, 1995.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered
hereunder, Syntro shall pay the Executive the sum of One Hundred Sixty-five
Thousand ($165,000.00) Dollars per year payable in equal semi-monthly
installments (payable on the 15th and the last day of each month). Said
salary may be increased by Syntro on October 1 of each year, beginning
October 1, 1993, to take into account the nature of the contributions to
Syntro by the Executive and any other factors that may be deemed relevant
by the Compensation Committee of the Board of Directors of Syntro (the
"Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in
any stock option plan(s), employees' stock purchase plan(s), 401(k) savings
plan, retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms
and conditions established by the Compensation Committee or the Board of
Directors of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as mutually
determined by the Executive and the Compensation Committee, and reflected
in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain a life insurance policy on the
life of the Executive in an amount of not less than Five Hundred Thousand
($500,000.00) Dollars and the beneficiary of such policy shall be as designated
from time to time by the Executive. In addition, Syntro
1
<PAGE>
shall obtain and maintain such policies of health and hospitalization and
disability insurance covering the Executive as Syntro shall reasonably
determine to be comparable to policies covering other senior executive officers
of Syntro. The Executive shall be entitled to ten (10) days of sick leave, with
full pay, per calendar year, commencing retroactively to January 1, 1992.
Accrued and unused sick leave will expire as of the last day of each calendar
year.
6. VACATIONS. The Executive shall be entitled to twenty (20) business days of
vacation time, at full salary, each calendar year, commencing retroactively to
January 1, 1992. In the event that, at the end of any calendar year during the
term of this Agreement, there shall be any vacation time of the Executive
remaining unused (including vacation time accrued from prior calendar years),
such accrued and unused vacation time shall be accumulated with previously
accrued but unused vacation time (including up to thirty (30) days of vacation
time accrued and unused prior to January 1, 1992) and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the Chairman of the Board of Syntro. Vacation time
shall be deemed to be used in the reverse chronological order in which it has
accrued so that current year vacation time is used before accrued but unused
vacation time is used. The Executive shall be entitled to such additional
vacation time, without pay, as he and the Chairman of the Board of Syntro shall
from time to time agree. Accrued and unused vacation time, not to exceed sixty
(60) days in total, shall be paid to the Executive on the last day of his
employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. During the term of this
Agreement, the Executive shall devote full time and efforts to the business
affairs of Syntro, shall perform such services as are consistent with his
position and as are from time to time mutually agreed upon by the parties
hereto, and shall use his best efforts to promote the interests of Syntro.
Without limiting the foregoing, the Executive's duties shall include exercising
the general powers and duties of supervision and management of Syntro usually
vested in the president and chief executive officer of a corporation. It is
expressly understood that the Executive's primary mission is to enhance the
growth and value of Syntro through sound management of its assets, including,
without limitation, its personnel, facilities and capital for product-related
research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him in connection with the performance
of his duties hereunder upon the presentation by the Executive from time to
time of itemized accounts of such expenditures. Syntro shall reimburse the
Executive for all business-related travel and entertainment expenses incurred
by him.
10. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
2
<PAGE>
(b) Definition of Cause. For purposes of this Agreement, termination of the
Executive by Syntro shall be deemed to be for "Executive Cause" if the Board of
Directors of Syntro shall have determined in good faith that the Executive has:
(1) willfully neglected his normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
For purposes of this Agreement, termination by the Executive shall be deemed
for "Syntro Cause" if the Executive shall have terminated his employment with
Syntro due to:
(x) the assignment to the Executive of duties not consistent with that of
President or Chief Executive Officer;
(y) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(z) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from Lenexa, Kansas.
11. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his present capacities, Syntro shall provide the Executive with
severance benefits as set forth below, unless he is terminated for Executive
Cause. The Executive shall be paid severance benefits as set forth in Section
12(c) ("Severance Benefits") upon the following conditions:
(1) the termination of his employment with Syntro pursuant to Section
10(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his employment due to
a Syntro Cause, or the Executive's employment is terminated by Syntro or
its successor in interest for any reason other than Executive Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's compensation based on the total
annual rate of base compensation for the Executive in effect prior to the
date of termination or change of control; and
(2) retention of all other employee benefits for a period of one (1)
year. These benefits shall include, but not be limited to, all health,
accident, and disability plans, as well as any life insurance plans,
provided by or through Syntro.
(d) Time of Paying Severance Benefits. The Severance Benefits described in
Section 11(c)(1) shall be payable by Syntro or its successor in interest to the
Executive on the last day of the Executive's employment. The Executive shall
not be required to mitigate the amount of severance benefit by
3
<PAGE>
seeking other employment and none of these payments may be reduced by any
future salary the Executive may earn.
12. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in Kansas City, Kansas, in
accordance with the rules of the American Arbitration Association then
obtaining, and judgment upon any award so rendered may be entered in any court
having jurisdiction thereof.
13. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
14. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
15. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
16. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
17. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
18. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the subject matter hereof. It may not be
changed orally, but only by agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ Stephen O'Neil
By: _________________________________
Stephen O'Neil
Chairman of the Board
Executive:
/s/ Judson D. Todd
-------------------------------------
Judson D. Todd
13920 Kenneth Road
Leawood, Kansas 66224
4
<PAGE>
AMENDMENT NO. 1
TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment No. 1 to Executive Employment Agreement is made and entered
into as of the first day of April, 1995 to amend that certain Executive
Employment Agreement effective as of the first day of October, 1992 by and
between Syntro Corporation, a Delaware corporation ("Syntro"), and Judson D.
Todd, a resident of Leawood, Kansas (the "Executive").
WITNESSETH
Whereas, the Executive has been serving as President and Chief Executive
Officer of Syntro and as an officer of SyntroVet Incorporated ("SyntroVet"), a
wholly-owned subsidiary of Syntro, under that certain Executive Employment
Agreement effective as of the first day of October, 1992 (the "1992
Agreement"); and
Whereas, the term of the 1992 Agreement is scheduled to expire on September
30, 1995; and
Whereas, Syntro desires to extend the term of the 1992 Agreement and thereby
continue the services of the Executive, and the Executive is willing to extend
the term of the 1992 Agreement and continue his services to Syntro and
SyntroVet through and including September 30, 1996 on the terms and conditions
of the 1992 Agreement; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
A. Section 2 of the 1992 Agreement is hereby amended to change the reference to
President of SyntroVet to Chairman of SyntroVet.
B. Section 3 of the 1992 Agreement is hereby amended to change the reference to
September 30, 1995 to September 30, 1996.
C. The 1992 Agreement, as amended hereby, shall continue unchanged and in full
force and effect.
In Witness Whereof, this Amendment No. 1 to Executive Employment Agreement is
effective as of the day and year first above written.
Syntro Corporation Executive:
9669 Lackman Road
Lenexa, Kansas 66219
/s/ Russell T. Stern, Jr.
By: _________________________________
/s/ Judson D. Todd
_____________________________________ _____________________________________
Chairman of the Board Judson D. Todd
13920 Kenneth Road
Leawood, Kansas 66224
5
<PAGE>
AMENDMENT NO. 2
TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment No. 2 to Executive Employment Agreement is made and entered
into as of the 16th day of May, 1995 to amend that certain Executive Employment
Agreement effective as of the first day of October, 1992 by and between SYNTRO
CORPORATION, a Delaware corporation ("Syntro"), and JUDSON D. TODD, a resident
of Leawood, Kansas (the "Executive"), as amended by Amendment No. 1 dated as of
April 1, 1995 (as so amended, the "1992 Agreement").
witnesseth:
Whereas, the term of the 1992 Agreement is scheduled to expire on September
30, 1996; and
Whereas, Syntro desires to extend the term of the 1992 Agreement so as to be
coterminous with executive employment agreements with other executives of
Syntro, and the Executive is willing to extend the term of the 1992 Agreement
and continue his services to Syntro and SyntroVet, through and including
February 28, 1997 on the terms and conditions of the 1992 Agreement; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
A. Section 3 of the 1992 Agreement (as amended by Paragraph B of Amendment No.
1) is hereby amended to change the reference of "September 30, 1996" to
"February 28, 1997."
B.The 1992 Agreement, as amended hereby, shall continue in full force and
effect.
In Witness Whereof, this Amendment No. 2 to Executive Employment Agreement is
effective as of the day and year first above written.
Syntro Corporation Executive:
9669 Lackman Road
Lenexa, Kansas 66219
/s/ Russell T. Stern, Jr. /s/ Judson D. Todd
By: _________________________________ _____________________________________
Russell T. Stern, Jr., Judson D. Todd
Chairman of the Board 13920 Kenneth Road
Leawood, Kansas 66224
6
<PAGE>
EXHIBIT B-3
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the 21st day of February,
1995, between Syntro Corporation, a Delaware corporation ("Syntro"), and
William J. Davies, a resident of Leawood, Kansas (the "Executive").
Witnesseth:
Whereas, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
Whereas, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
Whereas, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
Offices, and the Executive hereby accepts said engagement upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered hereunder,
Syntro shall pay the Executive the annual salary set forth on Schedule A,
payable in equal semi-monthly installments (payable on the 15th and the last
day of each month). Said salary may be increased by Syntro to take into account
the nature of the contributions to Syntro by the Executive and any other
factors that may be deemed relevant by the Compensation Committee of the Board
of Directors of Syntro (the "Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in any
stock option plan(s), employees' stock purchase plan(s), 401(k) savings plan,
retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms and
conditions established by the Compensation Committee or the Board of Directors
of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his (her) employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as determined by the
Executive, the President of Syntro and the Compensation Committee, and
reflected in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain such policies of health,
hospitalization, disability and life insurance covering the Executive as Syntro
shall reasonably determine to be
1
<PAGE>
comparable to policies covering other senior executive officers of Syntro. The
Executive shall be entitled to ten (10) days of sick leave, with full pay, per
calendar year. Accrued and unused sick leave will expire in accordance with the
Company policy then in effect.
6. VACATIONS. The Executive shall be entitled to the number of business days
of vacation time as shall be indicated on Schedule A, at full salary, each
calendar year, commencing retroactively to the Effective Date of Vacation
Accrual set forth on Schedule A. In the event that, at the end of any calendar
year during the term of this Agreement, there shall be any vacation time of the
Executive remaining unused (including vacation time accrued from prior calendar
years), such accrued and unused vacation time shall be accumulated with
previously accrued but unused vacation time and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the President of Syntro. Vacation time shall be
deemed to be used in the reverse chronological order in which it has accrued so
that current year vacation time is used before accrued but unused vacation time
is used. The Executive shall be entitled to such additional vacation time,
without pay, as he (she) and the President of Syntro shall from time to time
agree. Accrued and unused vacation time, not to exceed sixty (60) days in
total, shall be paid to the Executive on the last day of his (her) employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. The Executive shall devote his
(her) full and exclusive business time, attention, energies and best efforts to
the performance of his duties hereunder, in such manner and at such times as
may be determined by the President or the Board of Directors from time to time,
in accordance with the usual standards of ethics and the usual customs and
procedures applicable to the commercial businesses in which Syntro is engaged.
During the term of this Agreement, or any extension hereof, the Executive shall
neither directly nor indirectly be employed by any other person, firm or
corporation, in any capacity whatsoever except (a) as a director or the like of
any business or charitable entity or organization provided such entity or
organization is not engaged in activity competitive with Syntro or its
affiliates, and (b) as an officer and/or director of any corporation or manager
of any limited liability company as requested by Syntro. It is expressly
understood that the Executive's primary mission is to enhance the growth and
value of Syntro through sound management of its assets, including, without
limitation, its personnel, facilities, technologies, and capital for product-
related research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him (her) in connection with the
performance of his (her) duties hereunder upon the presentation by the
Executive from time to time of itemized accounts of such expenditures. Syntro
shall reimburse the Executive for all business-related travel and entertainment
expenses incurred by him (her).
10. EXECUTIVE COVENANTS. To induce Syntro to execute, deliver and perform
this Agreement, and for $10.00 in hand paid, Executive hereby covenants and
agrees:
(a) Nondisclosure of Information--The Executive acknowledges that Syntro's
business and financial records, customer and client lists, trade secrets and
confidential planning or policy matters, and any secret or confidential
operational, research, product development, management, financial, accounting,
control, system, marketing or tax information relating to the business of
Syntro and other confidential methods of operations or plans, as they may exist
from time to time ("confidential information") are valuable and unique assets
of Syntro, access to and knowledge of which are essential to performance of his
(her) duties hereunder, and therefore he (she) agrees he (she) will not, during
his
2
<PAGE>
(her) employment and for a period of five (5) years thereafter, disclose such
confidential information to any person or other entity who is or will be a
direct competitor of Syntro conducting business in the "territory" (hereinafter
defined in Paragraph 10(b) below), nor during said period of time shall the
Executive make use of any such confidential information for his (her) own
purposes or benefit in the territory or for the benefit of any person or other
entity (except for Syntro, or any affiliate thereof) who is or will be a direct
competition of Syntro conducting business in the territory. The foregoing is in
addition to and not in replacement for the Confidentiality Agreement executed
and delivered by the Executive upon commencing employment with Syntro, which
Confidentiality Agreement is hereby ratified and confirmed.
(b) Executive's Restrictive Covenants--As a paramount inducement to Syntro to
enter into this Executive Employment Agreement and to agree to pay to the
Executive his (her) regular compensation, bonuses and the other payments and
fringe benefits provided hereunder, and in view of the Executive's services and
his (her) access to the confidential information described above, the Executive
agrees that during the period of his (her) employment by Syntro and for a
period of 12 months after termination of his (her) employment, for any reason
whatsoever with Syntro, other than a Syntro Cause or by Syntro without
Executive Cause, or the balance of the time remaining of such original stated
period from the date of the entry by a court of competent jurisdiction of a
final non-appealable judgment or order enforcing the subject covenant, the
Executive will not, directly or indirectly, on his (her) own account, or as an
employee, consultant, adviser, partner, co-venturer, owner, member, manager,
officer, director or stockholder of any other person, firm, partnership,
limited liability company, or corporation:
(i) conduct, engage in, be connected with, or directly aid or assist as a
member of or consultant to management anyone else to engage in, a business
directly competitive with the vaccine product line of Syntro throughout the
United States of America, its territories, possessions, protectorates and
commonwealths; so long as and provided Syntro products are sold in the
territory described above during said applicable period of time (the
foregoing is not intended to preclude the Executive from pursuing other
opportunities in the animal health industry); nor
(ii) during such time, directly or indirectly, sell or solicit sales for
products competitive with those of Syntro, or to service, consult with,
divert, take away, transfer or interfere with any of the collaborative
partners or customers of Syntro; nor
(iii) during such time, directly or indirectly, for himself (herself) or
on behalf of any other person or entity in which he (she) shall have any
direct or indirect business or employment interest (collectively an
"affiliated entity"), induce or attempt to induce any present or future
management or other key employee of Syntro to leave the employ of Syntro
and/or to seek or accept employment with the Executive or any affiliated
entity, nor shall he (she) negotiate with any such employee in the employ
of Syntro with respect to such person's present or future employment
outside of Syntro.
However, nothing herein contained shall prevent the Executive during the time
indicated from purchasing and owning stock in any corporation listed on any
stock exchange or traded in the over-the-counter market provided such purchases
shall not result in the Executive owning in the aggregate directly or
beneficially, three percent (3%) or more of the equity securities of any
corporation or other entity engaged in a business which is competitive to that
of Syntro.
The Executive further agrees that, in view of the present scope of Syntro's
business activities, the time periods, territory and scope of activities
specified above describe the minimum reasonable time, area and scope of
activities necessary to protect Syntro and its successors and assigns, in the
use of the good will of the business to be conducted by Syntro, and therefore
he (she) agrees that Syntro, in case of violation of this Paragraph 10(b), may
have injunctive relief, without bond (but upon due notice) in addition to such
other relief as may appertain in equity or at law. No waiver of any violation
hereof shall be implied from Syntro's forbearance or failure to take action in
pursuance hereof. All covenants
3
<PAGE>
and provisions of this Paragraph 10(b) constitute a series of separate
covenants, and if any particular portion of this Paragraph 10(b) is adjudicated
invalid or unenforceable, the same shall be deemed deleted without affecting
the validity and enforcement of the other provisions hereof, and if any
provision hereof is deemed unenforceable because of its scope in terms of area,
time or business activities, the parties agree that the same may be made
enforceable by reductions or limitations thereon so as to be enforceable to the
fullest extent permissible under the laws and public policies of any applicable
jurisdiction.
The provisions of this Paragraph 10 shall continue in full force and effect
notwithstanding the termination of this Employment Agreement.
11. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
(b) Definition of Executive Cause. For purposes of this Agreement,
termination of the Executive by Syntro shall be deemed to be for "Executive
Cause" if the Board of Directors of Syntro shall have determined in good faith
that the Executive has:
(1) willfully neglected his (her) normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein
including, without limitation, the covenants set forth in Section 10;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
(c) Definition of Syntro Cause. For purposes of this Agreement, termination
by the Executive shall be deemed for "Syntro Cause" if the Executive shall have
terminated his employment with Syntro due to:
(1) the assignment to the Executive of duties not consistent with that of
his (her) Offices or demanding additional, official work days per week;
(2) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(3) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from the Syntro facility
at which the Executive predominantly performs his (her) duties as indicated
on Schedule A (the "Executive's Facility").
12. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his (her) present capacities, Syntro shall provide the Executive
with severance benefits as set forth below,
4
<PAGE>
unless he (she) is terminated for Executive Cause. The Executive shall receive
the severance benefits as set forth in Section 12(c) ("Severance Benefits")
upon the following conditions:
(1) the termination of his (her) employment with Syntro pursuant to
Section 11(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his (her) employment
due to a Syntro Cause, or the Executive's employment is terminated by
Syntro or its successor in interest for any reason other than Executive
Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's salary based on the total annual
rate of base compensation for the Executive in effect prior to the date of
termination or change of control;
(2) continued participation in all employee benefits for a period of one
(1) year. Should such participation not be possible due to terms of the
employee benefit plans, equivalent benefits shall be provided to the
Executive through alternative means. These benefits shall include, but not
be limited to, all health, accident, and disability plans, as well as any
life insurance plans, provided by or through Syntro; and
(3) a release and discharge of the covenants set forth in Section 10(b).
(d) Time of Paying Severance Benefits. The Severance Benefits described above
shall be payable by Syntro or its successor in interest to the Executive on the
last day of the Executive's employment. The Executive shall not be required to
mitigate the amount of severance benefit by seeking other employment and none
of these payments may be reduced by any future salary the Executive may earn.
13. DISABILITY AND DEATH.
(a) In the event of the Executive's "Disability" (as hereinafter defined),
Syntro or the Executive shall have the right to terminate the Executive's
employment hereunder. For purposes hereof, "Disability" shall mean the
Executive's inability to render services to Syntro customarily expected of him
(her) because of a medically determinable physical or mental illness, injury or
impairment expected to result either in death or to be of long, continued and
indefinite duration and for such reason, the Executive himself (herself) or the
Board of Directors of Syntro in good faith shall have determined to terminate
his (her) employment with Syntro provided, however, (i) neither the Executive
nor the Board shall have the right to terminate the Executive's employment on
the basis of a Disability unless such Disability shall have continued for a
period of one-hundred and twenty (120) calendar days and (ii) if either party
shall object to such determination of Disability, such Disability shall be
conclusively determined by an independent physician selected in good faith by
the Board for such purpose and whose determination shall be final and
conclusive on the parties hereto. Notwithstanding the foregoing, (1) the
Executive's absence from work because of any such illness, injury or impairment
for a continued period of 180 calendar days shall be deemed conclusive evidence
of such Disability and (2) a continuous period of Disability absence shall not
be deemed interrupted until the Executive returns to substantially full-time
work for a period of at least 22 successive business days.
5
<PAGE>
During the first 120 calendar days of such Disability, the Executive's
compensation hereunder shall be continued. After such 120 calendar days of
Disability, if the Executive's employment continues but the Executive is unable
to render the type or quality of services to Syntro customarily expected of him
(her) before any such Disability, no further regular compensation need be paid
by Syntro, except as otherwise mutually agreed to between the parties for any
services that the Executive may be capable of actually rendering. If, during
any such period of Disability, the Executive shall be entitled to receive
disability payments under the terms of any disability insurance program
maintained by Syntro or under any federal or state mandated disability
insurance program, the salary otherwise payable by Syntro shall be reduced, but
not below zero, by the amounts that the Executive is entitled to receive under
such disability insurance programs or laws for any of the periods during which
the Executive's Salary is to be continued pursuant to the foregoing provisions
of this Paragraph.
(b) The death of the Executive shall terminate this Agreement.
14. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the City in which there is
located the Executive's Facility as set forth on Schedule A, in accordance with
the rules of the American Arbitration Association then obtaining, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.
15. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
16. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
17. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
18. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
20. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision hereof.
21. TAXES. Syntro shall be entitled to deduct or withhold all applicable
payroll and social security taxes where required on all applicable compensation
paid to the Executive or any successor in interest.
22. RETURN OF DOCUMENTS. Upon termination of his (her) employment with Syntro
for any reason, the Executive shall forthwith deliver to Syntro and return, and
shall not retain, any originals or copies of any confidential information or
other books, papers, price or premium lists, client or customer contracts,
customer or client lists, files, books of account, notes and other documents
and data or other writings, tapes or records of the Executive (all of the same
are hereby agreed to be the exclusive property of Syntro).
23. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the
6
<PAGE>
subject matter hereof. It may not be changed orally, but only by agreement in
writing and signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
24. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of residence of the Executive as of the date hereof.
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Executive:
/s/ William J. Davies
-------------------------------------
Name: William J. Davies
Address:13121 Windsor Circle
Leawood, KS 66209
7
<PAGE>
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
----------------
Offices at Syntro:Vice President, Animal Health
Offices at SyntroVet:President
Initial Annual Salary:$114,400.00
No. of Business Days of
Vacation Time Per Calendar Year: 20
Effective Date of Vacation Accrual: January 1, 1995
Expiration Date of Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
8
<PAGE>
EXHIBIT B-4
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the 21st day of February,
1995, between Syntro Corporation, a Delaware corporation ("Syntro"), and Susan
H. Strobel, a resident of Leawood, Kansas (the "Executive").
Witnesseth:
Whereas, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
Whereas, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
Whereas, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
Offices, and the Executive hereby accepts said engagement upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered hereunder,
Syntro shall pay the Executive the annual salary set forth on Schedule A,
payable in equal semi-monthly installments (payable on the 15th and the last
day of each month). Said salary may be increased by Syntro to take into account
the nature of the contributions to Syntro by the Executive and any other
factors that may be deemed relevant by the Compensation Committee of the Board
of Directors of Syntro (the "Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in any
stock option plan(s), employees' stock purchase plan(s), 401(k) savings plan,
retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms and
conditions established by the Compensation Committee or the Board of Directors
of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his (her) employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as determined by the
Executive, the President of Syntro and the Compensation Committee, and
reflected in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain such policies of health,
hospitalization, disability and life insurance covering the Executive as Syntro
shall reasonably determine to be comparable to
1
<PAGE>
policies covering other senior executive officers of Syntro. The Executive
shall be entitled to ten (10) days of sick leave, with full pay, per calendar
year. Accrued and unused sick leave will expire in accordance with the Company
policy then in effect.
6. VACATIONS. The Executive shall be entitled to the number of business days
of vacation time as shall be indicated on Schedule A, at full salary, each
calendar year, commencing retroactively to the Effective Date of Vacation
Accrual set forth on Schedule A. In the event that, at the end of any calendar
year during the term of this Agreement, there shall be any vacation time of the
Executive remaining unused (including vacation time accrued from prior calendar
years), such accrued and unused vacation time shall be accumulated with
previously accrued but unused vacation time and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the President of Syntro. Vacation time shall be
deemed to be used in the reverse chronological order in which it has accrued so
that current year vacation time is used before accrued but unused vacation time
is used. The Executive shall be entitled to such additional vacation time,
without pay, as he (she) and the President of Syntro shall from time to time
agree. Accrued and unused vacation time, not to exceed sixty (60) days in
total, shall be paid to the Executive on the last day of his (her) employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. The Executive shall devote his
(her) full and exclusive business time, attention, energies and best efforts to
the performance of his duties hereunder, in such manner and at such times as
may be determined by the President or the Board of Directors from time to time,
in accordance with the usual standards of ethics and the usual customs and
procedures applicable to the commercial businesses in which Syntro is engaged.
During the term of this Agreement, or any extension hereof, the Executive shall
neither directly nor indirectly be employed by any other person, firm or
corporation, in any capacity whatsoever except (a) as a director or the like of
any business or charitable entity or organization provided such entity or
organization is not engaged in activity competitive with Syntro or its
affiliates, and (b) as an officer and/or director of any corporation or manager
of any limited liability company as requested by Syntro. It is expressly
understood that the Executive's primary mission is to enhance the growth and
value of Syntro through sound management of its assets, including, without
limitation, its personnel, facilities, technologies, and capital for product-
related research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him (her) in connection with the
performance of his (her) duties hereunder upon the presentation by the
Executive from time to time of itemized accounts of such expenditures. Syntro
shall reimburse the Executive for all business-related travel and entertainment
expenses incurred by him (her).
10. EXECUTIVE COVENANTS. To induce Syntro to execute, deliver and perform
this Agreement, and for $10.00 in hand paid, Executive hereby covenants and
agrees:
(a) Nondisclosure of Information--The Executive acknowledges that Syntro's
business and financial records, customer and client lists, trade secrets and
confidential planning or policy matters, and any secret or confidential
operational, research, product development, management, financial, accounting,
control, system, marketing or tax information relating to the business of
Syntro and other confidential methods of operations or plans, as they may exist
from time to time ("confidential information") are valuable and unique assets
of Syntro, access to and knowledge of which are essential to performance of his
(her) duties hereunder, and therefore he (she) agrees he (she) will not, during
his
2
<PAGE>
(her) employment and for a period of five (5) years thereafter, disclose such
confidential information to any person or other entity who is or will be a
direct competitor of Syntro conducting business in the "territory" (hereinafter
defined in Paragraph 10(b) below), nor during said period of time shall the
Executive make use of any such confidential information for his (her) own
purposes or benefit in the territory or for the benefit of any person or other
entity (except for Syntro, or any affiliate thereof) who is or will be a direct
competition of Syntro conducting business in the territory. The foregoing is in
addition to and not in replacement for the Confidentiality Agreement executed
and delivered by the Executive upon commencing employment with Syntro, which
Confidentiality Agreement is hereby ratified and confirmed.
(b) Executive's Restrictive Covenants--As a paramount inducement to Syntro to
enter into this Executive Employment Agreement and to agree to pay to the
Executive his (her) regular compensation, bonuses and the other payments and
fringe benefits provided hereunder, and in view of the Executive's services and
his (her) access to the confidential information described above, the Executive
agrees that during the period of his (her) employment by Syntro and for a
period of 12 months after termination of his (her) employment, for any reason
whatsoever with Syntro, other than a Syntro Cause or by Syntro without
Executive Cause, or the balance of the time remaining of such original stated
period from the date of the entry by a court of competent jurisdiction of a
final non-appealable judgment or order enforcing the subject covenant, the
Executive will not, directly or indirectly, on his (her) own account, or as an
employee, consultant, adviser, partner, co-venturer, owner, member, manager,
officer, director or stockholder of any other person, firm, partnership,
limited liability company, or corporation:
(i) conduct, engage in, be connected with, or directly aid or assist as a
member of or consultant to management anyone else to engage in, a business
directly competitive with the vaccine product line of Syntro throughout the
United States of America, its territories, possessions, protectorates and
commonwealths; so long as and provided Syntro products are sold in the
territory described above during said applicable period of time (the
foregoing is not intended to preclude the Executive from pursuing other
opportunities in the animal health industry); nor
(ii) during such time, directly or indirectly, sell or solicit sales for
products competitive with those of Syntro, or to service, consult with,
divert, take away, transfer or interfere with any of the collaborative
partners or customers of Syntro; nor
(iii) during such time, directly or indirectly, for himself (herself) or
on behalf of any other person or entity in which he (she) shall have any
direct or indirect business or employment interest (collectively an
"affiliated entity"), induce or attempt to induce any present or future
management or other key employee of Syntro to leave the employ of Syntro
and/or to seek or accept employment with the Executive or any affiliated
entity, nor shall he (she) negotiate with any such employee in the employ
of Syntro with respect to such person's present or future employment
outside of Syntro.
However, nothing herein contained shall prevent the Executive during the time
indicated from purchasing and owning stock in any corporation listed on any
stock exchange or traded in the over-the-counter market provided such purchases
shall not result in the Executive owning in the aggregate directly or
beneficially, three percent (3%) or more of the equity securities of any
corporation or other entity engaged in a business which is competitive to that
of Syntro.
The Executive further agrees that, in view of the present scope of Syntro's
business activities, the time periods, territory and scope of activities
specified above describe the minimum reasonable time, area and scope of
activities necessary to protect Syntro and its successors and assigns, in the
use of the good will of the business to be conducted by Syntro, and therefore
he (she) agrees that Syntro, in case of violation of this Paragraph 10(b), may
have injunctive relief, without bond (but upon due notice) in addition to such
other relief as may appertain in equity or at law. No waiver of any violation
hereof shall be implied from Syntro's forbearance or failure to take action in
pursuance hereof. All covenants
3
<PAGE>
and provisions of this Paragraph 10(b) constitute a series of separate
covenants, and if any particular portion of this Paragraph 10(b) is adjudicated
invalid or unenforceable, the same shall be deemed deleted without affecting
the validity and enforcement of the other provisions hereof, and if any
provision hereof is deemed unenforceable because of its scope in terms of area,
time or business activities, the parties agree that the same may be made
enforceable by reductions or limitations thereon so as to be enforceable to the
fullest extent permissible under the laws and public policies of any applicable
jurisdiction.
The provisions of this Paragraph 10 shall continue in full force and effect
notwithstanding the termination of this Employment Agreement.
11. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
(b) Definition of Executive Cause. For purposes of this Agreement,
termination of the Executive by Syntro shall be deemed to be for "Executive
Cause" if the Board of Directors of Syntro shall have determined in good faith
that the Executive has:
(1) willfully neglected his (her) normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein
including, without limitation, the covenants set forth in Section 10;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
(c) Definition of Syntro Cause. For purposes of this Agreement, termination
by the Executive shall be deemed for "Syntro Cause" if the Executive shall have
terminated his employment with Syntro due to:
(1) the assignment to the Executive of duties not consistent with that of
his (her) Offices or demanding additional, official work days per week;
(2) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(3) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from the Syntro facility
at which the Executive predominantly performs his (her) duties as indicated
on Schedule A (the "Executive's Facility").
12. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his (her) present capacities, Syntro shall provide the Executive
with severance benefits as set forth below,
4
<PAGE>
unless he (she) is terminated for Executive Cause. The Executive shall receive
the severance benefits as set forth in Section 12(c) ("Severance Benefits")
upon the following conditions:
(1) the termination of his (her) employment with Syntro pursuant to
Section 11(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his (her) employment
due to a Syntro Cause, or the Executive's employment is terminated by
Syntro or its successor in interest for any reason other than Executive
Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's salary based on the total annual
rate of base compensation for the Executive in effect prior to the date of
termination or change of control;
(2) continued participation in all employee benefits for a period of one
(1) year. Should such participation not be possible due to terms of the
employee benefit plans, equivalent benefits shall be provided to the
Executive through alternative means. These benefits shall include, but not
be limited to, all health, accident, and disability plans, as well as any
life insurance plans, provided by or through Syntro; and
(3) a release and discharge of the covenants set forth in Section 10(b).
(d) Time of Paying Severance Benefits. The Severance Benefits described above
shall be payable by Syntro or its successor in interest to the Executive on the
last day of the Executive's employment. The Executive shall not be required to
mitigate the amount of severance benefit by seeking other employment and none
of these payments may be reduced by any future salary the Executive may earn.
13. DISABILITY AND DEATH.
(a) In the event of the Executive's "Disability" (as hereinafter defined),
Syntro or the Executive shall have the right to terminate the Executive's
employment hereunder. For purposes hereof, "Disability" shall mean the
Executive's inability to render services to Syntro customarily expected of him
(her) because of a medically determinable physical or mental illness, injury or
impairment expected to result either in death or to be of long, continued and
indefinite duration and for such reason, the Executive himself (herself) or the
Board of Directors of Syntro in good faith shall have determined to terminate
his (her) employment with Syntro provided, however, (i) neither the Executive
nor the Board shall have the right to terminate the Executive's employment on
the basis of a Disability unless such Disability shall have continued for a
period of one-hundred and twenty (120) calendar days and (ii) if either party
shall object to such determination of Disability, such Disability shall be
conclusively determined by an independent physician selected in good faith by
the Board for such purpose and whose determination shall be final and
conclusive on the parties hereto. Notwithstanding the foregoing, (1) the
Executive's absence from work because of any such illness, injury or impairment
for a continued period of 180 calendar days shall be deemed conclusive evidence
of such Disability and (2) a continuous period of Disability absence shall not
be deemed interrupted until the Executive returns to substantially full-time
work for a period of at least 22 successive business days.
5
<PAGE>
During the first 120 calendar days of such Disability, the Executive's
compensation hereunder shall be continued. After such 120 calendar days of
Disability, if the Executive's employment continues but the Executive is unable
to render the type or quality of services to Syntro customarily expected of him
(her) before any such Disability, no further regular compensation need be paid
by Syntro, except as otherwise mutually agreed to between the parties for any
services that the Executive may be capable of actually rendering. If, during
any such period of Disability, the Executive shall be entitled to receive
disability payments under the terms of any disability insurance program
maintained by Syntro or under any federal or state mandated disability
insurance program, the salary otherwise payable by Syntro shall be reduced, but
not below zero, by the amounts that the Executive is entitled to receive under
such disability insurance programs or laws for any of the periods during which
the Executive's Salary is to be continued pursuant to the foregoing provisions
of this Paragraph.
(b) The death of the Executive shall terminate this Agreement.
14. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the City in which there is
located the Executive's Facility as set forth on Schedule A, in accordance with
the rules of the American Arbitration Association then obtaining, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.
15. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
16. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
17. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
18. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
20. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision hereof.
21. TAXES. Syntro shall be entitled to deduct or withhold all applicable
payroll and social security taxes where required on all applicable compensation
paid to the Executive or any successor in interest.
22. RETURN OF DOCUMENTS. Upon termination of his (her) employment with Syntro
for any reason, the Executive shall forthwith deliver to Syntro and return, and
shall not retain, any originals or copies of any confidential information or
other books, papers, price or premium lists, client or customer contracts,
customer or client lists, files, books of account, notes and other documents
and data or other writings, tapes or records of the Executive (all of the same
are hereby agreed to be the exclusive property of Syntro).
6
<PAGE>
23. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the subject matter hereof. It may not be
changed orally, but only by agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
24. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of residence of the Executive as of the date hereof.
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Executive:
/s/ Susan H. Strobel
-------------------------------------
Name: Susan H. Strobel
Address: 8816 Norwood
Leawood, KS 66206
7
<PAGE>
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
----------------
Offices at Syntro: Vice President, Finance & Administration;
Chief Financial Officer; Treasurer
Initial Annual Salary: $98,800.00
No. of Business Days of Vacation
Time Per Calendar Year: 15
Effective Date of Vacation Accrual: January 1, 1995
Expiration Date of Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
8
<PAGE>
EXHIBIT B-5
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the 3rd day of March, 1995,
between Syntro Corporation, a Delaware corporation ("Syntro"), and Janis K.
McMillen, a resident of Overland Park, Kansas (the "Executive").
witnesseth:
Whereas, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
Whereas, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
Whereas, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
Offices, and the Executive hereby accepts said engagement upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered hereunder,
Syntro shall pay the Executive the annual salary set forth on Schedule A,
payable in equal semi-monthly installments (payable on the 15th and the last
day of each month). Said salary may be increased by Syntro to take into account
the nature of the contributions to Syntro by the Executive and any other
factors that may be deemed relevant by the Compensation Committee of the Board
of Directors of Syntro (the "Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in any
stock option plan(s), employees' stock purchase plan(s), 401(k) savings plan,
retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms and
conditions established by the Compensation Committee or the Board of Directors
of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his (her) employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as determined by the
Executive, the President of Syntro and the Compensation Committee, and
reflected in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain such policies of health,
hospitalization, disability and life insurance covering the Executive as Syntro
shall reasonably determine to be comparable to
1
<PAGE>
policies covering other senior executive officers of Syntro. The Executive
shall be entitled to ten (10) days of sick leave, with full pay, per calendar
year. Accrued and unused sick leave will expire in accordance with the Company
policy then in effect.
6. VACATIONS. The Executive shall be entitled to the number of business days
of vacation time as shall be indicated on Schedule A, at full salary, each
calendar year, commencing retroactively to the Effective Date of Vacation
Accrual set forth on Schedule A. In the event that, at the end of any calendar
year during the term of this Agreement, there shall be any vacation time of the
Executive remaining unused (including vacation time accrued from prior calendar
years), such accrued and unused vacation time shall be accumulated with
previously accrued but unused vacation time and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the President of Syntro. Vacation time shall be
deemed to be used in the reverse chronological order in which it has accrued so
that current year vacation time is used before accrued but unused vacation time
is used. The Executive shall be entitled to such additional vacation time,
without pay, as he (she) and the President of Syntro shall from time to time
agree. Accrued and unused vacation time, not to exceed sixty (60) days in
total, shall be paid to the Executive on the last day of his (her) employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. The Executive shall devote his
(her) full and exclusive business time, attention, energies and best efforts to
the performance of his duties hereunder, in such manner and at such times as
may be determined by the President or the Board of Directors from time to time,
in accordance with the usual standards of ethics and the usual customs and
procedures applicable to the commercial businesses in which Syntro is engaged.
During the term of this Agreement, or any extension hereof, the Executive shall
neither directly nor indirectly be employed by any other person, firm or
corporation, in any capacity whatsoever except (a) as a director or the like of
any business or charitable entity or organization provided such entity or
organization is not engaged in activity competitive with Syntro or its
affiliates, and (b) as an officer and/or director of any corporation or manager
of any limited liability company as requested by Syntro. It is expressly
understood that the Executive's primary mission is to enhance the growth and
value of Syntro through sound management of its assets, including, without
limitation, its personnel, facilities, technologies, and capital for product-
related research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him (her) in connection with the
performance of his (her) duties hereunder upon the presentation by the
Executive from time to time of itemized accounts of such expenditures. Syntro
shall reimburse the Executive for all business-related travel and entertainment
expenses incurred by him (her).
10. EXECUTIVE COVENANTS. To induce Syntro to execute, deliver and perform
this Agreement, and for $10.00 in hand paid, Executive hereby covenants and
agrees:
(a) Nondisclosure of Information--The Executive acknowledges that Syntro's
business and financial records, customer and client lists, trade secrets and
confidential planning or policy matters, and any secret or confidential
operational, research, product development, management, financial, accounting,
control, system, marketing or tax information relating to the business of
Syntro and other confidential methods of operations or plans, as they may exist
from time to time ("confidential information") are valuable and unique assets
of Syntro, access to and knowledge of which are essential
2
<PAGE>
to performance of his (her) duties hereunder, and therefore he (she) agrees he
(she) will not, during his (her) employment and for a period of five (5) years
thereafter, disclose such confidential information to any person or other
entity who is or will be a direct competitor of Syntro conducting business in
the "territory" (hereinafter defined in Paragraph 10(b) below), nor during said
period of time shall the Executive make use of any such confidential
information for his (her) own purposes or benefit in the territory or for the
benefit of any person or other entity (except for Syntro, or any affiliate
thereof) who is or will be a direct competition of Syntro conducting business
in the territory. The foregoing is in addition to and not in replacement for
the Confidentiality Agreement executed and delivered by the Executive upon
commencing employment with Syntro, which Confidentiality Agreement is hereby
ratified and confirmed.
(b) Executive's Restrictive Covenants--As a paramount inducement to Syntro to
enter into this Executive Employment Agreement and to agree to pay to the
Executive his (her) regular compensation, bonuses and the other payments and
fringe benefits provided hereunder, and in view of the Executive's services and
his (her) access to the confidential information described above, the Executive
agrees that during the period of his (her) employment by Syntro and for a
period of 12 months after termination of his (her) employment, for any reason
whatsoever with Syntro, other than a Syntro Cause or by Syntro without
Executive Cause, or the balance of the time remaining of such original stated
period from the date of the entry by a court of competent jurisdiction of a
final non-appealable judgment or order enforcing the subject covenant, the
Executive will not, directly or indirectly, on his (her) own account, or as an
employee, consultant, adviser, partner, co-venturer, owner, member, manager,
officer, director or stockholder of any other person, firm, partnership,
limited liability company, or corporation:
(i) conduct, engage in, be connected with, or directly aid or assist as a
member of or consultant to management anyone else to engage in, a business
directly competitive with the vaccine product line of Syntro throughout the
United States of America, its territories, possessions, protectorates and
commonwealths; so long as and provided Syntro products are sold in the
territory described above during said applicable period of time (the
foregoing is not intended to preclude the Executive from pursuing other
opportunities in the animal health industry); nor
(ii) during such time, directly or indirectly, sell or solicit sales for
products competitive with those of Syntro, or to service, consult with,
divert, take away, transfer or interfere with any of the collaborative
partners or customers of Syntro; nor
(iii) during such time, directly or indirectly, for himself (herself) or
on behalf of any other person or entity in which he (she) shall have any
direct or indirect business or employment interest (collectively an
"affiliated entity"), induce or attempt to induce any present or future
management or other key employee of Syntro to leave the employ of Syntro
and/or to seek or accept employment with the Executive or any affiliated
entity, nor shall he (she) negotiate with any such employee in the employ
of Syntro with respect to such person's present or future employment
outside of Syntro.
However, nothing herein contained shall prevent the Executive during the time
indicated from purchasing and owning stock in any corporation listed on any
stock exchange or traded in the over-the-counter market provided such purchases
shall not result in the Executive owning in the aggregate directly or
beneficially, three percent (3%) or more of the equity securities of any
corporation or other entity engaged in a business which is competitive to that
of Syntro.
The Executive further agrees that, in view of the present scope of Syntro's
business activities, the time periods, territory and scope of activities
specified above describe the minimum reasonable time, area and scope of
activities necessary to protect Syntro and its successors and assigns, in the
use of the good will of the business to be conducted by Syntro, and therefore
he (she) agrees that Syntro, in case of violation of this Paragraph 10(b), may
have injunctive relief, without bond (but upon due notice) in addition to such
other relief as may appertain in equity or at law. No waiver of any violation
hereof
3
<PAGE>
shall be implied from Syntro's forbearance or failure to take action in
pursuance hereof. All covenants and provisions of this Paragraph 10(b)
constitute a series of separate covenants, and if any particular portion of
this Paragraph 10(b) is adjudicated invalid or unenforceable, the same shall be
deemed deleted without affecting the validity and enforcement of the other
provisions hereof, and if any provision hereof is deemed unenforceable because
of its scope in terms of area, time or business activities, the parties agree
that the same may be made enforceable by reductions or limitations thereon so
as to be enforceable to the fullest extent permissible under the laws and
public policies of any applicable jurisdiction.
The provisions of this Paragraph 10 shall continue in full force and effect
notwithstanding the termination of this Employment Agreement.
11. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
(b) Definition of Executive Cause. For purposes of this Agreement,
termination of the Executive by Syntro shall be deemed to be for "Executive
Cause" if the Board of Directors of Syntro shall have determined in good faith
that the Executive has:
(1) willfully neglected his (her) normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein
including, without limitation, the covenants set forth in Section 10;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
(c) Definition of Syntro Cause. For purposes of this Agreement, termination
by the Executive shall be deemed for "Syntro Cause" if the Executive shall have
terminated his employment with Syntro due to:
(1) the assignment to the Executive of duties not consistent with that of
his (her) Offices or demanding additional, official work days per week;
(2) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(3) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from the Syntro facility
at which the Executive predominantly performs his (her) duties as indicated
on Schedule A (the "Executive's Facility").
12. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his (her) present capacities, Syntro shall provide the Executive
with severance benefits as set forth below,
4
<PAGE>
unless he (she) is terminated for Executive Cause. The Executive shall receive
the severance benefits as set forth in Section 12(c) ("Severance Benefits")
upon the following conditions:
(1) the termination of his (her) employment with Syntro pursuant to
Section 11(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his (her) employment
due to a Syntro Cause, or the Executive's employment is terminated by
Syntro or its successor in interest for any reason other than Executive
Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's salary based on the total annual
rate of base compensation for the Executive in effect prior to the date of
termination or change of control;
(2) continued participation in all employee benefits for a period of one
(1) year. Should such participation not be possible due to terms of the
employee benefit plans, equivalent benefits shall be provided to the
Executive through alternative means. These benefits shall include, but not
be limited to, all health, accident, and disability plans, as well as any
life insurance plans, provided by or through Syntro; and
(3) a release and discharge of the covenants set forth in Section 10(b).
(d) Time of Paying Severance Benefits. The Severance Benefits described above
shall be payable by Syntro or its successor in interest to the Executive on the
last day of the Executive's employment. The Executive shall not be required to
mitigate the amount of severance benefit by seeking other employment and none
of these payments may be reduced by any future salary the Executive may earn.
13. DISABILITY AND DEATH.
(a) In the event of the Executive's "Disability" (as hereinafter defined),
Syntro or the Executive shall have the right to terminate the Executive's
employment hereunder. For purposes hereof, "Disability" shall mean the
Executive's inability to render services to Syntro customarily expected of him
(her) because of a medically determinable physical or mental illness, injury or
impairment expected to result either in death or to be of long, continued and
indefinite duration and for such reason, the Executive himself (herself) or the
Board of Directors of Syntro in good faith shall have determined to terminate
his (her) employment with Syntro provided, however, (i) neither the Executive
nor the Board shall have the right to terminate the Executive's employment on
the basis of a Disability unless such Disability shall have continued for a
period of one-hundred and twenty (120) calendar days and (ii) if either party
shall object to such determination of Disability, such Disability shall be
conclusively determined by an independent physician selected in good faith by
the Board for such purpose and whose determination shall be final and
conclusive on the parties hereto. Notwithstanding the foregoing, (1) the
Executive's absence from work because of any such illness, injury or impairment
for a continued period of 180 calendar days shall be deemed conclusive evidence
of such Disability and (2) a continuous period of Disability absence shall not
be deemed interrupted until the Executive returns to substantially full-time
work for a period of at least 22 successive business days.
5
<PAGE>
During the first 120 calendar days of such Disability, the Executive's
compensation hereunder shall be continued. After such 120 calendar days of
Disability, if the Executive's employment continues but the Executive is unable
to render the type or quality of services to Syntro customarily expected of him
(her) before any such Disability, no further regular compensation need be paid
by Syntro, except as otherwise mutually agreed to between the parties for any
services that the Executive may be capable of actually rendering. If, during
any such period of Disability, the Executive shall be entitled to receive
disability payments under the terms of any disability insurance program
maintained by Syntro or under any federal or state mandated disability
insurance program, the salary otherwise payable by Syntro shall be reduced, but
not below zero, by the amounts that the Executive is entitled to receive under
such disability insurance programs or laws for any of the periods during which
the Executive's Salary is to be continued pursuant to the foregoing provisions
of this Paragraph.
(b) The death of the Executive shall terminate this Agreement.
14. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the City in which there is
located the Executive's Facility as set forth on Schedule A, in accordance with
the rules of the American Arbitration Association then obtaining, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.
15. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
16. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
17. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
18. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
20. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision hereof.
21. TAXES. Syntro shall be entitled to deduct or withhold all applicable
payroll and social security taxes where required on all applicable compensation
paid to the Executive or any successor in interest.
22. RETURN OF DOCUMENTS. Upon termination of his (her) employment with Syntro
for any reason, the Executive shall forthwith deliver to Syntro and return, and
shall not retain, any originals or copies of any confidential information or
other books, papers, price or premium lists, client or customer contracts,
customer or client lists, files, books of account, notes and other documents
and data or other writings, tapes or records of the Executive (all of the same
are hereby agreed to be the exclusive property of Syntro).
6
<PAGE>
23. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the subject matter hereof. It may not be
changed orally, but only by agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
24. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of residence of the Executive as of the date hereof.
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Executive:
/s/ Janis K. McMillen
-------------------------------------
Name: Janis K. McMillen
Address: 10104 Hemlock
Overland Park, KS 66212
7
<PAGE>
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
----------------
Offices at SyntroVet:Vice President, Product Development and
Regulatory Affairs
Initial Annual Salary: $99,300.00
No. of Business Days of Vacation
Time Per Calendar Year: 20
Effective Date of Vacation Accrual: January 1, 1995
Expiration Date of Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
8
<PAGE>
EXHIBIT B-6
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the 21st day of February,
1995, between Syntro Corporation, a Delaware corporation ("Syntro"), and Mark
D. Cochran, a resident of Carlsbad, California (the "Executive").
witnesseth:
Whereas, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
Whereas, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
Whereas, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
Offices, and the Executive hereby accepts said engagement upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered hereunder,
Syntro shall pay the Executive the annual salary set forth on Schedule A,
payable in equal semi-monthly installments (payable on the 15th and the last
day of each month). Said salary may be increased by Syntro to take into account
the nature of the contributions to Syntro by the Executive and any other
factors that may be deemed relevant by the Compensation Committee of the Board
of Directors of Syntro (the "Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in any
stock option plan(s), employees' stock purchase plan(s), 401(k) savings plan,
retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms and
conditions established by the Compensation Committee or the Board of Directors
of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his (her) employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as determined by the
Executive, the President of Syntro and the Compensation Committee, and
reflected in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain such policies of health,
hospitalization, disability and life insurance covering the Executive as Syntro
shall reasonably determine to be comparable to
1
<PAGE>
policies covering other senior executive officers of Syntro. The Executive
shall be entitled to ten (10) days of sick leave, with full pay, per calendar
year. Accrued and unused sick leave will expire in accordance with the Company
policy then in effect .
6. VACATIONS. The Executive shall be entitled to the number of business days
of vacation time as shall be indicated on Schedule A, at full salary, each
calendar year, commencing retroactively to the Effective Date of Vacation
Accrual set forth on Schedule A. In the event that, at the end of any calendar
year during the term of this Agreement, there shall be any vacation time of the
Executive remaining unused (including vacation time accrued from prior calendar
years), such accrued and unused vacation time shall be accumulated with
previously accrued but unused vacation time and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the President of Syntro. Vacation time shall be
deemed to be used in the reverse chronological order in which it has accrued so
that current year vacation time is used before accrued but unused vacation time
is used. The Executive shall be entitled to such additional vacation time,
without pay, as he (she) and the President of Syntro shall from time to time
agree. Accrued and unused vacation time, not to exceed sixty (60) days in
total, shall be paid to the Executive on the last day of his (her) employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. The Executive shall devote his
(her) full and exclusive business time, attention, energies and best efforts to
the performance of his duties hereunder, in such manner and at such times as
may be determined by the President or the Board of Directors from time to time,
in accordance with the usual standards of ethics and the usual customs and
procedures applicable to the commercial businesses in which Syntro is engaged.
During the term of this Agreement, or any extension hereof, the Executive shall
neither directly nor indirectly be employed by any other person, firm or
corporation, in any capacity whatsoever except (a) as a director or the like of
any business or charitable entity or organization provided such entity or
organization is not engaged in activity competitive with Syntro or its
affiliates, and (b) as an officer and/or director of any corporation or manager
of any limited liability company as requested by Syntro. It is expressly
understood that the Executive's primary mission is to enhance the growth and
value of Syntro through sound management of its assets, including, without
limitation, its personnel, facilities, technologies, and capital for product-
related research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him (her) in connection with the
performance of his (her) duties hereunder upon the presentation by the
Executive from time to time of itemized accounts of such expenditures. Syntro
shall reimburse the Executive for all business-related travel and entertainment
expenses incurred by him (her).
10. EXECUTIVE COVENANTS. To induce Syntro to execute, deliver and perform
this Agreement, and for $10.00 in hand paid, Executive hereby covenants and
agrees:
(a) Nondisclosure of Information--The Executive acknowledges that Syntro's
business and financial records, customer and client lists, trade secrets and
confidential planning or policy matters, and any secret or confidential
operational, research, product development, management, financial, accounting,
control, system, marketing or tax information relating to the business of
Syntro and other confidential methods of operations or plans, as they may exist
from time to time ("confidential information") are valuable and unique assets
of Syntro, access to and knowledge of which are essential to performance of his
(her) duties hereunder, and therefore he (she) agrees he (she) will not, during
his
2
<PAGE>
(her) employment and for a period of five (5) years thereafter, disclose such
confidential information to any person or other entity who is or will be a
direct competitor of Syntro conducting business in the "territory" (hereinafter
defined in Paragraph 10(b) below), nor during said period of time shall the
Executive make use of any such confidential information for his (her) own
purposes or benefit in the territory or for the benefit of any person or other
entity (except for Syntro, or any affiliate thereof) who is or will be a direct
competition of Syntro conducting business in the territory. The foregoing is in
addition to and not in replacement for the Confidentiality Agreement executed
and delivered by the Executive upon commencing employment with Syntro, which
Confidentiality Agreement is hereby ratified and confirmed.
(b) Executive's Restrictive Covenants--As a paramount inducement to Syntro to
enter into this Executive Employment Agreement and to agree to pay to the
Executive his (her) regular compensation, bonuses and the other payments and
fringe benefits provided hereunder, and in view of the Executive's services and
his (her) access to the confidential information described above, the Executive
agrees that during the period of his (her) employment by Syntro and for a
period of 12 months after termination of his (her) employment, for any reason
whatsoever with Syntro, other than a Syntro Cause or by Syntro without
Executive Cause, or the balance of the time remaining of such original stated
period from the date of the entry by a court of competent jurisdiction of a
final non-appealable judgment or order enforcing the subject covenant, the
Executive will not, directly or indirectly, on his (her) own account, or as an
employee, consultant, adviser, partner, co-venturer, owner, member, manager,
officer, director or stockholder of any other person, firm, partnership,
limited liability company, or corporation:
(i) conduct, engage in, be connected with, or directly aid or assist as a
member of or consultant to management anyone else to engage in, a business
directly competitive with the vaccine product line of Syntro throughout the
United States of America, its territories, possessions, protectorates and
commonwealths; so long as and provided Syntro products are sold in the
territory described above during said applicable period of time (the
foregoing is not intended to preclude the Executive from pursuing other
opportunities in the animal health industry); nor
(ii) during such time, directly or indirectly, sell or solicit sales for
products competitive with those of Syntro, or to service, consult with,
divert, take away, transfer or interfere with any of the collaborative
partners or customers of Syntro; nor
(iii) during such time, directly or indirectly, for himself (herself) or
on behalf of any other person or entity in which he (she) shall have any
direct or indirect business or employment interest (collectively an
"affiliated entity"), induce or attempt to induce any present or future
management or other key employee of Syntro to leave the employ of Syntro
and/or to seek or accept employment with the Executive or any affiliated
entity, nor shall he (she) negotiate with any such employee in the employ
of Syntro with respect to such person's present or future employment
outside of Syntro.
However, nothing herein contained shall prevent the Executive during the time
indicated from purchasing and owning stock in any corporation listed on any
stock exchange or traded in the over-the-counter market provided such purchases
shall not result in the Executive owning in the aggregate directly or
beneficially, three percent (3%) or more of the equity securities of any
corporation or other entity engaged in a business which is competitive to that
of Syntro.
The Executive further agrees that, in view of the present scope of Syntro's
business activities, the time periods, territory and scope of activities
specified above describe the minimum reasonable time, area and scope of
activities necessary to protect Syntro and its successors and assigns, in the
use of the good will of the business to be conducted by Syntro, and therefore
he (she) agrees that Syntro, in case of violation of this Paragraph 10(b), may
have injunctive relief, without bond (but upon due notice) in addition to such
other relief as may appertain in equity or at law. No waiver of any violation
hereof shall be implied from Syntro's forbearance or failure to take action in
pursuance hereof. All covenants
3
<PAGE>
and provisions of this Paragraph 10(b) constitute a series of separate
covenants, and if any particular portion of this Paragraph 10(b) is adjudicated
invalid or unenforceable, the same shall be deemed deleted without affecting
the validity and enforcement of the other provisions hereof, and if any
provision hereof is deemed unenforceable because of its scope in terms of area,
time or business activities, the parties agree that the same may be made
enforceable by reductions or limitations thereon so as to be enforceable to the
fullest extent permissible under the laws and public policies of any applicable
jurisdiction.
The provisions of this Paragraph 10 shall continue in full force and effect
notwithstanding the termination of this Employment Agreement.
11. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
(b) Definition of Executive Cause. For purposes of this Agreement,
termination of the Executive by Syntro shall be deemed to be for "Executive
Cause" if the Board of Directors of Syntro shall have determined in good faith
that the Executive has:
(1) willfully neglected his (her) normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein
including, without limitation, the covenants set forth in Section 10;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
(c) Definition of Syntro Cause. For purposes of this Agreement, termination
by the Executive shall be deemed for "Syntro Cause" if the Executive shall have
terminated his employment with Syntro due to:
(1) the assignment to the Executive of duties not consistent with that of
his (her) Offices or demanding additional, official work days per week;
(2) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(3) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from the Syntro facility
at which the Executive predominantly performs his (her) duties as indicated
on Schedule A (the "Executive's Facility").
12. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his (her) present capacities, Syntro shall provide the Executive
with severance benefits as set forth below,
4
<PAGE>
unless he (she) is terminated for Executive Cause. The Executive shall receive
the severance benefits as set forth in Section 12(c) ("Severance Benefits")
upon the following conditions:
(1) the termination of his (her) employment with Syntro pursuant to
Section 11(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his (her) employment
due to a Syntro Cause, or the Executive's employment is terminated by
Syntro or its successor in interest for any reason other than Executive
Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's salary based on the total annual
rate of base compensation for the Executive in effect prior to the date of
termination or change of control;
(2) continued participation in all employee benefits for a period of one
(1) year. Should such participation not be possible due to terms of the
employee benefit plans, equivalent benefits shall be provided to the
Executive through alternative means. These benefits shall include, but not
be limited to, all health, accident, and disability plans, as well as any
life insurance plans, provided by or through Syntro; and
(3) a release and discharge of the covenants set forth in Section 10(b).
(d) Time of Paying Severance Benefits. The Severance Benefits described above
shall be payable by Syntro or its successor in interest to the Executive on the
last day of the Executive's employment. The Executive shall not be required to
mitigate the amount of severance benefit by seeking other employment and none
of these payments may be reduced by any future salary the Executive may earn.
13. DISABILITY AND DEATH.
(a) In the event of the Executive's "Disability" (as hereinafter defined),
Syntro or the Executive shall have the right to terminate the Executive's
employment hereunder. For purposes hereof, "Disability" shall mean the
Executive's inability to render services to Syntro customarily expected of him
(her) because of a medically determinable physical or mental illness, injury or
impairment expected to result either in death or to be of long, continued and
indefinite duration and for such reason, the Executive himself (herself) or the
Board of Directors of Syntro in good faith shall have determined to terminate
his (her) employment with Syntro provided, however, (i) neither the Executive
nor the Board shall have the right to terminate the Executive's employment on
the basis of a Disability unless such Disability shall have continued for a
period of one-hundred and twenty (120) calendar days and (ii) if either party
shall object to such determination of Disability, such Disability shall be
conclusively determined by an independent physician selected in good faith by
the Board for such purpose and whose determination shall be final and
conclusive on the parties hereto. Notwithstanding the foregoing, (1) the
Executive's absence from work because of any such illness, injury or impairment
for a continued period of 180 calendar days shall be deemed conclusive evidence
of such Disability and (2) a continuous period of Disability absence shall not
be deemed interrupted until the Executive returns to substantially full-time
work for a period of at least 22 successive business days.
5
<PAGE>
During the first 120 calendar days of such Disability, the Executive's
compensation hereunder shall be continued. After such 120 calendar days of
Disability, if the Executive's employment continues but the Executive is unable
to render the type or quality of services to Syntro customarily expected of him
(her) before any such Disability, no further regular compensation need be paid
by Syntro, except as otherwise mutually agreed to between the parties for any
services that the Executive may be capable of actually rendering. If, during
any such period of Disability, the Executive shall be entitled to receive
disability payments under the terms of any disability insurance program
maintained by Syntro or under any federal or state mandated disability
insurance program, the salary otherwise payable by Syntro shall be reduced, but
not below zero, by the amounts that the Executive is entitled to receive under
such disability insurance programs or laws for any of the periods during which
the Executive's Salary is to be continued pursuant to the foregoing provisions
of this Paragraph.
(b) The death of the Executive shall terminate this Agreement.
14. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the City in which there is
located the Executive's Facility as set forth on Schedule A, in accordance with
the rules of the American Arbitration Association then obtaining, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.
15. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
16. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
17. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
18. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
20. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision hereof.
21. TAXES. Syntro shall be entitled to deduct or withhold all applicable
payroll and social security taxes where required on all applicable compensation
paid to the Executive or any successor in interest.
22. RETURN OF DOCUMENTS. Upon termination of his (her) employment with Syntro
for any reason, the Executive shall forthwith deliver to Syntro and return, and
shall not retain, any originals or copies of any confidential information or
other books, papers, price or premium lists, client or customer contracts,
customer or client lists, files, books of account, notes and other documents
and data or other writings, tapes or records of the Executive (all of the same
are hereby agreed to be the exclusive property of Syntro).
6
<PAGE>
23. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the subject matter hereof. It may not be
changed orally, but only by agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
24. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of residence of the Executive as of the date hereof.
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Executive:
/s/ Mark D. Cochran
-------------------------------------
Name: Mark D. Cochran
Address: 4506 Horizon Drive
Carlsbad, CA 92008
7
<PAGE>
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
----------------
Offices at Syntro: Vice President, Research
Initial Annual Salary: $96,000.00
No. of Business Days of Vacation
Time Per Calendar Year: 20
Effective Date of Vacation Accrual: January 1, 1995
Expiration Date of Agreement: February 20, 1997
Executive's Facility: Syntro Research Laboratories; San Diego, CA
8
<PAGE>
EXHIBIT B-7
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement effective as of the 21st day of February,
1995, between Syntro Corporation, a Delaware corporation ("Syntro"), and Janice
Katterhenry, a resident of Lenexa, Kansas (the "Executive").
witnesseth:
Whereas, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
Whereas, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
Whereas, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
Now, Therefore, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in the
Offices, and the Executive hereby accepts said engagement upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth, the
term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) Salary. As base compensation for the services to be rendered hereunder,
Syntro shall pay the Executive the annual salary set forth on Schedule A,
payable in equal semi-monthly installments (payable on the 15th and the last
day of each month). Said salary may be increased by Syntro to take into account
the nature of the contributions to Syntro by the Executive and any other
factors that may be deemed relevant by the Compensation Committee of the Board
of Directors of Syntro (the "Compensation Committee").
(b) Compensation Plans. The Executive shall be entitled to participate in any
stock option plan(s), employees' stock purchase plan(s), 401(k) savings plan,
retirement plans, profit sharing plans, bonus programs and deferred
compensation plan(s) as Syntro may from time to time adopt upon the terms and
conditions established by the Compensation Committee or the Board of Directors
of Syntro.
(c) Bonus Compensation. The Executive shall be entitled to cash bonuses
during the term of his (her) employment based upon the success of Syntro and/or
the Executive in reaching certain goals and objectives as determined by the
Executive, the President of Syntro and the Compensation Committee, and
reflected in the minutes of the Board of Directors as approved thereby.
5. EMPLOYMENT BENEFITS. Syntro shall maintain such policies of health,
hospitalization, disability and life insurance covering the Executive as Syntro
shall reasonably determine to be comparable to
1
<PAGE>
policies covering other senior executive officers of Syntro. The Executive
shall be entitled to ten (10) days of sick leave, with full pay, per calendar
year. Accrued and unused sick leave will expire in accordance with the Company
policy then in effect.
6. VACATIONS. The Executive shall be entitled to the number of business days
of vacation time as shall be indicated on Schedule A, at full salary, each
calendar year, commencing retroactively to the Effective Date of Vacation
Accrual set forth on Schedule A. In the event that, at the end of any calendar
year during the term of this Agreement, there shall be any vacation time of the
Executive remaining unused (including vacation time accrued from prior calendar
years), such accrued and unused vacation time shall be accumulated with
previously accrued but unused vacation time and carried forward into the
succeeding and future calendar years. Notwithstanding the accumulation of
accrued and unused vacation time, the Executive shall not be entitled to use
more than thirty (30) business days of vacation time in any calendar year
without the prior consent of the President of Syntro. Vacation time shall be
deemed to be used in the reverse chronological order in which it has accrued so
that current year vacation time is used before accrued but unused vacation time
is used. The Executive shall be entitled to such additional vacation time,
without pay, as he (she) and the President of Syntro shall from time to time
agree. Accrued and unused vacation time, not to exceed sixty (60) days in
total, shall be paid to the Executive on the last day of his (her) employment.
7. DUTIES, UNDERSTANDINGS AND EXPECTATIONS. The Executive shall devote his
(her) full and exclusive business time, attention, energies and best efforts to
the performance of his duties hereunder, in such manner and at such times as
may be determined by the President or the Board of Directors from time to time,
in accordance with the usual standards of ethics and the usual customs and
procedures applicable to the commercial businesses in which Syntro is engaged.
During the term of this Agreement, or any extension hereof, the Executive shall
neither directly nor indirectly be employed by any other person, firm or
corporation, in any capacity whatsoever except (a) as a director or the like of
any business or charitable entity or organization provided such entity or
organization is not engaged in activity competitive with Syntro or its
affiliates, and (b) as an officer and/or director of any corporation or manager
of any limited liability company as requested by Syntro. It is expressly
understood that the Executive's primary mission is to enhance the growth and
value of Syntro through sound management of its assets, including, without
limitation, its personnel, facilities, technologies, and capital for product-
related research, development, registration, manufacturing and marketing.
8. WORKING FACILITIES. The Executive shall be furnished, at the cost of
Syntro, with office space, clerical help and such other facilities, supplies
and services as are deemed appropriate by Syntro as suitable to the Executive's
position and adequate for the performance of his duties hereunder.
9. EXPENSES. Syntro shall reimburse the Executive for all reasonable and
necessary costs and expenses incurred by him (her) in connection with the
performance of his (her) duties hereunder upon the presentation by the
Executive from time to time of itemized accounts of such expenditures. Syntro
shall reimburse the Executive for all business-related travel and entertainment
expenses incurred by him (her).
10. EXECUTIVE COVENANTS. To induce Syntro to execute, deliver and perform
this Agreement, and for $10.00 in hand paid, Executive hereby covenants and
agrees:
(a) Nondisclosure of Information--The Executive acknowledges that Syntro's
business and financial records, customer and client lists, trade secrets and
confidential planning or policy matters, and any secret or confidential
operational, research, product development, management, financial, accounting,
control, system, marketing or tax information relating to the business of
Syntro and other confidential methods of operations or plans, as they may exist
from time to time ("confidential information") are valuable and unique assets
of Syntro, access to and knowledge of which are essential to performance of his
(her) duties hereunder, and therefore he (she) agrees he (she) will not, during
his
2
<PAGE>
(her) employment and for a period of five (5) years thereafter, disclose such
confidential information to any person or other entity who is or will be a
direct competitor of Syntro conducting business in the "territory" (hereinafter
defined in Paragraph 10(b) below), nor during said period of time shall the
Executive make use of any such confidential information for his (her) own
purposes or benefit in the territory or for the benefit of any person or other
entity (except for Syntro, or any affiliate thereof) who is or will be a direct
competition of Syntro conducting business in the territory. The foregoing is in
addition to and not in replacement for the Confidentiality Agreement executed
and delivered by the Executive upon commencing employment with Syntro, which
Confidentiality Agreement is hereby ratified and confirmed.
(b) Executive's Restrictive Covenants--As a paramount inducement to Syntro to
enter into this Executive Employment Agreement and to agree to pay to the
Executive his (her) regular compensation, bonuses and the other payments and
fringe benefits provided hereunder, and in view of the Executive's services and
his (her) access to the confidential information described above, the Executive
agrees that during the period of his (her) employment by Syntro and for a
period of 12 months after termination of his (her) employment, for any reason
whatsoever with Syntro, other than a Syntro Cause or by Syntro without
Executive Cause, or the balance of the time remaining of such original stated
period from the date of the entry by a court of competent jurisdiction of a
final non-appealable judgment or order enforcing the subject covenant, the
Executive will not, directly or indirectly, on his (her) own account, or as an
employee, consultant, adviser, partner, co-venturer, owner, member, manager,
officer, director or stockholder of any other person, firm, partnership,
limited liability company, or corporation:
(i) conduct, engage in, be connected with, or directly aid or assist as a
member of or consultant to management anyone else to engage in, a business
directly competitive with the vaccine product line of Syntro throughout the
United States of America, its territories, possessions, protectorates and
commonwealths; so long as and provided Syntro products are sold in the
territory described above during said applicable period of time (the
foregoing is not intended to preclude the Executive from pursuing other
opportunities in the animal health industry); nor
(ii) during such time, directly or indirectly, sell or solicit sales for
products competitive with those of Syntro, or to service, consult with,
divert, take away, transfer or interfere with any of the collaborative
partners or customers of Syntro; nor
(iii) during such time, directly or indirectly, for himself (herself) or
on behalf of any other person or entity in which he (she) shall have any
direct or indirect business or employment interest (collectively an
"affiliated entity"), induce or attempt to induce any present or future
management or other key employee of Syntro to leave the employ of Syntro
and/or to seek or accept employment with the Executive or any affiliated
entity, nor shall he (she) negotiate with any such employee in the employ
of Syntro with respect to such person's present or future employment
outside of Syntro.
However, nothing herein contained shall prevent the Executive during the time
indicated from purchasing and owning stock in any corporation listed on any
stock exchange or traded in the over-the-counter market provided such purchases
shall not result in the Executive owning in the aggregate directly or
beneficially, three percent (3%) or more of the equity securities of any
corporation or other entity engaged in a business which is competitive to that
of Syntro.
The Executive further agrees that, in view of the present scope of Syntro's
business activities, the time periods, territory and scope of activities
specified above describe the minimum reasonable time, area and scope of
activities necessary to protect Syntro and its successors and assigns, in the
use of the good will of the business to be conducted by Syntro, and therefore
he (she) agrees that Syntro, in case of violation of this Paragraph 10(b), may
have injunctive relief, without bond (but upon due notice) in addition to such
other relief as may appertain in equity or at law. No waiver of any violation
hereof shall be implied from Syntro's forbearance or failure to take action in
pursuance hereof. All covenants and provisions of this Paragraph 10(b)
constitute a series of separate covenants, and if any particular
3
<PAGE>
portion of this Paragraph 10(b) is adjudicated invalid or unenforceable, the
same shall be deemed deleted without affecting the validity and enforcement of
the other provisions hereof, and if any provision hereof is deemed
unenforceable because of its scope in terms of area, time or business
activities, the parties agree that the same may be made enforceable by
reductions or limitations thereon so as to be enforceable to the fullest extent
permissible under the laws and public policies of any applicable jurisdiction.
The provisions of this Paragraph 10 shall continue in full force and effect
notwithstanding the termination of this Employment Agreement.
11. TERMINATION.
(a) Events of Termination. This Agreement and the Executive's employment with
Syntro may be terminated:
(1) at any time by mutual consent of Syntro and the Executive; or
(2) by Syntro for Executive Cause (as hereinafter defined) upon written
notice to the Executive; or
(3) by Syntro without Executive Cause upon 30 days prior written notice
to the Executive;
(4) by the Executive for Syntro Cause (as hereinafter defined); or
(5) by the Executive without Syntro Cause upon not less than 30 days
prior written notice to Syntro.
(b) Definition of Executive Cause. For purposes of this Agreement,
termination of the Executive by Syntro shall be deemed to be for "Executive
Cause" if the Board of Directors of Syntro shall have determined in good faith
that the Executive has:
(1) willfully neglected his (her) normal and material duties hereunder;
(2) willfully breached any of the material covenants contained herein
including, without limitation, the covenants set forth in Section 10;
(3) wrongfully converted funds or property of Syntro;
(4) made any unauthorized disclosure of any trade secrets, patents,
trademarks, copyrights or other proprietary business information owned or
developed by or on behalf of Syntro, its successors or assigns; or
(5) been arrested and arraigned for a crime involving moral turpitude.
(c) Definition of Syntro Cause. For purposes of this Agreement, termination
by the Executive shall be deemed for "Syntro Cause" if the Executive shall have
terminated his employment with Syntro due to:
(1) the assignment to the Executive of duties not consistent with that of
his (her) Offices or demanding additional, official work days per week;
(2) a reduction in salary or discontinuance of any bonus plan now in
effect in which the Executive may participate; or
(3) a change in the geographic location of where the Executive's position
is primarily based in excess of fifty (50) miles from the Syntro facility
at which the Executive predominantly performs his (her) duties as indicated
on Schedule A (the "Executive's Facility").
12. SEVERANCE BENEFITS FROM SYNTRO.
(a) Benefits/Accrual. To induce the Executive to continue to serve Syntro and
SyntroVet in his (her) present capacities, Syntro shall provide the Executive
with severance benefits as set forth below, unless he (she) is terminated for
Executive Cause. The Executive shall receive the severance benefits as set
forth in Section 12(c) ("Severance Benefits") upon the following conditions:
4
<PAGE>
(1) the termination of his (her) employment with Syntro pursuant to
Section 11(a)(1), (3) or (4); or
(2) Within one (1) year after there has occurred a "change in control"
(as hereinafter defined) the Executive has terminated his (her) employment
due to a Syntro Cause, or the Executive's employment is terminated by
Syntro or its successor in interest for any reason other than Executive
Cause.
(b) Definition of Change of Control. A "change of control" shall have
occurred if (i) any person (as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) that presently owns 50%
or less of the outstanding shares of Syntro Common Stock becomes the beneficial
owner (as defined in Rule 13(d)-3 of the Exchange Act) of a total of more than
50% of the outstanding shares of Syntro's Common Stock, or (ii) Syntro shall
have sold all or substantially all of its assets.
(c) Description of Severance Benefits. Severance Benefits for the Executive
shall be as follows:
(1) a lump-sum payment of one (1) year's salary based on the total annual
rate of base compensation for the Executive in effect prior to the date of
termination or change of control;
(2) continued participation in all employee benefits for a period of one
(1) year. Should such participation not be possible due to terms of the
employee benefit plans, equivalent benefits shall be provided to the
Executive through alternative means. These benefits shall include, but not
be limited to, all health, accident, and disability plans, as well as any
life insurance plans, provided by or through Syntro; and
(3) a release and discharge of the covenants set forth in Section 10(b).
(d) Time of Paying Severance Benefits. The Severance Benefits described above
shall be payable by Syntro or its successor in interest to the Executive on the
last day of the Executive's employment. The Executive shall not be required to
mitigate the amount of severance benefit by seeking other employment and none
of these payments may be reduced by any future salary the Executive may earn.
13. DISABILITY AND DEATH.
(a) In the event of the Executive's "Disability" (as hereinafter defined),
Syntro or the Executive shall have the right to terminate the Executive's
employment hereunder. For purposes hereof, "Disability" shall mean the
Executive's inability to render services to Syntro customarily expected of him
(her) because of a medically determinable physical or mental illness, injury or
impairment expected to result either in death or to be of long, continued and
indefinite duration and for such reason, the Executive himself (herself) or the
Board of Directors of Syntro in good faith shall have determined to terminate
his (her) employment with Syntro provided, however, (i) neither the Executive
nor the Board shall have the right to terminate the Executive's employment on
the basis of a Disability unless such Disability shall have continued for a
period of one-hundred and twenty (120) calendar days and (ii) if either party
shall object to such determination of Disability, such Disability shall be
conclusively determined by an independent physician selected in good faith by
the Board for such purpose and whose determination shall be final and
conclusive on the parties hereto. Notwithstanding the foregoing, (1) the
Executive's absence from work because of any such illness, injury or impairment
for a continued period of 180 calendar days shall be deemed conclusive evidence
of such Disability and (2) a continuous period of Disability absence shall not
be deemed interrupted until the Executive returns to substantially full-time
work for a period of at least 22 successive business days.
During the first 120 calendar days of such Disability, the Executive's
compensation hereunder shall be continued. After such 120 calendar days of
Disability, if the Executive's employment continues but the Executive is unable
to render the type or quality of services to Syntro customarily expected of him
(her) before any such Disability, no further regular compensation need be paid
by Syntro, except as otherwise mutually agreed to between the parties for any
services that the Executive may be capable
5
<PAGE>
of actually rendering. If, during any such period of Disability, the Executive
shall be entitled to receive disability payments under the terms of any
disability insurance program maintained by Syntro or under any federal or state
mandated disability insurance program, the salary otherwise payable by Syntro
shall be reduced, but not below zero, by the amounts that the Executive is
entitled to receive under such disability insurance programs or laws for any of
the periods during which the Executive's Salary is to be continued pursuant to
the foregoing provisions of this Paragraph.
(b) The death of the Executive shall terminate this Agreement.
14. ARBITRATION. Except as otherwise specifically provided herein, any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the City in which there is
located the Executive's Facility as set forth on Schedule A, in accordance with
the rules of the American Arbitration Association then obtaining, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.
15. NOTICES. Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing and personally delivered
(by commercial courier or otherwise) or mailed, return receipt requested,
postage prepaid, addressed to the parties hereto at their addresses indicated
below, or at such other addresses as may be hereafter designated by a party by
notice delivered in accordance herewith. Any notice delivered personally shall
be effective on the day of delivery; any notice mailed, as aforesaid, shall be
effective on the second day following posting.
16. WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach.
17. ASSIGNMENT. The rights and obligations of Syntro under this Agreement
shall inure to the benefit of, and shall be binding upon, Syntro and its
successors and assigns.
18. CAPTIONS. Captions are used herein for purposes of convenience only and
shall not be used for purposes of interpreting the meaning of any provision.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be deemed originals and together shall constitute one and
the same instrument.
20. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision hereof.
21. TAXES. Syntro shall be entitled to deduct or withhold all applicable
payroll and social security taxes where required on all applicable compensation
paid to the Executive or any successor in interest.
22. RETURN OF DOCUMENTS. Upon termination of his (her) employment with Syntro
for any reason, the Executive shall forthwith deliver to Syntro and return, and
shall not retain, any originals or copies of any confidential information or
other books, papers, price or premium lists, client or customer contracts,
customer or client lists, files, books of account, notes and other documents
and data or other writings, tapes or records of the Executive (all of the same
are hereby agreed to be the exclusive property of Syntro).
23. ENTIRE AGREEMENT. This instrument contains the entire agreement between
the parties. It supersedes any and all other agreements and understandings of
or by the parties with respect to the subject matter hereof. It may not be
changed orally, but only by agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
24. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of residence of the Executive as of the date hereof.
6
<PAGE>
In Witness Whereof, this Agreement is effective as of the day and year first
above written.
Syntro:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
/s/ J. Donald Todd
By: _________________________________
J. Donald Todd
President and Chief Executive
Officer
Executive:
/s/ Janice Katterhenry
_____________________________________
Name:Janice Katterhenry
Address: 14719 W. 83rd Place
Lenexa, KS 66215
7
<PAGE>
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
----------------
Offices at Syntro:Assistant Vice President, Finance &
Administration; Chief Accounting
Officer; Secretary
Offices at SyntroVet:Vice President, Finance & Administration;
Treasurer and Secretary
Initial Annual Salary:$81,600.00 reduced by 25% (to $61,200.00) for
25% reduced hours per work week
No. of Business Days of Vacation
Time Per Calendar Year:20
Effective Date of Vacation Accrual:January 1, 1995
Expiration Date of Agreement:February 20, 1997
Executive's Facility:Syntro Headquarters; Lenexa, KS
8
<PAGE>
Exhibit (c)
___________________________________
AGREEMENT AND PLAN OF MERGER
AMONG
MALLINCKRODT VETERINARY, INC.,
MALLINCKRODT VETERINARY ACQUISITIONS, INC.
AND
SYNTRO CORPORATION
DATED AS OF SEPTEMBER 25, 1995
___________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties and Recitals................................................... 1
ARTICLE I
THE OFFER
Section 1.1 The Offer................................................. 1
Section 1.2 Company Actions........................................... 3
ARTICLE II
THE MERGER
Section 2.1 The Merger................................................ 4
Section 2.2 Effective Time............................................ 5
Section 2.3 Effects of the Merger..................................... 5
Section 2.4 Certificate of Incorporation and Bylaws;
Directors and Officers.................................... 5
Section 2.5 Conversion of Securities.................................. 6
Section 2.6 Exchange of Certificates.................................. 6
Section 2.7 Dissenting Company Common Shares.......................... 8
Section 2.8 Merger Without Meeting of Stockholders.................... 9
Section 2.9 No Further Ownership Rights in Common
Stock..................................................... 9
Section 2.10 Closing of Company Transfer Books........................ 9
Section 2.11 Further Assurances....................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.1 Organization, Standing and Power.......................... 10
Section 3.2 Authority; Non-Contravention.............................. 10
Section 3.3 Offer Documents and Proxy Statement....................... 11
Section 3.4 Brokers................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization, Standing and Power......................... 12
Section 4.2 Capital Structure......................................... 12
Section 4.3 Subsidiaries.............................................. 13
Section 4.4 Other Interests........................................... 14
Section 4.5 Authority; Non-Contravention.............................. 14
Section 4.6 SEC Documents............................................. 15
Section 4.7 Offer Documents and Proxy Statement....................... 16
Section 4.8 Absence of Certain Events................................. 17
Section 4.9 Litigation................................................ 17
Section 4.10 Compliance with Applicable Law........................... 17
Section 4.11 Employee Plans........................................... 18
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.12 Employment Relations and Agreement....................... 19
Section 4.13 Contracts................................................ 20
Section 4.14 Intellectual Property.................................... 21
Section 4.15 Title to Property........................................ 22
Section 4.16 State Takeover Statutes.................................. 22
Section 4.17 Taxes.................................................... 22
Section 4.18 Environmental Matters.................................... 24
Section 4.19 Vote Required............................................ 26
Section 4.20 Insurance................................................ 26
Section 4.21 Brokers.................................................. 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 5.1 Organization and Standing................................. 26
Section 5.2 Capital Structure......................................... 27
Section 5.3 Authority; Non-Contravention.............................. 27
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business by the Company
Pending the Merger........................................ 27
Section 6.2 Acquisition Proposals..................................... 30
Section 6.3 Conduct of Business of Sub Pending the
Merger.................................................... 31
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Company Stockholder Approval; Proxy
Statement................................................. 32
Section 7.2 Access to Information..................................... 33
Section 7.3 Fees and Expenses......................................... 33
Section 7.4 Company Stock Options..................................... 34
Section 7.5 Reasonable Best Efforts................................... 35
Section 7.6 Public Announcements...................................... 36
Section 7.7 Real Estate Transfer and Gains Taxes...................... 36
Section 7.8 Indemnification; Directors and Officers
Insurance................................................. 36
Section 7.9 Board Representation...................................... 37
Section 7.10 Employee Benefits........................................ 38
Section 7.11 Severance Policy......................................... 38
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger......................................... 39
Section 8.2 Conditions to Obligations of Parent
and Sub................................................... 39
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................... 40
Section 9.2 Effect of Termination..................................... 42
Section 9.3 Amendment................................................. 43
Section 9.4 Waiver.................................................... 43
Section 9.5 Procedure for Termination, Amendment or
Waiver.................................................... 43
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and
Warranties............................................... 43
Section 10.2 Notices.................................................. 43
Section 10.3 Interpretation........................................... 45
Section 10.4 Counterparts............................................. 45
Section 10.5 Entire Agreement; No Third-Party
Beneficiaries............................................ 45
Section 10.6 Governing Law............................................ 45
Section 10.7 Assignment............................................... 46
Section 10.8 Severability............................................. 46
Section 10.9 Enforcement of this Agreement............................ 46
Section 10.10 Incorporation of Exhibits............................... 46
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of September 25, 1995 (this
"Agreement"), among Mallinckrodt Veterinary, Inc., a Delaware corporation
---------
("Parent"), Mallinckrodt Veterinary Acquisitions, Inc., a Delaware corporation
------
("Sub") and a wholly owned subsidiary of Parent, and Syntro Corporation, a
---
Delaware corporation (the "Company") (Sub and the Company being hereinafter
-------
collectively referred to as the "Constituent Corporations").
----------- ------------
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent pursuant to a
tender offer by Sub for all of the outstanding shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company at a price of $3.55 per
------------
share, net to the seller in cash (the "Offer"), followed by a merger (the
-----
"Merger") of Sub with and into the Company upon the terms and subject to the
------
conditions set forth herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that the Company's
stockholders accept the Offer; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or the Company will be
converted into the right to receive the per share consideration paid pursuant to
the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
---------
Section 1.1 The Offer. (a) Subject to the provisions of this
---------
Agreement, as promptly as practicable but in no event later than September 29,
1995, Sub shall, and Parent shall cause Sub to, commence, within the meaning of
Rule 14d-2 under the Exchange Act (as hereinafter defined), the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
<PAGE>
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject to the conditions set forth in Exhibit A and to the
---------
terms and conditions of this Agreement. The initial expiration date of the
Offer shall be 20 business days following the commencement of the Offer.
Without the prior written consent of the Company, Sub shall not (i) waive the
Minimum Condition (as defined in Exhibit A), (ii) reduce the number of shares of
---------
Common Stock subject to the Offer, (iii) reduce the price per share of Common
Stock to be paid pursuant to the Offer, (iv) extend the Offer if all of the
Offer conditions are satisfied or waived, (v) change the form of consideration
payable in the Offer, or (vi) amend, add or waive any term or condition of the
Offer (including the conditions set forth in Exhibit A) in any manner that would
---------
adversely affect the Company or its stockholders. Notwithstanding the
foregoing, Sub may, without the consent of the Company, extend the Offer (i) if
at the then scheduled expiration date of the Offer any of the conditions to
Sub's obligation to accept for payment and pay for shares of Common Stock shall
not have been satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; or (iii) if all Offer
---
conditions are satisfied or waived but the number of shares of Common Stock
tendered is less than 90% of the then outstanding number of shares of Common
Stock, for an aggregate period of not more than 15 business days (for all such
extensions) beyond the latest expiration date that would otherwise be permitted
under clause (i) or (ii) of this sentence. Subject to the terms and conditions
of the Offer and the Agreement, Sub shall, and Parent shall cause Sub to, pay
for all shares of Common Stock validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal (such Schedule 14D-1 and the documents therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Company and its counsel shall be given an opportunity
---------------
to review and comment upon the Offer Documents prior to the filing thereof with
the SEC. The Offer Documents shall comply as to form in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder, the "Exchange
--------
Act"), and on the date filed with the SEC and on the date first published, sent
- ---
or given to the Company's stockholders, the Offer Documents shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is
<PAGE>
made by Parent or Sub with respect to information supplied by the Company for
inclusion in the Offer Documents. Each of Parent, Sub and the Company agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub further agrees to
take all steps necessary, and the Company agrees to take all steps reasonably
requested by Parent, to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of shares of Common Stock, in
each case as and to the extent required by applicable federal securities laws.
Parent and Sub agree to provide the Company and its counsel in writing with any
comments Parent, Sub or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after receipt of such comments.
(c) Prior to or concurrently with the expiration of the Offer, Parent
shall provide or cause to be provided to Sub all of the funds necessary to
purchase any shares of Common Stock that Sub becomes obligated to purchase
pursuant to the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
---------------
consents to the Offer and represents that the Board of Directors of the Company
at a meeting duly called and held has unanimously duly adopted resolutions
approving this Agreement, the Offer and the Merger, determining that the Merger
is advisable and that the terms of the Offer and Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's stockholders accept the Offer and approve the Merger and this
Agreement. The Company represents that its Board of Directors has received the
written opinion of Piper Jaffray Inc. that the proposed consideration to be
received by the holders of shares of Common Stock pursuant to the Offer and the
Merger is fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Board of Directors of the Company described in the first sentence of this
Section 1.2.
- -----------
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
--------------
paragraph (a) above and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Company shall cooperate with Parent in mailing or otherwise
disseminating the Schedule 14D-9 with the appropriate Offer Documents to the
Company's stockholders. Parent and its counsel shall be given an opportunity to
review and comment upon the Schedule 14D-9 prior to the filing thereof with the
SEC. The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and, on the date filed with the SEC and on
the date first published, sent or given to the Company's
-3-
<PAGE>
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or Sub for inclusion in the
Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of shares of Common Stock, in each case as and to
the extent required by applicable federal securities laws. The Company agrees
to provide Parent and Sub and their counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub with mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and com puter files and
all other information in the Company's possession or control regarding the
beneficial ownership of Common Stock, and shall furnish to Sub such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Sub and each
of their affiliates and associates shall hold in confidence the information
contained in any of such labels, lists and files, will use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, will, upon request, deliver to the Company all copies of such
information then in their possession.
ARTICLE II
THE MERGER
----------
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
----
at the Effective Time (as hereinafter defined). Upon the effectiveness of the
Merger, the separate corporate existence of Sub shall
-4-
<PAGE>
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
---------------------
obligations of Sub in accordance with the DGCL.
Section 2.2 Effective Time. The Merger shall become effective when
--------------
the Certificate of Merger or, if applicable, the Certificate of Ownership and
Merger (each, the "Certificate of Merger"), executed in accordance with the
---------------------
relevant provisions of the DGCL, are accepted for record by the Secretary of
State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
--------------
Certificate of Merger is accepted for record or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be made
as soon as practicable after the satisfaction or waiver of the conditions to the
Merger set forth herein.
Section 2.3 Effects of the Merger. The Merger shall have the
---------------------
effects set forth in the DGCL.
Section 2.4 Certificate of Incorporation and Bylaws; Directors and
------------------------------------------------------
Officers. (a) At the Effective Time:
- --------
(i) Article SECOND of the Certificate of Incorporation of the Company
shall be amended to read in its entirety as follows:
"The registered office of this Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle, in the State of
Delaware. The name of its registered agent at such address is The
Corporation Trust Company.";
(ii) Article FOURTH of the Certificate of Incorporation of the Company
shall be amended to read in its entirety as follows:
"The total number of shares of all classes of capital stock which
this Corporation shall have the authority to issue is 1,000 shares of
Common Stock, with a par value of $.01 per share." and
(iii) Paragraph 3 of Article FIFTH of the Certificate of Incorporation
of the Company shall be deleted in its entirety.
As so amended, the Certificate of Incorporation of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation after such date, and thereafter may
be amended in accordance with the terms of and as provided by applicable law.
-5-
<PAGE>
(b) At the Effective Time the By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall continue as the By-Laws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by the Certificate of Incorporation of the Surviving Corporation or by
applicable law.
(c) The directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation as of the Effective Time.
Section 2.5 Conversion of Securities. As of the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of any stockholder of
the Company or Sub:
(a) All shares of Common Stock that are held in the treasury of the
Company or by any wholly owned Subsidiary (as hereinafter defined) of the
Company and any shares of Common Stock owned by Parent, Sub or any other
wholly owned Subsidiary of Parent shall be cancelled and no consideration
shall be delivered in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.5(a) and other than Dissenting Company Common
-------------
Shares (as defined in Section 2.7)) shall be converted into and become the
-----------
right to receive in cash, without interest, the per share consideration in
the Offer (the "Merger Consideration") in accordance with Section 2.6(c).
-------------------- --------------
All such shares of Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each
holder of a certificate or certificates (the "Certificates") representing
------------
any such shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(c) Each issued and outstanding share of the capital stock of Sub
shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
Section 2.6 Exchange of Certificates. (a) Paying Agent. Parent
------------------------ ------------
shall designate a commercial bank or trust company that is reasonably acceptable
to the Company to act as paying agent hereunder (the "Paying Agent") for the
------------
payment of the Merger Consideration upon surrender of Certificates. All of the
fees and expenses of the Paying Agent shall be borne by Parent.
-6-
<PAGE>
(b) Parent to Provide Funds. Parent shall deposit or shall cause to
-----------------------
be deposited (by Parent's affiliates other than the Company) in trust with the
Paying Agent prior to the Effective Time cash in an amount necessary to pay for
all of the shares of Common Stock pursuant to Section 2.5 (determined as though
-----------
there are no Dissenting Company Common Shares). Such amount shall hereinafter
be referred to as the "Exchange Fund." If the amount of cash in the Exchange
-------------
Fund is insufficient to pay all of the amounts required to be paid pursuant to
Sections 2.5, or 2.7, Parent from time to time after the Effective Time shall
- ------------ ---
deposit in trust additional cash with the Paying Agent sufficient to make all
such payments.
(c) Exchange Procedures. As soon as practicable after the Effective
-------------------
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any Subsidiary of Parent or the Company, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Paying Agent and shall be in a form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5, and the
-----------
Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or will accrue on the cash payable upon the surrender of any Certificate.
If payment is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer or
other Taxes (as hereinafter defined) required by reason of the delivery of such
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that any such Taxes have been paid or
are not applicable. Until surrendered as contemplated by this Section 2.6, each
-----------
Certificate (other than Certificates representing Dissenting Company Common
Shares and Certificates representing any shares of Common Stock owned by Parent,
the Company or any Subsidiary of Parent or the Company) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.5. Notwithstanding the foregoing, none of the Paying
-----------
Agent, the Surviving Corporation or
-7-
<PAGE>
any party hereto shall be liable to a former stockholder of the Company for any
cash or interest delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any portion of the Exchange Fund that
remains unclaimed by the stockholders of the Company for one year after the
Effective Time shall be repaid to Parent (including, without limitation, all
interest and other income received by the Paying Agent in respect of all such
funds). Thereafter, holders of shares of Common Stock shall look only to Parent
or the Surviving Corporation (subject to the terms of this Agreement and
abandoned property, escheat and other similar laws) as general creditors thereof
with respect to any Merger Consideration that may be payable upon due surrender
of the Certificates held by them. Parent or the Paying Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock such amounts as Parent or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Code (as hereinafter defined) or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent or the Paying Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Common Stock in respect of which such deduction and withholding was made by the
Parent or the Paying Agent.
Section 2.7 Dissenting Company Common Shares. Notwithstanding any
--------------------------------
provision of this Agreement to the contrary, if required by the DGCL but only to
the extent required thereby, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of such shares of Common Stock who have properly exercised appraisal
rights with respect thereto in accordance with Section 262 of the DGCL (the
"Dissenting Company Common Shares") will not be exchangeable for the right to
--------------------------------
receive the Merger Consideration, and holders of such shares of Common Stock
will be entitled to receive payment of the appraised value of such shares of
Common Stock in accordance with the provisions of such Section 262 unless and
until such holders fail to perfect or effectively withdraw or lose their rights
to appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company
will give Parent prompt notice of any demands received by the Company for
appraisals of shares of Common Stock. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
-8-
<PAGE>
Section 2.8 Merger Without Meeting of Stockholders. Notwithstanding
--------------------------------------
the foregoing, in the event that Sub, or any other direct or indirect subsidiary
of Parent, shall acquire at least 90 percent of the outstanding shares of Common
Stock, the parties hereto agree to take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
Section 2.9 No Further Ownership Rights in Common Stock. All cash
-------------------------------------------
paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Common Stock.
Section 2.10 Closing of Company Transfer Books. At the Effective
---------------------------------
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Article II.
----------
Section 2.11 Further Assurances. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
-9-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent represents and warrants to the Company as follows:
Section 3.1 Organization, Standing and Power. Parent is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
Section 3.2 Authority; Non-Contravention. Parent has all requisite
----------------------------
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 the consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent. This Agreement has been duly executed and delivered by Parent and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company) consti tutes a valid and binding obligation of Parent enforceable
against Parent in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, or result in
any 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
any obligation or to the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under, any provision
of (i) the Certificate of Incorporation or Bylaws of Parent or any provision of
the comparable charter or organization documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Parent or any of its Subsidiaries or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect (as hereinafter defined) on
Parent, materially impair the ability of Parent or Sub to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. No filing or registration with, or authorization, consent
or approval of, any domestic (federal and state), foreign or supranational
court, commission, governmental body, regulatory or administrative agency,
authority
-10-
<PAGE>
or tribunal (a "Governmental Entity") is required by or with respect to Parent
-------------------
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or is necessary for the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement, except for (i)
in connection, or in compliance, with the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iii) such filings and consents, if any, as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the transactions contemplated by this Agreement, (iv) such
filings, if any, as may be required in connection with the Gains Taxes described
in Section 7.7, (v) such filings and approvals as may be required under the
-----------
Hart-Scott-Rodino Improvements Act of 1976, as amended (the "Improvements Act"),
----------------
and (vi) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
materially impair the ability of Parent or Sub to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 3.3 Offer Documents and Proxy Statement. None of the
-----------------------------------
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, the information statement,
if any, filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement"), or the proxy
---------------------
statement (together with any amendments or supplements thereto, the "Proxy
-----
Statement") relating to the Stockholder Meeting (as defined in Section 7.1) will
- --------- -----------
(i) in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective time such documents are filed with the SEC or first
published, sent or given to the Company's stockholders, or (ii) in the case of
the Proxy Statement, at the time of the mailing of the Proxy Statement and at
the time of the Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the purchase
of shares of Common Stock pursuant to the Offer there shall occur any event with
respect to Parent, its officers and directors or any of its Subsidiaries which
is required to be described in the Offer Documents, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company.
-11-
<PAGE>
Section 3.4 Brokers. No broker, investment banker or other person,
-------
other than Goldman, Sachs & Co., the fees and expenses of which will be paid by
Parent, is entitled to any broker's, finder'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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization, Standing and Power. The Company and each
--------------------------------
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.2 Capital Structure. The authorized capital stock of the
-----------------
Company consists of 25,000,000 shares of Common Stock and 225,000 shares of
Preferred Stock, par value $1.00 per share ("Preferred Stock"). At the close of
---------------
business on September 22, 1995, (i) 11,454,185 shares of Common Stock were
issued and outstanding, (ii) 946,049 shares of Common Stock were reserved for
issuance upon the exercise of outstanding vested and exercisable stock options
issued under the Stock Plans (as hereinafter defined), 273,893 shares of Common
Stock were reserved for issuance upon the exercise of outstanding unvested stock
options issued under the Stock Plans, 3,000 shares of Common Stock were reserved
for issuance pursuant to vested and exercisable stock options granted to
consultants of the Company pursuant to written agreements which are attached to
the Company Disclosure Letter (the "Consultant Option Agreements") and 4,000
----------------------------
shares of Common Stock were reserved for issuance upon the exercise of
outstanding unvested stock options granted to consultants of the Company
pursuant to Consultant Option Agreements and (iii) no shares of Common Stock
were held by the Company in its treasury. As of the date hereof there are no
shares of Preferred Stock outstanding. There are no outstanding stock
appreciation rights. All outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as
-12-
<PAGE>
set forth in Section 4.2 of the Company Disclosure Letter and except for
1,219,942 stock options issued under the Company's 1984 Incentive Stock Option
Plan, 1988 Executive Stock Option Plan, 1988 Stock Option Plan and 1994 Stock
Option Plan (collectively, the "Stock Plans"), and 7,000 stock options issued by
-----------
the Company to consultants pursuant to Consultant Option Agreements, there are
no options, warrants, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company or of any of its Subsidiaries. No shares of the Company's capital stock
have been issued other than pursuant to the exercise of stock options already in
existence on such date since September 1, 1995. The Company has not granted any
stock options for any capital stock of the Company since September 1, 1995. The
Company has not adopted a shareholder's rights or a similar plan.
Section 4.3 Subsidiaries. The Company's Subsidiaries consist of (i)
------------
SyntroVet Incorporated, a Kansas corporation, the authorized capital stock of
which consists of 1,000 shares of common stock, $1.00 par value per share, all
of which are issued and outstanding, (ii) SyntroVenture Corporation, a Kansas
corporation ("SyntroVenture"), the authorized capital stock of which consists of
-------------
1,000 shares of common stock, no par value per share, 100 shares of which are
issued and outstanding, and (iii) Syntro Zeon, L.C., a Kansas limited liability
company ("Syntro Zeon"). Except for Syntro Zeon, fifty percent of the
-----------
membership interest of which is owned by SyntroVenture and fifty percent of the
membership interest of which is owned by Nippon Zeon of America, Inc., all of
the outstanding capital stock or ownership interest of each Subsidiary of the
Company is owned by the Company, directly or indirectly. All of the capital
stock or ownership interest of the Company's Subsidiaries owned by the Company,
directly or indirectly, are owned by the Company free and clear of any security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
charges or other encumbrances of any nature ("Liens") or any other limitation or
-----
restriction (including any restriction on the right to vote or sell the same,
except as may be provided as a matter of law), except as set forth in Section
4.3 of the Company Disclosure Letter. Except as set forth in Section 4.3 of the
Company Disclosure Letter, there are no securities of the Company or any of its
Subsidiaries convertible into or exchangeable for, options or other rights to
acquire from the Company or any of its Subsidiaries, or other contracts,
understandings, arrangements or obligations (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of, any capital
stock or other ownership interests in, or any other securities of, any
Subsidiary of the Company. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to
-13-
<PAGE>
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interest in any Subsidiary of the Company nor are there any
irrevocable proxies with respect to any shares of the capital stock of any of
the Company's Subsidiaries. All of the shares of capital stock of each
Subsidiary of the Company are validly existing, fully paid and non-assessable.
Except for statutory restrictions, there are no restrictions which prevent or
limit the payment of dividends by any of the Company's Subsidiaries.
Section 4.4 Other Interests. Except for the Company's interest in
---------------
its Subsidiaries and investments in ordinary course consistent with past
practice and except as set forth in Section 4.4 of the Company Disclosure
Letter, neither the Company nor its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in, nor is the Company or any of
its Subsidiaries subject to any obligation or requirement to provide for or to
make any investment (in the form of a loan, capital contribution or otherwise)
to or in, any corporation, partnership, joint venture, limited liability
company, business, trust or entity.
Section 4.5 Authority; Non-Contravention. The Board of Directors of
----------------------------
the Company has approved the Offer and declared the Merger advisable and the
Company has all requisite power and authority to enter into this Agreement and,
subject to approval of the Merger by the stockholders of the Company (if
required), 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 such approval
of the Merger by the stockholders of the Company (if required). This Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms. Except as set forth in the Company
SEC Documents (as hereinafter defined) and except as set forth in Section 4.5 of
-----------
the Company Disclosure Letter, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any 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 any obligation
or to the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or Bylaws of the Company (true and complete copies
of which as of the date hereof have been delivered to Parent) or any provision
of the comparable charter or organization documents
-14-
<PAGE>
of any of its Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage or indenture, any lease or other agreement pursuant to which the
Company has paid or received more than $20,000 in the last year, or any
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clause (ii) or (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) in connection or in compliance with the provisions of the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(iii) such filings and consents, if any, as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or the transactions contemplated by this Agreement, (iv) such filings, if any,
as may be required in connection with the Gains Taxes described in Section 7.7,
-----------
(v) such filings and approvals as may be required under the Improvements Act,
(vi) such filings as may be required under state securities laws or the rules of
the Nasdaq Stock Market, and (vii) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, materially impair the ability of Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 4.6 SEC Documents. (a) Since October 1, 1993, the Company
-------------
has filed all documents with the SEC required to be filed under the Securities
Act of 1933, as amended (including the rules and regulations promulgated
thereunder), or the Exchange Act (the "Company SEC Documents"). As of their
---------------------
respective dates, the Company SEC Documents complied in all material respects as
to form with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the
-15-
<PAGE>
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents as at the dates
thereof complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
(b) Except as set forth in the Company SEC Documents, neither the
Company nor any of its Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with generally accepted accounting principles, except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since September 30, 1994 which would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.7 Offer Documents and Proxy Statement. None of the
-----------------------------------
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Schedule 14D-9, the
Information Statement, if any, the Proxy Statement, if any, or any amendment or
supplement thereto, will (i) in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to the Company, its officers and directors or any of its Subsidiaries should
occur which is required to be described in an amendment of, or a supplement to,
the Proxy Statement or the Offer Documents, such event shall be so described,
and such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act.
-16-
<PAGE>
Section 4.8 Absence of Certain Events. Since September 30, 1994, the
-------------------------
Company and its Subsidiaries have operated their respective businesses in the
ordinary course consistent with its historical practices and there has not
occurred (i) any event, occurrence or conditions which, individually or in the
aggregate, has had, or is reasonably likely to have, a Material Adverse Effect
on the Company; (ii) any entry into or any commitment or transaction that,
individually or in the aggregate, has or is reasonably likely to have, a
Material Adverse Effect on the Company; (iii) any change by the Company or any
of its Subsidiaries in its accounting methods, principles or practices; (iv)
except as set forth in Section 4.8 of the Company Disclosure Letter, any
amendments or changes in the Certificate of Incorporation or Bylaws of the
Company; (v) any revaluation by the Company or any of its Subsidiaries of any of
their respective assets, including, without limitation, write-offs of accounts
receivable, other than in the ordinary course of the Company's and each of its
Subsidiaries' businesses consistent with past practices; (vi) any damage,
destruction or loss which resulted in or is reasonably likely to result in a
Material Adverse Effect on the Company; or (vii) any declaration, setting aside
or payment of any dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or other acquisition
by the Company or any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company.
Section 4.9 Litigation. Except as set forth in Section 4.9 of the
----------
Company Disclosure Letter, there are no actions, suits or proceedings pending
against the Company or any of its Subsidiaries or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, at law or in
equity, or before or by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other Governmental Entity or any
arbitrator or arbitration tribunal, that are reasonably likely to have a
Material Adverse Effect on the Company or would prevent or delay the
consummation of the transactions contemplated hereby.
Section 4.10 Compliance with Applicable Law. The Company and its
------------------------------
Subsidiaries hold, and at all required times have held, all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
-------
Permits"), except for failures to hold such permits, licenses, variances,
- -------
exemptions, orders and approvals which have not had, and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company from and after the date of this Agreement. The Company and its
Subsidiaries are, and at all times have been, in compliance with the terms of
the Company Permits, except where the failure so to comply has not had, and is
not reasonably likely to have, a Material Adverse Effect on
-17-
<PAGE>
the Company. The businesses of the Company and its Subsidiaries are not being,
and have not been, conducted in violation of any law, ordinance or regulation of
any Governmental Entity except for violations or possible violations which
individually or in the aggregate do not and will not have a Material Adverse
Effect on the Company. No investigation or review by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company, has
any Governmental Entity indicated an intention to conduct the same, other than,
in each case, those which the Company reasonably believes will not have a
Material Adverse Effect on the Company. The Company makes no representations in
this Section 4.10 with respect to any Environmental Laws (as hereinafter
------------
defined).
Section 4.11 Employee Plans. (a) The Company and each of its
--------------
Subsidiaries have complied with all requirements, and performed all obligations,
imposed by or in connection with any Company Benefit Plan (as hereinafter
defined) or any related trust agreement or insurance contract and the
requirements and obligations imposed by applicable law (including, without
limitation, the reporting and disclosure requirements imposed by ERISA or the
Code (each, as hereinafter defined), other than where the failure to so comply
or perform has not had, and is not reasonably likely to have, a Material Adverse
Effect on the Company. All contributions and other payments required by any
Company Benefit Plan or applicable law to be made by the Company or its
Subsidiaries to any Company Benefit Plan have been made or are properly
reflected on their financial statements, other than where the failure to do so
has not had, and is not reasonably likely to have a Material Adverse Effect on
the Company. There is no claim, dispute, grievance, charge, complaint,
restraining or injunctive order, litigation or proceeding pending, or to the
knowledge of the Company, threatened (other than routine claims for benefits)
against or relating to any Company Benefit Plan or against the assets of any
Company Benefit Plan, which has had, or is reasonably likely to have, a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has communicated generally to employees or specifically to any employee
regarding any future increase of benefit levels (or future creations of new
benefits) with respect to any Company Benefit Plan beyond those reflected in the
Company Benefit Plans, which benefit increases or creations, either individually
or in the aggregate, has had or is reasonably likely to have, a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries
presently sponsors, maintains, contributes to, nor is the Company or its
Subsidiaries required to contribute to, nor has the Company or any of its
Subsidiaries ever sponsored, maintained, contributed to, or been required to
contribute to, any employee pension benefit plan within the meaning of section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than the Company's 401(k) Deferred Savings Plan which is
-----
qualified under
-18-
<PAGE>
Section 401 of the Code, or any multiemployer plan within the meaning of section
3(37) or 4001(a)(3) of ERISA. Except as set forth in Section 4.11 of the
------------
Company Disclosure Letter, no Company Benefit Plan provides medical or life
insurance coverage for periods after termination of employment other than as
required by Section 601 et. seq. of ERISA.
-------
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not result in the imposition of any
federal excise tax with respect to any Company Benefit Plan.
(c) As a result of the transactions contemplated by this Agreement,
none of the Company, any of its Subsidiaries or Parent will be obligated to make
a payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(d) No entity other than any of the Company's Subsidiaries is,
together with the Company, treated as a single employer under section 414 of the
Code.
(e) (i) "Company Benefit Plan" means any bonus, incentive
--------------------
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability, workers' compensation
or other insurance, severance, separation or other employee benefit plan,
program, practice, policy or arrangement of any kind, including, but not limited
to, any "employee benefit plan" within the meaning of section 3(3) of ERISA,
other than a multiemployer plan within the meaning of section 3(37) or
4001(a)(3) of ERISA, established by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or has contributed
(including any such plan, program, practice policy or arrangement not now
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries does not now contribute, but with respect to which the
Company or any of its Subsidiaries has or may have any liability).
Section 4.12 Employment Relations and Agreement. (a) Except as would
----------------------------------
not constitute a Material Adverse Effect on the Company, (i) each of the Company
and its Subsidiaries is, and at all times has been, in compliance in all
material respects with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice;
(ii) no unfair labor practice complaint against the Company or any of its
Subsidiaries is pending before the
-19-
<PAGE>
National Labor Relations Board; (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its Subsidiaries, (iv) no
representation question exists respecting the employees of the Company or any of
its Subsidiaries; (v) no grievance exists, no arbitration proceeding arising out
of or under any collective bargaining agreement is pending and no claim therefor
has been asserted; (vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries; and (vii) the Company and
its Subsidiaries taken as a whole have not experienced any material labor
difficulty during the last three years. Since October 1, 1993, no union
organizing or election activities involving employees of the Company or its
Subsidiaries have occurred or, to the knowledge of the Company, been threatened.
There has not been and, to the knowledge of the Company, there will not be, any
change in relations with employees of the Company or any of its Subsidiaries as
a result of the transactions contemplated by this Agreement which could have a
Material Adverse Effect on the Company.
(b) Except for as reflected in the Company SEC Documents or as set
forth in Section 4.12(b) of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries has any written, or to the knowledge of the Company,
any binding oral (other than oral employment agreements which are binding under
Kansas and California law, all of which are terminable at will by the Company
without penalty arising under terms of the oral employment agreements),
employment or severance agreement with any other person.
Section 4.13 Contracts. Except as set forth in Section 4.13(i) of
---------
the Company Disclosure Letter, neither the Company nor its Subsidiaries is a
party to, or has any obligation under, any contract or agreement, written or
oral, which contains any covenants currently or prospectively limiting the
freedom of the Company, any of its Subsidiaries or any of their respective
affiliates to engage in any line of business or to compete with any entity. All
contracts and agreements to which the Company or any of its Subsidiaries is a
party or by which any of their respective assets is bound are valid and binding,
in full force and effect and enforceable against the parties thereto in
accordance with their respective terms, other than (i) such failures to be so
valid and binding, in full force and effect or enforceable which, either
individually or in the aggregate, has not had, or is not reasonably likely to
have, a Material Adverse Effect on the Company, and (ii) subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity. There is not under any such contract
or agreement any existing default, or event which, after notice or lapse of
time, or both, would constitute a default, by the Company or any of its
Subsidiaries, or to the Company's knowledge, any other party, except as set
-20-
<PAGE>
forth in Section 4.13(ii) of the Company Disclosure Letter and except to the
extent such default has not had, or is not reasonably likely to have, a Material
Adverse Effect on the Company. The Company has delivered to Parent true and
complete copies of each of the contracts and agreements (and any and all
amendments thereto) listed in the Company Disclosure Schedule. Neither the
Company nor any of its Subsidiaries has waived any material rights under any of
such contracts or agreements.
Section 4.14 Intellectual Property. (a) Except as would not
---------------------
reasonably be expected to have a Material Adverse Effect on the Company and
except as set forth in Section 4.14 of the Company Disclosure Letter (i) to the
knowledge of the Company, the Company and/or each of its Subsidiaries owns, or
is licensed or otherwise has the right to use (in each case, clear of any liens
or encumbrances of any kind), all Intellectual Property (as hereinafter defined)
used in or necessary for the conduct of its business as currently conducted;
(ii) no claims are pending or, to the knowledge of the Company, threatened that
the Company or any of its Subsidiaries is infringing on or otherwise violating
the rights of any person with regard to any Intellectual Property owned by
and/or licensed to the Company or its Subsidiaries; (iii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its Subsidiaries; (iv) all
registrations for copyrights, trademarks, service marks, trade names and patents
of the Company and its Subsidiaries are valid and in force, and all applications
therefor are pending, in good standing, and, to the knowledge of the Company,
without challenge of any kind; and (v) the Company and/or each of its
Subsidiaries has taken reasonable and necessary steps to protect their
Intellectual Property and their rights thereunder, and to the knowledge of the
Company no such rights or Intellectual Property have been lost or are in
jeopardy of being lost through failure to act by the Company or any of its
Subsidiaries. All of the Patents (as hereinafter defined) owned or licensed by
the Company and its Subsidiaries, and any licenses granted by the Company or any
of its Subsidiaries relating thereto, are listed in the Company Disclosure
Letter.
(b) For purposes of this Agreement, "Intellectual Property" means (i)
---------------------
all United States and foreign copyrights, whether registered or unregistered,
and pending applications to register the same, and all copyrightable works,
including, without limitation, software; (ii) all United States, state and
foreign trademarks, service marks and trade names (including all assumed or
fictitious names under which the Company is conducting the business or has
within the previous three years conducted the business), whether registered or
unregistered, and pending applications to register the foregoing; (iii) all
United States and foreign patents, patent applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures,
-21-
<PAGE>
inventions (whether or not patentable or reduced to practice) or improvements
thereto ("Patents"); (iv) all confidential ideas, know-how, methods, formulae,
-------
trade secrets, processes, reports, data, customer lists, business plans, or
other proprietary information; (v) all agreements, commitments, contracts, under
standings, licenses, sublicenses, assignments and indemnities which relate or
pertain to any of the intellectual property identified in subsections (i)
through (v) above or to disclosure or use of ideas of third parties.
Section 4.15 Title to Property. The Company or its Subsidiaries has
-----------------
good and, with respect to real property, marketable title to all of the material
assets reflected on the consolidated financial statements of the Company
included in the Company SEC Documents as being owned by it or its Subsidiaries
and all of the material assets thereafter acquired by it or its Subsidiaries
(except to the extent that such assets have thereafter been disposed of in the
ordinary course of business consistent with past practice), subject to no Liens.
Section 4.16 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Offer, the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Offer, the Merger and this Agreement
and the transactions contemplated by this Agreement the provisions of Section
203 of the DGCL. To the knowledge of the Company (without investigation), no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
Section 4.17 Taxes. (a) (i) Except as provided in the Company
-----
Disclosure Letter, the Company and each of its Subsidiaries have filed (or will
timely file) all Tax Returns required to have been filed on or before the date
hereof or the Effective Time, which returns are true and complete in all
material respects; (ii) all Taxes shown to be due on such Tax Returns have been
timely paid; (iii) all Taxes (whether or not shown on any Tax Return) owed by
the Company or any Subsidiary of the Company and required to be paid on or
before the Effective Time have been (or will be) timely paid or, in the case of
Taxes which the Company or any Subsidiary of the Company is presently contesting
in good faith, the Company or such Subsidiary has established an adequate
reserve for such Taxes on the books of the Company; (iv) neither the Company nor
any Subsidiary has waived any statute of limitations in respect of Taxes; (v)
the Tax Returns referred to in clause (i) relating to federal and state income
Taxes have never been examined by the Internal Revenue Service or the
appropriate state taxing authority; (vi) there is no suit, audit, or assessment
pending with respect to Taxes of the Company or any Subsidiary of the Company;
(vii) all deficiencies asserted or assessments made as a result of any
examination of the Tax Returns referred to in clause (i) by a
-22-
<PAGE>
taxing authority have been paid in full; and (viii) the Company and each of its
Subsidiaries have complied in all material respects with their legal obligations
to withhold and collect Taxes, and such withheld and collected Taxes have been
paid or accrued, reserved against and entered on the books of the Company.
(b) As of September 30, 1994, the "affiliated group" (as defined in
Section 1504(a) of the Code) of which Company is the common parent had
consolidated net operating loss carryforwards for federal income Tax purposes of
not less than $21,200,000 that expire in years 1996 through 2009 (the "NOLs"),
----
and between September 30, 1994 and the Effective Time none of the NOLs will have
been utilized or otherwise reduced. As of the Effective Time, (i) none of the
NOLs are disallowed or limited under the provisions of the Code or regulations
relating to separate return limitation years ("SRLY") or consolidated return
----
changes of ownership ("CRCO"), (ii) none of the NOLs are disallowed or limited
----
under the provisions of the Code and regulations relating to "dual consolidated
losses" (as defined in Section 1503 of the Code or the regulations thereunder),
and (iii) none of the NOLs are disallowed or subject to any limitation by reason
of Sections 269, 382, or 384 of the Code or the regulations thereunder, except
to the extent that the acquisition or right to acquire shares of Common Stock by
Parent, Sub or any of their affiliates results in any such disallowance or
limitation.
(c) As of September 30, 1994, the "affiliated group" (as defined in
Section 1504(a) of the Code) of which Company is the common parent has
consolidated credits described in Section 38(b) of the Code of not less than
$1,100,000 that expire in years 1996 through 2003 (the "Credits"), and between
-------
September 30, 1994 and the Effective Time none of the Credits will have been
utilized or otherwise reduced. The allocation of the total Credits among the
types of credits described in Section 38(b) of the Code is set forth in the
Company Disclosure Letter. As of the Effective Time, none of the Credits are
disallowed or subject to any limitation, including any disallowance or
limitation by reason of Section 269, 381 or 383 of the Code or the regulations
thereunder, except to the extent that the acquisition or right to acquire shares
of Common Stock by Parent, Sub or any of their affiliates results in any such
disallowance or limitation.
(d) For purposes of this Agreement (i) "Tax" (and, with correlative
---
meaning, "Taxes" and "Taxable") means any federal, state, local or foreign
----- -------
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity, and (ii) "Tax Return"
----------
means any return,
-23-
<PAGE>
report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax; and (iii) "Code" means the Internal Revenue Code of 1986, as amended.
----
Section 4.18 Environmental Matters. (a) The Company's and each of
---------------------
its Subsidiaries' past and present operations of its business have complied and
are in compliance with all applicable foreign, federal, state and local laws,
statutes, regulations, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Entity relating to or addressing the
environment, health or safety as in the effect at the relevant time, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, any amendments thereto, any successor statute and any regulations
promulgated thereunder ("CERCLA"), the Occupational Safety and Health Act, any
------
amendments thereto, any successor statute and any regulations promulgated
thereunder ("OSHA") and the Resource Conservation and Recovery Act, any
----
amendments thereto, any successor statute and any applicable regulations
promulgated thereunder ("RCRA"), and any state equivalent ("Environmental
---- -------------
Laws"), except for such failures to so comply that would not have a Material
Adverse Effect on the Company.
(b) Except as set forth in Section 4.18 of the Company Disclosure
Letter and except for such permits that the failure to so obtain would not have
a Material Adverse Effect on the Company, the Company and each of its
Subsidiaries has obtained all environmental, health and safety permits from
Governmental Entities necessary for the operation of its business, and all such
permits are in good standing and the Company and each of its Subsidiaries is in
compliance with all terms and conditions of such permits except where the
failure to so comply would not have a Material Adverse Effect on the Company.
(c) To the best knowledge of the Company, none of the Company or its
Subsidiaries, nor any of the Company's or its Subsidiaries' properties or its
past or present operations, is subject to any on-going investigation by, order
from or agreement with any person (including without limitation any prior owner
or operator of any property of the Company or its Subsidiaries) respecting (i)
any Environmental Law, (ii) any remedial action or (iii) any claim of losses and
expenses arising from the release or threatened release of any waste, pollutant,
hazardous or toxic substance or waste, petroleum, petroleum-based substance or
waste, special waste, biohazardous material (including genetically
engineered/recombinant material), radioactive material or any constituent of any
such substance or waste ("Contaminant") into the environment.
-----------
(d) Neither the Company nor any of its Subsidiaries is subject to any
judicial or administrative proceeding, order,
-24-
<PAGE>
judgment, decree or settlement alleging or addressing a violation of or
liability under any Environmental Law.
(e) Except as set forth in Section 4.18 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has (i) reported a
release of a hazardous substance pursuant to Section 103(a) of CERCLA, or any
state equivalent; (ii) filed a notice pursuant to Section 103(c) of CERCLA;
(iii) filed notice pursuant to Section 3010 of RCRA, indicating the generation
of any hazardous waste, as that term is defined under 40 CFR Part 261 or any
state equivalent; or (iv) filed any notice under any applicable Environmental
Law reporting a substantial violation of any applicable Environmental Law.
(f) There is not now, nor to the knowledge of the Company has there
even been, on or in any property of the Company or any of its Subsidiaries (i)
any treatment, recycling, storage or disposal of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any state equivalent that requires or
required a permit pursuant to Section 3005 of RCRA or (ii) any underground
storage tank or surface impoundment or landfill or waste pile.
(g) Except as set forth in Section 4.18 of the Company Disclosure
Letter, there is not now on or in any property of the Company or any of its
Subsidiaries any polychlorinated biphenyls (PCBs) used in pigments, hydraulic
oils, electrical transformers or other equipment.
(h) Neither the Company nor any of its Subsidiaries has received any
notice or claim to the effect that it is or may be liable to any person as a
result of, and the Company has no knowledge of any basis for any claim of
liability for, the release or threatened release of a Contaminant into the
environment on any property of the Company or any of its Subsidiaries.
(i) No property of the Company or any of its Subsidiaries has been
listed or, to the knowledge of the Company, proposed for listing on the National
Priorities List pursuant to CERCLA, on the Comprehensive Environmental Response,
Compensation and Liability Information System List or any state list of sites
requiring remedial action.
(j) To the best knowledge of the Company, neither the Company nor any
of its Subsidiaries has sent or arranged for the transport of any Contaminant to
any site listed on the National Priorities List pursuant to CERCLA.
(k) Any asbestos-containing material which is on or part of any
property of the Company or any of its Subsidiaries (excluding any raw materials
used in the manufacture of products or products themselves) is in good repair
according to the current standards and practices governing such material, and
its
-25-
<PAGE>
presence or condition does not violate any currently applicable Environmental
Law.
Section 4.19 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of Common Stock of the Company entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Agreement, the
Merger and any transactions contemplated hereby.
Section 4.20. Insurance. The Company and its Subsidiaries maintain
---------
policies of fire and casualty, liability (general, products and other
liability), workers' compensation and other forms of insurance and bonds in such
amounts and against such risks and losses as are insured against by companies
engaged in the same or a similar business. The Company shall keep or cause such
insurance or comparable insurance to be kept in full force and effect through
the Effective Time. The Company and its Subsidiaries have complied with each of
such insurance policies and have not failed to give any notice or present any
claim thereunder in a due and timely manner.
Section 4.21 Brokers. No broker, investment banker or other person,
-------
other than Piper Jaffray Inc., the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder'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, which arrangements
provide for the payment to Piper Jaffray Inc. of a fee of $500,000 and expenses
in connection with the transactions contemplated by this Agreement, and do not
bind Parent and its affiliates (including, after consummation of the Offer, the
Company and its Subsidiaries) other than with respect to indemnification and
contribution and the payment of such fees and expenses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
--------------------------------------------
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 5.1 Organization and Standing. Sub is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub was organized solely for the purpose of acquiring the Company
engaging in the transactions contemplated by this Agreement and has not engaged
in any business since it was incorporated which is not in connection with the
acquisition of the Company and this Agreement.
-26-
<PAGE>
Section 5.2 Capital Structure. The authorized capital stock of Sub
-----------------
consists of 1,000 shares of common stock, par value $.01 per share, all of which
are validly issued and outstanding, fully paid and nonassessable and are owned
by Parent free and clear of all Liens.
Section 5.3 Authority; Non-Contravention. Sub has the requisite
----------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and Parent as its sole stockholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of Sub
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Sub
and (assuming the due authorization, execution and delivery hereof by the
Company) constitutes a valid and binding obligation of Sub enforceable against
Sub in accordance with its terms.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 6.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as otherwise expressly contemplated by this Agreement, during the period
from the date of this Agreement through the Effective Time, the Company shall,
and shall cause its Subsidiaries to, in all material respects carry on their
respective businesses in, and not enter into any material transaction other than
in accordance with, the regular and ordinary course and, to the extent
consistent therewith, use its reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them. Without limiting the
generality of the foregoing, and, except as otherwise expressly contemplated by
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the
Company in their capacity as such, other than dividends payable to the
Company declared by any of the Company's Subsidiaries, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its
-27-
<PAGE>
capital stock or (z) except as set forth in Section 4.2 of the Company
Disclosure Letter, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or equity equivalent (other than, in the case of the Company,
the issuance of Common Stock during the period from the date of this
Agreement through the Effective Time upon the exercise of stock options
issued pursuant to the Stock Plans and outstanding (as set forth in Section
-------
4.2) on the date of this Agreement in accordance with their current terms;
---
(c) amend its charter or bylaws;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership, limited
liability Company, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole;
(e) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or
in the aggregate, to the Company and its Subsidiaries, taken as a whole,
except for sales of inventory or other assets in the ordinary course of
business;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice, or, except as
set forth in Section 4.2 of the Company Disclosure Letter, make any loans,
advances or capital contributions to, or investments in, any other person,
other than to the Company or any wholly owned Subsidiary of the Company and
other than in the ordinary course of business consistent with past
practice;
-28-
<PAGE>
(g) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of the Company;
(h) enter into or adopt or amend any existing severance plan,
severance agreement or severance arrangement or, other than in the ordinary
course of business, enter into or amend any Company Benefit Plan (including
without limitation, the Stock Plans) or employment or consulting agreement
except, (i) with respect to employees that are not executive officers or
directors, compensation increases associated with promotions and regular
reviews in the ordinary course of business consistent with past practices,
(ii) agreements with consultants of the Company providing for payments by
the Company of less than $20,000 to any individual consultant and less than
$75,000 in the aggregate to all consultants, and (iii) after December 31,
1995, increases of not more than 10% to the base salary of executive
officers of the Company;
(i) waive, amend or allow to lapse any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party;
(j) settle or compromise any suit, proceeding or claim or threatened
suit, proceeding or claim for an amount that is more than $20,000 in the
case of any individual suit, proceeding or claim or $100,000 for all suits,
proceedings or claims;
(k) knowingly violate or fail to perform any obligation or duty
imposed upon it by any applicable federal, state or local law, rule,
regulation, guideline or ordinance;
(l) change its credit policies, procedures or practices, or commit or
renew a prior commitment to lend money, purchase assets, issue a letter of
credit, guarantee or similar instrument or otherwise extend credit to any
person in a manner not in the ordinary course or in a manner inconsistent
with past practice;
(m) (i) modify, amend or terminate any contract, (ii) waive, release,
relinquish or assign any contract (including any insurance policy) or other
right or claim, (iii) prepay any indebtedness or (iv) cancel or forgive any
indebtedness owed to it, other than in each case in a manner in the
ordinary course of business consistent with past practice and which is not
material to the business of the Company and its Subsidiaries;
(n) make any Tax election or change any method of accounting for Tax
purposes, in each case except to the
-29-
<PAGE>
extent required by law, or settle or compromise any Tax liability;
(o) change any of the accounting principles or practices used by it
except as required by the SEC or the Financial Accounting Standards Board;
(p) (i) enter into any research and development contract, (ii) enter
into any production contract or "tolling agreement," or (iii) grant any
license relating to its Intellectual Property, except as required by
existing agreements of the Company, copies of which have been provided to
Parent; or
(q) authorize, recommend, announce, propose or agree to take any of
the foregoing actions.
During the period from the date of this Agreement through the Effective Time,
(i) as reasonably requested by Parent, the Company shall confer on a regular
basis with one or more representatives of Parent with respect to material
operational matters; (ii) the Company shall, within 25 days following each
fiscal month, deliver to Parent financial statements, including an income
statement and balance sheet for such month; and (iii) upon the knowledge of the
Company of any Material Adverse Change (as hereinafter defined) in the Company,
any material litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the breach in any material respect of any representation or warranty contained
herein, the Company shall promptly notify Parent thereof.
Section 6.2 Acquisition Proposals. From and after the date of this
---------------------
Agreement and prior to the Effective Time, except as provided below, the Company
agrees that (a) neither the Company nor its Subsidiaries shall, and the Company
shall not authorize or permit its officers, directors, employees and authorized
agents and representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, the
Company or its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or engage in any negotiations
----------- --------
concerning, or provide any confidential information or data to, or have any
substantive discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; (b) it will immediately cease and cause to be terminated any existing
-30-
<PAGE>
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken in
this Section 6.2; and (c) it will notify Parent immediately if any such
-----------
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, it, including the terms of its proposals; provided, however, that nothing
-------- -------
contained in this Section 6.2 shall prohibit the Board of Directors of the
-----------
Company from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that indicates an interest in making a
Superior Proposal (as hereinafter defined) if, and only to the extent that (A)
the Board of Directors determines in good faith after consultation with the
Company's outside counsel that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders imposed by laws
and (B) the Company keeps Parent informed of the status of any such discussions
or negotiations; and (ii) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal. If
any person or entity makes a Superior Proposal, upon receipt thereof the Company
shall provide written notice (a "Notice of a Superior Proposal") to Parent of
-----------------------------
such Superior Proposal, including the terms and structure thereof, and if within
five business days following the delivery of the Notice of a Superior Proposal
the Superior Proposal does not continue to be superior in terms of the aggregate
value to be received by the Company's stockholders in light of any improved
transaction proposed by Parent prior to the expiration of such five-day period,
the Company shall cease all discussions or negotiations with such person or
entity. For purposes of this Agreement, "Superior Proposal" means an
-----------------
unsolicited bona fide Acquisition Proposal in writing that the Board of
Directors determines in its good faith judgment (based on the advice of a
nationally recognized investment banking firm) provides greater aggregate value
to the Company's stockholders than the transactions contemplated by this
Agreement. Subject to Article IX, nothing in this Section 6.2 shall (x) permit
---------- -----------
the Company to terminate this Agreement, (y) permit the Company to enter into
any agreement with respect to an Acquisition Proposal during the term of this
Agreement, or (z) affect any other obligation of any party under this Agreement.
Section 6.3 Conduct of Business of Sub Pending the Merger. During
---------------------------------------------
the period from the date of this Agreement through the Effective Time, Sub shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.
-31-
<PAGE>
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 Company Stockholder Approval; Proxy Statement. (a) If
---------------------------------------------
approval of the Merger by the stockholders of the Company is required by
applicable law, the Company shall call a meeting of its stockholders (the
"Stockholder Meeting") for the purpose of voting upon the Merger and shall use
-------------------
its best efforts to obtain stockholder approval of the Merger. The Stockholder
Meeting shall be held as soon as practicable following the purchase of shares of
Common Stock pursuant to the Offer and the Company will, through its Board of
Directors but subject to the fiduciary duties of its Board of Directors under
applicable law as determined by the Board of Directors in good faith after
consultation with the Company's outside counsel, recommend to its stockholders
the approval of the Merger and not rescind its declaration that the Merger is
advisable. The record date for the Stockholder Meeting shall be a date
subsequent to the date Parent or Sub becomes a record holder of Common Stock
purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be cleared by the SEC. The Company will notify Parent of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger.
The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company and Parent agrees to use its best efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
stockholders of the Company. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its stockholders such an amendment or supplement.
-32-
<PAGE>
(c) The Company shall use its best efforts to obtain the necessary
approvals by its stockholders of the Merger, this Agreement and the transactions
contemplated hereby (subject to the fiduciary duties of its Board of Directors
under applicable law as determined by the Board of Directors in good faith after
consultation with the Company's outside counsel).
(d) Parent agrees, subject to applicable law, to cause all shares of
Common Stock purchased pursuant to the Offer and all other shares of Common
Stock owned by Sub or any other Subsidiary of Parent to be voted in favor of the
approval of the Merger.
Section 7.2 Access to Information. The Company shall, and shall
---------------------
cause each of its Subsidiaries to, afford to Parent, and to Parent's
accountants, counsel, financial advisers and other representatives, access and
permit them to make such inspections as they may require during normal business
hours during the period from the date of this Agreement through the Effective
Time to all their respective properties, books, contracts, commitments and
records and, during such period, the Company shall, and shall cause each of its
Subsidiaries to, furnish promptly to Parent (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 laws and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request. Except as required by law, Parent will hold, and will cause
its affiliates, associates and representatives to hold, any nonpublic
information in confidence until such time as such information otherwise becomes
publicly available and shall use its best efforts to ensure that such
affiliates, associates and representatives do not disclose such information to
others without the prior written consent of the Company. In the event of
termination of this Agreement for any reason, Parent shall, upon request, return
to the Company all nonpublic documents so obtained from the Company or any of
its Subsidiaries and any copies made of such documents for Parent.
Section 7.3 Fees and Expenses. (a) Except as otherwise provided in
-----------------
this Agreement, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
(b) If (A) any person (other than Parent or any of its affiliates)
shall have become, prior to the termination of this Agreement, the beneficial
owner of 50% or more of the outstanding shares of Common Stock, (B) the Offer
shall have expired at a time when the Minimum Condition (as defined in Exhibit
-------
A) shall not have been satisfied and at any time on or prior to nine months
- -
after the expiration of the Offer any person (other than Parent or any of its
affiliates) shall acquire beneficial
-33-
<PAGE>
ownership of 50% or more of the outstanding shares of Common Stock or shall
consummate an Acquisition Proposal, at a price per share less than the sum of
the Merger Consideration plus the amount determined by dividing $1,500,000 by
the number of shares of Common Stock outstanding immediately prior thereto, (C)
at any time prior to the termination of this Agreement any person (other than
Parent or any of its affiliates) shall publicly announce any Acquisition
Proposal and, at any time on or prior to nine months after the termination of
this Agreement, shall become the beneficial owner of 50% or more of the
outstanding shares of Common Stock or shall consummate an Acquisition Proposal,
or (D) the Company terminates this Agreement pursuant to Section 9.1(b)(ii),
-----------------
then the Company shall, in the case of clause (A), (B) or (C), promptly, but in
no event later than two business days after the first of such events to occur,
or, in the case of clause (D) at or prior to the time of such termination, pay
Parent $1,500,000. If the Company fails to pay such amount when due in
accordance with the immediately preceding sentence, which failure is finally
determined by a court of competent jurisdiction, Parent shall be entitled to the
payment from the Company, in addition to such amount, of any legal fees and
expenses incurred in procuring such judicial determination.
(c) If (i) this Agreement is terminated pursuant to Section 9.1(b)(ii)
------------------
or Section 9.1(c)(i), 9.1(c)(ii) (but only if this Agreement is terminated
----------------- ----------
because the representations or warranties of the Company were not true and
correct in all material respects when made (other than those qualified by
"knowledge of the Company" or "to the best knowledge of the Company")),
9.1(c)(iii) or 9.1(c)(iv) or (ii) at any time prior to the termination of this
- ----------- ----------
Agreement any person (other than Parent or any of its affiliates) shall publicly
announce any Acquisition Proposal and, at any time on or prior to six months
after the termination of this Agreement, shall become the beneficial owner of
50% or more of the outstanding shares of Common Stock or shall consummate an
Acquisition Proposal, the Company shall reimburse Parent and Sub (not later than
two business days after submission of statements therefor) for all documented
costs and expenses (including, without limitation, all legal, investment
banking, printing, depositary and related fees and expenses); provided, however,
-------- -------
that the amount to be paid to Parent and Sub pursuant to this Section 7.3(c)
--------------
shall not exceed $750,000; provided, further, that any amount paid pursuant to
-------- -------
this Section 7.3(c) shall be credited against any amount that may become payable
--------------
pursuant to Section 7.3(b); and provided, further, that if the Company has paid
-------------- -------- -------
$1,500,000 pursuant to Section 7.3(b) prior to any payment pursuant to this
--------------
Section 7.3(c), then no amount shall be payable pursuant to this Section 7.3(c).
- -------------- --------------
Section 7.4 Company Stock Options. (a) The Company shall (i)
---------------------
terminate the Stock Plans immediately prior to the Effective Time without
prejudice to the holders of Vested Company Stock Options (as hereinafter
defined), (ii) grant no additional
-34-
<PAGE>
stock options under the Stock Plans and (iii) accelerate the vesting to the date
of the consummation of the Offer of stock options for (A) 21,734 shares granted
on March 24, 1995 with an exercise price of $1.50 per share currently scheduled
to vest on March 24, 1996 and (B) 21,667 shares granted on December 28, 1993
with an exercise price of $2.938 per share currently scheduled to vest on
December 28, 1995.
(b) At the Effective Time, all outstanding stock options to purchase
shares of Common Stock heretofore issued under the Stock Plans or the Consultant
Option Agreements that are then fully exercisable or vested (including those
options vested pursuant to Section 7.4(a)(iii)) (a "Vested Company Stock
------------------- --------------------
Option"), shall, pursuant to the terms of the respective Stock Plans pursuant to
which they were issued and upon their surrender to the Company by the holders
thereof, be cancelled by the Company, and the holders thereof shall receive a
cash payment from the Company in an amount (if any) equal to the number of
shares of Common Stock subject to each surrendered option multiplied by the
difference (if positive) between the exercise price per share of Common Stock
covered by the option and the Merger Consideration. The Company shall use its
best efforts to cause each holder of Vested Company Stock Options to surrender
their Vested Company Stock Options in accordance with the prior sentence. At the
Effective Time, all outstanding stock options to purchase shares of Common Stock
issued under the Stock Plans or the Consultant Option Agreements that are not
then exercisable or vested shall be cancelled without payment to the holders
thereof and the Company shall use its best efforts to cause such stock options
to be surrendered to the Company.
Section 7.5 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 to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (a) promptly making their
respective filings and thereafter making any other required submission under the
Improvements Act with respect to the Offer and the Merger; (b) diligently
opposing any objections to, appeals from or petitions to reconsider or reopen
any such approval by persons not a party to this Agreement; (c) in addition to
the foregoing, the obtaining of all necessary actions or non-actions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (d) the obtaining of all necessary consents, approvals or
waivers from third parties, (e) the defending of any lawsuits or other
-35-
<PAGE>
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (f) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement.
Section 7.6 Public Announcements. Parent and Sub, on the one hand,
--------------------
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or national automated
interdealer quotation system.
Section 7.7 Real Estate Transfer and Gains Taxes. The Company will
------------------------------------
pay any real property transfer or gains Tax or any similar state or local tax
which is attributable to the transfer of the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the "Gains
-----
Taxes"), and any penalties or interest with respect to the Gains Taxes, payable
- -----
following the consummation of the Offer or the Merger. The Company agrees to
cooperate with Sub in the timely filing of any Tax Returns with respect to the
Gains Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company or its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such Tax
Returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Sub or Parent in its
reasonable discretion and such allocated amount will be used to determine Gains
Taxes. The stockholders of the Company shall be deemed to have agreed to be
bound by the allocation established pursuant to this Section 7.7 in the
-----------
preparation of any Tax Return with respect to the Gains Taxes.
Section 7.8 Indemnification; Directors and Officers Insurance. (a)
-------------------------------------------------
For a period of not less than six years from and after the Effective Time,
Parent agrees to, and to cause the Surviving Corporation to, indemnify and hold
harmless all past and present officers, directors and employees (the
"Indemnified Parties") of the Company and of its Subsidiaries to the full extent
- --------------------
such persons may be indemnified by the Company pursuant to the Company's
Certificate of Incorporation and Bylaws as in effect as of the date hereof for
acts and omissions occurring at or prior to the Effective Time and shall advance
reasonable litigation expenses incurred by such persons in connection with
defending any action arising out of such acts or omissions, provided that such
persons provide the requisite affirmations and
-36-
<PAGE>
undertaking, as set forth in the Company's Bylaws in effect at the date of this
Agreement.
(b) Any Indemnified Party will promptly notify the Parent and the
Surviving Corporation of any claim, action, suit, proceeding or investigation
for which such party may seek indemnification under this Section; provided,
--------
however, that the failure to furnish any such notice shall not relieve Parent or
- -------
the Surviving Corporation from any indemnification obligation under this Section
except to the extent Parent or the Surviving Corporation is materially
prejudiced thereby. In the event of any such claim, action, suit, proceeding,
or investigation, (x) the Surviving Corporation will have the right to assume
the defense thereof, and the Surviving Corporation will not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred thereafter by such Indemnified Parties in
connection with the defense thereof, except that all Indemnified Parties (as a
group) will have the right to retain one separate counsel, reasonably acceptable
to such Indemnified Party and Parent, at the expense of the indemnifying party
if the named parties to any such proceeding include both the Indemnified Party
and the Surviving Corporation and the representation of such parties by the same
counsel would be inappropriate due to a conflict of interest between them, (y)
the Indemnified Parties will cooperate in the defense of any such matter, and
(z) the Surviving Corporation will not be liable for any settlement effected
without its prior written consent. In addition, Parent will provide, or cause
the Surviving Corporation to provide, for a period of not less than six years
after the Effective Time, the Company's current directors and officers an
insurance and indemnification policy that provides coverage for events occurring
at or prior to the Effective Time (the "D&O Insurance") that is no less
--- ---------
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavail able, the best available coverage; provided, however, that
-------- -------
Parent and the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of two times the last annual premium
paid prior to the date hereof, but in such case shall purchase as much such
coverage as possible for such amount.
Section 7.9 Board Representation. Promptly upon the purchase of
--------------------
shares of Common Stock pursuant to the Offer, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Parent, subject to compliance
with Section 14(f) of the Exchange Act and the rule and regulations promulgated
thereunder, representation on the Board of Directors equal to the product of (a)
the total number of directors on the Board of Directors and (b) the percentage
that the number of shares of Common Stock purchased by Parent bears to the
number of shares of Common Stock outstanding, and the Company shall, upon
request by Parent, promptly increase the size of the Board of
-37-
<PAGE>
Directors and/or exercise its reasonable best efforts to secure the resignations
of such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors and shall cause Parent's designees to be so
elected. The Company shall take, at its expense, all action required pursuant
to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 7.9 and shall include in the Schedule 14D-9 or otherwise timely mail to
- -----------
its stockholders such information with respect to the Company and its officers
and directors as is required by Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 7.9. Parent will supply to the Company in
-----------
writing and be solely responsible for any information with respect to itself and
its or Parent's nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
Section 7.10 Employee Benefits. (a) Until September 30, 1996 Parent
-----------------
shall maintain employee benefits and programs for officers and employees of the
Company and its Subsidiaries that are no less favorable in the aggregate than
those being provided to such officers and employees on the date hereof (it being
understood that Parent will not be obligated to continue any one or more
employee benefits or programs). For purposes of eligibility to participate in
and vesting in all benefits provided to officers and employees of the Company
and its Subsidiaries, such officers and employees of the Company and its
Subsidiaries will be granted their years of service with the Company and its
Subsidiaries. To the extent officers or employees of the Company or its
Subsidiaries shall be covered by any medical plan of Parent, amounts paid under
any medical plans of the Company during the year such coverage becomes effective
shall be taken into account in calculating deductibles and maximum out-of-pocket
limits applicable under the medical plan of Parent as if such amounts had been
paid under such medical plan of Parent.
(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term or
duration or on any terms other than those the Surviving Corporation may
establish. Employment of any of the employees by the Surviving Corporation
shall be "at will" and may be terminated by the Surviving Corporation at any
time for any reason (subject to any legally binding agreement, or any applicable
laws or collective bargaining agreement, or any arrangement or commitment). No
provision of this Agreement shall create any third-party beneficiary with
respect to any employee (or dependent thereof) of the Company or any of its
Subsidiaries in respect of continued employment or resumed employment.
Section 7.11 Severance Policy. Parent shall maintain the severance
----------------
policy set forth in Section 7.11 of the Company
-38-
<PAGE>
Disclosure Letter hereof for a period of at least twelve months from the
Effective Time.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
Section 8.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
- ------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. If approval of the Merger by the holders
--------------------
of the Common Stock is required by applicable law, the Merger shall have
been approved by the requisite vote of such holders.
(b) No Order. No Governmental Entity or court of competent
--------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree or injunction which
prohibits or has the effect of prohibiting the consummation of the Merger;
provided, however, that the Company, Parent and Sub shall use their
-------- -------
reasonable best efforts to have any such order, decree or injunction
vacated.
Section 8.2 Conditions to Obligations of Parent and Sub. The
-------------------------------------------
respective obligations of each of Parent and Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed on or
prior to the Effective Time, and each of the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects (except as set forth in Section 8.2 of the Company
Disclosure Letter), in each case, on and as of the Effective Time as if
made on and as of such date, except as contemplated or permitted by this
Agreement and except for such failures to perform or such failures to be
true and correct as have not had and are not reasonably likely to have a
Material Adverse Effect on the Company, and Parent shall have received a
certificate of the Company, signed by the President or any Vice President
of the Company, to that effect; provided, however, that any references in
-------- -------
this Agreement to the phrases "knowledge of the Company" and "to the best
knowledge of the Company," and variants thereof, shall be disregarded for
the purposes of determining whether the Company shall have breached its
representations and warranties hereunder.
-39-
<PAGE>
(b) Third Party Consents. Except as set forth in Section 8.2 of the
--------------------
Company Disclosure Letter, all required authorizations, consents or
approvals of any third party, the failure to obtain which would have a
Material Adverse Effect on the Company (assuming the Merger had taken
place) shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after any approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced (except as a result
of actions or omissions by the Company) in accordance with Section 1.1(a);
--------------
or
(ii) there is a Superior Proposal to acquire all of the
outstanding shares of Common Stock or substantially all of the assets of
the Company and the Board of Directors of the Company determines in good
faith after consultation with the Company's outside counsel that the
failure to approve such Superior Proposal would be inconsistent with the
fiduciary duties to stockholders of the Board of Directors of the Company;
provided, however, that the right to terminate this Agreement pursuant to
-------- -------
this clause shall not be available (A) if the Company has breached in any
material respect its obligations under Section 6.2, (B) in respect of an
-----------
offer involving consideration that is not entirely cash or does not permit
stockholders to receive the payment of the offered consideration in respect
of all shares at the same time, unless the Board of Directors of the
Company has been furnished with a written opinion of a nationally
recognized investment banking firm to the effect that such offer provides a
higher value per share than the consideration per share pursuant to the
Offer or the Merger (as increased pursuant to any revised proposal of
Parent pursuant to Section 6.2) or (C) if, prior to or concurrently with
-----------
any purported termination pursuant to this clause, the Company shall not
have paid the fee contemplated by Section 7.3(b); or
--------------
(iii) there has been a breach by Parent or Sub of any
representation or warranty that would have a material adverse effect on
Parent's or Sub's ability to perform its obligations under this Agreement
and which breach has not
-40-
<PAGE>
been cured within five business days following receipt by Parent or Sub of
notice from the Company of the breach; or
(iv) Parent or Sub fails to comply in any material respect with
any of its material obligations or covenants contained herein, including,
without limitation, the obligation of Sub to purchase shares of Common
Stock pursuant to the Offer, unless such failure results from a breach of
the Company of any obligation, representation, or warranty hereunder, which
has not been cured within five business days following Parent's receipt of
notice from the Company of the breach;
(c) by Parent if:
(i) the Board of Directors of the Company shall have failed to
recommend, or withdrawn, modified or amended in any material respect its
approval or recommendations of, the Offer or the Merger or shall have
resolved to do any of the foregoing, or shall have failed to reject an
Acquisition Proposal within ten business days after receipt by the Company
or public announcement thereof; or
(ii) any of the representations or warranties made by the Company in
this Agreement shall not have been true and correct in all material
respects when made, or shall thereafter ceased to be true and correct in
any material respect as if made as of such later date (other than
representations and warranties made as of a specified date), which failure
to be true and correct has not been cured within five business days
following the Company's receipt of notice from Parent of the breach and
such failure to be true and correct shall be reasonably expected to have a
Material Adverse Effect on the Company; provided, however, that all
-------- -------
references in this Agreement to the phrases "knowledge of the Company" and
"to the best knowledge of the Company," and variants thereof, shall be
disregarded for the purposes of determining whether the Company shall have
breached its representations and warranties hereunder; or
(iii) the Company shall not in all material respects have performed
each obligation and agreement and complied with each covenant to be
performed and complied with by it under this Agreement, unless such failure
results from a breach of Parent or Sub of any obligation, representation or
warranty hereunder, which has not been cured within five business days
following the Company's receipt of notice from the Parent of the breach; or
(iv) the stockholders of the Company do not approve the Merger at the
Stockholder Meeting in accordance with the DGCL, if such approval is
required by the DGCL; or
-41-
<PAGE>
(v) if Sub is entitled to terminate the Offer as a result of the
occurrence of any event described in Exhibit A; or
---------
(d) by either Parent or the Company if:
(i) the Merger has not been effected on or prior to the close of
business on April 30, 1996; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this clause shall not be available to any party
whose failure to fulfill any obligation of this Agreement has been the
cause of, or resulted in, the failure of the Merger to have occurred on or
prior to the aforesaid date; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; or
(iii) upon a vote at a duly held meeting or upon any adjournment
thereof, the stockholders of the Company shall have failed to give any
approval required by applicable law; or
(iv) as the result of the failure of any of the conditions set
forth in Exhibit A hereto, the Offer shall have terminated or expired in
---------
accordance with its terms without Sub having purchased any shares of Common
Stock pursuant to the Offer; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this Section 9.1(d)(iv) shall not be available
-----------------
to any party whose failure to fulfill any of its obligations under this
Agreement results in the failure of any such condition; or
(v) Parent or the Company shall have reasonably determined that
any Offer condition (other than the Minimum Condition (as defined in
Exhibit A)) is not capable of being satisfied at any time in the future;
---------
provided, however, that the right to terminate this Agreement pursuant to
-------- -------
this clause shall not be available to any party whose failure to fulfill
any obligation of this Agreement has been the cause of, or resulted in,
such Offer condition being incapable of satisfaction.
Section 9.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company, as provided in Section 9.1, this
-----------
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except as set forth in the last two sentences of Section 7.2 and
-----------
except for Section 7.3, which shall survive the termination); provided, however,
----------- -------- -------
that nothing contained in this Section 9.2
-----------
-42-
<PAGE>
shall relieve any party hereto from any liability for any breach of this
Agreement.
Section 9.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after any approval of the Merger by the stockholders of
the Company but, after the purchase of shares of Common Stock pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration or
which in any way materially adversely affects the rights of such stockholders,
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 9.5 Procedure for Termination, Amendment or Waiver. A
----------------------------------------------
termination of this Agreement pursuant to Section 9.1, an amendment of this
-----------
Agreement pursuant to Section 9.3 or a waiver pursuant to Section 9.4 shall, in
----------- -----------
order to be effective, require (a) in the case of Parent, action by its Board of
Directors or the duly authorized designee of its Board of Directors and (b) in
the case of the Company, action by its Board of Directors.
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 Non-Survival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 10.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
-43-
<PAGE>
(a) if to Parent or Sub, to:
Mallinckrodt Veterinary, Inc.
421 East Hawley Street
Mundelein, Illinois 60060
Attention: Paul D. Cottone,
President and Chief Executive Officer
Fax: (708) 949-3756
with a copy to:
Mallinckrodt Veterinary, Inc.
421 East Hawley Street
Mundelein, Illinois 60060
Attention: Thomas L. Farquer,
Vice President, Law
Fax: (708) 949-3754
Mallinckrodt Group Inc.
7733 Forsyth Boulevard
St. Louis, Missouri 63105
Attention: Roger A. Keller,
Vice President, Secretary
and General Counsel
Fax: (314) 854-5366
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Dennis V. Osimitz
Fax: (312) 853-7036
(b) if to the Company, to:
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
Attention: J. Donald Todd
Fax: (913) 894-9373
with a copy to:
Husch & Eppenberger
1200 Main Street, Suite 1700
Kansas City, Missouri 64105
Attention: Mary Anne O'Connell
Fax: (816) 421-0596
The parties hereby agree that all reports, schedules, registration
statements and other documents to be provided to Parent pursuant to Section
-------
7.2(i) shall be delivered only to Thomas L. Farquer, Vice President, Law of
- ------
Parent, at the address listed above.
-44-
<PAGE>
Section 10.3 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of 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." As used in this Agreement, (a)
"business day" shall have the meaning ascribed thereto in Rule 14d-1(c)(6) under
the Exchange Act, (b) "Material Adverse Change" or "Material Adverse Effect"
----------------------- -----------------------
means, when used with respect to Parent, Sub or the Company, as the case may be,
any change or effect, either individually or in the aggregate, that is or can
reasonably be expected to be materially adverse to the business, assets,
liabilities, properties, condition (financial or otherwise), results of
operations or prospects of all or any material part of Parent and its
Subsidiaries taken as a whole, Sub, or the Company and its Subsidiaries taken as
a whole, as the case may be, except as set forth in Section 8.2 of the Company
Disclosure Letter, (c) "Subsidiary" means any corporation, partnership, limited
----------
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity and (d) "Company Disclosure Letter" means the letter dated
-------------------------
the date hereof from the Company to Parent and Sub.
Section 10.4 Counterparts. This Agreement may be executed in
------------
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 10.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, including the Company Disclosure Letter and the other documents and
instruments referred to herein, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) except for
Sections 7.4 and 7.8, is not intended to confer upon any person other than the
- ------------ ---
parties any rights or remedies hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 10.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent
-45-
<PAGE>
of the other parties, except that Sub may assign, in its sole discretion, any of
or all its rights, interests and obligations under this Agreement to Parent or
to any direct or indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Sub of any of its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
Section 10.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
Section 10.9 Enforcement of this Agreement. 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 hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.10 Incorporation of Exhibits. All Schedules, Exhibits and
-------------------------
Annexes attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
-46-
<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.
MALLINCKRODT VETERINARY, INC.
By: /s/ Paul D. Cottone
---------------------------
Name: Paul D. Cottone
Title: President
MALLINCKRODT VETERINARY
ACQUISITIONS, INC.
By: /s/ Paul D. Cottone
---------------------------
Name: Paul D. Cottone
Title: President
SYNTRO CORPORATION
By: /s/ J. Donald Todd
---------------------------
Name: J. Donald Todd
Title: President
-47-
<PAGE>
EXHIBIT A
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such shares of Common Stock
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common Stock which would
represent at least a majority of the outstanding shares of Common Stock on a
fully diluted basis (the "Minimum Condition") and (ii) any waiting period under
-----------------
the Improvements Act applicable to the purchase of shares of Common Stock
pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer of this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of this
Agreement and before the acceptance of such shares of Common Stock for payment
or the payment therefor, any of the following conditions exist or shall occur
and remain in effect:
(a) there shall have been instituted or pending any action or
proceeding by any Governmental Entity, which (i) seeks to challenge the
acquisition by Sub of shares of Common Stock pursuant to the Offer,
restrain, prohibit or delay the making or consummation of the Offer or the
Merger, or obtain any material damages in connection therewith, (ii) seeks
to make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal, (iii) seeks to impose
material limitations on the ability of Sub (or any of its affiliates)
effectively to acquire or hold, or to require Parent or the Company or any
of their respective affiliates or subsidiaries to dispose of or hold
separate, any material portion of the assets or the business of Parent and
its affiliates taken as a whole or the Company and its subsidiaries taken
as a whole, or (iv) seeks to impose material limitations on the ability of
Sub (or its affiliates) to exercise full rights of ownership of the shares
of Common Stock purchased by it, including, without limitation, the right
to vote the shares purchased by it on all matters properly presented to the
stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any state, federal or
foreign government or governmental authority or by any court, domestic or
foreign, any statute, rule, regulation, judgment, decree, order or
injunction, that could reasonably be expected to, in the judgment of
Parent, directly or indirectly, result in any of the consequences referred
to in clauses (i) through (iv) of subsection (a) above; or
<PAGE>
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States which would reasonably be expected
to have a Material Adverse Effect on the Company or prevent (or materially
delay) the consummation of the Offer, (iv) any limitation (whether or not
mandatory) by any governmental or regulatory authority on, or any other
event which, in the reasonable judgment of Parent, has had a material
adverse effect on the extension of credit by banks or other lending
institutions in the United States, or (v) from the date of this Agreement
through the date of termination or expiration of the Offer, a decline of at
least 25% in either the Dow Jones Industrial Average or the Standard &
Poor's 500 Index; or
(d) the Company and Parent shall have reached an agreement or
understanding that the Offer or this Agreement be terminated or this
Agreement shall have been terminated in accordance with its terms; or
(e) any of the representations and warranties made by the Company in
this Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in any material respect as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under this Agreement, which failure to be true and correct or such
failure to perform or comply has not been cured within five business days
following the Company's receipt of notice from Parent of the breach and
such failure to be true and correct or such failure to perform or comply
shall be reasonably expected to have a Material Adverse Effect on the
Company; provided, however, that all references in this Agreement to the
-------- -------
phrases "knowledge of the Company" and "to the best knowledge of the
Company," and variants thereof, shall be disregarded for the purposes of
determining whether the Company shall have breached its representations,
warranties and covenants resulting in the ability of Parent to terminate
this Agreement pursuant to this clause (e);
(f) the Company's Board of Directors shall have modified or amended
its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Acquisition Proposal or shall have resolved to do any of
the foregoing, or shall have failed to
-2-
<PAGE>
reject any Acquisition Proposal within ten business days after receipt of
the Company or public announcement thereof;
(g) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person"), other than Parent, shall have
acquired beneficial ownership of 50% or more of the outstanding shares of
Common Stock, or shall have been granted any options or rights, conditional
or otherwise, to acquire a total of 50% or more of the outstanding shares
of Common Stock; (ii) any new group shall have been formed which
beneficially owns 50% or more of the outstanding shares of Common Stock; or
(iii) any person (other than Parent or one or more of its affiliates) shall
have entered into an agreement in principle or definitive agreement with
the Company with respect to a tender or exchange offer for any shares of
Common Stock or a merger, consolidation or other business combination with
or involving the Company; or
(h) there shall have occurred a Material Adverse Change to the
Company.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
condition and may be waived by Parent, in whole or in part, at any time and from
time to time, in the sole discretion of Parent. The failure by Parent at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the depositary for the Offer to the tendering
stockholders.
-3-
<PAGE>
EXHIBIT D
[LETTERHEAD OF SYNTRO CORPORATION APPEARS HERE]
FOR IMMEDIATE RELEASE
Mallinckrodt Group
- ------------------
Media Contact: Barbara Abbett, (314) 854-5230
Investor Contact: Cole Lannum, (314) 854-5370
Syntro Corporation
- ------------------
Media & Investor Contact: Susan H. Strobel, (913) 888-8876
MALLINCKRODT TO MAKE TENDER OFFER
FOR SYNTRO CORPORATION STOCK
ST. LOUIS AND KANSAS CITY, MO, September 25, 1995 -- Mallinckrodt Group Inc.
(NYSE:MKG) and Syntro Corporation (NASDAQ:SYNT) announced today that
Mallinckrodt Group's subsidiary, Mallinckrodt Veterinary, Inc., has entered into
a merger agreement to acquire all of the outstanding shares of Syntro
Corporation, a biotechnology company focused on the development of innovative
vaccines for the animal health market.
A cash tender offer for Syntro's common stock at $3.55 per share will be
made by Mallinckrodt Veterinary Acquisitions, Inc., a subsidiary of Mallinckrodt
Veterinary, under terms of the merger agreement. The agreement has been
unanimously approved by the Boards of Directors of both Syntro and Mallinckrodt
Group. Mallinckrodt Veterinary reserves the right not to purchase any shares in
the tender offer if fewer than a majority of the shares are tendered. It is
expected that the tender offer will commence no later than September 29, 1995.
<PAGE>
EXHIBIT E
[On Syntro Corporation Letterhead]
September 29, 1995
To Our Stockholders:
On September 24, 1995, the Board of Directors of Syntro Corporation agreed to
a transaction providing for Mallinckrodt Veterinary Acquisitions, Inc.
("Mallinckrodt"), a subsidiary of Mallinckrodt Veterinary, Inc., to acquire the
Company. Mallinckrodt Veterinary, Inc., a subsidiary of Mallinckrodt Group,
Inc., is one of the world's leading animal health and nutrition companies, with
approximately 1,000 products sold in more than 100 countries. Products include
pharmaceuticals, livestock and pet vaccines, pesticides, surgical supplies,
anesthetics and mineral feed ingredients. Mallinckrodt Group is a St. Louis-
based company with fiscal 1995 sales of $2.2 billion, and provides specialty
products to the chemical, medical and animal health markets worldwide through
its three technology-based businesses, Mallinckrodt Chemical and Mallinckrodt
Medical, also headquartered in St. Louis, and Mallinckrodt Veterinary,
headquartered in the Chicago area.
Pursuant to the agreement between the companies, Mallinckrodt has today
commenced a cash tender offer (the "Offer") to purchase all outstanding shares
of Syntro common stock at $3.55 per share. Upon completion of the Offer,
Mallinckrodt will be merged with Syntro with shares of Syntro then outstanding
being converted into the right to receive $3.55 in cash.
The Board of Directors of Syntro Corporation unanimously supports the
proposed transaction. The Board has reviewed the Offer and the Merger and
believes them to be fair and in the best interests of Syntro stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT ALL STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES
The recommendation of the Board, including a description of matters it
considered, is included in the accompanying Schedule 14D-9. Mallinckrodt's
tender will begin on September 29, 1995 and will expire on October 27, 1995,
unless extended. Please review Mallinckrodt's Offer to Purchase and the related
Letter of Transmittal for the procedure for tendering shares, enclosed in this
package. I urge you to read them carefully.
Very truly yours,
/s/ J. Donald Todd
J. Donald Todd
President
<PAGE>
EXHIBIT F
CONFIDENTIALITY AGREEMENT
This Agreement, effective this 27th day of March, 1995, is entered into by
Mallinckrodt Veterinary, Inc. (hereinafter referred to as "Mallinckrodt"), 421
East Hawley Street, Mundelein, Illinois 60060, and Syntro Corporation
(hereinafter referred to as "Syntro"), 9669 Lackman Road, Lenexa, Kansas 66219.
It is agreed between the Parties as follows:
1. PURPOSE
Mallinckrodt and Syntro are interested in discussing Mallinckrodt's possible
investment in or acquisition of the stock and/or assets of Syntro. In the
course of such discussions, it may become necessary or desirable for each of
the Parties to disclose certain information which it considers proprietary or
confidential. The Parties shall limit disclosure of confidential and
proprietary information as defined below to those of its Representatives who
have a need to know such information for the purposes of the Agreement. As used
herein, the term "Representatives" includes the directors, officers, employees,
agents and professional advisors of the designated Party. Further, Mallinckrodt
reserves the right to disclose such information received from Syntro to its
parent, Mallinckrodt Group, Inc., which will honor the confidentiality
provisions of this Agreement. The purpose of this Agreement is to allow the
Parties to assess their interest in such an investment or acquisition.
2. DEFINITION
"Confidential or Proprietary Information" as used in this Agreement means all
scientific, technical, financial and business information, including samples
and any Confidential or Proprietary Information relating thereto disclosed in
writing designated as "confidential" or if disclosed orally confirmed in
writing as "confidential" within thirty (30) days of disclosure, other than
Confidential or Proprietary Information which:
a) is or becomes available to the public other than through unauthorized
disclosure by the recipient; or
b) was known to the recipient as evidenced by business records, before
receipt thereof from the disclosing Party under this Agreement; or
c) is received by the recipient without restriction on disclosure from a
third party who is not under any obligation of confidentiality with respect
to such Confidential or Proprietary Information; or
d) is independently developed by employees of the recipient who did not
have access to the information.
The term "Confidential and Proprietary Information" also includes all notes,
analyses, compilations, studies, interpretations or other documents prepared by
a Party or its Representatives which contain, reflect or are based upon, in
whole or in part, the information furnished by the other party pursuant hereto.
3. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
The Parties shall maintain in confidence and not publish or otherwise
disclose to any person other than the Representatives or use for any purpose
other than for the purpose of evaluating a possible transaction, all
Confidential or Proprietary Information disclosed pursuant to this Agreement
including the fact that these discussions are taking place.
<PAGE>
Notwithstanding anything to the contrary stated herein, in the event the
recipient is required by legal process or governmental action to disclose
Confidential or Proprietary Information, the recipient will provide the
disclosing party with prompt notice thereof to afford the opportunity to seek
an appropriate protective order and/or provide written consent to such
disclosure. If in the absence of a protective order or written consent the
recipient is nonetheless, in the written opinion of its counsel, compelled to
disclose such information, it may do so to the minimum extent required without
liability hereunder.
4. RETURN OF INFORMATION
At the conclusion of this Agreement, all copies of the Confidential or
Proprietary Information shall be returned to the disclosing Party, or
destroyed, provided, however, that one copy may be retained by the recipient in
its legal file for purposes of interpretation of this Agreement only.
Notwithstanding the return or destruction of the Confidential or Proprietary
Information, the Parties and their Representatives will continue to be bound by
their obligations of confidentiality and other obligations hereunder.
5. RESTRICTION ON USE OF INSIDE INFORMATION
The Parties hereby acknowledge that they are aware, and that they will advise
their Representatives, that the federal and state securities laws of the United
States prohibit any person who has received material, nonpublic information
about an issuer from purchasing or selling securities of such issuer, or from
communicating such information to another person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell
such securities. The Parties hereby agree that none of the Confidential or
Proprietary Information provided pursuant to this Agreement will be used by
them or disclosed to others for their use in purchasing, selling or trading in
securities of either party in any manner that is a violation of United States
federal and state securities laws and the rules and regulations promulgated
thereunder, and the Parties acknowledge their duties to not purchase, sell or
trade in securities on the basis of any material, nonpublic information
received from or about Syntro or Mallinckrodt, or to assist others in so doing.
6. ENFORCEMENT
It is understood and agreed that no failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
If a court of competent jurisdiction makes a final determination that a Party
or its Representatives has materially breached this Agreement, then such Party
shall pay the reasonable legal fees and court costs incurred by the injured
Party in connection with the enforcement of this Agreement as to such breach.
7. GENERAL PROVISIONS
The confidentiality and non-use obligations described herein shall terminate
three (3) years from the effective date of this Agreement as to information
other than product development and scientific information and five (5) years as
to product development and scientific information. This Agreement, including
the rights and obligations hereunder, shall apply to and benefit any successors
to or transferee of the rights of either Party and shall apply to and bind the
successors, assigns and legal representatives of each Party. This Agreement
shall be governed by the laws of the State of Kansas and no effect shall be
given to the principles of conflict of laws. This Agreement may only be amended
or modified by a writing signed by both Parties.
2
<PAGE>
It is agreed that unless and until a definitive agreement regarding a
business transaction between the Parties has been executed and delivered,
neither Party will be under any legal obligation of any kind whatsoever with
respect to such a transaction by virtue of this Agreement except for the
matters specifically agreed to herein.
Syntro Corporation Mallinckrodt Veterinary, Inc.
/s/ J. Donald Todd /s/ Paul D. Cottone
By: _________________________________ By: _________________________________
_____________________________________ _____________________________________
President & CEO President & CEO
Title: ______________________________ Title: ______________________________
_____________________________________ _____________________________________
27 March 1995 3/27/95
Date: _______________________________ Date: _______________________________
_____________________________________ _____________________________________
3
<PAGE>
Exhibit G
[On Piper Jaffray Companies Letterhead]
September 24, 1995
The Board of Directors
Syntro Corporation
9669 Lackman Road
Lenexa, KS 66219
Members of the Board:
Syntro Corporation (the "Company), Mallinckrodt Veterinary, Inc. (the "Buyer)
and Mallinckrodt Veterinary Acquisitions, Inc., a wholly-owned subsidiary of
Buyer ("Merger Sub"), have proposed to enter into an Agreement and Plan of
Merger (the "Agreement"). Pursuant to the Agreement, the Merger Sub will
commence a tender offer (the "Tender Offer") to purchase all outstanding shares
of common stock (the "Common Stock") of the Company at a price of $3.55 per
share, net to the seller in cash. The Agreement also provides that following
the Tender Offer, Merger Sub will be merged with and into the Company (the
"Merger" and, together with the Tender Offer, collectively, the "Transaction"),
and that each then outstanding share of Common Stock, subject to certain
exceptions, will be converted in the Merger into the right to receive $3.55 in
cash. You have requested our opinion as to whether the consideration to be
received by the holders of the Common Stock pursuant to the Agreement is fair,
from a financial point of view, to such holders.
Piper Jaffray Inc. ("Piper Jaffray"), as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, underwriting and secondary
distributions of securities, private placements and valuations for estate,
corporate and other purposes. We make a market in Company Common Stock and
provide research coverage on the Company. We acted as a co-manager of a public
offering of Company Common Stock in April 1992. For our services in rendering
this opinion, the Company will pay Piper Jaffray a fee which is not contingent
upon consummation of the Transaction. However, we have also acted as financial
advisor to the Company in connection with the Transaction, for which we will
receive a separate and more substantial fee from the Company, all of which is
contingent upon consummation of the Transaction. The Company will also
indemnify Piper Jaffray against certain liabilities in connection with its
engagement.
In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have reviewed the latest available draft of the Agreement,
certain internal financial planning information of the Company prepared by its
management, certain publicly available financial
<PAGE>
Syntro Corporation
September 24, 1995
Page 2
and other information of the Company prepared by its management, certain
publicly available financial and other information relative to the Company,
certain other financial and securities data of the Company or representative of
the business sectors in which it operates, and the financial terms, to the
extent publicly available, of certain business combination transactions which we
deemed comparable in whole or in part. We have had discussions regarding the
financial condition, current operating results, business outlook and prospects
for the Company with members of its management.
We have relied upon and assumed the accuracy and completeness of the financial
statements and other information provided by the Company or otherwise made
available to us and have not attempted independently to verify such information.
We have further relied upon the assurances of Company management that the
information provided has been prepared on a reasonable basis and, with respect
to financial planning data, reflects the best currently available estimates, and
that Company management is not aware of any information or facts that would make
the information provided to us incomplete or misleading.
In arriving at our opinion, we have not performed or been furnished with any
appraisals or valuations of specific assets of the Company, and we express no
opinion regarding the liquidation value of the Company. This opinion is based
upon the information available to us and facts and circumstances as they exist
and are subject to evaluation on the date hereof.
This opinion is for the benefit of the Board of Directors of the Company and
shall not be relied upon by others, and shall not be published or otherwise
used, nor shall any public references to us be made, without our written
consent. However, Piper Jaffray does hereby consent to inclusion of this
opinion in any proxy or tender offer document distributed in connection with the
Transaction. This opinion is not intended to be and does not constitute a
recommendation to any shareholder as to whether a shareholder should tender
Common Stock in, or how such shareholder should vote with respect to, the
Transaction.
Based upon and subject to the foregoing and based upon such other factors as we
consider relevant, it is our opinion that the consideration to be received by
the holders of Common Stock pursuant to the Agreement is fair, from a financial
point of view, to such holders as of the date hereof.
Sincerely,
/s/ Piper Jaffray Inc.
PIPER JAFFRAY INC.
<PAGE>
Exhibit H
[On Piper Jaffray Companies Letterhead]
April 6, 1995
Syntro Corporation
9669 Lackman Road
Lenexa, Kansas 66219
Attention: J. Donald Todd, President & CEO
This letter confirms and sets forth the agreement between Syntro Corporation
(the "Company") and Piper Jaffray Inc. ("Piper Jaffray") regarding the
engagement of Piper Jaffray by the Company, on the terms and conditions set
forth herein, to act as the exclusive financial advisor (the "advisor") to the
Board of Directors of the Company (the "Board of Directors") in connection with
the consideration by the Board of Directors of a possible Transaction (as
defined below) and, if the Board of Directors elects to pursue any Transaction,
in connection with the execution of such Transaction. For the purposes of this
agreement, a Transaction refers to any sale, exchange or other disposition of
20% or more of the ownership of the Company, or any sale, exchange or other
disposition by the Company of 20% or more of its assets or earning power
including, but not limited to, a license or exchange of the Company's product or
technology rights, and shall include a merger, consolidation or other similar
transaction
Piper Jaffray will have the exclusive right to act as the Company's advisor in
connection with the consideration of a possible Transaction for a period of two
months (the "Exclusive Period") from the date you sign this letter unless the
exclusive period is extended by the mutual consent of both parties.
This engagement notwithstanding, Piper Jaffray understands that at this time the
Board of Directors is only investigating certain specific Transactions and that,
beyond such investigation, the Board of Directors has not determined to
undertake any course of action and that it may elect not to implement any
recommendation of Piper Jaffray. Furthermore, Piper Jaffray understands that at
this time the Board of Directors has not authorized Piper Jaffray to conduct a
search of possible alternative transactions or to solicit any new third parties
with respect to determining their interest in acquiring any of the business or
assets of the Company or engaging in a Transaction.
As advisor to the Company, Piper Jaffray will provide the following services:
(i) Review the financial condition and prospects of the Company on the basis
of such information as is made available to them by the Company.
<PAGE>
(ii) As requested, arrange and participate in meetings with any potential
parties that have previously expressed interest in a possible Transaction
("Potential Parties") and otherwise perform such services as Piper Jaffray
believes desirable to develop Potential Parties' interests.
(iii) Assist in negotiations with Potential Parties to a Transaction as
reasonably requested by the Company.
(iv) Advise the Company on the structure of any proposed Transaction.
(v) In the event requested by the Company, render an opinion to the Board of
Directors of the Company as to the fairness, from a financial point of
view, of the consideration to be paid to the stockholders of the Company
pursuant to a Transaction. The fee for such opinion shall be $100,000
payable to Piper Jaffray upon delivery of the opinion by Piper Jaffray to
the Board of Directors, it being understood that such a fee shall be
credited against the payment set forth below. The Company and Piper
Jaffray understand the opinion will be intended only for the benefit of
the Company, will not be used by any other party, nor, except as
contemplated in the following sentence, will the opinion be publicly
disseminated or distributed without Piper Jaffray's prior written consent.
Piper Jaffray understands that its fairness opinion may be described in
and annexed to proxy materials distributed to the Company shareholders.
The Company hereby agrees that Piper Jaffray will have the right to review
and approve the form and content of any reference to Piper Jaffray or its
opinion in such proxy materials or in other written materials distributed
by the Company or filed by the Company with any governmental agency,
securities exchange or the NASD.
The Company will cooperate fully with Piper Jaffray in connection with our
financial review and analysis and the rendering of our opinion and advising with
respect to the Transaction, and will provide Piper Jaffray with such information
concerning the Company as Piper Jaffray deems necessary for our financial review
and analysis and the rendering of our opinion and advising with respect to the
Transaction. All such information provided by the Company will be complete and
accurate and not misleading. The opinion shall state that Piper Jaffray will
rely upon the information furnished to it by the Company or upon information
which is publicly available, and that Piper Jaffray assumes the accuracy and
completeness of such information and has not attempted independently to verify
any of such information.
The terms of any Transaction will be subject to the Company's approval and Piper
Jaffray will not make any agreement or commitment for the Company without prior
authorization from the Company.
Any expansion of the services provided by Piper Jaffray to the Company beyond
those included in (i) through (v) above would require a separate agreement
between Piper Jaffray and the Company.
In the event a Transaction is consummated pursuant to an agreement or commitment
which is entered into (i) during the Exclusive Period or (ii) during the 12
months following termination of the Exclusive Period to any person who engages
in serious discussions with either Piper Jaffray or the Company relative to a
Transaction during the Exclusive Period, which persons will be identified
<PAGE>
on Appendix A attached to this letter as Appendix A may be modified from time to
time, the Company agrees to pay Piper Jaffray a cash fee equal to (a) $500,000
plus (b) 2.0% of the total transaction value greater than $45,000,000 and less
than $55,000,000, plus (c) 2.5% of the total transaction value equal to or
greater than $55,000,000. It is expressly understood that Piper Jaffray will not
be paid a fee if the Company enters into a relationship which is not a
Transaction with any person (including those identified in Appendix A.
In the event all or a portion of the total Transaction value is paid in the form
of stock or other securities of the purchaser, or other non-cash consideration,
the fee payable to Piper Jaffray shall be determined on the basis of the cash
equivalent of such stock and/or other securities and/or non-cash consideration
as of the date that the payments are received by the Company or its
shareholders. If Piper Jaffray and the Company are unable to agree on the cash
equivalent of such stock and/or other securities and/or other non-cash
consideration within thirty days after the closing date, the determination of
the cash equivalent shall be made by an investment banker or other person
experienced in valuing such securities and/or other non-cash consideration
mutually acceptable to both Piper Jaffray and the Company. The determination of
such investment banker or other person shall be binding on both Piper Jaffray
and the Company, and Piper Jaffray and the Company shall each be responsible for
paying one-half of the fees of any such investment banker or other person.
It is the intention of the parties that the fee payable to Piper Jaffray
pursuant to (b) above will be computed based upon the total consideration
regardless of how allocated or the form of consideration. Therefore, the "total
Transaction value" referred to above shall include but is not limited to (A) the
cash value of any outstanding stock options or warrants whether vested or not
that are "rolled over" or "cashed out" as part of this Transaction, (B) any and
all deferred installments of the Transaction, (C) any portion of the Transaction
value held in escrow subsequent to closing, (D) payments to be made in the
future upon the occurrence of certain contingencies or meeting certain
performance objectives, and (E) any assets of the Company which are paid in the
form of dividends or otherwise to its shareholders or owners, subsequent to the
date hereof.
The entire fee payable pursuant to item (a) and (b) above shall be paid in cash
to Piper Jaffray at closing or with respect to non-cash consideration at such
time as the cash equivalent of the total transaction value is determined.
Upon receipt of an invoice, the Company will also reimburse Piper Jaffray for
its reasonable out-of-pocket expenses, including fees and disbursements of
counsel, whether or not a Transaction is consummated, provided that Piper
Jaffray will seek the consent of the Company prior to expanding in excess of
$10,000 on reimbursable counsel fees which consent shall not be unreasonably
withheld.
In the event Piper Jaffray personnel shall be required to prepare for, or attend
or participate in judicial or other proceedings relating to the fairness opinion
referred to above, Piper Jaffray shall be entitled to receive an additional, per
diem payment, per person, together with reimbursement of all out-of-pocket
expenses and disbursements, including reasonable attorneys' fees incurred by
Piper Jaffray in respect of its preparation for, or attendance or participation
at such proceedings. The per diem payment shall, at such time, be in the amount
then customarily charged for similar services.
<PAGE>
The Company also agrees to indemnify and hold Piper Jaffray ((which term
includes its directors, controlling persons (as such term is defined under the
Securities Act of 1933), officers, employees and agents)) harmless against and
from all losses, claims, damages or liabilities, and all actions, claims,
proceedings and investigations in respect thereof, arising out of or in
connection with this engagement or Piper Jaffray's services rendered in
connection with this engagement, and to reimburse Piper Jaffray for all
reasonable legal and other out-of-pocket expenses as incurred by Piper Jaffray
in connection with investigating, preparing or defending any such action, claim,
proceeding or investigation, provided, however, the Company shall not be so
liable to the extent that any such loss, claim, damage or liability is finally
judicially determined to have resulted primarily and directly from Piper
Jaffray's gross negligence or wilful misconduct.
If for any reason the foregoing indemnification or reimbursement is unavailable
to Piper Jaffray or insufficient to hold it harmless (except by reason of Piper
Jaffray's gross negligence or wilful misconduct), then the Company shall
contribute to the amount paid or payable by Piper Jaffray as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and Piper Jaffray
on the other hand, the relative fault of the Company and of Piper Jaffray and
any relevant equitable considerations, provided that, in no event, will the
aggregate contribution of Piper Jaffray hereunder exceed the amount of fees
actually received by Piper Jaffray pursuant to this agreement.
The reimbursement, indemnity and contribution obligations of the Company under
this agreement shall be in addition to any liability which the Company may
otherwise have, shall survive any termination of this agreement and shall be
binding upon and extend to the benefit of any successors, assigns, heirs and
personal representatives of the Company and Piper Jaffray.
The Company agrees that Piper Jaffray has the right to place advertisements in
financial and other newspapers and journals at their own expense describing
their services to the Company hereunder for any completed transactions, provided
that Piper Jaffray will submit a copy of any such advertisements to the Company
for its approval, which approval shall not be unreasonably withheld or delayed.
Our agreement represented by this letter shall be governed by the laws of
Minnesota. Any dispute or controversy arising out of this agreement shall be
determined by arbitration conducted in accordance with the rules of the New York
Stock Exchange or the National Association of Securities Dealers, Inc. then in
effect. Any arbitration award shall be final and binding upon the Company and
Piper Jaffray, and judgment upon the award may be entered in any court having
jurisdiction.
<PAGE>
If this letter correctly sets forth the understanding between us, please so
indicate by signing on the designated space below and returning a signed copy to
us, whereupon this letter shall constitute the agreement between us.
Sincerely,
PIPER JAFFRAY INC.
By /s/ David L. Midgley
______________________________________________
Agreed this 6th day of April, 1995.
SYNTRO CORPORATION
By /s/ Susan H. Strobel
______________________________________________
Title Vice President, Finance & Administration
___________________________________________
