SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to_______________
Commission File Number 0-15515
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APPLIED BIOSCIENCE INTERNATIONAL INC.
----------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2734293
-------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
4350 N. Fairfax Drive
Arlington, VA 22203-1627
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(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (703) 516-2490
---------------
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 28,976,255 shares of common
stock, par value $.01 per share, as of November 1, 1995.
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<TABLE><CAPTION>
INDEX
Part I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements.
Condensed Consolidated Statements of Operations for the
Three and Nine Month Periods Ended September 30, 1995 and 1994 3
Condensed Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994 4
Condensed Consolidated Statements of Cash Flows for the
Nine Month Periods Ended September 30, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
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2
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<TABLE><CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
--------- --------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Life sciences revenues, net of subcontractor costs of
$4,857, $4,493, $19,837 and $15,474, respectively $34,057 $32,389 $102,575 $95,270
Environmental sciences revenues, net of
subcontractor costs of $1,820, $1,402, $5,063, and
$3,270, respectively 12,184 11,838 37,331 34,091
--------- --------- ---------- ----------
46,241 44,227 139,906 129,361
--------- --------- ---------- ----------
Direct costs - Life sciences 23,579 23,147 72,377 67,904
Direct costs - Environmental sciences 8,283 7,691 25,715 21,753
Selling, general and administrative expenses 12,161 10,543 36,223 33,323
--------- --------- ---------- ----------
44,023 41,381 134,315 122,980
--------- --------- ---------- ----------
Operating income 2,218 2,846 5,591 6,381
Interest - expense (894) (972) (2,541) (2,330)
- income 29 139 139 442
Other income 267 91 554 217
--------- --------- ---------- ----------
Income from continuing operations before provision
for income taxes 1,620 2,104 3,743 4,710
Provision for income taxes 819 745 1,731 1,597
--------- --------- ---------- ----------
Income from continuing operations 801 1,359 2,012 3,113
--------- --------- ---------- ----------
Discontinued operations:
Loss from discontinued operations, net of income
tax benefit of $0, $0, $0, and $128,
respectively - - - (285)
Estimated loss on disposal of ETC and Paragon, net
of income tax benefit of $0, $0, $0 and $227,
respectively - (2,533) - (3,038)
--------- --------- ---------- ----------
Loss from discontinued operations - (2,533) - (3,323)
--------- --------- ---------- ----------
Net income (loss) $ 801 $(1,174) $ 2,012 $ (210)
========= ========= ========== ==========
Weighted average number of common shares outstanding 28,778 28,470 28,530 28,441
========= ========= ========== ==========
Earnings (loss) per common share:
Income from continuing operations $0.03 $0.05 $0.07 $0.11
Loss from discontinued operations - (0.09) - (0.12)
--------- --------- ---------- ----------
Earnings (loss) per share $0.03 ($0.04) $0.07 ($0.01)
========= ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
1995 1994
(unaudited) (audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,114 $ 7,944
Accounts receivable, net 63,778 63,585
Supply inventories 1,202 1,163
Income tax receivable 1,122 2,297
Prepaid expenses and other current assets 5,637 6,077
---------- ----------
Total current assets 77,853 81,066
PROPERTY AND EQUIPMENT, at cost less accumulated
depreciation and amortization 81,056 82,905
GOODWILL, less accumulated amortization 9,855 5,738
OTHER ASSETS 7,258 8,982
NON-CURRENT ASSETS of discontinued operations, net 4,153 2,989
---------- ----------
TOTAL ASSETS $180,175 $181,680
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 4,101 $ 2,406
Accounts payable 2,833 6,156
Accrued liabilities 24,295 24,619
Advance billings 19,718 23,649
Current liabilities of discontinued operations, net 146 553
---------- ----------
Total current liabilities 51,093 57,383
LONG-TERM DEBT 42,815 42,884
DEFERRED INCOME TAXES 11,500 11,348
DEFERRED RENT 1,121 1,357
---------- ----------
Total liabilities 106,529 112,972
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STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 40,000,000 shares authorized,
29,684,000 and 29,520,000 shares issued and outstanding,
respectively 297 295
Paid-in capital 69,177 68,826
Retained earnings 13,097 12,062
Treasury stock, at cost, 713,000 and 1,347,000 shares,
respectively (4,335) (9,355)
Unrealized loss on investments (1,964) (728)
Cumulative translation adjustment (2,266) (1,561)
Deferred compensation (360) (831)
---------- ----------
Total stockholders' equity 73,646 68,708
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $180,175 $181,680
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended September
30,
1995 1994
-------------- --------------
(unaudited)
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Cash flows from operating activities:
Net income (loss) $ 2,012 $ (210)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 8,736 7,509
Provision for loss on disposal of discontinued operations - 3,232
Deferred income taxes 940 1,900
Deferred rent benefit (236) (215)
Deferred compensation expense 288 430
Change in operating assets and liabilities (12,559) (14,443)
---------- ----------
Net cash used in operating activities (819) (1,797)
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment, net (5,781) (11,660)
---------- ----------
Cash flows from financing activities:
Short-term bank borrowings (repayments), net - (17,737)
Repayment of long-term debt (68,194) (13,490)
Long-term borrowings 69,800 38,403
Other 4,579 534
---------- ----------
Net cash provided by financing activities 6,185 7,710
---------- ----------
Effect of exchange rate changes on cash (1,415) 838
---------- ----------
Net decrease in cash and cash equivalents (1,830) (4,909)
Cash and cash equivalents, beginning of the period 7,944 10,549
---------- ----------
Cash and cash equivalents, end of the period $ 6,114 $ 5,640
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
(unaudited)
1. BASIS OF PRESENTATION
---------------------
The accompanying condensed consolidated financial statements include the
accounts of Applied Bioscience International Inc. (the "Company") and its
subsidiaries. The accompanying unaudited interim condensed consolidated
financial statements reflect all the normal recurring adjustments that, in the
opinion of management, are necessary for a fair presentation of the results for
the interim periods presented. The results for the three month and nine month
periods ended September 30, 1995 may not necessarily be indicative of the
results for the entire fiscal year.
These financial statements should be read in conjunction with the Company's
annual audited financial statements, as filed with the Securities and Exchange
Commission on Form 10-K, for the year ended December 31, 1994.
2. SEGMENT RESULTS
---------------
Results of the continuing operations by business segment are as follows
(unaudited, dollars in thousands):
<TABLE><CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUES
Life sciences $34,057 $32,389 $102,575 $ 95,270
Environmental sciences 12,184 11,838 37,331 34,091
--------- --------- --------- ---------
Total $46,241 $44,227 $139,906 $129,361
--------- --------- --------- ---------
OPERATING INC0ME
Life sciences $ 1,917 $ 2,020 $ 5,067 $ 5,284
Environmental sciences 2,650 2,436 7,580 7,726
Corporate and other (2,349) (1,610) (7,056) (6,629)
--------- --------- --------- ---------
Total $ 2,218 $ 2,846 $ 5,591 $ 6,381
========== ========= ========= =========
</TABLE>
3. DISCONTINUED OPERATIONS
-----------------------
As of December 31, 1993, APBI adopted a plan to divest ETC, its analytical
laboratory division. In connection with the plan, APBI wrote down its investment
in ETC to estimated net realizable value and provided for losses until its
expected disposition. On August 3, 1994, the Company's subsidiary APBI
Environmental Sciences Group, Inc. along with PACE, Inc. and Coast-to-Coast
Analytical Services, Inc. each contributed to PACE Incorporated ("PACE"), a
newly formed entity, substantially all of the assets used in their respective
environmental laboratory businesses. This was the first step in the ultimate
disposition of ETC. In the fourth quarter of 1994, the Company recorded
additional writedowns to reduce the carrying value of the investment to the
current net realizable value. At September 30, 1995, the Company's carrying
value of this investment was approximately $3.5 million.
In October 1995, the board of directors of PACE adopted a divestiture plan
which contemplates the sale of substantially all of the company's laboratories
in a series of transactions over the next several months. Although it has not
yet been determined, management believes that these transactions will have a
material adverse effect on the net realizable value of its remaining investment.
4. EARNINGS PER COMMON SHARE
-------------------------
Earnings per common share were computed using the weighted average number of
common stock and common stock equivalents outstanding during the year. Common
equivalent shares are calculated using the treasury stock method and consist
primarily of shares issuable upon exercise of stock options.
6
<PAGE>
5. ACQUISITION
-----------
On August 18, 1995, the Company through its newly formed subsidiary, Clinix
International Inc., acquired the business and assets of the Chicago Center for
Clinical Research ("CCCR"), a nationally recognized organization conducting
clinical trials in pharmaceuticals and food and nutrition. The consideration
consisted of 634,178 shares of APBI common stock valued at $4,043,000, together
with the assumption or retirement of substantially all of CCCR's outstanding
indebtedness and other related liabilities. As a result of this transaction,
the Company recorded $4,417,000 in goodwill which is being amortized on a
straight-line basis over a period of 15 years.
6. SUBSEQUENT EVENTS
-----------------
On November 1, 1995, the Company entered into a definitive purchase agreement
to sell its toxicology laboratories to Huntingdon International Holdings plc
("Huntingdon"). The Company will receive as consideration in the transaction
cash proceeds of $32.5 million, plus an upward adjustment for the cash
balances to be conveyed as part of the sale of the toxicology businesses. The
consideration also includes the Company's acquisition of Huntingdon's Phase I
clinical center located in Leicester, England at an agreed upon value of $4.5
million. The Company expects the transaction to close in late November 1995
and will record a loss on the disposition of the toxicology businesses at that
time. Completion of the transaction is subject to the satisfaction of a
number of closing conditions, including the approval of the shareholders of
Huntingdon.
The Company completed a sale/leaseback transaction involving Pharmaco LSR's
owned real estate in Austin, Texas on November 13, 1995. Total gross proceeds
in the transaction were $12,000,000. The facilities are leased to the Company
as a bond-type net lease with all responsibility of operations and maintenance
residing with the Company. The initial term of the operating lease is fifteen
years followed by four five-year renewal options. The future minimum annual
rent is $1,302,000.
7
<PAGE>
APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
General
- -------
Applied Bioscience International Inc. (the "Company") recorded net revenues
for the three months ended September 30, 1995 of $46,241,000, a 4.6% increase
from the third quarter of 1994. The Company's Life Sciences Group, which
includes Pharmaco LSR and the newly acquired Chicago Center for Clinical
Research, produced third quarter revenues of $34,057,000, up $1,668,000 or 5.1%
from a year ago. Net revenues for the Company's Environmental Sciences Group
were $12,184,000, compared with $11,838,000 (from continuing operations) in the
third quarter of 1994, an increase of 2.9%.
Income from continuing operations in the third quarter totaled $801,000,
equivalent to $0.03 per share, compared with income of $1,359,000, or $0.05 per
share, in the third quarter of 1994. Including discontinued operations, the
Company recorded a net loss in the third quarter of 1994 of $1,174,000, or $0.04
per share.
Earlier this year, the Company announced the adoption of a strategic plan
focusing on the growth and expansion of its clinical development services and
environmental consulting businesses. The Company believes that these core
businesses provide the best opportunities for profitable growth and enhancement
of shareholder value. Consistent with its strategic plan, the Company has
undertaken a mix of divestiture and acquisition initiatives aimed at redefining
the type of services offered by the Company.
On November 1, 1995, the Company entered into a definitive purchase agreement
to sell its toxicology laboratories to Huntingdon International Holdings plc
("Huntingdon"). The Company will receive as consideration in the transaction
cash proceeds of $32.5 million, plus an upward adjustment of for the cash
balances to be conveyed as part of the sale of the toxicology businesses.
The consideration also includes the Company's acquisition of Huntingdon's
Phase I clinical center located in Leicester, England at an agreed upon
value of $4.5 million. The Company expects the transaction to close in
late November 1995 and will record a loss on the disposition of the
toxicology businesses at that time. Completion of the transaction is subject
to the satisfaction of a number of closing conditions, including the approval
of the shareholders of Huntingdon.
In August of this year, the Company through its newly formed subsidiary,
Clinix International Inc., acquired the business and assets of the Chicago
Center for Clinical Research ("CCCR"), a nationally recognized organization
conducting clinical trials in pharmaceuticals and food and nutrition. The
consideration consisted of 634,178 shares of APBI common stock valued at
$4,043,000, together with the assumption or retirement of substantially all of
CCCR's outstanding indebtedness and other related liabilities. The Company
believes, from a strategic standpoint, that the acquisition will augment the
clinical development services currently offered by its Life Sciences Group.
The Company through APBI Environmental Sciences Group continues to own
preferred and common stock of PACE Incorporated ("PACE") representing
approximately 36% of PACE's weighted average preferred and common stock
outstanding, the investment in which is reflected as a discontinued operation.
(See Note 3 to the Company's Condensed Consolidated Financial Statements.) In
October 1995, the board of directors of PACE adopted a divestiture plan which
contemplates the sale of substantially all of PACE's laboratories in a series of
transactions over the next several months. The Company believes that these
transactions will have a material adverse impact on the net realizable value of
its remaining investment in PACE. At September 30, 1995, the Company's carrying
value of this investment was approximately $3.5 million.
Three Months Ended September 30, 1995 Versus Three Months Ended September 30,
- -----------------------------------------------------------------------------
1994
- ----
The Company recorded net revenues for the quarter ended September 30, 1995 of
$46,241,000, a 4.6% increase from the third quarter of 1994. Of such increase,
$1,668,000 (83%) was attributable to the Company's life sciences business, and
$346,000 (17%) was attributable to the Company's environmental sciences
business.
8
<PAGE>
The increase in net revenues of the life sciences business was principally
due to the continued increase in demand for the Company's clinical development
services. The clinical development services business in North America and
Europe, which also includes the Company's biostatistical services in North
America and Europe, reported a net revenue increase of $1,318,000 (10.3%) to
$14,061,000 for the three months ended September 30, 1995 from $12,743,000 for
the same period last year.
Net revenues from the Company's clinics, laboratories, and toxicology
business reported a slight decrease of $324,000 (1.6%) to $19,322,000 for the
quarter ended September 30, 1995 as compared to $19,646,000 for the comparable
period last year. Net revenues in the clinics, laboratories, and toxicology
business were impacted by several project delays and cancellations at the Phase
I clinic ($331,000) and at the toxicology businesses in Europe and New Jersey
($1,006,000). The analytical laboratory in Richmond, Virginia, reported a net
revenues increase of $1,013,000 (32%) as compared to the same quarter last year.
The newly acquired Chicago Center for Clinical Research, purchased in August
1995, reported net revenues of $674,000 for the period from acquisition through
September 30, 1995.
The $346,000 increase in net revenues in the Company's environmental sciences
business resulted from a 3.5% net revenue increase from ENVIRON. Net revenues
from ENVIRON of $12,199,000 were $408,000 higher than net revenues of
$11,791,000 in the third quarter of 1994. Offsetting ENVIRON's net revenue
increase versus last year was $62,000 of net revenue reported in the third
quarter last year without corresponding revenue in the third quarter of 1995,
relating to operating businesses that were discontinued during the later stages
of 1994.
Direct costs increased in the third quarter by $1,024,000 (3.3%) over the
third quarter last year. Of such increase, $432,000 was attributable to the
Company's Life Sciences Group and $592,000 was attributable to the Company's
Environmental Sciences Group. The increase in the direct costs of the Life
Sciences Group relates to the overall increase in business. The 1.9% increase
in direct costs in the Life Sciences Group compares favorably to the net revenue
increase previously mentioned. Consequently, as a percentage of net revenue,
direct costs of the Life Sciences Group decreased to 69.2% in the third quarter
of 1995 as compared to 71.5% during the third quarter last year. The decrease
in direct costs as a percentage of net revenues is principally due to lower
personnel costs as a result of fewer full-time equivalent employees in Pharmaco
LSR in 1995 as compared to 1994. At the end of the quarter, Pharmaco LSR's
1,543 full-time equivalents compared favorably to the 1,648 employees at the
same point in time last year. In the environmental sciences business, the
percentage of direct costs to net revenues increased to 68.0% from 65.0%. The
increase was attributable to start up of the new air sciences office in Novato,
California. After adjusting for the new office in California, direct costs in
the third quarter this year would represent 65.6% of net revenues.
Selling, general and administrative expenses increased $1,618,000 (15.3%) to
$12,161,000 in the third quarter of 1995 compared to $10,543,000 for the same
period last year. As a percentage of net revenues, selling, general and
administrative expenses increased to 26.3% in 1995 compared to 23.8% in 1994.
The increase in selling, general and administrative expenses related to:
additional expense related to the acquisition of CCCR and the opening of the
office in Novato, California in 1995 ($380,000), higher costs for insurance
claims ($200,000), higher pension and employee benefit costs ($450,000), and
expenses relating to the Company's investment in a new accounting system and
improvements in information technology.
Operating income decreased $628,000 (22.1%) to $2,218,000 in the third
quarter of 1995 as compared to $2,846,000 in the third quarter of 1994. As a
percentage of net revenue, quarterly operating income decreased to 4.8% in 1995
compared to 6.4% in 1994 primarily due to the increase in selling, general and
administrative expenses.
Other income increased 193.4% to $267,000 in the third quarter of 1995 as
compared to $91,000 in the third quarter of 1994 primarily due to favorable
exchange rate fluctuations.
Net income for the third quarter of 1995 was $801,000 or $0.03 per share
compared to a loss of $1,174,000 or $0.04 per share for the third quarter of
1994. The third quarter net income of 1994 includes a charge of $2,533,000 or
$0.09 per share from discontinued operations. The charge incurred in the third
quarter of 1994 related to additional reserves for the Company's investment in
PACE, the environmental laboratory business formed in August, 1994. Net income
from continuing operations decreased 41% primarily due to an increase in
operating expenses and an increase in the effective tax rate from 35.4% to
50.4%.
9
<PAGE>
Nine Months Ended September 30, 1995 Versus Nine Months Ended September 30, 1994
- --------------------------------------------------------------------------------
The Company recorded net revenues for the nine months ended September 30,
1995 of $139,906,000, a 8.2% increase from the same nine months of 1994. Of
such increase, $7,305,000 (69%) was attributable to the Company's life sciences
business and $3,240,000 (31%) was attributable to the Company's environmental
sciences business. Net revenues from the Company's life sciences business were
up 7.7% from the same period of 1994. Net revenues from the Environmental
Sciences Group were up 9.5% compared to the comparable period last year.
The increase in net revenues of the life sciences business was principally
due to the continued increase in demand for the Company's clinical development
services. The clinical development services business in North America and
Europe, which also includes the Company's biostatistical services in North
America and Europe, reported a net revenue increase of $7,395,000 (20.7%) to
$43,065,000 for the nine months ended September 30, 1995 from $35,670,000 for
the same period last year.
Net revenues from the Company's clinics, laboratories, and toxicology
business reported a slight decrease of $764,000 (1.3%) to $58,836,000 for the
first three quarters of 1995 as compared to $59,600,000 for the comparable
period last year. Net revenues in the clinics, laboratories, and toxicology
business were impacted by several project delays and cancellations at the
analytical laboratory in Richmond, Virginia, and at the toxicology businesses in
Europe and New Jersey.
The $3,240,000 increase in net revenues in the Company's environmental
sciences business resulted from a 12.2% net revenue increase in ENVIRON. Net
revenues from ENVIRON of $37,333,000 were $4,063,000 higher than net revenues of
$33,270,000 in the first three quarters of 1994. Offsetting ENVIRON's net
revenue increase versus last year was $823,000 of net revenue reported in the
first three quarters of last year without any material corresponding revenue in
the first three quarters of 1995, relating to operating businesses that were
discontinued during the later stages of 1994.
Direct costs increased in the first three quarters of 1995 by $8,435,000
(9.4%) over the first three quarters of last year. Of such increase, $4,473,000
was attributable to the Company's Life Sciences Group and $3,962,000 was
attributable to the Company's Environmental Sciences Group. The increase in the
direct costs of the Life Sciences Group relates to the overall increase in
business. The 6.6% increase in direct costs in the Life Sciences Group compares
favorably to the net revenue increase of 7.7%. Consequently, as a percentage of
net revenue, direct costs of the Life Sciences Group decreased to 70.6% in the
first three quarters of 1995 as compared to 71.3% during the first three
quarters of last year. The decrease in percentage of direct costs to net
revenue is attributable to higher employee utilization rates coupled with fewer
employees than the comparable period last year. In the environmental sciences
business, the percentage of direct costs to net revenues increased to 68.9% from
63.8%. The increase was attributable to start up of the new air sciences office
in Novato, California ($1,383,000), and increased personnel expense in other
ENVIRON offices to support the business's growth. The number of ENVIRON
employees increased from 306 at the end of September 1994 to 335 at the end of
September 1995, representing a 9.5% increase.
Selling, general and administrative expenses increased $2,900,000 (8.7%) to
$36,223,000 in the first three quarters of 1995 compared to $33,323,000 for the
same period last year. As a percentage of net revenues, selling, general and
administrative expenses were 25.9% in 1995 compared to 25.8% in 1994. The
increase in selling, general and administrative expenses relates primarily to
the acquisition of CCCR and opening of the office in Novato, California in 1995
($500,000), higher employee benefit costs ($970,000), higher computer hardware
depreciation ($395,000), and costs associated with the wide-area network
($303,000).
Operating income decreased $790,000 (12.4%) to $5,591,000 in the first nine
months of 1995 as compared to $6,381,000 for the first nine months of 1994. As
a percentage of net revenue, operating income decreased to 4.0% in 1995 compared
to 4.9% in 1994.
Interest expense, net of interest income, increased to $2,402,000 in the
third quarter of 1995 from $1,888,000 in the third quarter of 1994 due
principally to an increase in the prime rate by approximately three hundred
basis points.
Other income increased 155.3% to $554,000 in the first three quarters of 1995
as compared to $217,000 in the first three quarters of 1994 primarily due to
favorable exchange rate fluctuations.
10
<PAGE>
The effective tax rate was 46.2% at the end of the quarter versus 33.9% for
the same period in 1994. The increase is primarily attributable to the effect
of permanent differences and non-deductible foreign operating losses.
Net income for the first three quarters of 1995 was $2,012,000 or $0.07 per
share compared to a net loss of $210,000 or $0.01 per share for the first three
quarters of 1994. The nine months results for 1994 were unfavorably impacted by
$3,323,000, primarily for the estimated losses on the disposal of ETC and
Paragon. Net income for the first nine months of 1994 before discontinued
operations was $3,113,000 or $0.11 per share reflecting a 35.4% decrease due
primarily to increases in operating expenses and an increase in the effective
tax rate.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1995, the Company experienced a
net decrease in cash from operating activities of $819,000 primarily due to
decreases in accounts payable and advance billings. Capital expenditures
totaling $7,861,000 included $2,029,000 for expansion and improvement of offices
and laboratory testing facilities and $5,832,000 for new laboratory, office, and
computer equipment.
In 1994, the Company refinanced its principal credit facility. The three-
year facility consists of a term loan of $25,000,000 and a secured revolving
line of credit of $20,000,000. Approximately 84% or $21,111,000 of the term
loan accrues interest at a fixed rate of 9.25% per annum and the remainder bears
interest at the prime rate plus 1.0%. Repayment of the principal began on
September 1, 1995 at $892,900 per quarter. The secured revolving line of credit
accrues interest at the prime rate plus 1.0%. The variable rate is subject to
reduction if certain covenants related to financial performance are met. Based
on the first and second quarters of 1995, the variable rate was reduced from
1.5% to 1.0% over prime. The unused portion of the loan is available to provide
working capital and for general corporate purposes. As of September 30, 1995,
the Company has $6,114,000 of cash and cash equivalents on hand and has
$3,641,000 available under its lines of credit.
In February 1995 the Company arranged a $3,000,000 master lease agreement to
provide a means to lease rather than acquire certain equipment for use in the
United States without drawing on its principal credit facility.
The Company completed a sale/leaseback transaction involving Pharmaco LSR's
owned real estate in Austin, Texas on November 13, 1995. Total gross proceeds
from the transaction were $12,000,000. The facilities are leased to the Company
as a bond-type net lease with all responsibility of operations and maintenance
residing with the Company. The initial term of the operating lease is fifteen
years followed by four five-year renewal options. The future minimum annual
rent is $1,302,000 with renewals at the then current market value. The net
proceeds from the sale/leaseback transaction will be used to repay the remaining
mortgage balance on the referenced properties and the remaining cash will be
applied to the Company's revolving line of credit.
On November 1, 1995, the Company entered into a definitive purchase agreement
with Huntingdon International Holdings plc ("Huntingdon") whereby Huntingdon
would purchase the Company's two toxicology laboratories. In exchange, the
Company would receive cash consideration of $32.5 million as well as
Huntingdon's Phase I clinical center located in Leicester, England. The Company
expects the transaction to close in late November 1995 and anticipates using the
cash proceeds to repay its revolving line of credit and all of the remaining
balance on its term loan. It is anticipated that the Company will retain the
revolving portion of the current credit facility.
The Company believes that cash flow generated by its own operating
activities, together with its current borrowing capacity, is sufficient to
finance its world-wide operations and normal growth of its business at least
through 1996. Further growth of the Company's business also may be funded
through additional borrowings, the sale of non-strategic assets or through
issuance of shares of common stock by the Company.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - Not Applicable
ITEM 3. Defaults upon Senior Securities - Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders - Not Applicable
ITEM 5. Other Information - None
ITEM 6. Exhibits and Reports on Form 8-K
<TABLE>
<C> <C> <S>
(a) Exhibit 10.35 Change of Control Agreement by and
between Applied Bioscience International Inc. and Stephen
L. Waechter dated as of June 14, 1995
Exhibit 10.36 Employment Agreement by and between Applied
Bioscience International Inc. and Kenneth H. Harper dated
as of September 1, 1995
Exhibit 10.37 Restricted Stock Agreement by and between Applied
Bioscience International Inc. and Kenneth H. Harper dated
as of August 15, 1995
Exhibit 10.38 Employment Agreement by and between Applied
Bioscience International Inc. and John H. Timoney dated
as of September 1, 1995
Exhibit 10.39 Restricted Stock Agreement by and between Applied
Bioscience International Inc. and John H. Timoney dated
as of August 15, 1995
Exhibit 10.40a - Non-statutory Stock Option Agreements by and between Applied Bioscience
10.40f International Inc. and Grover C. Wrenn dated as of
September 19, 1995
Exhibit 10.41 Separation Agreement by and between Applied
Bioscience International Inc. and Grover C. Wrenn dated
August 25, 1995
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K - None
12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPLIED BIOSCIENCE INTERNATIONAL INC.
-------------------------------------
(Registrant)
By /s/ Kenneth H. Harper
-------------------------------------
President
(Chief Executive Officer)
By /s/ Jamie G. Donelan
-------------------------------------
Controller
(Chief Accounting Officer)
Date: November 14, 1995
13
<PAGE>
<TABLE><CAPTION>
INDEX TO EXHIBITS
-----------------
Sequential
Exhibit Page
Number Number
- ------- ------
<C> <S> <C>
10.35 Change of Control Agreement by and
between Applied Bioscience International Inc. and Stephen
L. Waechter dated as of June 14, 1995
10.36 Employment Agreement by and between Applied
Bioscience International Inc. and Kenneth H. Harper dated
as of September 1, 1995
10.37 Restricted Stock Agreement by and between Applied
Bioscience International Inc. and Kenneth H. Harper dated
as of August 15, 1995
10.38 Employment Agreement by and between Applied
Bioscience International Inc. and John H. Timoney dated
as of September 1, 1995
10.39 Restricted Stock Agreement by and between Applied
Bioscience International Inc. and John H. Timoney dated
as of August 15, 1995
10.40a - Non-statutory Stock Option Agreements by and between Applied Bioscience
10.40f International Inc. and Grover C. Wrenn dated as of
September 19, 1995
10.41 Separation Agreement by and between Applied
Bioscience International Inc. and Grover C. Wrenn dated
August 25, 1995
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
Exhibit 10.35
June 14, 1995
Mr. Stephen L. Waechter
Chief Financial Officer
Applied Bioscience International Inc.
4350 North Fairfax Drive, Suite 300
Arlington, Virginia 22203
Dear Steve:
APPLIED BIOSCIENCE INTERNATIONAL INC. ("APBI or the "Company") consi
ders the continuing maintenance of a sound and vital management to be essential
to protecting and enhancing the best interests of the Company and its
shareholders. In this connection, the Company recognizes that, as is the case
with many publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among management may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders. Accordingly,
the Company's Board of Directors has determined that should the Company become
subject to any proposed or threatened change in the control of the Company, it
is imperative that the Company and the Board of Directors be able to rely upon
you to remain in your position and to provide advice, if requested, as to the
best interests of the Company.
In order to induce you to remain in the employ of the Company, this
letter agreement sets forth the severance benefits which the Company agrees will
be provided to you in the event your employment with the Company is terminated
subsequent to a "change in control of the Company" (as defined in Section 1
hereof) under the circumstances described below.
1. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there shall have been a change in control of the Company, as set forth
below, and your employment by the Company shall thereafter have been terminated
in accordance with Section 2 below. For purposes of this Agreement, a "change
in control of the Company" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing fifty
<PAGE>
Mr. Stephen L. Waechter
June 6, 1995
Page 2
percent (50%) or more of the combined voting power of the Company's then
outstanding securities.
2. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in Section 1 hereof
constituting a change in control of the Company shall have occurred, you shall
be entitled to the benefits provided in Section 3 hereof if (i) the Company
subsequently terminates your employment within the one-year period following the
change of control or (ii) you terminate your employment with the Company for
"good reason" during the one-year period subsequent to the change in control of
the Company. You agree that prior to terminating your employment with the
Company for good reason that you will provide the Company with at least ten (10)
days written notice and an opportunity to cure any event or occurrence allegedly
giving rise to a right to terminate employment for good reason.
(b) For purposes of this Agreement, "good reason"
shall mean the occurrence of any one of the following events without your
express written consent within the one-year period following a change in control
of the Company:
(i)Your assignment to any duties
substantially inconsistent with your position, duties, responsibilities or
status with the Company, as of the time of the change of control, or a
substantial reduction of such duties or responsibilities, as compared with your
duties or responsibilities as of the time of the change of control, except in
connection with a termination of your employment because of disability;
(ii)A subsequent reduction by the Company in the amount
of your base salary from the amount as of the time of the change of control or
the failure by the Company to provide substantially similar employee benefits as
compared to those which you are receiving as of the time of the change of
control;
(iii) The failure by the Company to continue to provide
you with substantially similar bonus opportunities under the Company's bonus
plans or practices (if any) in effect as of the date of the change of control;
or
(iv) The relocation of your principal office to a
location more than thirty-five (35) miles from the location of such office
immediately prior to the change of control.
<PAGE>
Mr. Stephen L. Waechter
June 6, 1995
Page 3
3. COMPENSATION UPON TERMINATION.
(a) If, during the one-year period following a change
of control, the Company shall terminate your employment pursuant to
Section 2(a)(i) or you shall terminate your employment for good reason pursuant
to Section 2(a)(ii), then the Company shall be obligated to continue to pay or
provide to you as severance the following:
(i) your full base salary in accordance with
the Company's normal payroll practices for the twelve-month period following
your termination at the higher of the rate in effect at the time of your
termination or as of the date of the change in control of the Company;
(ii) subject to paragraph 3(c) below, all
employee benefits which you are receiving as of the date of your termination or
as of the date of the change in control of the Company (whichever you elect),
including health and disability coverage and any car allowance (but excluding
any ongoing bonus opportunities), shall be continued for the twelve-month period
following your termination.
(b) If, during the one-year period following a change
of control, the Company terminates your employment, or during the one-year
period following the Transition Period, you elect to terminate your employment
pursuant to Section 2, then all stock options granted to you under the Company's
stock option plans prior to such termination shall vest as of the date of such
termination and you will have the right, for a period of one hundred eighty
(180) days following such termination, to exercise all such stock options which
have not expired.
(c) In lieu of receiving your base salary and benefits
during the period provided in paragraph 3(a), as applicable, you may elect to
receive the amount you are entitled to as base salary in a single lump sum.
Such payment would be made by the Company within fifteen (15) days of the date
of your election. As provided above, election of the lump sum payment means you
forfeit any continuing rights to any employee benefits other than as may be
provided under COBRA.
(d) In the event your employment with the Company is
terminated pursuant to Section 2 above, the Company shall make available to you
out-placement services for a period of six months following such termination.
All fees of the out-placement service (excluding finder or headhunter fees)
shall be borne by the Company.
<PAGE>
Mr. Stephen L. Waechter
June 6, 1995
Page 4
4. OPTION AWARDS. In addition to the compensation and benefits
provided by Section 3 above, the Company's Compensation and Stock Plans
Committee has approved an option award ("Option Award") to you to allow you to
acquire up to 60,000 shares of Common Stock of the Company. Under the terms of
the Option Award, your exercise rights shall vest as follows:
Anniversary Date
of Next Option Grants
Under EVA Plan for
Senior Company Executives Number of Shares
1 6,667
2 13,333
3 20,000
4 13,333
5 6,667
The exercise price of the options shall be the fair market value of the
Common Stock of the Company as of the date of your acceptance of this
agreement. Such Option Award has been made under the terms of and
subject to the provisions of the Company's Stock Incentive Program (1990)
and shall be evidenced by a separate option agreement. You acknowledge that
the Option Award is in lieu of certain option grants that it is
anticipated that you would have received under the Company's EVA Plan and
that accordingly, it is not anticipated that you will receive additional
option awards under such incentive plan in 1995, 1996 or 1997.
5. LAPSE. Should you voluntarily leave employment
(other than after a change in control as provided in Paragraph 3) this
Agreement shall lapse and be of no other force and effect and no
compensation will be payable to you hereunder.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no
such succession had taken place.
<PAGE>
Mr. Stephen L. Waechter
June 6, 1995
Page 5
(b) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
7. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Chief Executive Officer of the
Company with a copy of the Secretary of the Company, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by you and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this Agree
ment. This Agreement supersedes and replaces in its entirety that certain
letter agreement between the Company and you dated October __, 1993. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware.
9. VALIDITY. The invalidity or unenforceability of any
provisions of this Agreement shall not effect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If this letter correctly sets forth our agreement on the subject
<PAGE>
Mr. Stephen L. Waechter
June 6, 1995
Page 6
matter hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: /s/Kenneth H. Harper
---------------------------------
Kenneth H. Harper
Chief Executive Officer
AGREED TO THIS 14th DAY OF
JUNE, 1995
By: /s/Stephen L. Waechter
-------------------------
Stephen L. Waechter
EXHIBIT 10.36
September 1, 1995
Dr. Kenneth H. Harper
Brookside, Roman Road
Ingatestone
Essex CMR 9PE
England
Dear Ken:
As you are aware, the initial term (the "Initial Employment Term") of
your Employment Agreement dated September 7, 1990 (the "Employment Agreement")
with Applied Bioscience International Inc. ("APBI") is due to expire on
September 6, 1995. Originally, it was contemplated that subsequent to
September 6, 1995 your responsibilities and overall time commitment to APBI
would be greatly reduced as reflected in that certain letter agreement dated
April 30, 1993 (the "Extension Letter"). However, in light of your recent
reelection to the position of chief executive officer of APBI and the
extraordinary time commitment you are making to APBI, APBI would like to extend
the Initial Employment Term of your Employment Agreement through September 6,
1996 and otherwise amend your Employment Agreement and the prior Extension
Letter, as provided herein.
1. Terms of Continuing Employment
Set forth below are the terms and conditions upon which we agree to
vary our respective rights, obligations and duties under the Employment
Agreement and the original Extension Letter and to continue and extend the
period of your employment with APBI.
A. Term, Employment and Duties.
(i) The Initial Employment Term of your Employment
Agreement shall be extended through September 6,
1996 with such date being referred to as the
"Expiration Date" both for purposes of this letter
and the Extension Letter. Your employment will be
reviewed annually and upon the expiration of the
Initial Employment Term (or any renewal period)
your employment, as APBI's chief executive
officer, may be extended for successive twelve-
month terms upon written approval of you and APBI.
In the event your employment is not extended as
provided above, then the terms and provisions of
the Extension Letter will immediately become
applicable with your continuing employment with
APBI during the Extension Period (as defined in
<PAGE>
Dr. Kenneth H. Harper
September 1, 1995
Page 2
the Extension Letter) being governed by the terms
set forth therein.
(ii) During the remainder of the Initial Employment
Term you shall continue to render your full-time
executive services to APBI as the Chairman of the
Board, Chief Executive Officer and President of
APBI, subject to the direction of the Board of
Directors of APBI. Your services will be
performed at your discretion at any of APBI's
offices, at the offices of APBI Investor
Relations, Inc. located at 214 Carnegie Center,
Suite 201, Princeton, New Jersey 08540, from your
residence in Essex, England (or such other
residence as you may subsequently establish) or
such other location as you and APBI may mutually
agree upon. Also, consistent with the terms of
your Employment Agreement you will not be
obligated to relocate your current personal
residence in connection with the performance of
your duties hereunder.
B. Compensation.
Your annual salary
will be $250,000 effective as of February 12,
1995. During the remainder of the Initial
Employment Term, your salary will be subject to
review and possible upward adjustment by APBI's
Employee Stock Plans and Compensation Committee
("Compensation Committee") in accordance with
Section 3.1 of your Employment Agreement.
Effective as of February 12, 1995, the Company
shall no longer continue its prior practice of
crediting any amounts paid to you in a particular
year from APBI's United Kingdom contributory
defined benefit pension plan toward the amount of
salary you would otherwise be entitled to
receive hereunder. In addition to the salary and
other benefits to be paid or made available to
you, during the Initial Employment Term you
shall be eligible to participate in APBI's
Economic Value Added incentive compensation plan
( the "EVA Plan") or any successor
plan. For fiscal year 1995 and all
additional periods of your employment during the
Initial Employment Term (and any renewal periods)
your target incentive shall be set by the Board or
the Compensation Committee.
(ii) Your salary during the
Extension Period and the Company's policy with
respect to expense reimbursement during such
period shall continue to be governed by the terms
of the Extension Letter.
<PAGE>
Dr. Kenneth H. Harper
September 1, 1995
Page 3
C. Relocation on Expenses
At such time as you desire to relocate all of your possessions,
household effects and similar items to the United Kingdom, all moving and
related expenses, including travel expenses of you and your spouse, shall be
borne by APBI.
D. Effect
Except as otherwise amended,Ivaried or supplemented hereby (whether
expressly or by implication), the terms of the Employment Agreement and the
Extension Letter shall continue to govern the terms of your employment with
APBI. For the avoidance of doubt, you acknowledge that, notwithstanding any
contrary provisions of the Employment Agreement, your sole claims to
compensation and your duties and responsibilities after the Expiration Date
shall be as set forth in the Extension Letter, provided, however, that the
provisions of Sections 5.1, 5.2, 5.5 and 5.12 of the Employment Agreement shall
remain in full force and effect during the Extension Period. The provisions
included herein shall in no way limit any rights that you may have under the
Employment Agreement during the Initial Employment Term or under that certain
severance agreement dated December 1, 1987, as amended (the "Severance
Agreement"), provided, however, that subsequent to September 6, 1995, you shall
be ineligible to receive benefits under the Severance Agreement for any event
occurring after September 6, 1995.
2. Governing Law
Any dispute arising hereunder or regarding interpretation of any
provision hereof shall be governed by the laws of the State of New Jersey.
3. Notice
Any notice given to either party hereunder shall be given in writing
delivered in person or by registered mail addressed to the Board of Directors of
APBI at the then principal office of APBI or to you at the address above stated,
as the case may be. If the foregoing reflects our understanding of the agreed
terms of amendment and extension of your employment with APBI, please indicate
<PAGE>
Dr. Kenneth H. Harper
September 1, 1995
Page 4
your acceptance of such terms by endorsing and returning to me the enclosed copy
of this letter.
Very truly yours,
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: /s/ Stephen L. Waechter
Name: Stephen L. Waechter
Title: Senior Vice President and Chief
Financial Officer
ACCEPTED AND AGREED:
/s/ Kenneth H. Harper
- ---------------------
Kenneth H. Harper
Dated: September 14, 1995
Exhibit 10.37
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") effective as of the
15th day of August, 1995, by and between Applied Bioscience International Inc.,
a Delaware corporation having its principal executive offices at 4350 North
Fairfax Drive, Suite 300, Arlington, Virginia 22203 (the "Company"), and Dr.
Kenneth H. Harper, an individual residing at Brookside, Roman Road, Ingatestone,
Essex CM4 9EX, England (the "Executive").
WITNESSETH:
WHEREAS, the Executive is employed by the Company or one of its
subsidiaries; and
WHEREAS, the Company has adopted, through appropriate action of its
Board of Directors, the Applied Bioscience International Inc. Stock Incentive
Program (1990) (the "Program"); and
WHEREAS, the Company has agreed to grant a Restricted Stock Award
to the Executive under the Program on the terms and conditions hereinafter set
forth; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Executive agrees to accept a Restricted Stock Award of the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants hereafter contained, and other good and valuable consideration,
receipt of which is hereby acknowledged, the Company and the Executive do
mutually covenant and agree as follows:
<PAGE>
1. Subject to the terms and conditions hereinafter set forth, the
Executive is hereby granted a Restricted Stock Award of Fifty Thousand (50,000)
shares of Common Stock, par value $.01 per share, of the Company (the
"Restricted Stock"). The Executive shall not be required to pay any
consideration in exchange for the Restricted Stock.
2. (a) A certificate representing the shares of Restricted Stock
granted under paragraph 1 hereof shall be registered in the name of the
Executive and deposited by him, together with stock powers endorsed in blank,
with the Company. Subject to subparagraphs (b), (c) and (d) below, the
Executive's right to receive such shares, and the Company's obligation to
deliver such shares to the Executive or his legal representative, shall vest at
such time as the average closing price for the Company's Common Stock for a
period of ten (10) consecutive trading days equals or exceeds $10.00 per share
(based on the quoted closing price of the Company's Common Stock as reported on
the NASDAQ National Market System). (The foregoing is referred to as the
"Vesting Condition.") Such calculation shall be appropriately adjusted for any
stock splits, dividends and similar events. In the event that during the period
commencing on the date hereof and ending on December 31, 1997 (the "Restricted
Period"), the Executive's rights to the Restricted Stock have not vested, then
effective as of December 31, 1997 all of the shares of the Restricted Stock
granted hereunder, shall be automatically forfeited to the Company.
(b) Subject to the terms and conditions hereof, the
Executive shall have all the rights of a stockholder with respect to the shares
-2-
<PAGE>
of the Restricted Stock granted hereunder, including, without limitation, the
right during the Restricted Period to vote and to receive any dividends declared
with respect to such shares.
(c) In the event that during the Restricted Period,
there shall have been a change in control of the Company, as set forth below,
then the Executive's right to receive such shares of Restricted Stock shall
automatically vest. For purposes of this Agreement, a "change in control of the
Company" shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(d) Notwithstanding the foregoing, in the event that
during the Restricted Period the Executive's employment with the Company or any
subsidiary or affiliate of the Company is terminated (i) voluntarily at the
election or the Executive or (ii) by the Company or any subsidiary or affiliate
of the Company for "cause" (as hereinafter defined), then all of the shares of
-3-
<PAGE>
the Restricted Stock shall be automatically forfeited to the Company. Subject
to satisfaction of the Vesting Condition, the rights of the Executive, or his
legal representative to receive the Restricted Stock shall not be affected by
the Executive's the death or disability, or the Company's termination of the
Executive's employment (other than for "cause").
(e) For the purposes of this Agreement, "cause" shall
mean (i) the Executive's conviction for any act or acts constituting a felony
under the laws of the United States, any state thereof or any foreign
jurisdiction; (ii) any material breach by the Executive of the policies of the
Company or any subsidiary of affiliate of the Company, including, without
limitation, the willful and persistent (after written notice to the Executive)
failure of the Executive to comply with any lawful directives of the Board of
Directors of the Company, any chronic and unexcused, absenteeism, habitual
insobriety or use of controlled substance; (iii) a course of conduct by the
Executive amounting to gross neglect, willful misconduct or dishonesty
materially affecting the Company's or any subsidiary or affiliate of the
Company's business or reputation; or (iv) any misappropriation of property of
the Company or any subsidiary or affiliate of the Company by the Executive or
any misappropriation by the Executive of a corporate or business opportunity of
the Company or any subsidiary or affiliate of the Company that is within the
scope of the business operations of the Company or any subsidiary or affiliate
of the Company, as then conducted, or as then proposed to be conducted pursuant
to business plans of the Company which are known to the Executive.
3. During the Restricted Period and until the Vesting Condition has
been satisfied, the shares of Restricted Stock granted hereunder may not be
transferred, assigned, pledged, hypothecated or encumbered, and shall not be
-4-
<PAGE>
subject to execution, attachment, garnishment or other similar legal processes.
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise encumber
or dispose of such shares of Restricted Stock, such shares shall immediately be
forfeited to the Company.
4. (a) No purported sale, assignment, mortgage, hypothecation,
transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or
other disposition of, or creation of a security interest in or lien on, any of
the shares of Restricted Stock by any holder thereof in violation of any
provision of this Agreement will be valid, and the Company will not transfer any
of said shares on its books nor will any of said shares be entitled to vote, nor
will any dividends be paid thereon, unless and until there has been compliance
with the provisions of the Program and this Agreement. The foregoing
restrictions are in addition to and not in lieu of any other remedies, legal or
equitable, available to enforce said provisions.
(b) Any waiver by any party of any rights hereunder as
to any transfer, will not, as to any future transfer of said shares (whether
voluntary or by operation of law), discharge such shares from any restrictions
contained in this Agreement.
5. Nothing contained in this Agreement, nor the granting of the
Restricted Stock Award hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary or any director, officer, employee or agent thereof, except for those
rights as are herein provided. Under no circumstances shall this Agreement be
construed as an express or implied contract of continuing employment for the
Executive, nor shall the Restricted Stock Award granted hereunder in any manner
obligate the Company, or any subsidiary or affiliate of the Company, to continue
-5-
<PAGE>
the employment of the Executive.
6. This Agreement incorporates the terms of the Program and any
modifications or amendments thereto. The Executive acknowledges receipt of a
copy of the Program and agrees to be bound by all the terms and provisions
thereof. Any inconsistency between this Agreement and the Program shall be
resolved in favor of the Program.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President
EXECUTIVE
/s/ Dr. Kenneth H. Harper
----------------------------------
Dr. Kenneth H. Harper
EXHIBIT 10.38
September 1, 1995
Mr. John H. Timoney
117 Leabrook Lane
Princeton, New Jersey 08540
Dear John:
As you are aware, the initial term (the "Initial Employment Term") of
your Employment Agreement dated September 7, 1990 (the "Employment Agreement")
with Applied Bioscience International Inc. ("APBI") is due to expire on
September 6, 1995. Originally, it was contemplated that subsequent to
September 6, 1995 your responsibilities and overall time commitment to APBI
would be greatly reduced as reflected in that certain letter agreement dated
April 30, 1993 (the "Extension Letter"). However, in light of the expanded role
you have been asked to undertake both in terms of strategic planning for APBI
ans as APBI's representative on the boards severl minority investments, APBI
would like to extend the Initial Employment Term of your Employment Agreement
through September 6, 1996 and otherwise amend your Employment Agreement and
the prior Extension Letter, as provided herein.
1. Terms of Continuing Employment
------------------------------
Set forth below are the terms and conditions upon which we
agree to vary our respective rights, obligations and duties under
the Employment Agreement and the original Extension Letter and to
continue and extend the period of your employment with APBI.
A. Term, Employment and Duties.
---------------------------
(i) The Initial Employment Term of your Employment
Agreement shall be extended through September 6,
1996 with such date being referred to as the
"Expiration Date" both for purposes of this letter
and the Extension Letter. Your employment will be
reviewed annually and upon the expiration of the
Initial Employment Term (or any renewal period)
your employment, as a Senior Vice President of
APBI and an officer of APBI Investor Relations,
Inc., may be extended for successive twelve-month
terms upon written approval of you and APBI. In
the event your employment is not extended as
provided above, then the terms and provisions of
the Extension Letter will immediately become
applicable with your continuing employment with
APBI during the Extension Period (as defined in
the Extension Letter) being governed by the terms
set forth therein.
<PAGE>
Mr. John H. Timoney
September 1, 1995
Page 2
(ii) During the remainder of the Initial Employment
Term you shall continue to render your full-time
executive services to APBI as a Senior Vice
President and as an officer of APBI Investor
Relations, Inc., subject to the direction of the
Chief Executive Officer of APBI. During such
term, your services will be performed primarily at
the offices of APBI Investor Relations, Inc.
located at 214 Carnegie Center, Suite 201,
Princeton, New Jersey 08540, or such other
location as you and APBI may mutually agree upon.
Also, consistent with the terms of your Employment
Agreement you will not be obligated to relocate
your current personal residence in connection with
the performance of your duties hereunder.
B.Compensation.
------------
(i) Your annual salary will be $180,000 effective as
of February 12, 1995. During the remainder of the
Initial Employment Term, your salary will be
subject to review and possible upward adjustment
by APBI's Employee Stock Plans and Compensation
Committee ("Compensation Committee") in accordance
with Section 3.1 of your Employment Agreement. In
addition to the salary and other benefits to be
paid or made available to you, during the Initial
Employment Term you shall be eligible to
participate in APBI's Economic Value Added
incentive compensation plan (the "EVA Plan") or
any successor plan. For fiscal year 1995 your
target incentive under the EVA Plan will be 40% of
your salary and thereafter during the Initial
Employment Term (and any renewal periods) your
target incentive shall be set by the Board or the
Compensation Committee.
(ii) Your salary during the Extension Period and the
Company's policy with respect to expense
reimbursement during such period shall continue to
be governed by the terms of the Extension Letter.
C. Effect
------
Except as otherwise amended, varied or supplemented hereby
(whether expressly or by implication), the terms of the
Employment Agreement and the Extension Letter shall continue to
govern the terms of your employment with APBI. For the avoidance
of doubt, you acknowledge that, notwithstanding any contrary
provisions of the Employment Agreement, your sole claims to
compensation and your duties and responsibilities after the
Expiration Date shall be as set forth in the Extension Letter,
provided, however, that the provisions of Sections 5.1, 5.2, 5.5
and 5.12 of the Employment Agreement shall remain in full force
and effect during the Extension Period. The provisions included
herein shall in no way limit any rights that you may have under
the Employment Agreement during the Initial Employment Term or
under that certain severance agreement dated December 1, 1987, as
amended (the "Severance Agreement"), provided, however, that
subsequent to September 6, 1995, you shall be ineligible to
receive benefits under the Severance Agreement for any event
occurring after September 6, 1995.
<PAGE>
Mr. John H. Timoney
September 1, 1995
Page 3
2. Governing Law
-------------
Any dispute arising hereunder or regarding interpretation of
any provision hereof shall be governed by the laws of the State
of New Jersey.
3. Notice
------
Any notice given to either party hereunder shall be given in
writing delivered in person or by registered mail addressed to
the Board of Directors of APBI at the then principal office of
APBI or to you at the address above stated, as the case may be.
If the foregoing reflects our understanding of the agreed terms
of amendment and extension of your employment with APBI, please
indicate your acceptance of such terms by endorsing and returning
to me the enclosed copy of this letter.
Very truly yours,
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: Stephen L. Waechter
--------------------------------
Name: Stephen L. Waechter
Title: Senior Vice President/Chief
Financial Officer
ACCEPTED AND AGREED
/s/John H. Timoney
John H. Timoney
Dated: 9-14-95
Exhibit 10.39
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") effective as of the
15th day of August, 1995, by and between Applied Bioscience International Inc.,
a Delaware corporation having its principal executive offices at 4350 North
Fairfax Drive, Suite 300, Arlington, Virginia 22203 (the "Company"), and
John H. Timoney, an individual residing at 117 Leabrook Lane, Princeton, New
Jersey 08540 (the "Executive").
WITNESSETH:
WHEREAS, the Executive is employed by the Company or one of
its subsidiaries; and
WHEREAS, the Company has adopted, through appropriate action of its
Board of Directors, the Applied Bioscience International Inc. Stock Incentive
Program (1990) (the "Program"); and
WHEREAS, the Company has agreed to grant a Restricted Stock
Award to the Executive under the Program on the terms and conditions hereinafter
set forth; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Executive agrees to accept a Restricted Stock Award of the Company.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants hereafter contained, and other good and valuable consideration,
receipt of which is hereby acknowledged, the Company and the Executive do
mutually covenant and agree as follows:
<PAGE>
1. Subject to the terms and conditions hereinafter set forth,
the Executive is hereby granted a Restricted Stock Award of Ten Thousand
(10,000) shares of Common Stock, par value $.01 per share, of the Company (the
"Restricted Stock"). The Executive shall not be required to pay any
consideration in exchange for the Restricted Stock.
2. (a) A certificate representing the shares of Restricted Stock
granted under paragraph 1 hereof shall be registered in the name of the
Executive and deposited by him, together with stock powers endorsed in blank,
with the Company. Subject to subparagraphs (b), (c) and (d) below, the
Executive's right to receive such shares, and the Company's obligation to
deliver such shares to the Executive or his legal representative, shall vest at
such time as the average closing price for the Company's Common Stock for a
period of ten (10) consecutive trading days equals or exceeds $10.00 per share
(based on the quoted closing price of the Company's Common Stock as reported on
the NASDAQ National Market System). (The foregoing is referred to as the
"Vesting Condition.") Such calculation shall be appropriately adjusted for any
stock splits, dividends and similar events. In the event that during the period
commencing on the date hereof and ending on December 31, 1997 (the "Restricted
Period"), the Executive's rights to the Restricted Stock have not vested, then
effective as of December 31, 1997 all of the shares of the Restricted Stock
granted hereunder, shall be automatically forfeited to the Company.
(b) Subject to the terms and conditions hereof, the
Executive shall have all the rights of a stockholder with respect to the shares
of the Restricted Stock granted hereunder, including, without limitation, the
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<PAGE>
right during the Restricted Period to vote and to receive any dividends declared
with respect to such shares.
(c) In the event that during the Restricted Period,
there shall have been a change in control of the Company, as set forth below,
then the Executive's right to receive such shares of Restricted Stock shall
automatically vest. For purposes of this Agreement, a "change in control of the
Company" shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(d) Notwithstanding the foregoing, in the event that
during the Restricted Period the Executive's employment with the Company or any
subsidiary or affiliate of the Company is terminated (i) voluntarily at the
election or the Executive or (ii) by the Company or any subsidiary or affiliate
of the Company for "cause" (as hereinafter defined), then all of the shares of
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<PAGE>
the Restricted Stock shall be automatically forfeited to the Company. Subject
to satisfaction of the Vesting Condition, the rights of the Executive, or his
legal representative to receive the Restricted Stock shall not be affected by
the Executive's the death or disability, or the Company's termination of the
Executive's employment (other than for "cause").
(e) For the purposes of this Agreement, "cause" shall
mean (i) the Executive's conviction for any act or acts constituting a felony
under the laws of the United States, any state thereof or any foreign
jurisdiction; (ii) any material breach by the Executive of the policies of the
Company or any subsidiary of affiliate of the Company, including, without
limitation, the willful and persistent (after written notice to the Executive)
failure of the Executive to comply with any lawful directives of the Board of
Directors of the Company, any chronic and unexcused, absenteeism, habitual
insobriety or use of controlled substance; (iii) a course of conduct by the
Executive amounting to gross neglect, willful misconduct or dishonesty
materially affecting the Company's or any subsidiary or affiliate of the
Company's business or reputation; or (iv) any misappropriation of property of
the Company or any subsidiary or affiliate of the Company by the Executive or
any misappropriation by the Executive of a corporate or business opportunity of
the Company or any subsidiary or affiliate of the Company that is within the
scope of the business operations of the Company or any subsidiary or affiliate
of the Company, as then conducted, or as then proposed to be conducted pursuant
to business plans of the Company which are known to the Executive.
3. During the Restricted Period and until the Vesting Condition has
been satisfied, the shares of Restricted Stock granted hereunder may not be
transferred, assigned, pledged, hypothecated or encumbered, and shall not be
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<PAGE>
subject to execution, attachment, garnishment or other similar legal processes.
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise encumber
or dispose of such shares of Restricted Stock, such shares shall immediately be
forfeited to the Company.
4. (a) No purported sale, assignment, mortgage, hypothecation,
transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or
other disposition of, or creation of a security interest in or lien on, any of
the shares of Restricted Stock by any holder thereof in violation of any
provision of this Agreement will be valid, and the Company will not transfer any
of said shares on its books nor will any of said shares be entitled to vote, nor
will any dividends be paid thereon, unless and until there has been compliance
with the provisions of the Program and this Agreement. The foregoing
restrictions are in addition to and not in lieu of any other remedies, legal or
equitable, available to enforce said provisions.
(b) Any waiver by any party of any rights hereunder as
to any transfer, will not, as to any future transfer of said shares (whether
voluntary or by operation of law), discharge such shares from any restrictions
contained in this Agreement.
5. Nothing contained in this Agreement, nor the granting of the
Restricted Stock Award hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary or any director, officer, employee or agent thereof, except for those
rights as are herein provided. Under no circumstances shall this Agreement be
construed as an express or implied contract of continuing employment for the
Executive, nor shall the Restricted Stock Award granted hereunder in any manner
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<PAGE>
obligate the Company, or any subsidiary or affiliate of the Company, to continue
the employment of the Executive.
6. This Agreement incorporates the terms of the Program and any
modifications or amendments thereto. The Executive acknowledges receipt of a
copy of the Program and agrees to be bound by all the terms and provisions
thereof. Any inconsistency between this Agreement and the Program shall be
resolved in favor of the Program.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President
EXECUTIVE
/s/ John H. Timoney
----------------------------------
John H. Timoney
Exhibit 10.40a
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on July 8, 1991;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
1. Grant. The Company does hereby grant to the Executive the right and option
to purchase, under the terms and conditions hereinafter set forth, in whole or
in part, 20,000 shares of Common Stock of the Company, par value $.01 per share
("Stock"), which right and option shall be in replacement of and substitution
<PAGE>
for, the incentive stock option originally granted to the Executive on July 8,
1991 (such replacement option being referred to as the "Replacement Option").
The Replacement Option shall not constitute an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986. The price at which
each share may be purchased shall be $15.875, which price is the fair market
value of such stock on the date of grant of the Original Option (the "Option
Price").
2. Terms.
(a) The Replacement Option herein granted shall expire at 12:00 midnight on the
earlier of (i) February 11, 2001 or (ii) the day immediately following any
period of twenty (20) consecutive trading days in which the last sale for shares
of APBI's common stock (as adjusted for stock splits, dividends and similar
events) for each of such trading days equaled or exceeded $20 per share as
quoted on the NASDAQ National Market System.
(b) Of the option grant award of 20,000 shares of Stock, 16,000 shall be
immediately subject to purchase through the exercise of this Replacement Option
and the balance of 4,000 shall vest and may be purchased on or after July 8,
1996.
3. Exercise. Employee may exercise the option granted hereunder by giving
written notice to the Company's chief financial officer at the principal office
of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203. Such
notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4. Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
5. Registration Rights. APBI shall, if requested by Executive, as soon as
reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
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<PAGE>
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6. Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7. Effect of Reorganization. In the event of a reorganization as defined
below, provision has not been made by the surviving corporation for substitution
of new options for this Replacement Option which is satisfactory to the
Executive, such Executive will have distributed to him or her within thirty (30)
days after the reorganization in full satisfaction the following:
(i) With respect to this Replacement Option, if unexpired, cash representing
the excess, if any, of the highest market price for the Company's Common Stock
on the date, or the earliest prior date on which a price has been established
for trading purposes, preceding the reorganization over the Option Price,
without regard to the exercise dates provided in this Replacement Option or, at
the election of the surviving or acquiring corporation, stock in the surviving
or acquiring corporation or parent thereof equal in value to the above as of the
date of the reorganization, provided that stock in such survivor or parent
company is traded on a national securities exchange or quoted by the Automated
Quotation System of the National Association of Securities Dealers, Inc.
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<PAGE>
(ii) Reorganization for purposes of this Section 7(a) means a merger,
consolidation, sale of all or substantially all of the Company's assets, or
other corporate reorganization in which the Company is not the surviving
corporation (other than any such transaction the effect of which is merely to
change the jurisdiction of incorporation of the Company), or any merger in which
the Company is the surviving corporation but the holders of its shares receive
cash or securities of another corporation, or a dissolution or liquidation of
the Company.
8. No Implied Rights. Nothing contained in this Agreement, nor the granting of
any options hereunder, shall be construed as giving the Executive or any other
person any legal or equitable rights against the Company or any subsidiary
corporation or any director, officer, employee or agent thereof, except for
those rights as are herein provided. Under no circumstances shall this
Agreement, be construed as a contract of continuing employment of the Executive,
nor shall this option grant in any manner obligate the Company or any subsidiary
or affiliate of the Company to continue the employment of the Executive.
9. No Assignment. Except as contemplated by Section 4 hereof, this option and
the rights and privileges conferred hereby may not be transferred, assigned,
pledged, hypothecated or encumbered, and shall not be subject to execution,
attachment, garnishment or other similar legal processes. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise encumber or dispose of this
option, this option and the rights and privileges conferred hereunder shall
immediately become null and void. This option may be exercised during the
lifetime of the Executive only by the Executive; provided, however, that if the
Executive is declared legally incompetent, the Executive's duly appointed legal
representative may exercise the option hereunder in the manner and to the extent
that the Executive is entitled to exercise the option hereunder.
10. Governing Law. This Agreement and the rights hereunder shall be governed
by and construed under the laws of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
Exhibit 10.40b
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on September 13, 1994;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
<PAGE>
1.Grant. The Company does hereby grant to the Executive the right and
option to purchase, under the terms and conditions hereinafter set forth, in
whole or in part, 50,000 shares of Common Stock of the Company, par value $.01
per share ("Stock"), which right and option shall be in replacement of and
substitution for, the non-qualified stock option originally granted to the
Executive on September 13, 1994 (such replacement option being referred to as
the "Replacement Option"). The Replacement Option shall not constitute an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986. The price at which each share may be purchased shall be $5.875,
which price is the fair market value of such stock on the date of grant of the
Original Option (the "Option Price").
2.Terms.
(a)The Replacement Option herein granted shall expire at
12:00 midnight on the earlier of (i) February 11, 2001 or (ii) the day
immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b)Of the option grant award of 50,000 shares of Stock,
16,666 shall be immediately subject to purchase through the exercise of this
Replacement Option and the balance of 33,334, shall vest and may be purchased in
cumulative annual installments of portions of the shares of Stock covered by
this option as follows:
3.Exercise. Employee may exercise the option granted hereunder by
giving written notice to the Company's chief financial officer at the principal
office of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203.
Such notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4.Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
5.Registration Rights. APBI shall, if requested by Executive, as soon
as reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
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<PAGE>
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6.Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7.Effect of Reorganization. If, in the event of a reorganization as
defined below, provision has not been made by the surviving corporation for
substitution of new options for this Replacement Option which is satisfactory to
the Executive, such Executive will have distributed to him or her within thirty
(30) days after the reorganization in full satisfaction the following:
(i)With respect to this Replacement Option, if
unexpired, cash representing the excess, if any, of the highest market price for
the Company's Common Stock on the date, or the earliest prior date on which a
-3-
<PAGE>
price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or parent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(iii)Reorganization for purposes of this Section
7(a) means a merger, consolidation, sale of all or substantially all of the
Company's assets, or other corporate reorganization in which the Company is not
the surviving corporation (other than any such transaction the effect of which
is merely to change the jurisdiction of incorporation of the Company), or any
merger in which the Company is the surviving corporation but the holders of its
shares receive cash or securities of another corporation, or a dissolution or
liquidation of the Company.
8.No Implied Rights. Nothing contained in this Agreement, nor the
granting of any options hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary corporation or any director, officer, employee or agent thereof,
except for those rights as are herein provided. Under no circumstances shall
this Agreement, be construed as a contract of continuing employment of the
Executive, nor shall this option grant in any manner obligate the Company or any
subsidiary or affiliate of the Company to continue the employment of the
Executive.
9.No Assignment. Except as contemplated by Section 4 hereof, this
option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged, hypothecated or encumbered, and shall not be subject to
execution, attachment, garnishment or other similar legal processes. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
10.Governing Law. This Agreement and the rights hereunder shall be
governed by and construed under the laws of the State of Delaware. IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above written.
-4-
<PAGE>
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
Exhibit 10.40c
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on June 25, 1993;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
<PAGE>
1.Grant. The Company does hereby grant to the Executive the right and
option to purchase, under the terms and conditions hereinafter set forth, in
whole or in part, 39,024 shares of Common Stock of the Company, par value $.01
per share ("Stock"), which right and option shall be in replacement of and
substitution for, the non-qualified stock option originally granted to the
Executive on June 25, 1993 (such replacement option being referred to as the
"Replacement Option"). The Replacement Option shall not constitute an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986. The price at which each share may be purchased shall be $5.625, which
price is the fair market value of such stock on the date of grant of the
Original Option (the "Option Price").
2.Terms.
(a)The Replacement Option herein granted shall expire at
12:00 midnight on the earlier of (i) February 11, 2001 or (ii) the day
immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b)Of the option grant award of 39,024 shares of Stock,
28,179 shall be immediately subject to purchase through the exercise of this
Replacement Option and the balance of 10,845 shall vest and may be purchased on
or after June 25, 1996.
3.Exercise. Employee may exercise the option granted hereunder by
giving written notice to the Company's chief financial officer at the principal
office of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203.
Such notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4.Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
5.Registration Rights. APBI shall, if requested by Executive, as soon
as reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
-2-
<PAGE>
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6.Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7.Effect of Reorganization. If, in the event of a reorganization as
defined below, provision has not been made by the surviving corporation for
substitution of new options for this Replacement Option which is satisfactory to
the Executive, such Executive will have distributed to him or her within thirty
(30) days after the reorganization in full satisfaction the following:
(i)With respect to this Replacement Option, if
unexpired, cash representing the excess, if any, of the highest market price for
the Company's Common Stock on the date, or the earliest prior date on which a
-3-
<PAGE>
price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or parent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(ii)Reorganization for purposes of this Section
7(a) means a merger, consolidation, sale of all or substantially all of the
Company's assets, or other corporate reorganization in which the Company is not
the surviving corporation (other than any such transaction the effect of which
is merely to change the jurisdiction of incorporation of the Company), or any
merger in which the Company is the surviving corporation but the holders of its
shares receive cash or securities of another corporation, or a dissolution or
liquidation of the Company.
8.No Implied Rights. Nothing contained in this Agreement, nor the
granting of any options hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary corporation or any director, officer, employee or agent thereof,
except for those rights as are herein provided. Under no circumstances shall
this Agreement, be construed as a contract of continuing employment of the
Executive, nor shall this option grant in any manner obligate the Company or any
subsidiary or affiliate of the Company to continue the employment of the
Executive.
9.No Assignment. Except as contemplated by Section 4 hereof, this
option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged, hypothecated or encumbered, and shall not be subject to
execution, attachment, garnishment or other similar legal processes. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
10.Governing Law. This Agreement and the rights hereunder shall be
governed by and construed under the laws of the State of Delaware.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
-5-
Exhibit 10.40d
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on June 25, 1993;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
1.Grant. The Company does hereby grant to the Executive the right and
option to purchase, under the terms and conditions hereinafter set forth, in
whole or in part, 12,976 shares of Common Stock of the Company, par value $.01
<PAGE>
per share ("Stock"), which right and option shall be in replacement of and
substitution for, the incentive stock option originally granted to the Executive
on June 25, 1993 (such replacement option being referred to as the "Replacement
Option"). The Replacement Option shall not constitute an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986. The
price at which each share may be purchased shall be $5.625, which price is the
fair market value of such stock on the date of grant of the Original Option (the
"Option Price").
2.Terms.
(a)The Replacement Option herein granted shall expire at
12:00 midnight on the earlier of (i) February 11, 2001 or (ii) the day
immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b)Of the option grant award of 12,976 shares of Stock,
6,488 shall be immediately subject to purchase through the exercise of this
Replacement Option and the balance of 6,488, shall vest and may be purchased on
or after June 25, 1996.
3.Exercise. Employee may exercise the option granted hereunder by
giving written notice to the Company's chief financial officer at the principal
office of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203.
Such notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4.Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
5.Registration Rights. APBI shall, if requested by Executive, as soon
as reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
-2-
<PAGE>
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6.Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7.Effect of Reorganization. If, in the event of a reorganization as
defined below, provision has not been made by the surviving corporation for
substitution of new options for this Replacement Option which is satisfactory to
the Executive, such Executive will have distributed to him or her within thirty
(30) days after the reorganization in full satisfaction the following:
(i)With respect to this Replacement Option, if
unexpired, cash representing the excess, if any, of the highest market price for
the Company's Common Stock on the date, or the earliest prior date on which a
-3-
<PAGE>
price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or parent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(ii)Reorganization for purposes of this Section
7(a) means a merger, consolidation, sale of all or substantially all of the
Company's assets, or other corporate reorganization in which the Company is not
the surviving corporation (other than any such transaction the effect of which
is merely to change the jurisdiction of incorporation of the Company), or any
merger in which the Company is the surviving corporation but the holders of its
shares receive cash or securities of another corporation, or a dissolution or
liquidation of the Company.
8.No Implied Rights. Nothing contained in this Agreement, nor the granting of
any options hereunder, shall be construed as giving the Executive or any other
person any legal or equitable rights against the Company or any subsidiary
corporation or any director, officer, employee or agent thereof, except for
those rights as are herein provided. Under no circumstances shall this
Agreement, be construed as a contract of continuing employment of the Executive,
nor shall this option grant in any manner obligate the Company or any subsidiary
or affiliate of the Company to continue the employment of the Executive.
9.No Assignment. Except as contemplated by Section 4 hereof, this
option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged, hypothecated or encumbered, and shall not be subject to
execution, attachment, garnishment or other similar legal processes. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
10.Governing Law. This Agreement and the rights hereunder shall be
governed by and construed under the laws of the State of Delaware.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
Exhibit 10.40e
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on December 10, 1991;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
<PAGE>
1.Grant. The Company does hereby grant to the Executive the right and
option to purchase, under the terms and conditions hereinafter set forth, in
whole or in part, 17,204 shares of Common Stock of the Company, par value $.01
per share ("Stock"), which right and option shall be in replacement of and
substitution for, the non-qualified stock option originally granted to the
Executive on December 10, 1991 (such replacement option being referred to as the
"Replacement Option"). The Replacement Option shall not constitute an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986. The price at which each share may be purchased shall be $13.3125, which
price is the fair market value of such stock on the date of grant of the
Original Option (the "Option Price").
2.Terms.
(a)The Replacement Option herein granted shall expire at
12:00 midnight on the earlier of (i) February 11, 2001 or (ii) the day
immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b)All of the 17,204 shares of Stock, subject to this option
grant award shall be immediately subject to purchase through the exercise of
this Replacement Option.
3.Exercise. Employee may exercise the option granted hereunder by
giving written notice to the Company's chief financial officer at the principal
office of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203.
Such notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4.Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
5.Registration Rights. APBI shall, if requested by Executive, as soon
as reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
-2-
<PAGE>
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6.Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7.Effect of Reorganization. If, in the event of a reorganization as
defined below, provision has not been made by the surviving corporation for
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<PAGE>
substitution of new options for this Replacement Option which is satisfactory to
the Executive, such Executive will have distributed to him or her within thirty
(30) days after the reorganization in full satisfaction the following:
(i)With respect to this Replacement Option, if
unexpired, cash representing the excess, if any, of the highest market price for
the Company's Common Stock on the date, or the earliest prior date on which a
price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or parent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(iii)Reorganization for purposes of this Section
7(a) means a merger, consolidation, sale of all or substantially all of the
Company's assets, or other corporate reorganization in which the Company is not
the surviving corporation (other than any such transaction the effect of which
is merely to change the jurisdiction of incorporation of the Company), or any
merger in which the Company is the surviving corporation but the holders of its
shares receive cash or securities of another corporation, or a dissolution or
liquidation of the Company.
8.No Implied Rights. Nothing contained in this Agreement, nor the
granting of any options hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary corporation or any director, officer, employee or agent thereof,
except for those rights as are herein provided. Under no circumstances shall
this Agreement, be construed as a contract of continuing employment of the
Executive, nor shall this option grant in any manner obligate the Company or any
subsidiary or affiliate of the Company to continue the employment of the
Executive.
9.No Assignment. Except as contemplated by Section 4 hereof, this
option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged, hypothecated or encumbered, and shall not be subject to
execution, attachment, garnishment or other similar legal processes. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
10.Governing Law. This Agreement and the rights hereunder shall be
governed by and construed under the laws of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
Exhibit 10.40f
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into as of this
19th day of September, 1995 by and between APPLIED BIOSCIENCE INTERNATIONAL
INC., a Delaware corporation (the "Company" or "APBI"), and GROVER C. WRENN (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer of the
Company and/or its ENVIRON division, and as such has been granted the following
stock options under the APBI Stock Incentive Program (1990):
Option Option Option
Grant Date Share Amounts Exercise Price
07/08/91 20,000 $15.8750
12/10/91 8,224 $13.3125
12/10/91 17,204 $13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the Executive's services
are no longer required on behalf of the Company or ENVIRON and have entered into
a Separation Agreement dated effective August 25, 1995 (the "Separation
Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and the
Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option granted to
the Executive in lieu of, and in full substitution for, the Original Option
granted to the Executive on December 10, 1991;
NOW, THEREFORE, intending to be legally bound hereby, the Company and the
Executive do hereby covenant and agree as follows:
<PAGE>
1.Grant. The Company does hereby grant to the Executive the right and
option to purchase, under the terms and conditions hereinafter set forth, in
whole or in part, 8,224 shares of Common Stock of the Company, par value $.01
per share ("Stock"), which right and option shall be in replacement of and
substitution for, the incentive stock option originally granted to the Executive
on December 10, 1991 (such replacement option being referred to as the
"Replacement Option"). The Replacement Option shall not constitute an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986. The price at which each share may be purchased shall be $13.3125, which
price is the fair market value of such stock on the date of grant of the
Original Option (the "Option Price").
2.Terms.
(a) The Replacement Option herein granted shall expire
at 12:00 midnight on the earlier of (i) February 11, 2001 or (ii) the day
immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b) All of the 8,224 shares of Stock, subject to this
option grant award shall be immediately subject to purchase through the exercise
of this Replacement Option.
Date Number of Shares
---- ----------------
September 13, 1996 16,667
September 13, 1997 16,667
3.Exercise. Employee may exercise the option granted hereunder by
giving written notice to the Company's chief financial officer at the principal
office of the Company at 4350 North Fairfax Drive, Arlington, Virginia 22203.
Such notice shall state the number of full shares (no fractional shares may be
purchased) to which the election applies. Such notice shall be accompanied by
payment in an amount sufficient to purchase the number of shares set forth in
the notice at the per share price established by Section 1 hereof. Payment
shall be made in cash or shares of the Company's Common Stock having a fair
market value equal to the purchase price (as determined by the APBI Compensation
and Stock Plans Committee or the "APBI Compensation Committee"), or a
combination of cash and such shares.
4.Death. In the event of death of the Executive, the option shall be
exercisable by the person or persons who acquire the option by bequest or
inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
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<PAGE>
5.Registration Rights. APBI shall, if requested by Executive, as soon
as reasonably practicable file a registration statement on a form of general use
under the Securities Act of 1933, as amended (the "Securities Act"), to permit
the sale or other disposition of the shares of Stock that have been or that may
be acquired upon exercise of this Replacement Option in accordance with the
intended method of sale or other disposition requested by Executive. Executive
shall provide all information reasonably requested by APBI for inclusion in any
registration statement to be filed hereunder. APBI will use its best efforts to
cause such registration statement to remain effective for such period as
Executive reasonably deems necessary to effect such sales or other dispositions
but not to exceed ninety (90) days and not after the status of the shares of
Stock subject to the Option as "restricted securities" within the meaning of
Rule 144 under the Securities Act or any successor thereto terminates. Such
registration shall be effected at APBI's expense except for underwriting
commissions and the fees and disbursements of Executive's counsel attributable
to the registration of such Stock. The filing of the registration statement
contemplated by this paragraph may be delayed for such period of time as may
reasonably be required by APBI to facilitate any public distribution of Stock by
APBI or if APBI decides in its good faith judgment that such registration would
be detrimental to the interests of APBI and its stockholders. In connection
with such registration statement, APBI and Executive shall enter into an
agreement under which each will indemnify the other with respect to information
provided by such party for use in the registration statement, such indemnities
and the procedures therefor to be in a form customarily included in registration
rights agreements. APBI further agrees to use its best efforts to register or
qualify the Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as Executive shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable Executive to consummate the
disposition of such securities in such jurisdictions, except that APBI shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6.Adjustment of Number of Shares. In the event that (i) a dividend is
declared on the Company's Common Stock payable in shares of Common Stock, (ii)
the outstanding shares of Common Stock are to be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation or (iii) there is any other change in the Company's
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<PAGE>
capitalization or otherwise which causes the Company to adjust the number or
kind of shares of Common Stock subject to option awards under the Company's
Stock Incentive Program, the equivalent adjustment shall be made to the shares
which are the subject of this Replacement Option and the option price therefor.
7.Effect of Reorganization. If, in the event of a reorganization as
defined below, provision has not been made by the surviving corporation for
substitution of new options for this Replacement Option which is satisfactory to
the Executive, such Executive will have distributed to him or her within thirty
(30) days after the reorganization in full satisfaction the following:
(i)With respect to this Replacement Option, if
unexpired, cash representing the excess, if any, of the highest market price for
the Company's Common Stock on the date, or the earliest prior date on which a
price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or parent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(ii)Reorganization for purposes of this Section
7(a) means a merger, consolidation, sale of all or substantially all of the
Company's assets, or other corporate reorganization in which the Company is not
the surviving corporation (other than any such transaction the effect of which
is merely to change the jurisdiction of incorporation of the Company), or any
merger in which the Company is the surviving corporation but the holders of its
shares receive cash or securities of another corporation, or a dissolution or
liquidation of the Company.
8.No Implied Rights. Nothing contained in this Agreement, nor the
granting of any options hereunder, shall be construed as giving the Executive or
any other person any legal or equitable rights against the Company or any
subsidiary corporation or any director, officer, employee or agent thereof,
except for those rights as are herein provided. Under no circumstances shall
this Agreement, be construed as a contract of continuing employment of the
Executive, nor shall this option grant in any manner obligate the Company or any
subsidiary or affiliate of the Company to continue the employment of the
Executive.
9.No Assignment. Except as contemplated by Section 4 hereof, this
option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged, hypothecated or encumbered, and shall not be subject to
execution, attachment, garnishment or other similar legal processes. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
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<PAGE>
10.Governing Law. This Agreement and the rights hereunder shall be
governed by and construed under the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By:/s/ Stephen L. Waechter
---------------------------------
Stephen L. Waechter
Senior Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
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Exhibit 10.41
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is entered into this 25th day
of August, 1995 by and between Mr. Grover C. Wrenn (the "Executive"), and
Applied Bioscience International Inc., a Delaware corporation ("APBI").
BACKGROUND
1. The Executive, APBI and ENVIRON INTERNATIONAL CORPORATION
(the predecessor to APBI Environment Sciences Group Inc.) ("ENVIRON") are
parties to certain agreements, including an Employment Agreement dated September
7, 1990 (the "Employment Agreement") and a Non-competition Agreement dated
September 7, 1990 (the "Non-competition Agreement"). Pursuant to the Employment
Agreement, the Executive has been employed at various times as the Chief
Executive Officer of ENVIRON, the President of APBI and most recently the Chief
Executive Officer of APBI.
2. APBI, ENVIRON and the Executive have agreed that the
Executive's services are no longer required on behalf of APBI or ENVIRON.
Accordingly, APBI and the Executive have agreed that the Executive will be
released from full-time employment duties and responsibilities, as further
described herein. During this transition period, APBI and ENVIRON have agreed
to continue to make available certain salary, benefits and employment-related
perquisites as set forth herein.
3. This Agreement is intended to memorialize the parties'
agreement and understanding with respect to the Executive's separation from
APBI.
1. Resignation/Employment Continuance.
(a) The Executive has resigned from all officer
positions with APBI and its affiliates effective as of February 12, 1995 (the
"Separation Date"). During the Transition Period (as hereinafter defined), the
Executive shall continue to be an employee of APBI, provided that the Executive
shall no longer have any full-time employment responsibilities nor any authority
on behalf of APBI or its affiliates. The salary and benefits to be paid or made
available to the Executive during the Transition Period are set forth in
Sections 2 and 3 hereof.
(b) The Executive has resigned from his position as a
member of the Board of Directors of APBI effective as of April 24, 1995.
Effective immediately, the Executive resigns from his position as a member of
the various APBI subsidiary board of director seats, if any, that he currently
holds. The Executive confirms that he shall no longer be considered APBI's
nominee or representative on the board of directors of PACE Incorporated or
EnSys Environmental Products, Inc. ("EnSys").
(c) As of the Separation Date, the Executive's
Employment Agreement has been terminated, except for Article V thereof which
<PAGE>
shall continue and is hereby modified so that (i) the provisions of Article V
shall be extended and shall continue to apply until February 11, 1996, and (ii)
the business of EnSys, as currently conducted, shall not be considered as
competitive with the business of APBI or its affiliates and accordingly, the
Executive's employment by EnSys shall not be deemed a violation of Section 5.1
of the Employment Agreement. Notwithstanding the foregoing, in the event that
prior to February 11, 1996 EnSys's current business changes either through an
internal expansion into new lines of business or by way of merger, consolidation
or otherwise, then the restrictions imposed by Section 5.1. of the Employment
Agreement shall continue to apply to the extent that the new business or lines
of business are directly or indirectly competitive with the business of APBI or
its affiliates. Any time on or after September 7, 1995, the Executive may elect
by written notice to APBI to terminate the continuing applicability of Section
5.1 of Article V of the Executive's Employment Agreement and his Non-competition
Agreement in which case APBI shall be relieved of any obligations thereafter (i)
to make the base salary payments contemplated under Section 2(a) hereof, (ii) to
continue to provide the benefits contemplated by Section 3(a) hereof or (iii) to
make any further matching contributions pursuant to Section 3(b) hereof.
(d) For purposes hereof, the "Transition Period" shall
mean the period commencing as of February 12, 1995 and ending as of February 11,
1996.
(e) APBI will adhere to a policy of not providing
references with respect to the Executive's employment.
2. Certain Payments.
(a) During the Transition Period, subject to Section
1(c) above, APBI agrees to continue to pay the Executive's current base salary
of $250,000 per annum in installments on its regularly scheduled payroll dates.
(b) The Executive is entitled to receive a one-time
severance payment of $58,241. The Executive acknowledges receipt of $43,841 of
such payment with the balance of $14,400 to be paid as of the date hereof. The
Executive will not be eligible for any EVA based or other bonuses for calendar
year 1994 or any periods thereafter.
(c) All amounts payable under this Section 2 and
Section 3, whether such payment is to be made in cash or in other property,
shall be subject to withholding for Federal, state and local income withholding
taxes and contributions to the extent appropriate in the determination of APBI
and the Executive agrees to report all such amounts as ordinary income on his
personal income returns and for all other purposes.
(d) Except as set forth herein, and except for
reimbursement for expenses incurred by the Executive in accordance with APBI's
policies pertaining to business expenses, from and after the Separation Date the
Executive shall have no further rights to any payments of any kind from APBI,
ENVIRON or any other APBI affiliate, whether characterized as payments for, or
in lieu of salary, bonuses, commissions, incentive compensation, vacation, sick
leave or otherwise. The Executive will not be entitled to any salary or other
payments from APBI after the Transition Period.
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<PAGE>
(e) Subject to Section 1(c) above, all sums due to the
Executive hereunder shall be paid without reduction for compensation earned by
the Executive in any subsequent employment and shall be payable to the Executive
or his estate notwithstanding the Executive's death or disability.
3. Benefits.
(a) During the Transition Period, subject to Section
1(c) hereof, the Executive shall continue to be entitled to participate in, and
to receive all employee benefits he is currently receiving, including benefits
under APBI's or ENVIRON's, as the case may be, health, life, automobile,
accident and disability insurance plans or programs with contributions by APBI
to be maintained at their current level. A schedule of such benefits is
attached hereto as Exhibit A. Upon the expiration of the Transition Period, the
Executive may elect to commence receipt of continuation coverage under COBRA, at
his own expense. In no event, however, shall APBI be liable for any
eligibility or coverage decisions made by its insurance providers.
(b) During the Executive's employment with APBI, he
has been a participant in the Applied Bioscience International U.S. Retirement
Savings Plan ("APBI Retirement Plan") and the ENVIRON Pension Plan and
Supplemental Executive Retirement Plan ("ENVIRON Plans"). During the Transition
Period, subject to Section 1(c) hereof, he shall have the right to contribute to
the APBI Retirement Plan and to receive the APBI matching contribution to the
APBI Retirement Plan and contributions to the ENVIRON Plans. Thereafter, the
Executive shall only be entitled to such rights as are defined therein for
former employees of APBI and ENVIRON.
(c) APBI recognizes that the Executive has incurred or
will incur certain costs associated with the transition, including legal fees;
accordingly, APBI agrees to reimburse the Executive for his documented legal
costs associated with the transition up to a total reimbursement of $20,000.
This reimbursement may include costs associated with legal review of the
Executive's proposed November 1994 employment agreement.
(d) The Executive will not be accorded any office
privileges at APBI during the Transition Period.
4. Transition Assistance. From time to time during the balance
of the Transition Period, APBI may request the Executive's assistance in certain
transition-related activities. It is understood that the Executive shall not be
required to provide such assistance and that any such assistance would be
provided simply as a courtesy to APBI.
5. Non-competition Agreement. The Non-competition Agreement
shall remain in full force and effect and is in no manner superseded by this
Agreement, except that by agreement of the parties (i) the term of the Non-
competition Agreement has been extended until February 11, 1996 (subject to
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<PAGE>
earlier termination by the Executive pursuant to Section 1(c) hereof) and (ii)
the business of EnSys, as currently conducted, shall not be considered as
competitive with the business of APBI or its affiliates and accordingly, the
Executive's employment by EnSys shall not be deemed a violation of Section 2 of
the Non-competition Agreement. Notwithstanding the foregoing, in the event that
prior to February 11, 1996 EnSys's current business changes either through an
internal expansion into new lines of business or by way of merger, consolidation
or otherwise, then the restrictions imposed by Section 2 shall continue to apply
to the extent that the new business or lines of business are directly or
indirectly competitive with the business of APBI or its affiliates.
6. Stock Options. During the Executive's employment with APBI
or ENVIRON, he has been granted certain stock options pursuant to APBI's Stock
Incentive Program (1990) (the "Program"). APBI has agreed to grant to the
Executive an equal number of non-qualified options (outside of the Program) that
are in lieu of and substitution for his existing options. Such options would be
on the same terms as the existing options; provided that the vesting and
expiration dates would not be contingent on the Executive's continuing
employment with APBI, and provided further that such options shall expire on the
earlier of (I) the fifth anniversary following the end of the Transition Period,
(ii) the date that the underlying option for which it was substituted would
have expired by its terms (i.e. ten years from the initial grant date) or (iii)
the day immediately following any period of twenty (20) consecutive trading days
in which the last sale price for shares of APBI's common stock (as adjusted for
stock splits, dividends and similar events) for each of such trading days
equaled or exceeded $20 per share as quoted on the NASDAQ National Market
System. Substitute option agreements reflecting such options, in the form
attached as Exhibit B, shall be delivered to the Executive within ten days from
the date hereof and upon their issuance all options granted to the Executive
under the Program shall be restored to the status of unissued options under the
Program.
7. Waiver and Release.
(a) The Executive, on behalf of himself, his
descendants, dependents, heirs, executors, administrators, successors and
assigns, covenants not to sue, and fully and forever releases and discharges
APBI, its parents, subsidiaries, affiliates, divisions, successors and assigns,
together with its past and present trustees, directors, officers, employees,
agents, attorneys and representatives, (collectively, the "Releasees") from any
and all claims, debts, liens, liabilities, demands, obligations, acts,
agreements, causes of action, suits, costs and expenses (including attorneys'
fees), damages (whether actual or exemplary) or liabilities of any nature or
kind whatsoever in law or equity or otherwise, whether now known or unknown,
existing or arising in the future, arising out of or in any way connected with
the Executive's Employment Agreement, or his employment or termination of
employment, officerships or directorships with APBI or any of its subsidiaries.
This release includes but is not limited to claims arising under federal, state
or local laws prohibiting employment discrimination, including but not limited
to Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination
in Employment Act, as amended, the Americans with Disabilities Act, claims for
wrongful discharge, claims under the Employee Retirement Income Security Act, as
amended, or any other claims under federal, state, or local law, common law or
any other law in any way relating to the Executive's employment with APBI or any
of its subsidiaries or the termination of his employment. Notwithstanding the
foregoing, the Executive does not release APBI from claims arising out of any
breach of this Agreement.
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<PAGE>
(b) The Releasees hereby covenant not to sue and
hereby fully and forever release and discharge the Executive from any and all
claims, debts, liens, liabilities, demands, obligations, acts, agreements,
causes of action, suits, costs and expenses (including attorneys' fees), damages
(whether actual or exemplary) or liabilities of any nature or kind whatsoever in
law or equity or otherwise, whether now known or unknown, existing or arising in
the future and which arise out of or are in any way connected with the
Executive's employment or termination of employment, officerships or
directorships with APBI or any of its subsidiaries; provided however, that the
Releasees do not release the Executive from any claim existing or arising in the
future which may involve the Executive to the extent that such claim is
(i) (A) based upon an allegation that the Executive has obtained or received
personal financial benefit or gain on an unauthorized or unlawful basis in
connection with his prior employment or service on behalf of APBI or that the
Executive has violated his duty of loyalty to APBI and (B) based upon facts or
circumstances of which neither APBI nor its senior officers or directors are
presently aware, or (ii) asserted by third-party shareholders (including any
derivative action, suit or proceeding brought by a shareholder in the name of or
by right of APBI).
8. Indemnification and Insurance. To the extent that the
Executive is a party to or threatened to be made a party to any suit, action or
proceeding as a result of his actions as an officer, director or employee of
APBI, any APBI affiliate or any other entity for which he served at the request
of APBI, APBI agrees to indemnify the Executive to the full extent and in the
manner allowable under both (a) Delaware corporate law and (b) the APBI
certificate of incorporation and by-laws. In addition, APBI agrees to afford
the Executive, at a minimum, such rights to advancement of expense as are
accorded any other APBI officers or directors. APBI shall use its best efforts,
without being required to pay additional premiums, to maintain in effect for not
less than three years after the date hereof directors' and officers' liability
coverage with respect to the Executives actions while an employee, officer or
director of APBI that provides the Executive with the same coverage afforded
then current APBI directors and officers. APBI shall notify the Executive in
the event that such renewal coverage is not obtained.
9. Return of Company Property. On or prior to the date hereof
the Executive has returned to APBI all company property or equipment of any kind
and all memoranda, notes, records, reports, manuals, computer files in any media
and other documents (and all copies thereof) relating to APBI or its business;
provided, that the Executive shall not be obligated to deliver pursuant to this
provision any such materials or documents which constitute personal property of
the Executive and which do not otherwise embody or reveal confidential matters
relating to APBI. APBI agrees that it will return to the Executive any personal
property belonging to the Executive currently in APBI's possession. In
addition, APBI shall permit the Executive to make copies or retain the originals
of the files indexed on Exhibit C hereto, all of which files relate to matters
as to which the Executive has previously provided environmental consulting
services; provided that any such information shall continue to be considered
confidential and proprietary as to APBI and, except as to limited consulting
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<PAGE>
assignments in which the Executive would act as an expert witness or in a
similar capacity, shall not be used by the Executive for any other purpose that
is competitive with any of APBI's businesses. In the event the Executive is
provided with the originals of the foregoing files, he agrees to permit APBI
access to such files at APBI's reasonable request, and subsequently to make
copies of such files at APBI's discretion.
10. Entire Agreement. This Agreement represents the entire
agreement between the parties and supersedes all other agreements, whether
written or oral; except that both Article V of the Employment Agreement and the
entire Non-competition Agreement remain in full force and effect, as amended
herein.
11. Amendment and Waiver. The terms of this Agreement may not
be modified other than in writing signed by the parties. No term or condition
of this Agreement shall be deemed to have been waived, nor shall there be any
estoppel against enforcement of any provision of this Agreement, except by
written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.
12. Notices. All notices, consents or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been given when personally delivered, sent postage prepaid by registered or
certified mail, return receipt requested, such receipt showing delivery to have
been made, or sent overnight by prepaid receipt or courier addressed as follows:
If to the Executive: Mr. Grover C. Wrenn
8920 Potomac Forest Drive
Great Falls, Virginia 22066
If to APBI: Applied Bioscience International, Inc.
4350 North Fairfax Drive
Arlington, Virginia 22203
Attn: Dr. Kenneth H. Harper
Chief Executive Officer
With a copy to: Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, DC 20037
Attn: Craig Chason
-6-
<PAGE>
or to such other addresses as may hereafter be furnished in writing by the
respective parties if given in the manner required above.
13. Bind and Inure. This Agreement shall be binding upon and
inure to the benefit of the Executive and APBI and their respective heirs, legal
representatives, and in the case of APBI, its successors and assigns.
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Virginia applicable to agreements made
and entirely to be performed therein without regard to any otherwise applicable
principle of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement this 25th
day of August, 1995.
/s/Grover C. Wrenn
Grover C. Wrenn
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: /s/Dr. Kenneth H. Harper
Dr. Kenneth H. Harper
Attachments
<PAGE>
EXHIBIT A
BENEFITS SCHEDULE
. Life insurance equal to two times salary up to $500,000.
. Health insurance which covers medical, dental, eye care and certain
wellness expenses.
. Disability insurance which pays out 60% of salary up to $10,000 per
month after 180 days of continuous absence.
. Participation in optional supplemental life and disability programs
(consistent with participation on Separation Date).
. Participation in optional flex medical and dependent care spending
accounts (consistent with participation on Separation Date).
. 401(k) Plan which matches $.50 for each dollar deferred up to the
first 6% of salary.
. Participation in the ENVIRON pension plan which contributes 3.75% of
salary up to the Social Security wage base and an additional 3.75% on
everything over the wage base up to the $150,000 federal limit.
. Participation in the ENVIRON SERP which continues the pension benefit
on salary earned in excess of the $150,000 limit.
. Participation in the ENVIRON medical wrap around plan, which
reimburses up to $4,000 per year for medical expenses not covered by
insurance.
. Continued payment by APBI of premiums on CML Life Insurance Policies
70987280 and 4905189 and Disability Income Policies 4530942 and
8006645, with transfer of Policy 70987280 to Mr. Wrenn upon his
payment of net cash value at end of the Transition Period.
<PAGE>
EXHIBIT B
FORM OF NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") entered into
as of this ____ day of August, 1995 by and between APPLIED BIOSCIENCE
INTERNATIONAL INC., a Delaware corporation (the "Company" or "APBI"), and GROVER
C. WRENN (the "Executive").
WITNESSETH:
WHEREAS, the Executive has been employed as a senior executive officer
of the Company and/or its ENVIRON division, and as such has been granted the
following stock options under the APBI Stock Incentive Program (1990):
<TABLE><CAPTION>
Option Option Option
Grant Date Share Amounts Exercise Price
<S> <C> <C>
07/08/91 20,000 $ 15.8750
12/10/91 8,224 $ 13.3125
12/10/91 17,204 $ 13.3125
06/25/93 12,976 $ 5.6250
06/25/93 39,024 $ 5.6250
09/13/94 50,000 $ 5.8750
</TABLE>
The foregoing are referred to as the "Original Options."
WHEREAS, the Company and the Executive have agreed that the
Executive's services are no longer required on behalf of the Company or ENVIRON
and are entering into a Separation Agreement of even date herewith (the
"Separation Agreement");
WHEREAS, under the terms of the Separation Agreement, the Company and
the Executive have agreed that in lieu of each of the Original Options, the
Executive will receive a replacement option that is granted outside of the APBI
Stock Incentive Program (1990) ("Stock Incentive Program);
WHEREAS, this Agreement is intended to reflect the replacement option
granted to the Executive in lieu of, and in full substitution for, the Original
Option granted to the Executive on _________, 199__;
NOW, THEREFORE, intending to be legally bound hereby, the Company and
the Executive do hereby covenant and agree as follows:
-1-
<PAGE>
1. Grant. The Company does hereby grant to the Executive the
right and option to purchase, under the terms and conditions hereinafter set
forth, in whole or in part, _____ shares of Common Stock of the Company, par
value $.01 per share ("Stock"), which right and option shall be in replacement
of and substitution for, the [incentive] [non-qualified] stock option originally
granted to the Executive on ________ (such replacement option being referred to
as the "Replacement Option"). The Replacement Option shall not constitute an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986. The price at which each share may be purchased shall be _____,
which price is the fair market value of such stock on the date of grant of the
Original Option (the "Option Price").
2. Terms.
(a) The Replacement Option herein granted shall expire
at 12:00 midnight on the earlier of (i) [this will be February 11, 2001, or ten
(10) years from the date of Original Option whichever is earlier] or (ii) the
day immediately following any period of twenty (20) consecutive trading days in
which the last sale for shares of APBI's common stock (as adjusted for stock
splits, dividends and similar events) for each of such trading days equaled or
exceeded $20 per share as quoted on the NASDAQ National Market System.
(b) Of the option grant award of ________ shares of
Stock, ________ shall be immediately subject to purchase through the exercise of
this Replacement Option and the balance of ________, may be purchased in
cumulative annual installments of portions of the shares of Stock covered by
this option as follows:
Date Number of Shares
_______________ ______________
_______________ ______________
_______________ ______________
_______________ ______________
3. Exercise. Employee may exercise the option granted
hereunder by giving written notice to the Company's chief financial officer at
the principal office of the Company at 4350 North Fairfax Drive, Arlington,
Virginia 22203. Such notice shall state the number of full shares (no
fractional shares may be purchased) to which the election applies. Such notice
shall be accompanied by payment in an amount sufficient to purchase the number
of shares set forth in the notice at the per share price established by
Section 1 hereof. Payment shall be made in cash or shares of the Company's
Common Stock having a fair market value equal to the purchase price (as
determined by the APBI Compensation and Stock Plans Committee or the "APBI
Compensation Committee"), or a combination of cash and such shares.
4. Death. In the event of death of the Executive, the option
shall be exercisable by the person or persons who acquire the option by bequest
or inheritance or by reason of the death of the Executive, or by the executor or
administrator of the estate of the deceased Executive at any time before the
expiration date of the option but only to the extent the option is otherwise
exercisable at the date of the Executive's death.
-2-
<PAGE>
5. Registration Rights. APBI shall, if requested by Executive,
as soon as reasonably practicable file a registration statement on a form of
general use under the Securities Act of 1933, as amended (the "Securities Act"),
to permit the sale or other disposition of the shares of Stock that have been or
that may be acquired upon exercise of this Replacement Option in accordance with
the intended method of sale or other disposition requested by Executive.
Executive shall provide all information reasonably requested by APBI for
inclusion in any registration statement to be filed hereunder. APBI will use
its best efforts to cause such registration statement to remain effective for
such period as Executive reasonably deems necessary to effect such sales or
other dispositions but not to exceed ninety (90) days and not after the status
of the shares of Stock subject to the Option as "restricted securities" within
the meaning of Rule 144 under the Securities Act or any successor thereto
terminates. Such registration shall be effected at APBI's expense except for
underwriting commissions and the fees and disbursements of Executive's counsel
attributable to the registration of such Stock. The filing of the registration
statement contemplated by this paragraph may be delayed for such period of time
as may reasonably be required by APBI to facilitate any public distribution of
Stock by APBI or if APBI decides in its good faith judgment that such
registration would be detrimental to the interests of APBI and its stockholders.
In connection with such registration statement, APBI and Executive shall enter
into an agreement under which each will indemnify the other with respect to
information provided by such party for use in the registration statement, such
indemnities and the procedures therefor to be in a form customarily included in
registration rights agreements. APBI further agrees to use its best efforts to
register or qualify the Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as Executive shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable Executive to consummate
the disposition of such securities in such jurisdictions, except that APBI shall
not for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this sentence be obligated to be so qualified or to consent to
general service of process in any such jurisdiction. The registration right
contained in this paragraph, together with the registration rights contained in
the Executive's other Replacement Options may only be exercised three times
collectively by the Executive so that in effect the Executive has a total of
three registration rights with respect to all of the Stock issued or to be
issued pursuant to all of the Replacement Options.
6. Adjustment of Number of Shares. In the event that (i) a
dividend is declared on the Company's Common Stock payable in shares of Common
Stock, (ii) the outstanding shares of Common Stock are to be changed into or
exchanged for a different number or kind of shares of stock or securities of the
Company or of another corporation or (iii) there is any other change in the
Company's capitalization or otherwise which causes the Company to adjust the
number or kind of shares of Common Stock subject to option awards under the
Company's Stock Incentive Program, the equivalent Adjustment shall be made to
the shares which are the subject of this Replacement Option and the option price
therefor.
7. Effect of Reorganization. If, in the event of a
reorganization as defined below, provision has not been made by the surviving
corporation for substitution of new options for this
-3-
<PAGE>
Replacement Option which is satisfactory to the Executive, such Executive will
have distributed to him or her within thirty (30) days after the reorganization
in full satisfaction the following:
(i) With respect to this Replacement Option,
if unexpired, cash representing the excess, if any, of the highest market price
for the Company's Common Stock on the date, or the earliest prior date on which
a price has been established for trading purposes, preceding the reorganization
over the Option Price, without regard to the exercise dates provided in this
Replacement Option or, at the election of the surviving or acquiring
corporation, stock in the surviving or acquiring corporation or parent thereof
equal in value to the above as of the date of the reorganization, provided that
stock in such survivor or agent company is traded on a national securities
exchange or quoted by the Automated Quotation System of the National Association
of Securities Dealers, Inc.
(ii) Reorganization for purposes of this
Section 7(a) means a merger, consolidation, sale of all or substantially all of
the Company's assets, or other corporate reorganization in which the Company is
not the surviving corporation (other than any such transaction the effect of
which is merely to change the jurisdiction of incorporation of the Company), or
any merger in which the Company is the surviving corporation but the holders of
its shares receive cash or securities of another corporation, or a dissolution
or liquidation of the Company.
8. No Implied Rights. Nothing contained in this Agreement, nor
the granting of any options hereunder, shall be construed as giving the
Executive or any other person any legal or equitable rights against the Company
or any subsidiary corporation or any director, officer, employee or agent
thereof, except for those rights as are herein provided. Under no circumstances
shall this Agreement, be construed as a contract of continuing employment of the
Executive, nor shall this option grant in any manner obligate the Company or any
subsidiary or affiliate of the Company to continue the employment of the
Executive.
9. No Assignment. Except as contemplated by Section 4 hereof,
this option and the rights and privileges conferred hereby may not be
transferred, assigned, pledged, hypothecated or encumbered, and shall not be
subject to execution, attachment, garnishment or other similar legal processes.
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise encumber
or dispose of this option, this option and the rights and privileges conferred
hereunder shall immediately become null and void. This option may be exercised
during the lifetime of the Executive only by the Executive; provided, however,
that if the Executive is declared legally incompetent, the Executive's duly
appointed legal representative may exercise the option hereunder in the manner
and to the extent that the Executive is entitled to exercise the option
hereunder.
10. Governing Law. This Agreement and the rights hereunder
shall be governed by and construed under the laws of the State of Delaware.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: Dr. Kenneth H. Harper
---------------------------------
President and Cheif Executive
Officer
EXECUTIVE
/s/ Grover C. Wrenn
----------------------------------
Grover C. Wrenn
-5-
<PAGE>
EXHIBIT C
CERTAIN APBI FILES
BOX 1 OF 4
1. McColl Declaration and Comments to EPA
2. Performance of Environmental Assessments During Real Estate
Transactions
3. Occupational Exposure to Asbestos, Trimalite, and Anthophyllite and
Actinolite: Statement by G. Wrenn
4. OSHA and Risk Assessment (from Vermont Law School 1990)
5. Overview of Hazard Communications Standard: Cosmetic Industry - Wrenn
6. The OSHA Hazard Communications Standard: Identification and Evaluation
- Grover Wrenn
7. OSHA Hearing Statement for Armstrong Industries (February 1991)
8. Potential Risks Posed by Asbestos Substitutes
9. The Problem of Causation in Toxic Court Litigation
10. Risk Assessment and the Determination of Significance Risks
11. Risk Assessment and Environmental Impairment Liability Insurance II 81
12. The Role of Environmental Consultants in Criminal Environmental
Enforcement Matters
13. St. Vrain Valley School v. W.R. Grace
14. SARA: Solution to Superfund Problems or More of the Same?
(Robert Harris/Grover Wrenn)
15. Significance of Risk in OSHA Standard Setting Process
16. Significant Risk Decisions and Federal Regulatory Agencies
17. Standard Setting: Scientific Policy Issues
18. Support for a Mass Environmental Tort Case
19. Testimony - Sterling V. Velsicol
20. Trends in Risk Assessment at Hazardous Waste Cites
21. Tyson's Cite Rod Revised
22. The Use of Risk Assessment in Insurance, Real Estate and Merger
Decisions
23. The Use of Risk Assessment in Superfund Process
24. Worker Safety and Health Issues Associated with Superfund Response
Actions (Wrenn)
25. Technical Issues Affecting Claims and Litigation
-1-
<PAGE>
BOX 2 OF 4
1. OSHA: Cancer Policy
2. OSHA: Noise Standard
3. OSHA: Hazard Communication
4. OSHA: Hazard Communication Regulations
5. OSHA Reform Panel
6. Clean Air
7. Criminal Enforcement/Liability
8. PCB's
9. Regulatory Policy
10. Browning Ferris Industries Inc. v. Evanston Insurance Company et al.
in the 113th District Court of Harris County Texas
11. The Mayor and City Council of Baltimore v. Keene Corporation et al.
12. Withdrawing from Representation
13. NISA Litigation
-2-
<PAGE>
BOX 3 OF 4 (NO FILES; BOOKS WITH THE FOLLOWING TITLES)
1. Environmental Auditing
2. Defending the Corporation and Criminal Prosecutions
3. Practical Guide to Environmental Management
4. Risk Assessment in the Federal Government
5. Risk Communication Assessment and Management of Chemical Risk
6. Asbestos Abatement
7. California Hazardous Waste Enforcement
8. Superfund Strategy
9. Ground Water - Saving the Unseen Resource
10. The McGraw-Hill Environmental Auditing Handbook
11. Proceedings of the Interdepartmental Worker's Compensation Task Force
Conference on Occupational Diseases and Worker's Compensation 1976
12. Legislative History of the Occupational Safety and Health Act of 1970
13. Controlled Clinical Trials in Neurological Disease
14. Hazard Communication Handbook
15. Elements of Toxicology and Risk Assessment
16. PRP Organization Handbook
17. Superfund Negotiation Handbook
18. Code of Criminal Justice - State of New Jersey
19. Readings in Risk
20. The Green Entrepreneur
21. Chemicals, the Press and the Public
22. Risk Assessment and Risk Control
23. The Dose Makes the Poison
-3-
<PAGE>
BOX 4 OF 4
1. Analysis of Potential Hazards Posed by No. 2 Fuel Oil Contained in
Underground Storage Tanks
2. An Overview of the Hazard Communications Standard: Compliance - Grover
Wrenn
3. Response to EPA Asbestos Ban
4. Asbestos Ban and Phase-Out Proposal - Testimony by Grover Wrenn
5. Asbestos Ban - Decision of Fifth Circuit Court
6. Asbestos School Litigation Deposition - Wrenn (12/90)
7. Assessment of Environmental Liability
8. Baltimore County Board of Education Deposition
9. Comments Responding to EPA's Interim Guidelines and Non-Binding
Allocation of Responsibility
10. Criminal Law and Environmental Liability of Corporate Officials: Wrenn
11. Deposition Conserve Chemical Company
12. Department of Justice's Prosecution of Environmental Crimes: Impact on
Compliance - Wrenn
13. Do Superfund Cites Pose Significant Risks?
14. Effective Use of Experts in Criminal Environmental Litigation - Wrenn
'87
15. EIL Risk Assessment Survey
16. Environmental Due Diligence and Liability Identification: Risk
Assessment Method
17. Elements of Chemical Exposure Assessment
18. Elements of Toxicology
19. Environmental Due Diligence Procedures for Lenders
20. Environmental Impairment Liability Insurance Risk Assessment Surveys
21. EPA Guidelines for Cost Allocation at Multi-party Superfund Cites
22. Evaluation of Exposure to Airborne Fibers During Removal of Resilient
Floor Tiles
23. Evaluation of Exposure to Airborne Fibers During Maintenance of
Asbestos for Tiles
24. Hardage Judgment and Order
25. Highline School District Deposition - G. Wrenn
26. History of Federal Asbestos Regulations and Related Activities
27. Important Nutrients in Prosecution of Environmental Crimes: Wrenn
28. Making Superfund Work (Harris and Wrenn)
<TABLE><CAPTION>
Exhibit No. 11
APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
1995 1994 1995 1994
--------- --------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Primary earnings per share:
Income from continuing operations $801 $ 1,359 $2,012 $ 3,113
Loss from continued operations - (2,533) - (3,323)
--------- --------- ---------- ---------
Net income (loss) $801 $(1,174) $2,012 $ (210)
========= ========= ========== =========
Weighted average number of shares of
common outstanding during the period 28,490 28,470 28,275 28,441
Common stock equivalents assuming exercise
of stock options (a) 288 - 255 -
--------- --------- ---------- ----------
Weighted average common and common
equivalent shares outstanding 28,778 28,470 28,533 28,441
========= ========= ========== ==========
Primary earnings (loss) per common share-
Continuing operations $0.03 $ 0.05 $0.07 $0.11
Discontinued operations - (0.09) - (0.12)
--------- --------- ---------- ----------
Primary earnings (loss) per share $0.03 $(0.04) $0.07 $(0.01)
========= ========= ========== ==========
Fully diluted earnings per share:
Income from continuing operations $801 $ 1,359 $2,012 $ 3,113
Loss from discontinued operations - (2,533) - (3,323)
--------- --------- ---------- ----------
Net income (loss) $801 (1,174) $2,012 $ (210)
========= ========= ========== ==========
Weighted average number of shares of
common outstanding during the period 28,490 28,476 28,275 28,454
Common stock equivalents assuming exercise
of stock options (a) 348 - 346 -
--------- --------- ---------- ----------
Weighted average common and common
equivalent shares outstanding 28,838 28,476 28,621 28,454
========= ========= ========== ==========
Fully diluted earnings (loss) per common
share-
Continuing operations $0.03 $ 0.05 $0.07 $0.11
Discontinued operations - (0.09) - (0.12)
--------- --------- ---------- ----------
Fully diluted earnings (loss) per share $0.03 $(0.04) $0.07 $(0.01)
========= ========= ========== ==========
</TABLE>
(a) In the calculation of common stock equivalents, stock options are assumed to
be exercised at the beginning of the period. The proceeds from the options
exercised are assumed to be used to purchase common stock at (i) the average
market price during the period for primary earnings per share and (ii) the
higher of the average or last market price during the period for fully
diluted earnings per share.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT No. 27
APPLIED BIOSCIENCE INTERNATIONAL INC. AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
Applied Bioscience International Inc. Condensed Consolidated Balance
Sheet and Statement of Operations included within this Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,114
<SECURITIES> 0
<RECEIVABLES> 67,311
<ALLOWANCES> 3,533
<INVENTORY> 1,202
<CURRENT-ASSETS> 77,853
<PP&E> 140,988
<DEPRECIATION> 59,932
<TOTAL-ASSETS> 180,175
<CURRENT-LIABILITIES> 51,093
<BONDS> 42,815
<COMMON> 297
0
0
<OTHER-SE> 73,349
<TOTAL-LIABILITY-AND-EQUITY> 180,175
<SALES> 0
<TOTAL-REVENUES> 139,906
<CGS> 0
<TOTAL-COSTS> 98,092
<OTHER-EXPENSES> 36,223
<LOSS-PROVISION> 239
<INTEREST-EXPENSE> 2,541
<INCOME-PRETAX> 3,743
<INCOME-TAX> 1,731
<INCOME-CONTINUING> 2,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,012
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
