SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998, or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________to___________
__________________
Commission file number 0-17272
__________________
TECHNE CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1427402
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
614 MCKINLEY PLACE N.E. (612) 379-8854
MINNEAPOLIS, MN 55413 (Registrant's telephone number,
(Address of principal (Zip Code) including area code)
executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
At November 2, 1998, 20,043,189 shares of the Company's Common Stock (par
value $.01) were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
9/30/98 6/30/98
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10,625,749 $ 27,372,345
Short-term investments 10,998,142 15,321,935
Accounts receivable (net) 12,989,870 10,001,937
Inventories 9,209,031 3,810,600
Deferred income taxes 1,675,000 1,583,000
Other current assets 588,846 431,187
------------ ------------
Total current assets 46,086,638 58,521,004
Deferred income taxes 2,092,000 1,798,000
Fixed assets (net) 12,526,629 11,687,300
Intangible assets (net) 52,726,412 293,854
Other assets 509,601 618,723
------------ ------------
TOTAL ASSETS $113,941,280 $ 72,918,881
============ ============
LIABILITIES & EQUITY
Trade accounts payable $ 3,702,276 $ 2,203,130
Salary and related accruals 1,289,856 2,005,428
Other payables 4,872,710 1,039,334
Income taxes payable 3,283,348 2,185,122
------------ ------------
Total current liabilities 13,148,190 7,433,014
Deferred rent 1,732,200 1,655,100
Royalty payable 15,228,000 -
Common stock, par value $.01 per
share; authorized 50,000,000;
issued and outstanding 20,056,089
and 19,049,983, respectively 200,561 190,500
Additional paid-in capital 31,454,844 13,714,445
Retained earnings 51,557,595 49,446,319
Accumulated foreign currency
translation adjustments 619,890 479,503
------------ ------------
Total stockholders' equity 83,832,890 63,830,767
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $113,941,280 $ 72,918,881
============ ============
</TABLE>
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------
9/30/98 9/30/97
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<S> <C> <C>
Sales $21,335,192 $15,537,143
Cost of sales 6,614,877 4,545,906
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Gross margin 14,720,315 10,991,237
Operating expenses (income):
Selling, general and administrative 4,431,095 4,003,404
Research and development 2,752,125 2,465,848
Amortization expense 2,394,662 42,471
Interest income (212,411) (243,868)
----------- -----------
9,365,471 6,267,855
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Earnings before income taxes 5,354,844 4,723,382
Income taxes 1,830,000 1,461,000
----------- -----------
NET EARNINGS $ 3,524,844 $ 3,262,382
=========== ===========
BASIC EARNINGS PER SHARE $ 0.18 $ 0.17
=========== ===========
DILUTED EARNINGS PER SHARE $ 0.17 $ 0.17
=========== ===========
</TABLE>
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
9/30/98 9/30/97
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,524,844 $ 3,262,382
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 2,929,880 568,311
Deferred income taxes (370,000) (232,000)
Deferred rent 77,100 178,200
Tax benefit from exercise of options 135,000 11,000
Other 259,523 130,135
Change in current assets and current
liabilities, net of acquisition:
(Increase) decrease in:
Accounts receivable (2,903,205) (37,671)
Inventories 317,639 (69,720)
Other current assets (153,741) (260,492)
Increase (decrease) in:
Trade account/other payables 1,575,186 526,582
Salary and related accruals (718,813) (360,692)
Income taxes payable 1,073,792 1,587,089
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,747,205 5,303,124
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition (Note B) (24,967,220) -
Purchase of short-term investments (3,020,000) (7,245,876)
Proceeds from sale of short-term
investments 7,343,793 3,731,451
Additions to fixed assets (1,042,242) (1,030,222)
Increase in other long term assets (150,000) -
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (21,835,669) (4,544,647)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 616,400 5,288
Repurchase of common stock (1,414,508) (280,000)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (798,108) (274,712)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 139,976 (16,483)
----------- -----------
NET CHANGE IN CASH AND EQUIVALENTS (16,746,596) 467,282
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 27,372,345 8,598,367
----------- -----------
CASH AND EQUIVALENTS AT END OF PERIOD $10,625,749 $ 9,065,649
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</TABLE>
See notes to unaudited Consolidated Financial Statements.
TECHNE CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. BASIS OF PRESENTATION:
The unaudited Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles and with
instructions to Form 10-Q and Article 10 of Regulation S-X. The
accompanying unaudited Consolidated Financial Statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
presentation of the results for the interim periods presented. All such
adjustments are of a normal recurring nature.
A summary of significant accounting policies followed by the Company is
detailed in the Annual Report to Shareholders for Fiscal 1998. The Company
follows these policies in preparation of the interim Financial Statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
Consolidated Financial Statements be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto for the fiscal year
ended June 30, 1998 included in the Company's Annual Report to Shareholders
for Fiscal 1998.
Certain Consolidated Balance Sheet captions appearing in this interim
report are as follows:
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<CAPTION>
9/30/98 6/30/98
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<S> <C> <C>
ACCOUNTS RECEIVABLE
Accounts receivable $13,262,870 $10,270,937
Less reserve for bad debts 273,000 269,000
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NET ACCOUNTS RECEIVABLE $12,989,870 $10,001,937
=========== ===========
INVENTORIES
Raw materials $ 2,057,986 $ 2,125,365
Supplies 128,083 145,539
Finished goods 7,022,962 1,539,696
----------- -----------
TOTAL INVENTORIES $ 9,209,031 $ 3,810,600
=========== ===========
FIXED ASSETS
Laboratory equipment $10,468,510 $ 9,944,951
Office equipment 3,111,912 2,923,110
Leasehold improvements 10,929,763 10,243,142
----------- -----------
24,510,185 23,111,203
Less accumulated depreciation
and amortization 11,983,556 11,423,903
----------- -----------
NET FIXED ASSETS $12,526,629 $11,687,300
=========== ===========
INTANGIBLE ASSETS
Customer list $18,010,000 $ 1,010,000
Technology licensing agreements 500,000 500,000
Goodwill 39,052,767 1,225,547
----------- -----------
57,562,767 2,735,547
Less accumulated amortization 4,836,355 2,441,693
----------- -----------
NET INTANGIBLE ASSETS $52,726,412 $ 293,854
=========== ===========
</TABLE>
Effective July 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
requires disclosures of comprehensive income and its components in the
Company's financial statements. The Company's total comprehensive income
for the quarters ended September 30, 1998 and 1997 was $3,665,231 and
$3,140,097, respectively. The Company's comprehensive income consists of
net income, unrealized holding gains and losses on securities and foreign
currency translation adjustments.
During fiscal 1999, the Company will adopt Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which requires the disclosure of financial and
descriptive information about the reportable operating segments of the
Company.
B. ACQUISITION:
On July 1, 1998, the Company, through its Research and Diagnostics Systems,
Inc. subsidiary, acquired the research products business of Genzyme
Corporation. Assets acquired were as follows:
Inventories $ 5,660,000
Equipment 320,000
Customer list 17,000,000
-----------
$22,980,000
===========
The purchase price paid and payable for the acquisition is as follows:
$24.76 million cash, 987,206 shares of Techne common stock valued at $17
million and $18.84 million of royalties (present value of an estimated
$23.7 million payable over five years) on the Company's biotechnology
sales. The excess of the consideration (including acquisition costs) over
the fair market value of the assets acquired has been recorded as goodwill
and is being amortized on a straight-line basis over six years. The
customer list is being amortized on a declining basis over an estimated
economic life of five years.
Pro forma financial information for the quarter ended September 30, 1997,
presented as if the acquisition had occurred on July 1, 1997, are as
follows (in 000's except earnings per share data):
Sales $19,058
Net earnings 1,097
Basic earnings per share .06
Diluted earnings per share .05
C. EARNINGS PER SHARE:
Effective for the quarter ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share". The September 30, 1997 earnings per share amounts have been
restated to conform to the new standard.
Shares used in the earnings per share computations are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
9/30/98 9/30/97
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<S> <C> <C>
Weighted average common shares
outstanding--basic 20,115,898 18,868,132
Dilutive effect of stock options and warrants 427,706 643,102
---------- ----------
Average common shares outstanding--diluted 20,543,604 19,511,234
========== ==========
</TABLE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations Quarter Ended September 30, 1998
vs. Quarter Ended September 30, 1997
Techne Corporation (Techne) has two operating subsidiaries: Research and
Diagnostic Systems, Inc. (R&D Systems) located in Minneapolis, Minnesota
and R&D Systems Europe Ltd. (R&D Europe) located in Abingdon, England. R&D
Systems has two divisions: Biotechnology and Hematology. The Biotechnology
Division manufactures purified cytokines (proteins), antibodies and assay kits
which are sold primarily to biomedical researchers and clinical research
laboratories. The Hematology Division develops and manufactures whole blood
hematology controls and calibrators which are sold to hospital and clinical
laboratories to check the performance of their hematology instruments to
assure the accuracy of hematology test results. R&D Europe sells R&D Systems'
biotechnology products in Europe, both directly and through a sales subsidiary
in Germany. The Company has a foreign sales corporation, Techne Export Inc.
In November 1997, January 1998 and July 1998, Techne purchased $1 million of
preferred stock of ChemoCentryx, Inc. (CCX), respectively, representing
approximately 37% of issued and outstanding voting shares. In addition, Techne
is obligated to purchase up to an additional $2 million of preferred stock
over the next year upon CCX's achievement of certain milestones. After
purchase of the additional preferred shares, Techne will own approximately 49%
of the issued and outstanding voting shares (assuming no investment by other
parties). Techne has consolidated CCX into its financial statements due to
the limited amount of cash consideration provided by the holders of the
common shares of CCX. CCX is a new technology and drug development company
working in the area of chemokines. Chemokines are cytokines which regulate
the trafficking patterns of leukocytes, the effector cells of the human immune
system. In conjunction with the equity investment and joint research efforts,
Techne obtains exclusive worldwide research and diagnostic marketing rights to
chemokine proteins, antibodies and receptors discovered or developed by CCX or
R&D Systems.
Net Sales
Net sales for the quarter ended September 30, 1998 were $21,335,192, an
increase of $5,798,049 (37%) from the quarter ended September 30, 1997.
R&D Systems sales increased $4,364,250 (37%) and R&D Europe sales increased
$1,433,799 (38%).
The increase in sales was due, in part, to the acquisition of Genzyme
Corporation's research products business on July 1, 1998. Sales of these
products were $2,463,028 for the quarter ended September 30, 1998. In
addition, the increase in consolidated sales for the quarter was due to
increased sales of R&D Systems' cytokines, antibodies and immunoassay kits
to both R&D Systems customers and to former Genzyme customers as they are
converted from Genzyme products to R&D Systems products.
Gross Margins
Gross margins, as a percentage of sales, decreased slightly from the prior
year. Margins for the first quarter of fiscal 1999 were 69.0% compared to
70.7% for the same quarter in fiscal 1998.
R&D Europe gross margins decreased from 53.0% to 46.9% for the quarter as a
result of the transfer of all manufacturing activities to R&D Systems during
fiscal 1998 and changes in product mix. Hematology Division gross margins
decreased from 48.5% to 46.0% for the quarter as a result of changes in
product mix. Biotechnology Division gross margins decreased from 73.1% to
69.8% for the quarter as a result of changes in product mix and lower gross
profit levels on the inventory acquired from Genzyme.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $427,691 (11%) from
the first quarter of fiscal 1998. The majority of the increase for the
quarter was due to additional sales personnel added in the U.S. and Europe
as a result of the Genzyme acquisition.
Research and Development Expenses
Research and development expenses increased $286,277 (12%) for the quarter
ended September 30, 1998. The increase related to products currently under
development, many of which have been or will be released in fiscal 1999.
Products currently under development include both biotechnology and
hematology products.
Amortization Expense
Amortization expense increased $2,352,191 as a result of the write off of
the customer list and goodwill associated with the Genzyme acquisition.
Net Earnings
Earnings before income taxes increased $631,462 from $4,723,382 in the
first quarter of fiscal 1998 to $5,354,844 in the first quarter of fiscal 1999.
The increase in earnings before income taxes was due mainly to an increase in
Biotechnology Division earnings of $854,103 and an increase in R&D Europe's
earnings before taxes of $59,882. These increases were offset by a slight
decease in Hematology Division earnings and a net loss by CCX in the first
quarter of fiscal 1999.
Income taxes for the quarter ended September 30, 1998 were provided at a
rate of approximately 34% of consolidated pretax earnings compared to 31%
for the prior year. The increase in the tax rate is due to the net loss by
CCX in the first quarter of fiscal 1999 for which no tax benefit has been
provided. U.S. federal taxes have been reduced by the credit for research
and development expenditures and the benefit of the foreign sales corporation.
Foreign income taxes have been provided at rates which approximate the tax
rates in the United Kingdom and Germany.
Liquidity and Capital Resources
At September 30, 1998, cash and cash equivalents and short-term investments
were $21,623,891 compared to $42,694,280 at June 30, 1998. The decrease
from June 30, 1998 was due to the cash outlay for the Genzyme acquisition.
The Company believes it can meet its future cash, working capital and capital
addition requirements through currently available funds, cash generated
from operations and maturities of short-term investments. The Company has
an unsecured line of credit of $750,000. The interest rate on the line of
credit is at prime. There were no borrowings on the line in the prior or
current fiscal years.
Cash Flows From Operating Activities
The Company generated cash of $5,747,205 from operating activities in the
first three months of fiscal 1999 compared to $5,303,124 for the first three
months of fiscal 1998. The increase was mainly the result of increased net
earnings and increased current liabilities.
Cash Flows From Investing Activities
On July 1, 1998 the Company acquired the research products business of
Genzyme Corporation for $24.76 million cash, $17 million common stock and
royalties on the Company's biotechnology sales for five years. Acquisition
costs through September 30, 1998 were $207,220. Cash and cash equivalents
at June 30, 1998 and maturities of short-term investments were used to
finance the cash portion of the acquisition.
During the three months ended September 30, 1998 short-term investments
decreased by $4,323,793. During the three months ended September 30, 1997,
the Company increased short-term investments by $3,514,425. The Company's
investment policy is to place excess cash in short-term tax-exempt bonds.
The objective of this policy is to obtain the highest possible return with
the lowest risk, while keeping the funds accessible.
Capital additions were $1,042,242 for the first three months of fiscal 1999,
compared to $1,030,222 for the first three months of fiscal 1998. Included
in the fiscal 1999 and 1998 additions were $683,000 and $721,000 for leasehold
improvements related to remodeling of facilities by R&D Systems. The
remaining additions in fiscal 1999 and 1998 were for laboratory and computer
equipment. Total expenditures for capital additions planned for the remainder
of fiscal 1999 are expected to cost approximately $6 million and are expected
to be financed through currently available funds and cash generated from
operating activities.
Cash Flows From Financing Activities
Cash of $616,400 and $5,288 was received during the three months ended
September 30, 1998 and 1997, respectively, for the exercise of options for
143,100 and 1,094 shares of common stock. During the first three months of
fiscal 1998, options for 24,506 shares of common stock were exercised by
the surrender of 7,624 shares of the Company's common stock with a fair
market value of $126,194.
During the first three months of fiscal 1999 and 1998, the Company purchased
and retired 94,000 and 20,000 shares, respectively, of Company common stock
at market values of $1,414,508 and $280,000. The Board of Directors has
authorized the Company, subject to market conditions and share price, to
purchase and retire up to $10 million of its common stock. Through November
2, 1998, 575,600 shares have been purchased at a market value of $6,887,547.
The Company has never paid cash dividends and has no plans to do so in
fiscal 1999.
MARKET RISK
At September 30, 1998, the Company had an investment portfolio of fixed
income securities, excluding those classified as cash and cash equivalents,
of $10,998,142. These securities, like all fixed income instruments, are
subject to interest rate risk and will decline in value if market interest
rates increase. However, the Company has the ability to hold its fixed
income investments until maturity and therefore the Company would not expect
to recognize an adverse impact in income or cash flows.
The Company operates internationally, and thus is subject to potentially
adverse movements in foreign currency rate changes. The Company does not
enter into foreign exchange forward contracts to reduce its exposure to
foreign currency rate changes on intercompany foreign currency denominated
balance sheet positions. Historically, the effect of movements in the
exchange rates have been immaterial to the consolidated operating results
of the Company.
YEAR 2000 AND EURO CURRENCY ISSUES
The Company must take steps to ensure that it is not adversely affected by
Year 2000 software failures which may arise in software applications where
two-year digits are used to define the applicable year. The Company is
conducting a review of all of its computer systems (information technology as
well as embedded systems) to identify those areas that could be affected by
Year 2000 noncompliance. The Company plans to complete the process of
upgrading those systems which may not be Year 2000 compliant by mid 1999 and
does not believe the cost of any such upgrades will be material. The Company
is in the process of developing contingency plans should systems fail. The
Company has also communicated with many of its suppliers and service providers
regarding compliance with Year 2000 requirements. As a result of such
inquiries, no significant deficiencies have been identified. The Company will
continue to monitor these third parties for Year 2000 compliance.
There can be no assurance, however, that there will not be a delay in, or
increased costs associated with, upgrading the Company's computer systems,
which could have a material adverse effect on the operations and financial
position of the Company. In addition, there can be no assurances that the
Company's customers and suppliers will not be adversely affected by their own
Year 2000 issues, which may indirectly adversely affect the Company.
The Company is currently implementing new accounting and operational software
at its European subsidiary which will accommodate the conversion on January 1,
1999 to a common currency, the "euro," by members of the European Union.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
No change.
ITEM 2 - CHANGES IN SECURITIES
On July 1, 1998, the Company issued 987,206 shares of Common Stock,
valued at $17.2203 per share, to Genzyme Corporation ("Genzyme") in
connection with the acquisition of Genzyme Corporation's research
products business. The sale of such stock was deemed to be exempt from
registration under the Securities Act of 1933 by virtue of Section 4(2)
thereof. Genzyme represented its intention to acquire the stock for
investment purposes only and not with a view to the distribution thereof.
In addition, a restrictive legend has been placed on the certificate
representing the shares.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SHAREHOLDERS
(a) The Annual Meeting of the Registrant's shareholders was held on
Thursday, October 22, 1998.
(b) A proposal to set the number of directors at seven was adopted by a
vote of 17,377,823 in favor with 23,411 shares against, 27,328 shares
abstaining and no shares represented by broker nonvotes.
(c) Proxies for the Annual meeting were solicited pursuant to Regulation
14A under the Securities Exchange Act of 1934. There was no
solicitation in opposition to management's nominees as listed in the
proxy statement, and all such nominees were elected, as follows:
Nominee For Withheld
------- --- ---------
Thomas E. Oland 17,397,763 30,799
Roger C. Lucas 17,305,535 123,027
Howard V. O'Connell 17,393,724 34,838
G. Arthur Herbert 17,388,524 40,038
Randolph C. Steer 17,373,124 55,438
Lowell E. Sears 17,390,275 38,287
Christopher S. Henney 16,765,309 663,253
(d) A proposal to approve the 1998 Nonqualified Stock Option Plan was
adopted by a vote of 16,474,038 in favor with 858,298 shares against,
96,226 shares abstaining and no shares represented by broker nonvotes.
ITEM 5 - OTHER INFORMATION
Forward Looking Information and Cautionary Statements: Statements in this
filing, and elsewhere, which look forward in time involve risks and
uncertainties which may affect the actual results of operations. The
following important factors, among others, have affected and, in the future,
could affect the Company's actual results: the level of success in converting
customers and distributors of Genzyme Corporation's research product business
to the Company and selling the Company's broader range of products to the
former Genzyme customers and distributors, the introduction and acceptance of
new biotechnology and hematology products, the levels and particular
directions of research into cytokines by the Company's customers, the impact
of the growing number of producers of cytokine research products and related
price competition, the retention of hematology OEM and proficiency survey
business, the Company's expansion of marketing efforts in Europe, and the
costs and results of research and product development efforts of the Company
and of companies in which the Company has invested or with which it has
formed strategic relationships.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
See exhibit index immediately following signature page.
B. REPORTS ON FORM 8-K
The following reports on Form 8-K were filed by the Registrant for
the quarter ended September 30, 1998:
Form 8-K dated July 1, 1998, reporting under Item 2 the acquisition
of the research products business of Genzyme Corporation.
Form 8-K/A dated July 1, 1998, filed on September 14, 1998,
reporting the required financial information related to the above
acquisition.
SIGNATURE
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.
TECHNE CORPORATION
(Company)
Date: November 13, 1998 Thomas E. Oland
-------------------------------
Thomas E. Oland
President, Chief Executive and
Financial Officer
EXHIBIT INDEX
TO
FORM 10-Q
TECHNE CORPORATION
Exhibit # Description
---------- ------------------
10.1 1998 Nonqualified Stock Option Plan
10.2 Form of Stock Option Agreement for 1998
Nonqualified Stock Option Plan
27 Financial Data Schedule
TECHNE CORPORATION
1998 NONQUALIFIED STOCK OPTION PLAN
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) "Committee" shall mean a Committee of two or more directors who shall
be appointed by and serve at the pleasure of the Board. As long as the
Company's securities are registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, then, to the extent necessary for compliance
with Rule 16b-3, or any successor provision, each of the members of the
Committee shall be a "Non-Employee Director." For purposes of this Section
1(b) "Non-Employee Director" shall have the same meaning as set forth in Rule
16b-3, or any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
(b) The "Company" shall mean Techne Corporation, a Minnesota corporation.
(c) "Fair Market Value" shall mean (i) if such stock is reported by the
Nasdaq National Market or Nasdaq SmallCap Market or is listed upon an
established stock exchange or exchanges, the reported closing price of such
stock by the Nasdaq National Market or Nasdaq SmallCap Market or on such
stock exchange or exchanges on the date the option is granted or, if no
sale of such stock shall have occurred on that date, on the next preceding
day on which there was a sale of stock; (ii) if such stock is not so
reported by the Nasdaq National Market or Nasdaq SmallCap Market or listed
upon an established stock exchange, the average of the closing "bid" and
"asked" prices quoted by the National Quotation Bureau, Inc. (or any
comparable reporting service) on the date the option is granted, or if
there are no quoted "bid" and "asked" prices on such date, on the next
preceding date for which there are such quotes; or (iii) if such stock is
not publicly traded as of the date the option is granted, the per share
value as determined by the Board, or the Committee, in its sole discretion
by applying principles of valuation with respect to all such options.
(d) The "Internal Revenue Code" is the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Non-Employee Director" shall mean members of the Board who are not
employees of the Company or any subsidiary.
(f) "Option Stock" shall mean Common Stock of the Company (subject to
adjustment as described in Section 13) reserved for options pursuant to
this Plan.
(g) The "Optionee" means an employee, officer, director, consultant,
advisor or such other individual of the Company or any Subsidiary to whom
an option is granted pursuant to this Plan.
(h) "Parent" shall mean any corporation which owns, directly or indirectly
in an unbroken chain, fifty percent (50%) or more of the total voting power
of the Company's outstanding stock.
(i) The "Plan" means the Techne Corporation 1998 Nonqualified Stock Option
Plan, as amended hereafter from time to time, including the form of Option
Agreements as they may be modified by the Board from time to time.
(j) A "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the total voting power of outstanding stock is owned, directly
or indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the retention of competent personnel and
by furnishing incentive to officers, directors, employees, consultants, and
advisors upon whose efforts the success of the Company and its Subsidiaries
will depend to a large degree.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date of approval by the
shareholders of the Company.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the
Company (hereinafter referred to as the "Board") or by a Committee which
may be appointed by the Board from time to time (whether the Board or such
a Committee, referred to herein as the "Administrator"). The Administrator
shall have all of the powers vested in it under the provisions of the Plan,
including but not limited to exclusive authority (where applicable and
within the limitations described herein) to determine, in its sole discretion,
whether an option shall be granted, the individuals to whom, and the time or
times at which, options shall be granted, the number of shares subject to each
option and the option price and terms and conditions of each option. The
Administrator shall have full power and authority to administer and interpret
the Plan, to make and amend rules, regulations and guidelines for
administering the Plan, to prescribe the form and conditions of the respective
stock option agreements (which may vary from Optionee to Optionee) evidencing
each option and to make all other determinations necessary or advisable for
the administration of the Plan. The Administrator's interpretation of the
Plan, and all actions taken and determinations made by the Administrator
pursuant to the power vested in it hereunder, shall be conclusive and binding
on all parties concerned. Notwithstanding anything in the Plan to the
contrary, an Optionee shall not, in any calendar year, be granted options
which, in total, provide for the purchase of more than 200,000 shares of
Option Stock.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the
administration of the Plan. In the event the Board appoints a Committee as
provided hereunder, any action of the Committee with respect to the ad
ministration of the Plan shall be taken pursuant to a majority vote of the
Committee members or pursuant to the written resolution of all Committee
members.
SECTION 5.
PARTICIPANTS
The Administrator shall from time to time, at its discretion and
without approval of the shareholders, designate those employees, officers,
directors, consultants, and advisors of the Company or of any Subsidiary to
whom options shall be granted under this Plan; provided, however, that
consultants or advisors shall not be eligible to receive stock options
hereunder unless such consultant or advisor renders bona fide services to
the Company or Subsidiary and such services are not in connection with the
offer or sale of securities in a capital raising transaction. The
Administrator may grant additional options under this Plan to some or all
participants then holding options or may grant options solely or partially
to new participants. In designating participants, the Administrator shall
also determine the number of shares to be optioned to each such participant.
The Board may from time to time designate individuals as being ineligible to
participate in the Plan.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized
but unissued shares of Option Stock. Three hundred thousand (300,000)
shares of Option Stock shall be reserved and available for options under
the Plan; provided, however, that the total number of shares of Option
Stock reserved for options under this Plan shall be subject to adjustment
as provided in Section 12 of the Plan. In the event that any outstanding
option under the Plan for any reason expires or is terminated prior to the
exercise thereof, the shares of Option Stock allocable to the unexercised
portion of such option shall continue to be reserved for options under the
Plan and may be optioned hereunder.
SECTION 7.
DURATION OF PLAN
The Plan shall have no fixed termination date. Options may be granted
pursuant to the Plan from time to time after the effective date of the Plan
and until the Plan is discontinued or terminated by the Board. Any option
granted prior to the termination of the Plan by the Board shall remain in
full force and effect until the expiration of the option as specified in
the written stock option agreement and shall remain subject to the terms
and conditions of this Plan.
SECTION 8.
PAYMENT
Optionees may pay for shares upon exercise of options granted pursuant
to this Plan with cash, personal check, certified check or, if approved by
the Administrator in its sole discretion, Common Stock of the Company
valued at such Stock's then Fair Market Value, or such other form of
payment as may be authorized by the Administrator. The Administrator may,
in its sole discretion, limit the forms of payment available to the Optionee
and may exercise such discretion any time prior to the termination of the
option granted to the Optionee or upon any exercise of the option by the
Optionee.
With respect to payment in the form of Common Stock of the Company,
the Administrator may require advance approval or adopt such rules as it
deems necessary to assure compliance with Rule 16b-3, or any successor
provision of the General Rules and Regulations under the Securities Exchange
Act of 1934 and to achieve accounting treatment for the financial statements
of the Company most advantageous to it.
SECTION 9.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to this Plan shall be
evidenced by a written Option Agreement. The Option Agreement shall be in
such form as may be approved from time to time by the Administrator and may
vary from Optionee to Optionee; provided, however, that each Optionee and
each Option Agreement shall comply with and be subject to the following
terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement shall
state the total number of shares covered by the nonqualified stock
option. Unless otherwise determined by the Administrator, the option
price per share shall be one hundred percent (100%) of the Fair Market
Value of the Common Stock per share on the date the Administrator
grants the option.
(b) Term and Exercisability of Nonqualified Stock Option. Except as
provided in Section 10, the term during which any nonqualified stock
option granted under the Plan may be exercised shall be established in
each case by the Administrator. The Option Agreement shall state when
the nonqualified stock option becomes exercisable and shall also state
the maximum term during which the option may be exercised. In the
event a nonqualified stock option is exercisable immediately, the
manner of exercise of the option in the event it is not exercised in
full immediately shall be specified in the stock option agreement.
The Administrator may accelerate the exercisability of any nonqualified
stock option granted hereunder which is not immediately exercisable as of
the date of grant.
(c) Withholding. The Company or its Subsidiary shall be entitled to
withhold and deduct from future wages of the Optionee all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Optionee's exercise of a
nonqualified stock option. In the event the Optionee is required
under the Option Agreement to pay the Company, or make arrangements
satisfactory to the Company respecting payment of, such withholding
and employment-related taxes, the Administrator may, in its discretion
and pursuant to such rules as it may adopt, permit the Optionee to
satisfy such obligation, in whole or in part, by electing to have the
Company withhold shares of Common Stock otherwise issuable to the
Optionee as a result of the option's exercise equal to the amount
required to be withheld for tax purposes. Any stock elected to be
withheld shall be valued at its Fair Market Value, as of the date the
amount of tax to be withheld is determined under applicable tax law.
The Optionee's election to have shares withheld for this purpose shall
be made on or before the date the option is exercised or, if later,
the date that the amount of tax to be withheld is determined under
applicable tax law. Such election shall be approved by the Administrator
and otherwise comply with such rules as the Administrator may adopt to
assure compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this
Section 10 shall contain such other provisions as the Administrator
shall deem advisable.
SECTION 10.
GRANTING OF AUTOMATIC OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Upon Election or Re-election to or Continuation on the Board. Each
Non-Employee Director who, on and after the date this Plan is approved by
the Company's shareholders, is elected or re-elected as a director of the
Company or, in the event the Company adopts staggered terms for its
directors, whose term of office continues after a meeting of shareholders
at which directors are elected shall, as of the date of such re-election or
shareholder meeting, automatically be granted an option to purchase 10,000
shares of the Common Stock at an option price per share equal to 100% of
the Fair Market Value of the Common Stock on the date of such election, re-
election or shareholder meeting; provided however, that if such Non-
Employee Director is elected other than by shareholders at an annual
meeting, the number of shares subject to the option shall be determined by
multiplying 10,000 by a fraction, the numerator of which is the number of
months until the next regular annual meeting of shareholders and the
denominator of which is 12. Options granted pursuant to this subsection
(a) shall be immediately exercisable in full.
(b) General. Options granted pursuant to this Section 10 shall be
immediately exercisable in full and shall terminate, subject to the earlier
termination provisions of this Section, 10 years from date of grant. If a
Non-Employee Director's membership on the Board and service to the Company
as an employee, advisor or consultant terminates for any reason other than
death or disability, the options shall terminate on the earlier of (i) the
close of business on the date twelve months following the date of termination
or (ii) the 10 year anniversary of the date of grant. If a Non-Employee
Director dies (i) while a member of the Board or serving as an employee,
advisor or consultant, or (ii) within twelve months following the date of
termination of membership on the Board, the options shall terminate on the
earlier of (i) the close of business on the twelve-month anniversary of the
date of death or (ii) the 10 year anniversary of the date of grant. If a Non-
Employee Director terminates his or her membership on the Board and service to
the Company as an employee, advisor or consultant by reason of disability,
the options shall expire on the earlier of (i) the close of business on the
twelve-month anniversary of the date of termination, or (ii) the 10 year
anniversary of the date of grant. In the event of a change in the accounting
treatment of options to be granted automatically pursuant to this Section 10,
the Board in its discretion may modify or amend the terms of such options
provided that no such modification or amendment shall change the terms of
outstanding options or materially increase the benefits accruing to recipients
of future automatic grants.
SECTION 11.
TRANSFER OF OPTION
The Administrator may, in its sole discretion, permit the Optionee to
transfer any or all nonqualified stock options to any member of the
Optionee's "immediate family" as such term is defined in Rule 16a-1(e)
promulgated under the Securities Exchange Act of 1934, or any successor
provision, or to one or more trusts whose beneficiaries are members of such
Optionee's "immediate family" or partnerships in which such family members
are the only partners; provided, however, that the Optionee receives no
consideration for the transfer and such transferred nonqualified stock
option shall continue to be subject to the same terms and conditions as
were applicable to such nonqualified stock option immediately prior to its
transfer.
SECTION 12.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number
of shares of Common Stock effected without receipt of consideration by the
Company, the number of shares of Option Stock reserved under Section 6
hereof, the number of shares of Option Stock covered by each outstanding
option and the price per share thereof, and the number of shares subject to
automatic grant to Non-Employee Directors pursuant to Section 10 above
shall automatically be adjusted to reflect such change, provided that the
Board in its discretion may in such event decrease but not increase the
number of shares subject to the automatic grants of Section 10 above made
subsequent to the date of such event. Additional shares which may be
credited pursuant to such adjustment shall be subject to the same
restrictions as are applicable to the shares with respect to which the
adjustment relates.
Unless otherwise provided in the stock option agreement, in the event
of an acquisition of the Company through the sale of substantially all of
the Company's assets and the consequent discontinuance of its business or
through a merger, consolidation, exchange, reorganization, reclassification,
extraordinary dividend, divestiture or liquidation of the Company
(collectively referred to as a "transaction"), all outstanding options shall
become immediately exercisable, whether or not such options had become
exercisable prior to the transaction; provided, however, that if the acquiring
party seeks to have the transaction accounted for on a "pooling of interests"
basis and, in the opinion of the Company's independent certified public
accountants, accelerating the exercisability of such options would preclude a
pooling of interests under generally accepted accounting principles, the
exercisability of such options shall not accelerate. In addition to the
foregoing, in the event of such a transaction, the Board may provide for one
or more of the following:
(a) the complete termination of this Plan and cancellation of
outstanding options not exercised prior to a date specified by the
Board (which date shall give Optionees a reasonable period of time in
which to exercise the options prior to the effectiveness of such
transaction);
(b) that Optionees holding outstanding incentive or nonqualified
options shall receive, with respect to each share of Option Stock
subject to such options, as of the effective date of any such
transaction, cash in an amount equal to the excess of the Fair Market
Value of such Option Stock on the date immediately preceding the
effective date of such transaction over the option price per share of
such options; provided that the Board may, in lieu of such cash
payment, distribute to such Optionees shares of stock of the Company
or shares of stock of any corporation succeeding the Company by reason
of such transaction, such shares having a value equal to the cash
payment herein; or
(c) the continuance of the Plan with respect to the exercise of
options which were outstanding as of the date of adoption by the Board
of such plan for such transaction and provide to Optionees holding
such options the right to exercise their respective options as to an
equivalent number of shares of stock of the corporation succeeding the
Company by reason of such transaction.
The Board may restrict the rights of or the applicability of this Section
12 to the extent necessary to comply with Section 16(b) of the Securities
Exchange Act of 1934, the Internal Revenue Code or any other applicable law
or regulation. The grant of an option pursuant to the Plan shall not limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate,
sell or transfer all or any part of its business or assets.
SECTION 13.
SECURITIES LAW COMPLIANCE
No shares of Common Stock shall be issued pursuant to the Plan unless
and until there has been compliance, in the opinion of Company's counsel,
with all applicable legal requirements, including without limitation, those
relating to securities laws and stock exchange listing requirements. As a
condition to the issuance of Option Stock to Optionee, the Administrator
may require Optionee to (i) represent that the shares of Option Stock are
being acquired for investment and not resale and to make such other
representations as the Administrator shall deem necessary or appropriate to
qualify the issuance of the shares as exempt from the Securities Act of
1933 and any other applicable securities laws, and (ii) represent that
Optionee shall not dispose of the shares of Option Stock in violation of
the Securities Act of 1933 or any other applicable securities laws.
As a further condition to the grant of any incentive or nonqualified
stock option or the issuance of Option Stock to Optionee, Optionee agrees
to the following:
(a) In the event the Company advises Optionee that it plans an
underwritten public offering of its Common Stock in compliance with
the Securities Act of 1933, as amended, and the underwriter(s) seek to
impose restrictions under which certain shareholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of
part or all of their stock purchase rights of the underlying Common
Stock, Optionee will not, for a period not to exceed 180 days from the
prospectus, sell or contract to sell or grant an option to buy or
otherwise dispose of any incentive or nonqualified stock option
granted to Optionee pursuant to the Plan or any of the underlying
shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).
(b) In the event of a transaction (as defined in Section 13 of the
Plan) which is treated as a "pooling of interests" under generally
accepted accounting principles, Optionee will comply with Rule 145 of
the Securities Act of 1933 and any other restrictions imposed under
other applicable legal or accounting principles if Optionee is an
"affiliate" (as defined in such applicable legal and accounting
principles) at the time of the transaction, and Optionee will execute
any documents necessary to ensure compliance with such rules.
The Company reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted pursuant to the Plan
to assure compliance with this Section 13.
SECTION 14.
RIGHTS AS A SHAREHOLDER
An Optionee (or the Optionee's successor or successors) shall have no
rights as a shareholder with respect to any shares covered by an option
until the date of the issuance of a stock certificate evidencing such shares.
No adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property), distributions or other rights for
which the record date is prior to the date such stock certificate is actually
issued (except as otherwise provided in Section 12 of the Plan).
SECTION 15.
AMENDMENT OF THE PLAN
The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided,
however, that no such revision or amendment, except as is authorized in
Section 12, shall impair the terms and conditions of any option which is
outstanding on the date of such revision or amendment to the material
detriment of the Optionee without the consent of the Optionee. Notwith
standing the foregoing, no such revision or amendment shall (i) materially
increase the number of shares subject to the Plan except as provided in
Section 12 hereof, (ii) change the designation of the class of employees
eligible to receive options, (iii) decrease the price at which options may
be granted, or (iv) materially increase the benefits accruing to Optionees
under the Plan without the approval of the shareholders of the Company if
such approval is required for compliance with the requirements of any
applicable law or regulation.
SECTION 16.
NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the Optionee
to exercise such option. Further, the granting of an option hereunder shall
not impose upon the Company or any Subsidiary any obligation to retain the
Optionee as an employee, officer, director, consultant or advisor for any
period.
TECHNE CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made this ____ day of _______, ____, by and between
Techne Corporation, a Minnesota corporation (the "Company"), and
________________ (the "Optionee");
WITNESSETH
WHEREAS, the Optionee on the date hereof is an employee, officer or
director of or consultant to the Company or a Subsidiary of the Company;
and
WHEREAS, to induce the Optionee to further the Optionee's efforts in
its behalf, the Company desires to grant to the Optionee an option to
purchase shares of its Common Stock; and
WHEREAS, the Company's Board of Directors and shareholders have
adopted a stock option plan providing for the grant of nonqualified stock
options known as the "Techne Corporation 1998 Nonqualified Stock Option
Plan" (hereinafter referred to as the "Plan"); and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee, on
the date of this Agreement, the option to purchase ______ shares of Common
Stock of the Company (the "Option Stock") subject to the provisions of
Paragraph 3 hereof and to the other terms and conditions herein contained,
and subject only to adjustment in such number of shares as provided in
Section 12 of the Plan.
2. Option Price. During the term of this option, the purchase price
for the shares of Option Stock granted herein is $______ per share, subject
only to adjustment of such price as provided in Section 12 of the Plan.
3. Term of Option. The term during which this option may be
exercised expires at the close of business on ______ __, ____, unless
terminated earlier under the provisions of paragraphs 10, 11 or 12 below.
This option shall be immediately exercisable.
4. Transfer of Option. The Company, in its sole discretion, may
permit the Optionee to transfer any or all of this Option to any member of
the Optionee's "immediate family" as such term is defined in Rule 16a-1(e)
under the Securities Exchange Act of 1934, or any successor provision, or
to one or more trusts whose beneficiaries are members of such Optionee's
"immediate family" or partnerships in which such family members are the
only partners; provided, however, that the Optionee receives no
consideration for such transfer and that this Option shall continue to be
subject to the same terms and conditions as were applicable to such Option
immediately prior to its transfer.
5. Manner of Exercise of Option. This option is to be exercised by
the Optionee (or by the Optionee's successor or successors) by giving
written notice to the Company of an election to exercise such option. Such
notice shall specify the number of shares to be purchased hereunder and
shall specify a date (not more than 30 calendar days and not less than 10
calendar days from the date of delivery of the notice to the Company) on
which the Optionee shall deliver payment of the full purchase price for the
shares being purchased. Such notice shall be delivered to the Company at
its principal place of business. An option shall be considered exercised
at the time the Company receives such notice. As soon as practicable
following receipt of such notice and subject to the provisions of Paragraph
9 below, the Company shall, against payment by the Optionee of the required
purchase price, deliver to the Optionee certificates for the shares so
purchased. Payment for shares of Option Stock may be made in the form of
cash, certified check, or, if authorized by the Company, in Common Stock of
the Company. Any stock so tendered as part of such payment shall be valued
at its then "fair market value" as provided in the Plan.
6. Rights as a Shareholder. The Optionee or a transferee of this
option shall have no rights as a shareholder with respect to any shares
covered by this option until the date of the issuance of a stock
certificate for such shares, except as provided in Section 12 of the Plan.
No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other
rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 12 of the Plan.
7. Stock Option Plan. The option evidenced by this Agreement is
granted pursuant to the Plan, a copy of which Plan is attached hereto or
has been made available to the Optionee and is hereby made a part of this
Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. The Plan governs this option and the
Optionee, and in the event of any question as to the construction of this
Agreement or of a conflict between the Plan and this Agreement, the Plan
shall govern, except as the Plan otherwise provides.
8. Withholding Taxes. In order to permit the Company to receive a
tax deduction in connection with the exercise of this option, the Optionee
agrees that as a condition to any exercise of this option, the Optionee
will also pay to the Company, or make arrangements satisfactory to the
Company regarding payment of, any federal, state, local or other taxes
required by law to be withheld with respect to the option's exercise.
9. Investment Purpose. Unless a Registration Statement under the
Securities Act of 1933 is in effect at the time, the Company requires as a
condition to the grant and exercise of this option that any stock acquired
pursuant to this option be acquired for investment. In this regard, if
requested by the Company, the Optionee, prior to the acquisition of any
shares pursuant to this option, shall execute an investment letter to the
effect that the Optionee is acquiring shares pursuant to the option for
investment purposes only and not with the intention of making any
distribution of such shares and will not dispose of the shares in violation
of the applicable federal and state securities laws.
10. Termination of Relationship with the Company. If the Optionee
ceases to be an employee, consultant, advisor or director of the Company or
any Subsidiary for any reason other than because of death or disability (as
described below) or because of the sale, merger, or liquidation of the
Company (which is covered by the provisions of Section 12 of the Plan),
this option shall terminate (notwithstanding Paragraph 3 of this Agreement)
on the earlier of (i) the close of business on the twelve-month anniversary
date of such termination of relationship or directorship and (ii) this
option's originally stated expiration date. In such period following such
termination of relationship or directorship, this option shall be
exercisable as provided above only to the extent the option was exercisable
on the date of termination of relationship or directorship but had not
previously been exercised.
11. Death of Optionee. If the Optionee dies (i) while an employee,
consultant, advisor or director of the Company or any Subsidiary, or (ii)
within a period of twelve months after his termination of relationship or
directorship with the Company or any Subsidiary as provided in Paragraph
10, this option shall terminate (notwithstanding Paragraph 3 of this
Agreement) on the earlier of (i) the close of business on the twelve-month
anniversary date of the Optionee's death, and (ii) this option's originally
stated expiration date. In such period following the Optionee's death,
this option may be exercised only by the person or persons to whom the
Optionee's rights under this option shall have passed by the Optionee's
will or by the laws of descent and distribution, and only to the extent the
option was exercisable on the date of death but had not previously been
exercised.
12. Termination of Relationship or Directorship by Reason of
Disability. If the Optionee ceases to be an employee, consultant, advisor
or director of the Company or any Subsidiary before the original stated
expiration of this option and such termination is due to permanent and
total disability, this option shall be exercisable only to the extent it
was exercisable on the date of such termination until the close of business
on the twelve-month anniversary of such termination date or until the
original stated termination date of the option, whichever is earlier. For
purposes of this paragraph, a person is permanently and totally disabled if
he is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
13. Recapitalizations, Sales, Mergers, Exchanges, Consolidations,
Liquidation. In the event of a stock dividend or stock split, the number
of shares of Option Stock and option exercise price shall be adjusted as
provided in Section 12 of the Plan. Similarly, in the event of a sale,
merger, exchange, consolidation or liquidation of the Company, this option
shall be adjusted as provided in Section 12 of the Plan.
14. Scope of Agreement This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and the Optionee and
any successor or successors of the Optionee permitted by Paragraph 4 above.
15. Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement
of any such controversy. If, notwithstanding, such dispute cannot be
resolved, such dispute shall be settled by binding arbitration. Judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator shall be a retired state or
federal judge or an attorney who has practiced securities or business
litigation for at least 10 years. If the parties cannot agree on an
arbitrator within 20 days, any party may request that the chief judge of
the District Court for Hennepin County, Minnesota, select an arbitrator.
Arbitration will be conducted pursuant to the provisions of this Agreement,
and the commercial arbitration rules of the American Arbitration
Association, unless such rules are inconsistent with the provisions of this
Agreement, but without submission of the dispute to such Association.
Limited civil discovery shall be permitted for the production of documents
and taking of depositions. Unresolved discovery disputes may be brought to
the attention of the arbitrator who may dispose of such dispute. The
arbitrator shall have the authority to award any remedy or relief that a
court of this state could order or grant; provided, however, that punitive
or exemplary damages shall not be awarded. The arbitrator may award to the
prevailing party, if any, as determined by the arbitrator, all of its costs
and fees, including attorneys' fees. Unless otherwise agreed by the
parties, the place of any arbitration proceedings shall be Hennepin County,
Minnesota.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement in the manner appropriate to each, as of the day and year first
above written.
TECHNE CORPORATION
By __________________________
Thomas E. Oland, President
_____________________________
___________________, Optionee
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