June 10, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: BioWhittaker, Inc. (the "Company")
10-Q for the Quarterly Period Ended April 30, 1997
Dear Ladies and Gentlemen:
For filing with the Securities and Excahnge Commission pursuant to
Instruction G of Form 10-Q is an electronicallyh transmitted copy with exhibits
of the Company's Quarterly Report.
Please acknowledge receipt of this filing.
/s/F. Dudley Staples, Jr.
- -------------------------
F. Dudley Staples, Jr.
Secretary and General Counsel
cc: Mr. Philip L. Rohrer, Jr. (w/encl.)
File
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UNITED STATES
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 period ended April 30, 1997
|_| 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 1-10870
BIOWHITTAKER, INC.
------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-3917176
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8830 Biggs Ford Road, Walkersville, Maryland 21793-0127
- -------------------------------------------- ----------
(Address of Principal Executive Offices) (zip code)
(301) 898-7025
--------------
(Registrant's telephone number, including area code)
Indicate by check 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.
|X| Yes |_| No
The number of shares outstanding of the Registrant's only class of common
stock as of April 30, 1997 was 10,760,866.
- ------------------------------------------------------------------------------
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BIOWHITTAKER, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three Months For the Six Months
-------------------- ------------------
Ended April 30, Ended April 30,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
Sales.............................. $ 14,901 $ 13,559 $ 27,932 $ 25,471
Costs and expenses
Cost of sales ..................... 7,472 7,187 14,142 13,665
Research and development......... 709 649 1,395 1,234
Selling, general and administrative 4,127 3,736 7,823 7,031
------- -------- -------- -------
12,308 11,572 23,360 21,930
------- -------- -------- -------
Income From Operations............. 2,593 1,987 4,572 3,541
Other (income)/expenses
Purchased research and development -- -- -- 4,000
Gain on sale of product line..... -- -- -- (1,322)
Other income .................... (90) (90) (181) (181)
Interest......................... (2) 60 47 159
Loss/(Gain) on foreign currency
transactions ................. 7 (8) 13 28
-------- ------- -------- -------
(85) (38) (121) 2,684
-------- ------- -------- --------
Income Before Income Taxes......... 2,678 2,025 4,693 857
Provision for income taxes......... 978 658 1,726 1,449
------- ------- -------- --------
Net Income/(Loss).................. $ 1,700 $ 1,367 $ 2,967 $ (592)
======== ======== ======== ========
Net Income/(Loss) Per Share........ $ 0.16 $ 0.13 $ 0.27 $ (0.05)
======== ======== ======== ========
Average common and common equivalent
shares outstanding (in thousands) 10,935 10,906 10,920 10,891
======= ======= ======= =======
Unaudited
See Notes to Consolidated Financial Statements
2
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BIOWHITTAKER, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
April 30, October 31,
--------- -----------
1997 1996
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................... $ 2,853 $ 701
Accounts receivable........................... 8,147 8,623
Other receivables............................. 790 1,233
Inventories................................... 22,323 21,114
Prepaid expenses.............................. 2,314 1,687
Deferred income taxes ........................ 126 119
--------- ---------
Total Current Assets......................... 36,553 33,477
--------- ---------
PROPERTY, PLANT AND EQUIPMENT................. 33,919 33,595
Less accumulated depreciation and amortization 17,421 16,808
--------- ---------
16,498 16,787
INTANGIBLE ASSETS............................. 13,766 12,511
Less accumulated amortization................. 2,293 1,698
--------- ---------
11,473 10,813
OTHER ASSETS.................................. 78 78
--------- ---------
$ 64,602 $ 61,155
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable................................. $ -- $ 300
Current portion of long-term debt............. 761 291
Accounts payable.............................. 4,327 3,857
Accrued liabilities........................... 5,402 6,483
Income taxes payable.......................... 1,290 321
---------- ----------
Total Current Liabilities.................... 11,780 11,252
---------- ----------
LONG-TERM DEBT................................ 1,551 1,443
---------- ----------
DEFERRED INCOME TAXES......................... 1,504 1,669
---------- ----------
STOCKHOLDERS' EQUITY
Common stock.................................. 108 108
Additional paid-in capital.................... 26,397 26,389
Retained earnings............................. 23,280 20,313
Translation adjustment........................ (18) (19)
----------- ---------
Total Stockholders' Equity............... 49,767 46,791
---------- ----------
$ 64,602 $ 61,155
========== ==========
April 30, 1997 - Unaudited
See Notes to Consolidated Financial Statements
3
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BIOWHITTAKER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the Six Months
------------------
Ended April 30,
---------------
1997 1996
---- ----
OPERATING ACTIVITIES
Net income/(loss)................................. $ 2,967 $ (592)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization.................. 1,896 1,681
Purchased research and development............. -- 4,000
Gain on sale of product line................... -- (1,322)
Deferred income taxes.......................... (172) (51)
Loss on disposal of property, plant and equipment 16 17
Changes in operating assets and liabilities,
excluding the affect of acquisitions:
Accounts receivable........................ 476 477
Inventories................................ (1,209) 235
Prepaid expenses and other assets.......... (345) (1,605)
Prepaid royalty payment.................... (375) (1,100)
Accounts payable and accrued liabilities... 358 (120)
-------- -------
Net Cash Provided by Operating Activities...... 3,612 1,620
-------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment........ (1,028) (1,534)
Proceeds from sale of product line................ 536 11,914
Purchase of Clonetics, net of cash received....... -- (8,226)
------- -------
Net Cash (Used in)/Provided by Investing
Activities ................................. (492) 2,154
-------- -------
FINANCING ACTIVITIES
Net payments of notes payable..................... (300) (900)
Payment of long-term debt......................... (422) (1,640)
Other............................................. (246) ( 123)
------- -------
Net Cash Used in Financing Activities.......... (968) (2,663)
------- -------
Net Change In Cash and Cash Equivalents........ 2,152 1,111
Cash and Cash Equivalents At Beginning Of Year 701 359
------- -------
Cash and Cash Equivalents At End Of Period .... $ 2,853 $ 1,470
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest..................................... $ 127 $ 257
======= =======
Income taxes................................. $ 929 $ 1,724
======= =======
Notes
1.In connection with the acquisition of all of the common stock of Clonetics
Corporation for $8,733 in cash, the Company acquired assets with a value of
$8,236, assumed liabilities of $3,503 and expensed $4,000 of purchased
research and development.
Unaudited
See Notes to Consolidated Financial Statements
4
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BIOWHITTAKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, Except Per Share Data)
Basis of Presentation: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended
April 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending October 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Annual Report on Form 10-K for the year ended October 31, 1996 for BioWhittaker,
Inc. and its subsidiaries ("the Company" or "BioWhittaker").
Reclassifications: Certain prior years' amounts in the Consolidated
Financial Statements have been reclassified to conform to the 1997 presentation.
Net Income Per Share: Net income per share is computed by dividing net income
by the weighted average number of common and common equivalent shares
outstanding. Common equivalent shares include the dilutive effect of outstanding
stock purchase options and Anasco's right to maintain its aggregate percentage
voting interest in the Company calculated, in each case, under the treasury
stock method. Net income per share determined on a fully diluted basis is not
materially different from the primary net income per share presented.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 Earnings per Share, which is required to be adopted in fiscal year 1998.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of basic and fully diluted earnings per share is not expected to be material.
Inventories: Inventories consisted of the following:
April 30, October 31,
---------- -----------
1997 1996
---- ----
Raw material........................... $ 4,487 $ 4,050
Work in process........................ 7,701 7,323
Finished goods......................... 10,135 9,741
-------- --------
$ 22,323 $ 21,114
========= =========
Acquisitions and Divestitures: On January 17, 1996, the Company acquired 100%
of the stock of Clonetics Corporation ("Clonetics"), a leading supplier of
normal human cells, for $8,733 in cash and the assumption of approximately
$3,500 in liabilities. The operations of Clonetics are included in the
Consolidated Statement of Income from the date of acquisition. The acquisition
was accounted for as a purchase transaction and resulted in the recording of
approximately $2,260 of goodwill, $3,350 of purchased technology and $1,480 of
other intangibles that will be amortized over periods ranging from 7 to 15
years. $4,000 of the purchase price was allocated to purchased research and
development and expensed on the Company's Consolidated Statement of Income for
the three months ended January 31, 1996.
5
<PAGE>
BIOWHITTAKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands, Except Per Share Data)
On December 18, 1995, the Company sold to Carter-Wallace, Inc. ("Carter") its
diagnostic test kit business in the EIA format for $9,000 and on February 2,
1996 sold its related FIAX line for $1,000. Carter also purchased EIA and FIAX
finished goods inventory for approximately $1,400. BioWhittaker agreed to
continue to manufacture EIA and FIAX products for Carter for up to one and five
years, respectively. Under a separate agreement with one of Carter's contract
manufacturers, BioWhittaker agreed to sell certain raw material and work in
process inventory over a two year period.
BioWhittaker also agreed to provide to Carter's customers certain diagnostic
testing instrumentation associated with the EIA and FIAX product lines and to
service the equipment for up to two years. The equipment surcharge typically
paid on each kit purchased by customers will be collected by Carter and
periodically remitted to the Company in the amount of approximately $1,585, the
book value of such diagnostic equipment owned by the Company at closing. As of
April 30, 1997, Carter owed the Company $0.5 million of such book value.
As a result of this transaction, BioWhittaker recorded a pre-tax gain of
$2,261 on its Consolidated Statement of Income for fiscal 1996, which includes
the write-off of approximately $2,200 of unamortized cost of patents and
goodwill. A pre-tax gain of $1,322 was recognized in the Company's Consolidated
Statement of Income for the six months ended April 30, 1996.
The following table presents proforma consolidated results of operations for
the three and six months ended April 30, 1996 and 1997, assuming that the
purchase of Clonetics Corporation and the sale of the diagnostic test kit
business to Carter-Wallace, Inc. had occurred at the beginning of each of the
respective fiscal periods.
For the Three Months For the Six Months
-------------------- ------------------
Ended April 30, Ended April 30,
----------------- -----------------
1996 1997 1996 1997
---- ---- ---- ----
Sales....................... $ 14,901 $ 13,559 $ 27,932 $ 25,300
Net Income.................. $ 1,700 $ 1,367 $ 2,967 $ 2,072
Net Income Per Share........ $ 0.16 $ 0.13 $ 0.27 $ 0.19
The above proforma information is presented for illustrative purposes only
and is not necessarily indicative of the operating results had both the
acquisition of Clonetics Corporation and the sale to CarterWallace, Inc.
occurred as of November 1, 1995 and November 1, 1996.
6
<PAGE>
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Overview
The discussion below contains certain forward-looking statements that
involve risks and uncertainties concerning the future Results of Operations of
BioWhittaker, Inc. Actual results could differ materially from those discussed.
In evaluating such statements, readers should specifically consider risk factors
identified under the caption "Factors Affecting Future Operating Results"
contained in the Company's annual report on Form 10-K for the fiscal year ended
October 31, 1996. Readers should also consider the information contained under
the caption "Recent Developments".
Results of Operations
Revenue Summary
BioWhittaker's sales are derived from three principal product lines; cell
culture products, endotoxin detection products and clinical diagnostic testing
products. Sales for the three month and six month periods ended April 30 are
shown in the following table:
Three Months Six Months
------------ ----------
Ended April 30, Ended April 30,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
(In thousands)
Cell culture products............... $ 9,659 $ 7,837 $ 17,848 $ 13,857
Endotoxin detection products........ 4,013 3,841 7,754 6,709
Clinical diagnostic testing products 1,229 1,881 2,330 4,905
------- ------- -------- -------
Total sales ........................ $ 14,901 $ 13,559 $ 27,932 $ 25,471
======== ======= ======== ========
Comparison of the first six months of fiscal 1997 to the first six months of
fiscal 1996.
Sales for the first six months of fiscal 1997 of $27.9 million exceeded sales
in the comparable fiscal period of fiscal 1996 by $2.5 million, or 9.7%.
Cell culture product sales increased by $4.0 million, or 28.8%, due primarily
to an additional $2.3 million in sales of Clonetics products, higher prices for
certain cell cultures sold to a large customer and to higher sales volume for
cell culture media.
Endotoxin detection product sales increased by $1.0 million, or 15.6%, due to
increased sales volume in all of the Company's test formats. This rate of
increase is higher than expected because of a change in order patterns for the
Company's European distributors. Future growth is expected to resume at an
annual rate that more closely resembles that of the most recently completed
fiscal year.
Clinical diagnostic testing product sales decreased by $2.6 million, or
52.5%, $1.4 million of which was due to the sale of the EIA and FIAX Product
Lines and $0.8 million due to the completion in the third quarter of fiscal 1996
of a contract to produce botulinum antitoxin. In addition, sales for the
Company's allergy detection products declined $0.3 million primarily as a result
of increased competition. The Company expects sales for these products to
continue to decline at similar rates for the foreseeable future.
7
<PAGE>
Gross margins were 49.4% of sales for the first six months of fiscal 1997
compared to 46.4% during the comparable period of fiscal 1996 reflecting
proportionally higher margins associated with Clonetics products, improved
margins due to higher sales prices for certain cell cultures sold to a large
customer and to improved manufacturing efficiencies.
Research and development expenses increased from $1.2 million for the first
six months of fiscal 1996 to $1.4 million for the same period of fiscal 1997
primarily as a result of increased development efforts for Clonetics.
Selling, general and administrative expenses increased from $7.0 million for
the first six months of fiscal 1996 to $7.8 million for the same period of
fiscal 1997 primarily as a result of higher selling expenses for Clonetics
products.
"Other Income" is comprised of payments received from Boehringer Ingelheim
for technology assistance under the terms of its agreement with the Company.
For fiscal 1996,"Purchased research and development" represents the
expensing of in-process research and development acquired as a part of the
purchase of Clonetics. "Gain on the sale of product line" represents the gain,
before the effect of taxes, as a result of the sale of the EIA and FIAX Product
Lines.
"Provision for income taxes" as a percentage of Income Before Income Taxes
was 36.8% for the first six months of fiscal 1997. For the first six months of
fiscal 1996, the "Provision for income taxes" reflects the lack of income tax
benefit associated with the expensing of purchased research and development and
favorable treatment of the gain associated with the sale of the Company's
diagnostic test kit business. Before the effect of these transactions, the
"Provision for income taxes" as a percentage of Income Before Income Taxes was
34.8% and reflects the application of lower tax rates to the income of Clonetics
for the first six months of fiscal 1996.
Comparison of the second quarter of fiscal 1997 to the second quarter of fiscal
1996.
Sales for the second quarter of fiscal 1997 of $14.9 million exceeded sales
in the comparable fiscal period of fiscal 1996 by $1.3 million, or 9.9%.
Cell culture product sales increased by $1.8 million, or 23.3%, due primarily
to a 53.7% increase in sales of Clonetics products to $2.4 million, to higher
prices for certain cell cultures products sold to a large customer and to higher
sales volume for cell culture media.
Endotoxin detection product sales increased by $0.2 million, or 4.5%, due to
increased sales volume. Sales for the second quarter of fiscal 1997 were
impacted by higher then expected sales in the first quarter of fiscal 1997 to
the Company's European distributors as a result in changes in order patterns.
Future growth is expected to resume at an annual rate more closely resembling
that of the most recent fiscal year.
Clinical diagnostic testing product sales decreased by $0.7 million, or
34.6%, primarily due to the completion in fiscal 1996 of a contract to produce
botulinum antitoxin and to lower sales volume for the Company's allergy
detection products, primarily as a result of increased competition. The Company
expects clinical diagnostic testing product sales to continue to reflect the
effect of both of these factors in the foreseeable future.
8
<PAGE>
Gross margins were 49.9% of sales for the second quarter of fiscal 1997
compared to 47.0% during the comparable period of fiscal 1996 reflecting
proportionally higher margins associated with Clonetics products, to improved
margins due to higher sales prices for certain cell cultures sold to a large
customer and to improved manufacturing efficiencies.
Research and development expenses increased from $0.6 million for the second
quarter of fiscal 1996 to $0.7 million for the same period of fiscal 1997,
primarily as a result of increased development efforts for Clonetics.
Selling, general and administrative expenses increased from $3.7 million for
the second quarter of fiscal 1996 to $4.1 million for the same period of fiscal
1997 primarily as a result of higher selling expenses for Clonetics products.
"Other Income" is comprised of payments received from Boehringer Ingelheim
for technology assistance under the terms of its agreement with the Company.
"Provision for income taxes" as a percentage of Income Before Income Taxes
was 36.5% for the second quarter of fiscal 1997 compared to 32.5% for the second
quarter of fiscal 1996, such difference reflecting primarily the application of
lower tax rates to the income of Clonetics for the second quarter of fiscal
1996.
Liquidity and Financial Condition
During the first six months of fiscal 1997, the Company financed its
operations, capital expenditures and product development activities with cash
provided by operations. For the first six months of fiscal year 1997, cash
increased by $2.2 million. The Company's operating activities provided cash of
$3.6 million for the same period.
Total current assets of $36.6 million at April 30, 1997 were $3.1 million
higher than total current assets of $33.5 million at October 31, 1996, primarily
as a result of increased cash on hand and higher inventories for endotoxin
detection products. These increases were slightly offset by a decrease in
accounts receivable as a result of strong collection efforts. Total current
liabilities at April 30, 1997 were $11.8 million compared to $11.3 million at
October 31, 1996, such increase due mainly to the recording of deferred payments
under the terms of the Company's arrangement with its supplier of normal human
hepatocytes for the Clonetics product line.
The Company's investing activities consumed cash of $0.5 million in the first
six months of fiscal 1997, primarily as a result of purchases of property, plant
and equipment totaling $1.0 million, offset slightly by the receipt of certain
deferred payments as a result of the sale of the EIA and FIAX Product Lines. The
Company's investing activities generated cash of $2.2 million in the first six
months of fiscal 1996, primarily due to the receipt of $11.9 million in proceeds
from the sale of its EIA and FIAX Product Lines offset by the use of $8.2
million to acquire Clonetics. Purchases of property, plant and equipment totaled
$1.5 million for the first six months of fiscal 1996.
Financing activities consumed cash of $1.0 and $2.7 million for the first
six months of fiscal years 1997 and 1996 respectively, reflecting primarily the
repayment of amounts outstanding under the Company's various debt facilities.
9
<PAGE>
At April 30, 1997, the Company's principal short-term cash requirements were
to fund the Company's normal working capital needs, consisting primarily of
inventories and receivables, and to fund capital expenditures. At April 30,
1997, the Company had outstanding capital commitments of approximately $1.4
million and $9.0 million was available under the terms of the Company's
revolving credit facility. In addition, the Company expects to receive
approximately $0.5 million related to the sale of its EIA and FIAX Product
Lines.
Recent Developments
The Company previously announced that it had retained Alex. Brown & Sons,
Inc. to assist the Company in exploring strategic alternatives to best position
the Company for growth, concentrating on methods and strategies for enhancing
shareholder value. The Company is considering, among other actions, expanding
its product lines through internal development or acquisitions, a succession
plan for senior management and/or effecting strategic business combinations.
There is no assurance that any of these strategies will be implemented or that,
if implemented, any given strategy will be successful in enhancing shareholder
value.
The Company announced recently that there was sufficient interest to warrant
further discussions with several third parties concerning the possible sale of
the Company. Discussions are at a preliminary stage and it is impossible to
predict whether a sale will result from these discussions.
On May 16, 1997, Anasco GmbH ("Anasco") amended its Statement on Schedule 13D
to report that, in connection with the Company's announcement regarding its
review of strategic alternatives and with a pending reassessment of the
bioproducts and biosystems businesses of companies within the Boehringer
Ingelheim Group, initial steps had been taken by the Boehringer Ingelheim Group
to determine whether there may be prospective purchasers of all or a portion of
various types of assets related to the group's bioproducts and biosystems
businesses.
These assets include approximately 19.9% of the Company's outstanding Common
Stock, the resale of which is subject to a right of first refusal by the
Company. These assets also include 100% of the interests owned indirectly by
Anasco in a partnership (the "Partnership") that manufactures, markets and
distributes products, including certain of the Company's products in certain
countries of Europe, North Africa and the Middle East (the "Territory"). The
Company previously had owned indirectly a 50% interest in the Partnership, which
the Company sold to an Anasco affiliate in April 1995 subject to various terms
and conditions, including the grant to the Company of an option to repurchase a
50% interest in the Partnership subject to certain conditions, provisions
relating to the effect of a change of control of the Company or the Partnership,
and certain other rights reserved to the Company. In addition to certain
distribution rights, the Partnership has the right to use certain technology of
the Company.
The Company is in discussions with Anasco concerning certain alternatives
regarding the Company stock and the Partnership. The Company has not determined
what effect, if any, the possible actions being considered by Anasco would have
on the Company and its distribution efforts in the Territory.
10
<PAGE>
BIOWHITTAKER, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's 1997 Annual Meeting of Stockholders was held on March 14,
1997, at which time the stockholders voted on the election of Class III
directors and a proposal to ratify the appointment of Ernst & Young LLP
as the Company's independent auditors for the fiscal year. The votes
cast with respect to each of the issues subject to a vote of security
holders were as follows:
Against
or Broker
For Withheld Abstentions Non-Votes
--- -------- ----------- ---------
Noel L. Buterbaugh 9,387,601 89,651 -- --
Rudiger Erckel 9,391,377 85,875 -- --
Ratification of the
Appointment of Auditors 9,408,499 49,652 19,101 --
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11. Statement regarding Computation of Per Share Net Income for the
three months and six months ended April 30, 1997.
10.19 Change of Control Employment Agreements
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended April 30, 1997.
11
<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.
BIOWHITTAKER, INC.
Date: June 10, 1997 By /S/PHILP L. ROHRER, JR.
------------- -----------------------
Philip L. Rohrer, Jr.,
Vice President
(Principal Financial Officer)
12
<PAGE>
BIOWHITTAKER, INC.
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
11 Computation of Per Share Net Income 14
10.19 Change of Control Employment Agreements 15
13
<PAGE>
Exhibit 11
BIOWHITTAKER, INC.
COMPUTATION OF PER SHARE NET INCOME
(Dollars in thousands, except per share data)
For the Three Months For the Six Months
-------------------- ------------------
Ended April 30, Ended April 30,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
Earnings
Net income/(loss)................. $ 1,700 $ 1,367 $ 2,967 $ (592)
======= ======== ========= =======
Average Common and Common Equivalent
Shares (in 000)
Weighted average number of common
shares outstanding.............. 10,760 10,759 10,760 10,759
Common equivalent share:
Stock options included under
treasury stock method.......... 153 125 138 110
Proportional interest rights
of Anasco GmbH ............... 22 22 22 22
-------- -------- ------- ------
Total............................... 10,935 10,906 10,920 10,891
======== ======= ======= =======
Net Income/(Loss) Per Share......... $ 0.16 $ 0.13 $ 0.27 $ (0.05)
========= ======== ======== ========
Unaudited
Note:Net income per share determined on a fully diluted basis is not
materially different from primary net income per share shown above.
14
<PAGE>
Exhibit 10.19
The following executive officers have entered into "Change of Control
Employment Agreements" with the Company identical to the following form:
Messrs. Thomas Winkler, Philip L. Rohrer, Jr., Leif Olsen and
F. Dudley Staples, Jr.
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
AGREEMENT by and between BioWhittaker, Inc., a Delaware corporation (the
"Company") and (the "Executive"), dated March 11, 1997.
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative:
(a) to diminish the inevitable distraction of the Executive
by the personal uncertainties and risks created by a
pending or threatened Change of Control,
(b) to encourage the Executive's full attention and
dedication to the Company currently and in the event of
any threatened or pending Change of Control, and
(c) to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensures
that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive
with those of other similarly situated corporations.
To accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Certain Definitions
(a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section l(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date", shall mean the date immediately
prior to the date of such termination of employment.
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(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the second anniversary of the date hereof,
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of rule 13d-3 promulgated under the Exchange Act) of 50% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) an acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A) and (B) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or any subsidiary of the Company or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, either (A)(i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, 50% or
more of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business
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Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be or (ii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination and (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 50% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership at that
percentage existed prior to the Business Combination.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be generally comparable to the most
significant of those held, exercised and assigned during the 120-day period
immediately preceding the Effective Date, provided that this shall not
preclude assignment to different duties of comparable importance and (B) the
Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or
location within 25 miles of such location.
Notwithstanding (i)(A) above and (vii) below, if the Executive is unable to
work on a full-time basis for 60 consecutive days, the Company may assign
someone else to perform his duties and, upon his return, the Company may
assign him to other duties which may not be comparable or have comparable
authority and responsibility, but which shall be executive or managerial in
nature. In addition, if the Executive is unable to work on a full-time basis
for 60 consecutive days, upon his return, the Company may provide different
office facilities and support, provided that the office facilities and staff
support are appropriate both for an executive and for the responsibilities to
which the Executive is then assigned.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent
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necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions
and (C) manage personal investments, so long as any of such activities do not
materially exceed the time and effort expended by the Executive in such
activities prior to the Change in Control and do not significantly interfere
with the performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate at least equal to twelve times the highest monthly
base salary paid or payable, including any which has been earned but
deferred, to the Executive by the Company during the twelve (12) month period
immediately preceding the month in which the Effective Date occurs. During
the Employment Period, the Annual Base Salary shall be reviewed no more than
12 months after the last salary increase awarded to the Executive prior to
the Effective Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced and
the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as increased from time to time.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
average of the bonuses paid to the Executive under the Company's annual bonus
plan, or any comparable bonus under any predecessor or successor plan,
including any bonuses earned but deferred, for the last three full fiscal
years prior to the Effective Date (or such lesser period as the Executive has
been employed) (annualized in the event that the Executive was not employed
by the Company for the whole of such fiscal years) (the "Average Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive elects to defer the receipt of
such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive
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opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than the most favorable of those provided
by the Company for the Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately
preceding the Effective Date.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which
are less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date.
(v) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services and if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date, or if more favorable
to the Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies,
provided that the Executive must elect as a group either the benefits in
effect before the Effective Date or after the Effective Date and may not
select different fringe benefits from each period.
(vii) Office and Support Staff, During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least comparable to those which had been provided to the
Executive by the Company immediately preceding the Effective Date, unless the
Company makes a general change in its policy for secretarial and office
support which is not discriminatory to the Executive and the Executive is
given office space, furnishings and secretarial support consistent with such
policy and with that provided to his peers in the Company.
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(viii) Vacation. During the Employment Period, the Executive shall
be entitled to paid holiday and other vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date, or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies, provided that the Executive must elect as a group either the
holiday and vacation benefits in effect before the Effective Date or after
the Effective Date and may not select different benefits from each period.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or to the Executive's legal representative (such agreement not
to be unreasonably withheld)(provided that termination for disability shall not
terminate the Executive's rights under the Company's disability or life
insurance policies in effect at the time of death or the commencement of the
disability.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean any of the following which is or is determined likely to be
demonstrably harmful to the Company:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or, if the Executive
is not the Chief Executive Officer of the Company, by the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is demonstrably injurious to the Company.
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(iii) commission of an intentional act of fraud, embezzlement
or theft by the Executive in connection with the Executive's duties or in the
course of the Executive's employment,
(iv) causing intentional, wrongful damage to property of the
Company,
(v) intentionally and wrongfully disclosing secret processes
or other material confidential information of the Company or its customers,or
(vi) participating without the Company's consent in the
management of any business enterprise which engages in substantial and direct
competition with the Company.
For purposes of the provision, any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board (excluding the Executive if the Executive is a member of the Board) at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than a failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required in the ordinary course in the 12
month period prior to the Effective Date;
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(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement, unless such failure is remedied within ten (10)
days after receipt by the Company or any successor of notice thereof.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause, death, Good Reason
or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the following obligations:
(i) payment of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid and payment of any annual
bonus earned for years prior to the year in which the Date of Termination
occurs not theretofore paid;
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(ii) payment for the year in which the Date of Termination occurs of
the product of (x) the Average Annual Bonus paid or payable but for any
deferral and (y) a fraction, the numerator of which is the number of days in
the current fiscal year through the Date of Termination, and the denominator
of which is 365 (the amounts described in this clause(ii) is hereinafter
referred to as the "Termination Bonus"); and
(iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet paid by
the Company (subject to Section 7) and any accrued vacation pay not yet paid
by the Company (the amounts described in clauses (i), (ii) and (iii) above
are herein after referred to as "Accrued Obligations").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, at the option of the Company, either (x) in a lump
sum in cash within 30 days of the Date of Termination or (y) in twelve equal
consecutive monthly installments, with the first installment to be paid within
30 days of the Date of Termination.
The Company to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits") in accordance with the terms of such plan, program, policy, practice
or contract or agreement.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(a) shall include, without limitation, and the
Executive)s estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits, provided by the Company to the
estates and beneficiaries of peer executives of the Company under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 6(b)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company to disabled executives
and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date
(c) By the Company for Cause or by the Executive Not for Good
Reason. If, during the Employment Period, the Company shall terminate the
Executive's employment for Cause or the Executive shall terminate employment
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not for Good Reason, this Agreement shall terminate without further
obligation to the Executive under this Agreement other than the payment to the
Executive in a lump sum in cash within 30 days after the Date of Termination of
the aggregate of the Accrued Obligations (but excluding the Termination Bonus
portion thereof) and the Other Benefits.
(d) By the Company other than for Cause, Death or Disability or by
the Executive for Good Reason. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause, Death or
Disability, or if the Executive shall terminate employment under this Agreement
for Good Reason:
(i) The Company shall pay to the Executive the aggregate of the
following amounts, such amounts, to be payable at the option of the Company,
either (x) in a lump sum in cash within 30 days of the Date of Termination or
(y) in twelve equal consecutive monthly installments, with the first
installment to be paid within 30 days of the Date of Termination:
A. all Accrued Obligations;
B. 1 times the sum of the Executive's Annual Base Salary and the
Executive's Annual Bonus paid or payable but for any deferral (and
annualized for any fiscal year consisting of less than twelve full
months or for which the executive has been employed for less than twelve
full months) to the Executive for the most recently completed fiscal
year prior to the Date of Termination;
C. The Executive shall be entitled to receive a separate lump-sum
supplemental retirement benefit equal to the difference between (a) the
actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the BioWhittaker Inc. Defined
Contribution Plan (or any successor plan thereto (the "Retirement Plan")
during the 90-day period immediately preceding the Effective Date) of
the benefit payable under the Retirement Plan and any supplemental
and/or excess retirement plan providing benefits for the Executive (the
"SERP") which the Executive would receive if the Executive's employment
continued at the compensation levels provided for in Section 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment Period,
assuming for this purpose that all accrued benefits are fully vested and
that benefit accrual formulas are no less advantageous to the Executive
than those in effect during the 90-day period immediately preceding the
Effective Date, and (b) the actuarial equivalent (utilizing for this
purpose the actuarial assumptions utilized with respect to the
Retirement Plan during the 90-day period immediately preceding the
Effective Date) of the Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP; and
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Executive and, where applicable, the
Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described
in Section 4(b)(iv) of this Agreement if the Executive's employment had not
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been terminated in accordance with the most favorable plans, practices, pro-
grams or policies of the Company and its affiliated companies generally
applicable to other peer executives and their families during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
in the aggregate, as in effect at any time thereafter generally with respect to
other peer executives of the Company and its affiliated companies and their
families, provided that the Executive shall receive either the benefits in
effect before the Effective Date or after the Effective Date and may not receive
different fringe benefits from each period. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have retired on
the last day of such period.
Notwithstanding the above, if the Executive obtains other full-time
employment providing any comparable benefits, the Company may discontinue
providing any benefits comparable to those provided by the new employer.
The amounts required to be paid under this Section 6(d) (other than the
Accrued Obligations) shall be reduced by any other amount of severance (i.e.,
relating solely to salary or bonus continuation or actual or deemed pension or
insurance continuation) received by the Executive upon such termination of
employment under any severance plan, policy or arrangement of the Company
applicable to the Executive or a group of employees of the Company, including
the Executive, and applicable without regard to the occurrence of a Change of
Control. The amounts payable to the Executive pursuant to this Agreement will
not be subject to any requirements of mitigation, nor will they be offset or
otherwise reduced by reason of Executive's receipt of compensation from any
source other than the Company.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive
may qualify, nor, subject to Section 12(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company at or subsequent to the
Date of Termination (including pay or bonuses deferred in accordance with the
terms of any such plan, policy, practice or program or contract or agreement)
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement. In no
event shall this Agreement accelerate payments under the Retirement Plan or any
SERP applicable to the Executive.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
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Company agrees to reimburse the Executive, to the full extent permitted by
law, for all legal fees, expenses and court costs which the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) if the final court decision in such contest is in the Executive's
favor. If the Executive becomes entitled to reimbursement, the Company shall pay
any bills not yet paid which would be eligible for reimbursement. However, in no
event shall the reimbursements and payments exceed in the aggregate one hundred
thousand dollars ($100,000), plus in each case interest on any payment from the
date the payment was made by the Executive to the date of reimbursement at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. In
the event of a settlement prior to a court decision in such contest, the amount
to be reimbursed shall be a matter to be resolved as part of the settlement.
9. Reduction of Aggregate Payments to Avoid Tax Penalty. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that the aggregate payments or distributions by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement) (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), and if such Payments on a net after-tax basis would yield the Executive
an amount equal to or less than the "Reduced Amount," then the Payments shall be
reduced to the Reduced Amount. The "Reduced Amount" shall mean Payments in an
amount such that the receipt of such Payments would not give rise to any Excise
Tax.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company, and its business, which
shall have been obtained by the Executive during the Executive's employment by
the Company and which shall not be or become public knowledge (other than by
acts by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall. not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
11. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
26
<PAGE>
(c) 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 assume
expressly 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
If to the Company:
BioWhittaker, Inc.
8830 Biggs Ford Road
Walkersville, MD 21793-0127
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
27
<PAGE>
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, subject to Section l(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has signed and the Company has caused
to be signed by its duly authorized representative this Agreement, all as of the
day and year first above written.
WITNESS: Executive
BioWhittaker, Inc.
By:
Noel Buterbaugh, President &
Chief Executive Officer
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
BioWhittaker's interim consolidated statement of income for the three months
ended April 30, 1997 and it's consolidated balance sheet as of April 30, 1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000879550
<NAME> BioWhittaker, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 2,853
<SECURITIES> 0
<RECEIVABLES> 8,206
<ALLOWANCES> 59
<INVENTORY> 22,323
<CURRENT-ASSETS> 36,553
<PP&E> 33,919
<DEPRECIATION> 17,421
<TOTAL-ASSETS> 64,602
<CURRENT-LIABILITIES> 11,780
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 49,659
<TOTAL-LIABILITY-AND-EQUITY> 64,602
<SALES> 27,932
<TOTAL-REVENUES> 27,932
<CGS> 14,142
<TOTAL-COSTS> 23,360
<OTHER-EXPENSES> (168)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 4,693
<INCOME-TAX> 1,726
<INCOME-CONTINUING> 2,967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,967
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
