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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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ENDOGEN, INC.
(Name of Subject Company)
ENDOGEN, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
29264J 10 8
(CUSIP Number of Class of Securities)
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Owen A. Dempsey
President and Chief Executive Officer
Endogen, Inc.
30 Commerce Way
Woburn, MA 01801-1059
(781) 937-0890
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person(s) Filing Statement)
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Copy To:
Brian D. Goldstein, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
(617) 248-7000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Endogen, Inc., a Massachusetts
corporation (the "COMPANY"), and the address of the principal executive offices
of the Company is 30 Commerce Way, Woburn, Massachusetts 01801-1059. The title
of the class of the Company's equity securities to which this statement relates
is Common Stock, par value $0.01 per share (each a "SHARE," and collectively,
the "SHARES").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by EWOK Acquisition Corp., a
Massachusetts corporation (the "PURCHASER"), a direct wholly-owned subsidiary of
PerBio Science AB, a Swedish corporation ("PARENT"), to purchase all of the
outstanding Shares at a price of $3.75 per Share, net to the seller in cash
without interest (the "OFFER PRICE"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 2, 1999 (the "OFFER TO
PURCHASE"), and the related Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements thereto collectively
constitute the "OFFER").
The Offer is disclosed in a Tender Offer Statement on Schedule 14D-1, dated
June 2, 1999 (the "SCHEDULE 14D-1"), which was filed with the Securities and
Exchange Commission (the "COMMISSION") pursuant to the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), and the rules promulgated by the
Commission thereunder. The Offer is being made pursuant to the Agreement and
Plan of Merger (the "MERGER AGREEMENT") dated as of May 27, 1999 among Parent,
Purchaser and the Company. The Merger Agreement provides that Purchaser's
obligation to accept for payment and to pay for any Shares tendered is subject
to, among other things, there being tendered and not withdrawn at least
two-thirds of all outstanding Shares on a fully diluted basis prior to the
expiration of the Offer or any extension thereof (the "MINIMUM CONDITION"). The
Merger Agreement provides, among other things, that as soon as practicable after
the completion of the Offer and the satisfaction or waiver of the conditions set
forth in the Merger Agreement, including the Minimum Condition, Purchaser will
be merged with and into the Company (the "MERGER"), and the Company will
continue as the surviving corporation of the Merger and as a wholly-owned
subsidiary of Parent (the "SURVIVING CORPORATION"). At the effective time of the
Merger, each Share then outstanding (other than Shares held by Parent, by
Purchaser, in the treasury of the Company or by any subsidiary of Parent,
Purchaser or the Company, all of which will be canceled, and other than Shares,
if any, held by stockholders who have perfected rights as dissenting
stockholders under Massachusetts law) will be converted into the right to
receive $3.75 in cash or any higher price per Share paid in the Offer. A copy of
the Merger Agreement has been filed as Exhibit 1 to this statement and is
incorporated herein by reference.
As set forth in the Schedule 14D-1, the address of the principal executive
offices of Parent is SE-284 80 Perstorp, Sweden and the address of the principal
executive offices of Purchaser is 3747 North Meridian Road, Rockford, Illinois
61101.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this statement, is set forth above under Item 1.
(b) Except as forth in this Item 3(b), to the knowledge of the Company, as
of the date hereof, there are no material contracts, agreements,
arrangements or understandings or actual or potential conflicts of
interest between the Company or its affiliates and (1) the Company and
its executive officers, directors or affiliates or (2) Parent or
Purchaser or their respective executive officers, directors or
affiliates.
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(1) CERTAIN MATERIAL CONTRACTS, AGREEMENTS, ARRANGEMENTS OR
UNDERSTANDINGS AND ANY ACTUAL OR POTENTIAL CONFLICTS OF INTERESTS BETWEEN
(A) THE COMPANY OR ITS AFFILIATES AND (B) THE COMPANY AND ITS EXECUTIVE
OFFICERS, DIRECTORS OR AFFILIATES.
PROXY DISCLOSURE
Certain material contracts, agreements, arrangements or understandings
between the Company and its directors, executive officers and affiliates are
described on pages 4, 8 and 9 of the Company's Proxy Statement dated as of
September 25, 1998 for its 1998 Annual Meeting of Stockholders (the "PROXY
STATEMENT"). Pages 4, 8 and 9 of the Proxy Statement have been filed as Exhibit
2 to this statement and are incorporated herein by reference.
EMPLOYMENT, CONSULTING AND SEVERANCE ARRANGEMENTS
Pursuant to a letter, dated as of July 2, 1998, from the Company to Charles
R. Burke, Ph.D., a director of the Company, Dr. Burke is entitled to the same
compensation paid to all non-employee directors of the Company, and is also
entitled to receive $500 per half-day meeting with the Company's President and
Chief Executive Officer which is not a Board or Committee meeting and an option
to purchase 6,000 shares of the Company's Common Stock pursuant to the Company's
1992 Stock Plan (the "1992 PLAN"). These options were granted at an exercise
price of $2.88 per share, which was 100% of the fair market value of the
Company's Common Stock as of the date of grant. One-third of these options
vested on the date of grant and, provided that Dr. Burke continues to serve the
Company in the capacity of employee, officer, director or consultant, the
balance of the options will vest over a period of two years, in two equal annual
installments.
Pursuant to a letter agreement, dated as of September 11, 1998, between the
Company and Christine Burns, the Company's Vice President--Product Development
and Technology, during the first year of Dr. Burns' employment her annual base
salary was set at $128,000 and her annual incentive pay was set at a maximum of
$24,000. During the second year of Dr. Burns' employment her annual base salary
will be increased to $144,000 and her incentive pay will be set at a maximum of
$24,000. In addition, if, through no fault of her own, Dr. Burns' employment
with the Company is terminated, she will be entitled to a severance package in
the form of salary continuation for a period of six months from her last date of
employment, at the rate of her then current annual base salary, and medical
benefits will also be continued for up to six months.
Pursuant to a letter, dated as of September 30, 1998, from the Company to
Dennis Walczewski, the Company's Vice President of Sales, Mr. Walczewski's
annual compensation was adjusted retroactively such that effective December 1,
1997 his annual base salary was increased to $99,000 and his incentive pay was
set at a maximum of $48,000. Mr. Walczewski's annual base salary as of December
1, 1998 was fixed at $106,000 and his annual incentive compensation was fixed at
a maximum of $48,000. In addition, if through no fault of his own, Mr.
Walczewski's employment is terminated, he will be entitled to a severance
package in the form of salary continuation for a period of six months from his
last date of employment, at the rate of his current annual base salary, and
medical benefits will also be continued for up to six months.
STOCK OPTION ACCELERATION AND CASH OUT
Pursuant to the 1992 Plan and the option agreements issued thereunder, upon
the consummation of the Offer the holders of stock options granted under the
1992 Plan, including the executive officers of the Company and participating
directors, will receive a cash payment in connection with the cancellation of
their options. The cash payment for each option that has an exercise price that
is lower than the Offer Price will equal the difference between the Offer Price
and the exercise price of such option, multiplied by the number of Shares
subject to such option (whether vested or unvested). The Company will make
aggregate payments equal to approximately $401,390. Of that total, Mr. Owen A.
Dempsey will receive approximately $110,000 and Dr. Burns will receive
approximately $60,000. The Company will make aggregate payments to non-employee
directors under the 1992 Plan in the amount of $12,420. Of that
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total, Mr. Hayden Harris will receive approximately $7,200 and Dr. Burke will
receive approximately $5,220.
Non-employee directors of the Company holding stock options granted pursuant
to the Company's 1993 Non-Employee Director Stock Option Plan (the "1993 PLAN")
will receive a cash payment in connection with the cancellation of their
options. The cash payment for each option that has an exercise price that is
lower than the Offer Price will equal the difference between the Offer Price and
the exercise price of such option, multiplied by the number of vested (but not
unvested) Shares subject to such option. The Company will make aggregate
payments equal to approximately $40,520. Of that total, Mr. Wallace Dempsey will
receive approximately $19,880; Mr. Harris will receive approximately $19,880;
Mr. Irwin Gruverman will receive approximately $380; and Dr. Wolfgang Woloszczuk
will receive approximately $380.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND MERGER. In considering the
recommendations of the Board set forth in Item 4(a) below, the Company's
stockholders (the "STOCKHOLDERS") should be aware that certain executive
officers of the Company and members of the Board of Directors have interests in
the Merger and the Offer, which are described in this statement, and in Annex A,
and which may present them with certain conflicts of interest.
(2) CERTAIN MATERIAL CONTRACTS, AGREEMENTS, ARRANGEMENTS OR
UNDERSTANDINGS AND ANY ACTUAL OR POTENTIAL CONFLICTS OF INTEREST BETWEEN (A)
THE COMPANY OR ITS AFFILIATES AND (B) PARENT OR PURCHASER AND THEIR
RESPECTIVE EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES.
For a description of certain agreements or understandings between the
Company, on the one hand, and Parent or Purchaser or certain affiliates of
Parent or Purchaser, on the other, see the information set forth below and in
Item 4 of this statement under the heading "Background of the Transaction: Past
Contacts, Transactions and Negotiations with Parent and Purchaser."
CONFIDENTIAL DISCLOSURE AGREEMENT
The following is a summary of certain material provisions of the
Confidential Disclosure Agreement, dated as of January 11, 1999, between the
Company and Pierce Chemical Company ("PIERCE"), an affiliate of Parent (the
"CONFIDENTIALITY AGREEMENT"). This summary does not purport to be complete and
is qualified in its entirety by reference to the complete text of the
Confidentiality Agreement, a copy of which has been filed as Exhibit 3 to this
statement and is incorporated herein by reference.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Pierce agreed to keep confidential all non-public,
confidential or proprietary information furnished to it by the Company relating
to the Company, subject to certain exceptions (the "CONFIDENTIAL INFORMATION")
and to use the Confidential Information solely for the purpose of evaluating a
possible transaction involving the Company.
EXCLUSIVITY AGREEMENT
The following is a summary of certain material provisions of the Exclusivity
Agreement (the "EXCLUSIVITY AGREEMENT") dated as of May 12, 1999 by and between
the Company and Pierce. This summary does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Exclusivity
Agreement, a copy of which has been filed as Exhibit 4 to this statement and is
incorporated herein by reference
The Exclusivity Agreement contains customary provisions, pursuant to which,
among other matters, the Company agreed (i) to provide Pierce and
representatives of Pierce reasonable access to the books, records, properties
and personnel of the Company, including records of the Company's independent
certified public accountants, (ii) to cease any ongoing discussions with other
parties that relate to a transaction or series of transactions similar to those
contemplated by the Merger Agreement and (iii) subject to the Board of
Directors' fiduciary duties, not to solicit, initiate or otherwise engage in
negotiations or communications with other parties regarding transactions of the
type contemplated by the Merger Agreement for a period of ten days. The
Exclusivity Agreement expired on May 22, 1999 and was not extended.
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MERGER AGREEMENT
The following is a summary of certain material provisions of the Merger
Agreement. Defined terms used below and not defined herein have the respective
meanings assigned to those terms in the Merger Agreement. This summary does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Merger Agreement, a copy of which is filed as Exhibit 1
hereto and incorporated herein by reference.
The Merger Agreement provides that following the satisfaction of the
conditions described below under "Conditions to the Merger," the Purchaser will
be merged with and into the Company, and each then outstanding Share (other than
Shares then owned by the Company, Parent, or any direct or indirect wholly owned
subsidiary of Parent or by stockholders, if any, who dissent from the Merger and
comply with all of the provisions of the Massachusetts Business Corporation Law
("MBCL") concerning the right, if applicable, of holders of Shares to seek
appraisal of their Shares) will be converted into the right to receive the price
per Share paid in the Offer.
THE OFFER. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described below. The Merger Agreement
provides that the Purchaser may extend the Offer by giving oral or written
notice of such extension to the depositary, without the consent of the Company,
only (1) if at the Expiration Date (as defined in the Merger Agreement) any of
the conditions to the Purchaser's obligations to accept Shares for payment are
not satisfied or waived, until such time as such conditions are satisfied or
waived (each individual extension not to exceed five (5) business days after the
previously scheduled Expiration Date), (2) for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer, and (3) on up to two occasions in each case for period
of not more than five (5) business days beyond the latest Expiration Date if on
such Expiration Date there shall have been tendered more than the number of
Shares sufficient to satisfy the Minimum Condition but less than 90% of the
Shares. In addition, the Purchaser has agreed in the Merger Agreement that it
will not, without the express written consent of the Company and after giving
oral or written notice of such extension to the depositary, (1) reduce the
number of Shares subject to the Offer, (2) reduce the Offer Price, (3) add to or
modify the conditions of the Offer, including the Minimum Condition, (4) except
as provided above, extend the Offer if all of the conditions of the Offer are
satisfied or waived, (5) change the form of the consideration payable in the
Offer or (6) amend or alter any term of the Offer in any manner materially
adverse to the Company's stockholders; provided, however, that nothing contained
in the Merger Agreement will prohibit the Purchaser, in its sole discretion
without the consent of the Company, from waiving satisfaction of any condition
of the Offer other than the Minimum Condition.
Pursuant to the Merger Agreement, the Company has granted the Purchaser an
irrevocable option (the "PURCHASER STOCK OPTION") to purchase up to 690,172
shares of the Company's Common Stock, representing approximately 19.9% of the
Company's outstanding Common Stock, at a price per share equal to the Offer
Price payable in cash. The Purchaser Stock Option may be exercised, in whole or
in part, at any time and from time to time after the date on which the Purchaser
has accepted for payment the Shares tendered pursuant to the Offer and subject
to satisfaction of the Minimum Condition if, but only if, Parent and Purchaser
agree to permanently waive the conditions of the Offer.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, the Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of the
Purchaser will cease and the Company will be the surviving corporation (the
"SURVIVING CORPORATION"). As a result of the Merger, each Share issued and
outstanding immediately prior to the Effective Time (as defined in the Merger
Agreement) (other than Shares then owned by the Company, Parent, the Purchaser
or any other direct or indirect wholly owned subsidiary of Parent, or by
stockholders of the Company, if any, who dissent from the Merger and comply with
all the provisions of
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the MBCL concerning the right, if applicable, of holders of Shares to seek
appraisal of their Shares) will be converted into the right to receive the price
paid in the Offer, in cash, without interest (the "MERGER CONSIDERATION"). As a
result of the Merger each issued and outstanding share of capital stock of
Purchaser will be automatically converted into one share of the common stock of
the Surviving Corporation.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of the
terms of the Merger Agreement by the stockholders of the Company, (1) by mutual
written consent of the Company and Parent, (2) by either the Company or Parent
if (a)(i) as a result of any of the conditions to the Offer not being satisfied,
the Offer shall have been terminated or expired in accordance with its terms
without the Purchaser having accepted for payment any Shares pursuant to the
Offer (including the Minimum Condition) or (ii) the Purchaser shall not have
accepted for payment any Shares pursuant to and subject to the conditions to the
Offer by July 31, 1999; provided, however, that the right to terminate the
Merger Agreement pursuant to clause (2)(a) will not be available to any party
whose failure to perform any of its obligations under the Merger Agreement
proximately contributed to the failure of any such condition or if the failure
of such condition results from facts or circumstances that constitute a breach
of any representation or warranty under the Merger Agreement by such party or
(b) if any Federal, state or local government or any court, tribunal,
administrative agency or commission or other regulatory authority or agency,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"), shall have issued
any order, decree or ruling or taken any action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for, Shares pursuant to the Offer or the Merger and such order, decree or ruling
or other action has become final and nonappealable, (3) by Parent or the
Purchaser prior to the Purchaser's obligation to accept Shares for payment
pursuant to the Offer, in the event of a material breach (as defined in the
Merger Agreement) by the Company of any representation, warranty, covenant or
other agreement contained in the Merger Agreement which would or reasonably
would be expected to give rise to the failure of a condition of the Offer, (4)
by Parent or the Company if, prior to the obligation of the Purchaser to accept
Shares for payment pursuant to the Offer, the Company (i) amends this Schedule
14D-9 or takes other action to modify its recommendation that the Offer and the
Merger are fair to and in the best interest of the Company and its stockholders
and its recommendation that the Company's stockholders accept the Offer, tender
their shares pursuant to the Offer and approve and adopt the Merger and the
Merger Agreement or (ii) enters into an acquisition agreement for an Alternative
Transaction (as defined below) that constitutes a Superior Proposal (as defined
below) and (5) by the Company if Parent or the Purchaser shall have (a) failed
to commence the Offer within five business days of the date of the Merger
Agreement, (b) failed to pay for Shares pursuant to the Offer in accordance with
the terms of the Merger Agreement or (c) breached in any material respect any of
their respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach or failure to perform in respect
of clause (c) is incapable of being cured or has not been cured within 30 days
after the giving of written notice to Parent or the Purchaser, as applicable,
except in any case under clause (c), such breaches and failures which would not
prevent the consummation of the Offer or the Merger subject to the terms and
conditions of the Merger Agreement.
ALTERNATIVE TRANSACTIONS. The Merger Agreement provides that the Company
and its subsidiaries shall not, and shall not authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it to, directly or
indirectly, (1) solicit, initiate or furnish any information in response to any
inquiries or the making of any proposal that may lead to an Alternative
Transaction or (2) participate in any discussions or negotiations regarding any
Alternative Transaction; provided, however, that if, at any time prior to the
acceptance for payment of Shares pursuant to and subject to the conditions
(including the Minimum Condition) of the Offer, the Board determines in good
faith, after consultation with its outside counsel, that action is required by
reason of the Board's fiduciary duties under applicable law, the Company may
(subject to compliance with the notification provisions discussed below), in
response to an unsolicited Third Party Proposal (as defined below), (a) furnish
information with respect to the Company to any person making
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such Third Party Proposal pursuant to a confidentiality agreement that is at
least as protective of the Company's interest as is the Confidentiality
Agreement and (b) participate in negotiations regarding such Alternative
Transaction.
The Merger Agreement defines "THIRD PARTY PROPOSAL" as a bona fide proposal
from a third party, which proposal did not result from a breach of the
restrictions described above relating to a Third Party Proposal and which third
party the Board determines in good faith and upon the advice of AH&H or another
financial advisor of nationally recognized reputation to be reasonably capable
of completing a Superior Proposal. The Merger Agreement defines "ALTERNATIVE
TRANSACTION" as any direct or indirect acquisition or purchase of assets of the
Company and its subsidiaries outside the ordinary course of business or
outstanding equity securities of the Company or any subsidiary, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning equity securities of the Company or any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction that would result in the
acquisition of the Company or any subsidiary, other than the transactions
contemplated by the Merger Agreement and other than the acquisition of Shares
pursuant to the exercise of Company Stock Options or Warrants (each as defined
below) which are issued and outstanding as of the date of the Merger Agreement.
The Merger Agreement provides further that unless the Board shall have
terminated the Merger Agreement as described below, neither the Board nor any
committee thereof will (1) withdraw or modify, or propose to withdraw or modify,
the approval or recommendation by such Board or such committee of the Offer, the
Merger Agreement or the Merger, (2) approve or recommend, or propose to approve
or recommend, any Alternative Transaction or (3) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
agreement (an "ACQUISITION AGREEMENT") with respect to any Alternative
Transaction, unless in connection with the taking of any action described in
clause (1), (2) or (3) the Board shall have previously terminated the Merger
Agreement in connection with a Superior Proposal (as set forth above in clause
(4) of the section entitled "Termination of the Merger Agreement").
Notwithstanding the preceding sentence, if the Company's Board determines in its
good faith judgment, after taking into consideration the advice of its outside
legal counsel, that it is required by reason of their fiduciary duties under
applicable law, the Company's Board of Directors may: (A) withdraw its
recommendation of the Offer or the Merger and the other transactions
contemplated thereby, or (B) approve or recommend or cause the Company to enter
into an agreement with respect to a Superior Proposal; provided, however, that
the Company concurrently terminates this Agreement and pays the Parent a
termination fee, including Expenses (as defined below), in the amount of one
million dollars ($1,000,000).
The Merger Agreement defines a "SUPERIOR PROPOSAL" to be any Third Party
Proposal to acquire, directly or indirectly, all of the Shares or all or
substantially all of the assets of the Company; provided that (a) the Board
determines in its good faith judgment (after consulting with a financial advisor
of nationally recognized reputation) that such Third Party Proposal is on terms
that are more favorable to the Company's stockholders from a financial point of
view than the Offer and the Merger (taking into account all relevant factors,
including the amount and form of consideration to be received in respect of the
Shares, the relative value of any non-cash consideration and the timing and
certainty of closing), and (b) the Board determines in its good faith judgment
(after consultation with outside counsel) that the failure to recommend or
accept such Third Party Proposal would be required in order for its members to
comply with their fiduciary duties under applicable law.
In addition to the obligations of the Company set forth in the preceding
paragraphs, the Merger Agreement provides that the Company as promptly as
reasonably practicable shall advise Parent orally and in writing of any request
for information or of any proposal or any inquiry regarding any Alternative
Transaction and the material terms and conditions of such request, proposal or
inquiry. The Company is further required under the terms of the Merger
Agreement, to the extent reasonably practicable and not in violation of the
Board's fiduciary duties under applicable law, after consultation with its
outside counsel, to
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keep Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request, proposal or inquiry. The Merger
Agreement provides that nothing contained therein shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders with respect to any Third Party Proposal if (1) in the
good faith judgment of the Board, after consultation with its outside counsel,
such disclosure is required by reason of the Board's fiduciary duties under
applicable law and (2) the Company shall have provided Parent and the Purchaser
with reasonable advance notice of its position and proposed disclosure under the
circumstances; provided, however, that neither the Company nor its Board nor any
committee thereof is permitted, except as permitted by the Merger Agreement, to
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer, the Merger or the Merger Agreement or approve or recommend, or
propose to approve or recommend, an Alternative Transaction.
FEES AND EXPENSES. The Merger Agreement provides that in the event that the
Merger Agreement is terminated (1) by Parent or Purchaser pursuant to clause (3)
under the section above entitled "Termination of the Merger Agreement," (2) by
Parent pursuant to and in accordance with clause (2)(a)(i) under the section
above entitled "Termination of the Merger Agreement" if such termination results
from the failure of the conditions described in clauses (c), (f) or (h) under
the section below entitled "Certain Conditions of the Offer" as a result of any
breach by the Company of any covenant or agreement or any representation or
warranty made by the Company in the Merger Agreement or (3) pursuant to clause
(4) under the section above entitled "Termination of the Merger Agreement," the
Company shall promptly pay to Parent a termination fee, including all Expenses,
in the amount of one million dollars ($1,000,000). The Merger Agreement defines
"EXPENSES" as all out-of-pocket expenses incurred by the Purchaser and Parent in
connection with the Merger Agreement, the Stockholder Agreement and the
transactions contemplated thereby.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that
during the term of the Merger Agreement, the Company shall, and shall cause each
of its subsidiaries to, carry on its business in the ordinary course and use its
best efforts to preserve intact its current business organization, keep
available the services of its current officers and employees as appropriate and
preserve its relationships with customers, suppliers, licensors, licensees and
others having business dealings with it. The Merger Agreement further provides
that, except as otherwise expressly contemplated by the Merger Agreement or
approved by Parent in writing (which approval shall not be unreasonably withheld
or delayed), the Company shall not and shall cause its subsidiaries not to (1)
(a) declare, set aside or pay any dividends on, or make any other distributions
in respect of, any of its capital stock, (b) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or (c)
purchase, redeem or otherwise acquire any shares of capital stock of the Company
or any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities; (2) issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities (other
than the issuance of Shares upon the exercise of Company Stock Options or
warrants to purchase Shares outstanding on the date of the Merger Agreement in
accordance with their present terms); (3) amend its articles of organization or
by-laws; (4) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (B) any assets except for the
purchase of assets for an amount which does not exceed, individually or in the
aggregate, $100,000; (5) sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of its properties or assets,
except sales of inventory or sales of immaterial assets; (6) (A) except for
certain existing indebtedness and certain short-term borrowings incurred in the
ordinary course of business, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
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the Company, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing or (B) make any loans, advances or capital contributions to, or
investments in, any other person; (7) make or agree to make any capital
expenditure or expenditures with respect to property, plant or equipment which,
individually, is in excess of $75,000 or, in the aggregate, are in excess of
$250,000; (8) except as required by law or as consistent with past practice,
make any tax election or settle or compromise any income tax liability or take
any action or position inconsistent with the past tax or accounting practices of
the Company; (9) with certain exceptions, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in any report of the Company filed with the Commission and publicly
available prior to the date of the Merger Agreement or incurred thereafter in
the ordinary course of business consistent with past practice, or waive the
benefits of, or agree to modify in any material respect, any confidentiality,
standstill or similar agreement to which the Company or any subsidiary is a
party, (10) except in the ordinary course of business, modify, amend or
terminate any material contract, agreement, arrangement or other instrument
(including any amendments thereto) to which the Company or any of its
subsidiaries is a party or waive, release or assign any rights or claims; (11)
enter into any contracts, agreements, arrangements or instruments (including any
amendments thereto) relating to the distribution, sale or marketing by third
parties of the Company's or its subsidiaries' products or services or enter into
any such arrangement with any supplier of the Company unless terminable upon no
more than thirty (30) days notice; (12) except as required to comply with
applicable law and subject to exceptions for the Employment Agreements, (A)
adopt, enter into, terminate or amend any benefit plan or other arrangement for
the benefit or welfare of any director, officer or current or former employee,
(B) increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee (except for normal increases or
bonuses, in the ordinary course of business consistent with past practice), (C)
pay any benefit not provided for under any benefit plan other than bonuses in
the ordinary course of business consistent with past practice, (D) except as
permitted in clause (B), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or benefit plan (including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreement or awards made
thereunder) or (E) take any action other than in the ordinary course of business
to fund or in any other way secure the payment of compensation or benefits under
any employee plan, agreement, contract or arrangement or benefit plan; or (13)
authorize any of, or commit or agree to take any of, the foregoing actions.
Pursuant to the Merger Agreement, the Company shall not take any action or
omit to take any action, the taking or omission of which could reasonably be
expected to result in (1) any of its representations and warranties set forth in
the Merger Agreement becoming untrue or inaccurate in any material respect or
(2) any of the conditions to the Offer or to the Merger not being satisfied
(subject to exceptions specifically permitted by the Merger Agreement).
STOCK OPTIONS. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement but in no event later than the
consummation of the Offer, the Company (or, if appropriate, the Board or any
committee administering the Stock Option Plans) shall (including by adopting
resolutions or taking any other actions) take action so as to allow that each
outstanding option to purchase Shares (a "COMPANY STOCK OPTION") granted under
any stock option, stock appreciation rights or stock purchase plan, or other
right, program, arrangement or agreement of the Company (collectively, the
"STOCK OPTION PLANS") and each outstanding warrant to purchase Shares (a
"WARRANT") in each case outstanding immediately prior to the date of the Merger
Agreement: (A) to the extent then exercisable, either (1) to be cancelled
immediately after consummation of the Offer in exchange for an amount in cash,
payable at the time of such cancellation, equal to the product of (x) the number
of Shares subject to such
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Company Stock Option or Warrant immediately prior to the Effective Time and (y)
the excess, if any, of the price per Share to be paid in the Offer over the per
Share exercise price of such Company Stock Option or Warrant (the "NET AMOUNT")
or (2) to be converted immediately prior to the Effective Time into the right
solely to receive the Net Amount; provided, however, that no such cash payment
has been made or (B) to the extent not then exercisable, to be canceled
immediately after consummation of the Offer. The Company shall not make, or
agree to make, any payment of any kind to any holder of a Company Stock Option
or a Warrant (except for the payment described above) without the consent of
Parent.
The Merger Agreement provides further that subject to the provisions set
forth above, all Stock Option Plans and the Employee Stock Purchase Plan shall
terminate as of the Effective Time and the provisions in any other benefit plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
terminated as of the Effective Time. The Merger Agreement provides that the
Company shall ensure that following the Effective Time, no holder of a Company
Stock Option or Warrant nor any participant in any Stock Option Plan or the
Employee Stock Purchase Plan shall have any right thereunder to acquire any
capital stock of the Company, Parent or the Surviving Corporation, and that the
Company shall use its reasonable best efforts to ensure that following the
Effective Time, no holder of any remaining Company Stock Option or Warrant nor
any participant in any Stock Option Plan shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
The Merger Agreement also provides that the Surviving Corporation shall continue
to be obligated to pay the Net Amount to holders of any Company Stock Options or
Warrants converted in accordance with clause (y) of the immediately preceding
paragraph.
INDEMNIFICATION AND EXCULPATION. Parent has agreed in the Merger Agreement
that all rights to indemnification and exculpation (including the advancement of
expenses) from liabilities for acts or omissions occurring at or prior to the
Effective Time (including with respect to the transactions contemplated by the
Merger Agreement) existing now or at the Effective Time in favor of the current
or former directors or officers of the Company as provided in its articles of
organization, its by-laws and certain indemnification agreements shall be
assumed by the Surviving Corporation in the Merger, without further action, as
of the Effective Time and shall survive the Merger and shall continue in full
force and effect without amendment, modification or repeal in accordance with
their terms; provided however, that if any claims are asserted or made within
such period, all rights to indemnification (and to advancement of expenses)
hereunder in respect of any such claims shall continue, without diminution,
until disposition of any and all such claims.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger is
subject to the satisfaction or waiver of certain conditions, including the
following: (1) if required by applicable law, the Merger Agreement having been
approved and adopted by the affirmative vote of the Company's stockholders by
the requisite vote in accordance with applicable law and the Company's articles
of organization and (2) no statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other governmental entity or
other legal restraint or prohibition preventing the consummation of the Merger
being in effect; provided, however, that each of the Company, the Purchaser and
Parent has used reasonable efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any injunction or other
order that may be entered.
REASONABLE EFFORTS. The Merger Agreement provides that, on the terms and
subject to the conditions of the Merger Agreement, each of the parties will use
all reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer and the Merger and the other
transactions contemplated by the Merger Agreement.
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REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer, the Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless the Minimum Condition shall
have been satisfied. Furthermore, notwithstanding any other term of the Offer,
the Purchaser shall not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and except as otherwise provided in the Merger Agreement or under
applicable law, may terminate the Offer if, at any time on or after the date
hereof and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists and is continuing as of any
Expiration Date (other than as a result of any action or inaction of Parent or
any of its subsidiaries that constitutes a breach of the Merger Agreement):
(a) there shall be instituted or pending by any person or Governmental
Entity any suit, action or proceeding (i) challenging the acquisition by
Parent or the Purchaser of any Shares under the Offer or pursuant to the
Stockholder Agreement, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement or the Stockholder
Agreement (including the voting provisions thereunder), or seeking to obtain
from the Company, Parent or the Purchaser any damages in connection with the
aforesaid transactions that are material in relation to the Company, (ii)
seeking to compel the Parent to dispose of or hold separate any material
portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, as a result of the Offer, (iii) seeking to
impose material limitations on the ability of Parent or the Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer or purchased under the
Stockholder Agreement, including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company,
or (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect any material portion of the
assets, properties, business or operations of the Company and its
subsidiaries taken as a whole.
(b) there shall be any statute, rule, regulation, judgment, order,
injunction or other restraint enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity or court, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above; provided, however, that
each of Parent and the Purchaser shall have used reasonable efforts to
prevent the entry of any such injunction or other court order and to appeal
as promptly as possible any injunction or other court order that may be
entered;
(c) there shall have occurred and continue to exist as of any Expiration
Date any change or event that, individually or in the aggregate with any
other change or event, is materially adverse to the assets, properties,
business, financial condition, results of operations or prospects of the
Company and its subsidiaries, taken as a whole, or any occurrence that with
notice or lapse of time or both could reasonably be expected to result in
any such change or event;
(d) there shall have occurred and continue to exist as of any Expiration
Date (i) any general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange or the NASDAQ, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the United States or any limitation by federal or state authorities on the
extension of credit by lending institutions, or a disruption of or other
event materially adversely affecting the extension of credit by lending
institutions, (iii) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States, which has and continues to materially adversely affect the
trading of securities on the NYSE involving the United States or (iv) in
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the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct at the date hereof and at the
scheduled or extended Expiration Date as though made on or as of such date
(except for representations and warranties made as of a specified date) but
only if the respects in which the representations and warranties made by the
Company are inaccurate would in the aggregate have a material adverse effect
and if such breaches of representations or warranties have not been cured
within five (5) business days of written notice to Company by Parent or
Purchaser; provided, however that in no event shall Parent be obligated to
extend the Offer for more than one five (5) business day extension or beyond
July 1, 1999 in order to permit Company to cure any such breach. For
purposes of this offer condition, "material adverse effect" shall mean that
claims, demands, liabilities and losses arising out of such inaccuracy will
actually or may reasonably be expected to result in Losses suffered or
incurred by the Company, the Parent or the Purchaser, when taken as a whole,
in excess of $300,000.
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement and such failure has a material adverse effect;
(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) the Company's total stockholders equity as of May 31, 1999 shall not
be at least Five Million Five Hundred Thousand Dollars ($5,500,000) as
determined in accordance with Company's past practice consistently applied;
which in the reasonable judgment of Parent, in any such case, makes it
inadvisable to proceed with the Offer or the acceptance for payment or payment
for the Shares.
The foregoing conditions other than conditions (b) and (g) are for the sole
benefit of the Purchaser and Parent and, subject to the terms of the Merger
Agreement, may be waived by the Purchaser and Parent in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent or
the Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time, except as
otherwise provided in the Merger Agreement.
STOCKHOLDER AGREEMENT
The following is a summary of certain material provisions of a Stockholder
Agreement dated as of May 27, 1999 (the "STOCKHOLDER AGREEMENT") between
Purchase, Parent and Owen A. Dempsey, Hayden H. Harris, Charles R. Burke,
Christine A. Burns, Avery W. Catlin, Wallace G. Dempsey, Irwin J. Gruverman, G&G
Diagnostics Limited Partnership I. Hayden H. Harris Living Trust DTD 3/6/98 and
Wolfgang Woloszczuk (collectively, the "SELLING STOCKHOLDERS"). This summary
does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Stockholder Agreement, a copy of which has been filed
as Exhibit 5 to this statement and is incorporated herein by reference.
The Stockholder Agreement provides that each Selling Stockholder will tender
in the Offer, and the Purchaser will purchase, all Shares beneficially owned by
such Selling Stockholder (the "Subject Shares"), at a price per Share equal to
the Offer Price. Such obligations regarding the Subject Shares are subject to
the prior satisfaction or waiver of (1) the Purchaser having accepted Shares for
payment under the terms of the Offer, (2) the Minimum Condition having been
satisfied, (3) all regulatory approvals required by any applicable law, rule or
regulation having been obtained and being final, and (4) there shall exist no
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preliminary or permanent injunction, or any other order by any court of
competent jurisdiction, restricting, preventing or prohibiting either the
purchase or the delivery of Subject Shares.
Each of the Selling Stockholders has agreed, until the Merger Agreement has
terminated, among other things, not to: (1) sell, transfer, give, pledge, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
with respect to the sale, transfer, pledge, assignment or other disposition of,
the Subject Shares owned by such Selling Stockholder other than pursuant to the
terms of the Offer or the Merger or (2) enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, in connection with, directly or
indirectly, any takeover proposal.
Each of the Selling Stockholders has agreed, until the Merger Agreement has
terminated, among other things, not to: (1) sell, transfer, give, pledge, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
with respect to the sale, transfer, pledge, assignment or other disposition of,
the Subject Shares owned by such Selling Stockholder other than pursuant to the
terms of the Offer or the Merger or (2) enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, in connection with, directly or
indirectly, any takeover proposal. Each of the Selling Stockholders has also
agreed until the Stockholder Agreement has terminated (and the Stockholder
Agreement includes an irrevocable proxy provision for the benefit of the
Purchaser with respect to the Shares subject to the Stockholder Agreement owned
by each Selling Stockholder), (1) to vote the Subject Shares at any meeting of
stockholders of the Company called to vote upon the Merger and the Merger
Agreement or at any adjournment thereof or in any other circumstances upon which
a vote, consent or other approval (including by written consent) with respect to
the Merger and the Merger Agreement is sought, in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger Agreement;
and (2) to vote such Shares at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which a Selling
Stockholder's vote, consent or other approval is sought, against (x) any
Alternative Transaction, (y) any amendment of the Company's articles of
organization or by-laws or other proposal or transaction involving the Company,
which amendment or other proposal or transaction would be reasonably likely to
impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement or change in any
manner the voting rights of each class of the Company's common stock or (z) any
action that would cause the Company to breach any representation, warranty or
covenant contained in the Merger Agreement.
EMPLOYMENT AGREEMENTS
The following are summaries of certain material provisions of Employment
Agreements between Purchaser and employees of the Company. These summaries do
not purport to be complete and are qualified in their entirety by reference to
the complete text of the Employment Agreements, copies of which have been filed
as Exhibits 13 and 14 to this statement and are incorporated herein by
reference.
The Purchaser has entered into employment agreements with certain employees
of the Company including Owen A. Dempsey, the President of the Company and
Christine A. Burns, the Vice President of Product Development and Technology
(the "EMPLOYMENT AGREEMENTS"), pursuant to which such persons will serve the
Company after consummation of the Offer. The Employment Agreements were executed
as of May 27, 1999 and are not effective until the date that the Purchaser
accepts for payment the Shares as specified in Section 4 of the Offer to
Purchase. The initial term of each of the Employment Agreements is two years.
Under the Employment Agreements, Mr. Dempsey will receive a base salary of
$160,000 per year and Ms. Burns will receive a base salary of $144,000 per year.
The Purchaser has agreed to provide each of Mr. Dempsey and Ms. Burns with a
yearly bonus pursuant to a bonus plan to be agreed upon by the Purchaser and
each of them within 90 days after the Employment Agreements become effective.
Under such bonus plans, Mr. Dempsey will be entitled to earn up to an additional
$60,000 per year and Ms. Burns
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will be entitled to earn up to an additional $36,000 per year. In addition, the
Purchaser has agreed to provide a yearly vehicle allowance to Mr. Dempsey
equivalent in value to $10,000 and to Ms. Burns equivalent in value to $6,000.
Under the Employment Agreements, each of Mr. Dempsey and Ms. Burns and the
Purchaser have the right to terminate the agreement upon providing notice of
such party's intention not to renew the agreement at least 90 days prior to the
expiration of the agreement's initial term. The Purchaser may terminate the
Employment Agreements at any time for cause. The Purchaser and each of Mr.
Dempsey and Ms. Burns have the right to terminate their Employment Agreements
without cause upon at least 6 months' notice. In addition, each of Mr. Dempsey
and Ms. Burns has the right to terminate his or her employment for good reason,
(such as a reduction in salary, a relocation of more than 50 miles away from the
Employee's current place of employment, or any significant adverse change in the
nature of the Employee's duties or responsibilities), upon at least 30 days'
notice to the Purchaser.
If the Purchaser terminates the employment of Mr. Dempsey or Ms. Burns by
choosing not to renew their agreements after the initial term or by terminating
their employment without cause, Mr. Dempsey and Ms. Burns are entitled to
continue to receive their salary for 12 months after their employment is
terminated. If Mr. Dempsey terminates his employment for good reason, he is
entitled to continue to receive his salary for 6 months after his employment is
terminated. If Ms. Burns terminates her employment for good reason, she remains
entitled to continue to receive her salary for 12 months after her employment is
terminated.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board of Directors of the Company has determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, are in the best interests of the Stockholders, has approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and recommends that the Stockholders accept the Offer and tender their
Shares pursuant to the Offer.
A copy of a letter to all Stockholders dated June 2, 1999 communicating the
recommendation of the Board of Directors has been filed as Exhibit 6 to this
statement and is incorporated by reference.
(b) BACKGROUND OF THE TRANSACTION: PAST CONTACTS, TRANSACTIONS AND
NEGOTIATIONS WITH PARENT AND PURCHASER.
Prior to August 1998, the Company from time to time held discussions with
various companies regarding possible strategic transactions. In light of
accelerated consolidation trends in the life science industry, the Board of
Directors and senior management had begun to assess the Company's prospects and
various strategies to enhance shareholder value. During special meetings of the
Board of Directors held on July 20 and July 24, 1998, the Board discussed
various alternatives for the Company and instructed the Company's President,
Owen Dempsey, to investigate retaining the services of an investment banker to
act as a financial advisor to the Company.
On August 10, 1998, the Company engaged AH&H as its financial advisor to
undertake a review of the Company's strategic alternatives, including continued
internal growth, acquisitions of or partnering with other companies and a sale
to or combination with another company, and to ascertain the parties that may
have a potential interest in partnering or combining with or acquiring the
Company.
Between September and December 1998, AH&H contacted or held discussions with
eight companies in the life science industry. The Company entered into
confidentiality agreements with all eight of the companies contacted during this
period, and some of those companies received non-public information regarding
the Company, including projected financial information.
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At a regularly scheduled meeting of the Board of Directors held on September
24, 1998, the Board reviewed the activities of AH&H, including the contacts made
with potentially interested parties, and further discussed various strategic
opportunities for the Company.
After several discussions between representatives of AH&H, the Company and a
potential bidder, on November 30, 1998, the Company received a preliminary,
non-binding indication of interest to purchase all of the outstanding Shares in
a stock for stock transaction valued at the time of receipt of the indication of
interest in the range of $22 million to $24 million (including options and
warrants). This indication of interest was prior to completion of the bidder's
due diligence review. In light of the volatility of the bidder's stock, from
late November through the end of January, the Company, AH&H and the Company's
counsel conducted initial negotiations with this bidder and its financial
advisor regarding the maximum and minimum number of shares of the bidder's stock
that would be issued in the proposed transaction in the event of increases or
decreases in the market value of the bidder's stock prior to the consummation of
the transaction (the "PRICING COLLAR") and the bidder's requirement that
expenses incurred in connection with the proposed transaction be deducted from
the value of the stock to be received by the Company's stockholders. The bidder
insisted on a Pricing Collar that provided only limited protection to the
Company's stockholders if the bidder's stock price declined prior to closing the
proposed transaction.
At special meetings of the Board of Directors on December 6, 1998 and
January 20, 1999, the directors expressed their concerns regarding the Pricing
Collar and the risks it presented to the Company's stockholders in light of the
volatility of the bidder's stock, which had declined by as much as 30% during
preliminary negotiations. During the second week of January, the Company
released financial results for its second quarter that were below the bidder's
expectations, and at the end of January the bidder terminated discussions with
the Company.
Between January and April 1999, AH&H contacted 14 additional companies,
including Pierce, and the Company entered into confidentiality agreements with
five additional companies and certain of those companies received non-public
information regarding the Company. AH&H and the Company's management held
discussions with these additional companies between January and April.
During January 1999 representatives of AH&H contacted the senior management
of Pierce to inquire as to Pierce's interest in pursuing a transaction with the
Company. Following this contact, Pierce initiated a review of certain publicly
available information concerning the Company and contacted representatives of
AH&H to advise them that Pierce would be interested in reviewing non-public
information about the Company and meeting with members of the Company's senior
management. On January 11, 1999, Pierce entered into the Confidentiality
Agreement with the Company.
On February 16, 1999, representatives of Pierce met with certain members of
the Company's senior management regarding the business, strategies and prospects
of the Company.
On March 23, 1999, representatives of Pierce and its financial advisor,
Vector Securities International, Inc. ("Vector"), met with representatives of
the Company and AH&H and conducted a preliminary review of certain non-public
information. From March 23, 1999 through April 19, 1999, Pierce, Pierce's
advisors, the Company's senior management and the Company's advisors engaged in
various discussions regarding the business, strategies and prospects of the
Company and the possible terms of a potential transaction.
On April 16, 1999, the Company received a non-binding indication of interest
from a company (the "THIRD PARTY") to purchase all of the outstanding Shares in
a stock for stock transaction valued at the time of receipt of the indication of
interest in the range of $11 million to $12 million (the "APRIL 16 PROPOSAL").
On April 19, 1999, Vector, on behalf of Parent, submitted a non-binding
letter of interest to acquire all of the Shares for $3.00 per share in cash,
subject to, among other things, the Parent completing a due diligence review of
the Company and the execution of a definitive agreement (the "APRIL 19
PROPOSAL").
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On April 21, 1999, at a regularly scheduled meeting of the Board of
Directors, Mr. Dempsey and representatives of AH&H reported to the Board the
April 16 Proposal and the April 19 Proposal, and reviewed the discussions with
these companies. AH&H also updated the Board on its contacts with other
potentially interested parties and advised the Board that, except for Parent and
the Third Party, no parties had expressed an interest in acquiring the Company.
The Board instructed AH&H to negotiate a higher price per Share with Parent and
the Third Party.
During the weeks of April 19 and April 26, 1999, AH&H, on behalf of the
Company, led negotiations with Parent and the Third Party. With respect to the
April 16 Proposal, the Third Party was unwilling to increase its offer price.
Representatives of AH&H and the Company continued negotiations and on April
28, 1999, Vector, on behalf of Parent, submitted a revised non-binding letter of
interest to acquire all the Shares for $3.75 per Share in cash (the "APRIL 28
PROPOSAL"). At special meetings of the Board of Directors held on April 29 and
30, 1999, Mr. Dempsey and representatives of AH&H updated the Board regarding
discussions with the Third Party and Parent. At the April 30 meeting, the Board
authorized Mr. Dempsey to proceed with further negotiations with Parent.
On May 3, 1999, Pierce and its representatives continued their review of the
Company. On May 7, 1999 the Company's counsel received an initial draft of the
proposed Merger Agreement and the proposed Stockholder Agreement. During the
week of May 10, 1999 the Company's counsel and Parent's counsel discussed a
number of issues presented by the draft Merger Agreement and draft Stockholder
Agreement. Concurrently, management of Parent and the Company began discussions
of the continued employment of certain employees of the Company.
On May 12, 1999 the Board of Directors held a special meeting to discuss the
status of the negotiations with Parent regarding the Merger Agreement. Mr.
Dempsey and the Company's counsel reviewed the issues presented in the draft
agreements and received instructions from the Board regarding the proposed
terms. At this meeting, Mr. Dempsey informed the Board that Parent insisted that
the Company enter into an exclusivity agreement before it would continue
negotiations. At the instruction of the Board, the Exclusivity Agreement was
executed later that day, which subsequently expired on May 22, 1999.
During the week of May 17, 1999, AH&H and the Company's counsel, in
consultation with senior management and the Board of Directors, continued to
negotiate with Parent's counsel the terms and conditions of the proposed Merger
Agreement, including price, termination fee, representations and warranties,
covenants, termination provisions and conditions to the Offer. During this
period, Company counsel, in consultation with management and the Board of
Directors, also continued to negotiate with Parent's counsel the terms of the
Stockholder Agreement. At a special meeting of the Board of Directors held on
May 21, 1999, representatives from AH&H and the Company's counsel provided
updates on the status of negotiations with Parent. The Company's counsel
reviewed the terms of the proposed Merger Agreement and proposed Stockholder
Agreement. In addition, Mr. Dempsey reported to the Board that Parent would
require certain employees of the Company to enter into employment agreements.
Mr. Dempsey summarized the terms of the proposed employment agreements as they
were communicated to him by senior management of Parent.
On May 24, 1999, Mr. Dempsey and certain other employees of the Company
received draft employment agreements from Parent (the "EMPLOYMENT AGREEMENTS"),
which Parent required to be entered into as a condition to entering into the
Merger Agreement. These employees of the Company retained counsel separate from
the Company's counsel to negotiate the Employment Agreements, and between May 24
and May 27, 1999, counsel to Parent and these employees, along with management
of Parent and these employees, negotiated the terms of the Employment
Agreements.
16
<PAGE>
On May 24, 1999, at a special meeting of the Board of Directors, the
Company's counsel reviewed the then current terms of the proposed Merger
Agreement and proposed Stockholder Agreement, and Mr. Dempsey reviewed the terms
of the Employment Agreements. AH&H then presented a review of its financial
analysis of the proposed cash tender offer of $3.75 per Share for all Shares and
further indicated it was prepared to deliver an opinion to the Board of
Directors that the consideration to be received in the proposed Merger Agreement
was fair from a financial point of view to the Stockholders.
On May 25, 1999, at a special meeting of the Board of Directors, Mr. Dempsey
and the Company's counsel updated the Board on the status of the negotiations.
AH&H then updated its May 24, 1999 presentation to the Board of Directors
regarding its financial analysis of the Offer and presented a draft of its
opinion that the consideration to be received in the proposed Merger Agreement
was fair from a financial point of view to the Stockholders. The Board voted,
based in part on the opinion of AH&H as to the fairness of the consideration
from a financial point of view to the Stockholders and all other relevant
factors in relation to the proposed transaction with Parent, to approve the
Merger Agreement and to recommend to the Stockholders that they tender their
Shares in the Offer conditioned upon counsel and the Company's President
continuing to negotiate final transaction documents in accordance with the
Board's instructions.
Following the May 25, 1999 Board of Directors meeting, counsel for the
Company and Parent continued the final negotiation of the transaction documents.
The Merger Agreement, the Stockholder Agreement and the Employment Agreements
were executed and a joint press release was issued by the parties announcing the
Merger Agreement on the morning of May 27, 1999. The text of this release is
filed as Exhibit 7 to this statement and is incorporated herein by reference.
Reference is made to the Offer to Purchase for a description of the matters
considered by Parent in connection with the transaction.
REASONS FOR THE RECOMMENDATIONS; FACTORS CONSIDERED BY THE BOARD OF
DIRECTORS
At the meeting held on May 25, 1999, the Board of Directors approved the
Merger Agreement, and determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to and in the
best interests of the Stockholders, and the Board of Directors resolved to
recommend that Stockholders accept the Offer and tender their Shares. In making
such recommendation and approving the Merger Agreement and the transactions
contemplated thereby, the Board of Directors considered a number of factors,
including, but not limited to, the following:
(i) the financial and other terms and conditions of the Merger
Agreement, including the proposed structure of the Offer and the Merger
involving a cash tender offer of $3.75 per Share for all outstanding Shares
to be followed by a merger for the same consideration;
(ii) the extensive negotiations between the Company and Parent, leading
to the belief by the Board of Directors that $3.75 per Share represented the
highest price per Share that could be negotiated with Parent;
(iii) the fact that the $3.75 per Share to be paid in the Offer and as
the consideration in the Merger represents: (1) a premium of approximately
87.5% over the closing sale price of $2.00 per Share as reported on the
Nasdaq SmallCap Market on April 27, 1999, 30 days prior to the execution of
the Merger Agreement; (2) a premium of approximately 28% over the $2.93
average closing price over the 20 trading days prior to the execution of the
Merger Agreement; and (3) a premium of approximately 30% over the $2.88
closing sale price for the Shares on the Nasdaq SmallCap Market on May 26,
1999, the last trading day prior to the execution of the Merger Agreement;
(iv) the financial presentation of AH&H made on May 24, 1999 (as updated
on May 26, 1999) and the written opinion received by the Company from AH&H
on May 27, 1999 to the effect that as of that date, and based upon its
review and analysis and subject to the assumptions, limitations and
17
<PAGE>
qualifications set forth therein, the consideration to be received by the
Stockholders pursuant to the Merger Agreement, the Offer and the Merger is
fair to the Stockholders from a financial point of view. A copy of the
written opinion dated May 27, 1999 of AH&H, which sets forth the assumptions
made, procedures followed, other matters considered and limits of the review
by AH&H, is attached hereto as Annex B. STOCKHOLDERS ARE URGED TO READ SUCH
OPINION IN ITS ENTIRETY;
(v) the fact that neither the Offer nor the Merger is subject to any
financing condition, and that Parent has represented that it has possession
of, or has available to it under existing finance commitments, sufficient
funds available to consummate the Offer and the Merger and the transactions
contemplated thereby;
(vi) the Company's business, financial condition, assets, liabilities
and results of operation, including the substantially lower operating margin
and return on equity of the Company's operations compared to a group of its
competitors;
(vii) the consolidation trend in the life science industry and the
resulting pricing pressures on the Company's product lines;
(viii) the possibility of continuing to operate the Company as an
independent entity, and the business strategy and prospects of the Company,
as well as the various risks and uncertainties associated with those
prospects;
(ix) current financial market conditions, both generally and those
affecting "small cap" stocks like the Company, and historical market prices,
volatility, trading information and liquidity with respect to the Shares;
(x) the fact that the Company had carefully considered over several
months a full range of options, including acquiring smaller companies and
technologies, and that none of these options, in the directors' view, was
compelling given the Company's size and competitive position;
(xi) the fact that, after a more than nine-month effort by the Company
and its financial advisor, AH&H, to canvas the market for strategic partners
and merger and acquisition possibilities that would maximize value for the
Stockholders, in the directors' view the other proposals to acquire the
Company contained significant risks and contingencies, including the nature
of the consideration proposed; and the fact that none of the other proposals
during this market canvas resulted in a firm offer; and
(xii) the fact that, under the terms of the Merger Agreement, prior to
consummation of the Offer, the Board of Directors may approve a superior
proposal to be acquired by a third party if the Board of Directors has
determined in good faith, after taking into consideration advice of its
outside legal counsel, that such approval is required by reason of the Board
of Directors' fiduciary duties under applicable law, and further provided
that the Company shall have paid a termination fee (including expenses) of
$1 million to Parent.
The Board of Directors' approval and recommendation was based on the
totality of the information considered by it. The Board of Directors did not
assign relative weights to the factors considered by it or determine that any
one factor was of primary importance.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated August 10, 1998 between the Company and
AH&H, the Company, as compensation for financial advisory services rendered by
AH&H, agreed to pay AH&H (i) $25,000 upon execution of such letter agreement,
(ii) $50,000 if the Company requests, and AH&H delivers, an opinion as to the
fairness from a financial point of view of any proposed transaction (defined as
one or a series of transactions, including, but not limited to, transactions of
the type contemplated in the
18
<PAGE>
Merger Agreement), and (iii) $300,000, if a transaction of the type and size
contemplated by the Merger Agreement is consummated, less any amounts paid
pursuant to clauses (i) and (ii). In addition, the Company agreed to reimburse
AH&H for its reasonable out-of-pocket expenses incurred in connection with
rendering financial advisory services, including fees and disbursements of its
legal counsel; provided, however, that the aggregate amount of cash
reimbursements shall not exceed $20,000 except as otherwise agreed to by the
Company. In addition, if the Company receives a break-up fee, topping fee or
other termination fee in connection with the Merger Agreement and the
transactions contemplated thereby, AH&H will be entitled to 25% of such fee. The
Company also agreed to indemnify AH&H and its affiliates, and their respective
control persons, directors, officers, agents, employees and controlling persons
for certain costs, expenses and liabilities, including liabilities under the
federal securities laws.
Pursuant to a letter agreement, dated as of July 6, 1998, as amended on May
7, 1999, between the Company and Ulrich Schmid, the Company's Director of
Business Development, Mr. Schmid is entitled to a success fee of $100,000 upon
the completion of the transactions contemplated by the Merger Agreement. In
addition, if Mr. Schmid is terminated by the Company without cause, he is
entitled to receive continuation of base salary for a period of up to six months
following the date of termination. Medical benefits will also be continued
during this period, with the cost of premiums paid by the Company.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the Stockholders on its behalf with
respect to the Offer, except that such solicitations or recommendations may be
made by directors, officers or employees of the Company, for which services no
additional compensation will be paid.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Neither the Company nor, to the knowledge of the Company, any of its
executive officers, directors, affiliates or subsidiaries, has effected any
transaction in the Company's securities in the past 60 days.
(b) To the knowledge of the Company, all of its executive officers,
directors, affiliates or subsidiaries who are also Stockholders presently intend
to tender their Shares in the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this statement, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company, (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company, (iii)
a tender offer for or other acquisition of securities by or of the Company, or
(iv) any material change in the present capitalization or dividend policy of the
Company. Pursuant to the Merger Agreement, however, and as described under the
heading "The Merger Agreement -- Alternative Transactions" in Item 3 above, the
Company and the Board of Directors may, subject to certain limitations, take
certain actions in respect of proposed transactions necessary for the directors
of the Company to discharge their fiduciary obligations to the Company's
stockholders under applicable law.
(b) Except as described in this statement, there are no transactions,
resolutions of the Board of Directors, agreements in principle or signed
contracts in response to the Offer that relate to or would result in one or more
of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached hereto as Annex A is being furnished in
connection with the contemplated designation by Purchaser, pursuant to the
Merger Agreement, of certain persons to be
19
<PAGE>
appointed to the Board of Directors of the Company other than at a meeting of
the stockholders following the purchase by Purchaser, pursuant to the Offer, of
the number of shares representing not less than the number of Shares that will
satisfy the Minimum Condition.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Agreement and Plan of Merger and Letter Agreement each dated as of May 27,
1999 among Parent, Purchaser and the Company.
Exhibit 2 Excerpt from the Company's Proxy Statement dated as of September 25, 1998
(inclusive of pages 4, 8 and 9 thereof).
Exhibit 3 Confidential Disclosure Agreement dated as of January 11, 1999 between the
Company and Pierce.
Exhibit 4 Exclusivity Agreement dated as of May 12, 1999 by and between Pierce and the
Company.
Exhibit 5 Stockholder Agreement dated May 27, 1999 by and among Parent, Purchaser and
certain individuals listed on Exhibit A thereto.
Exhibit 6 Letter, dated June 2, 1999, from the President and Chief Executive Officer of
the Company to the stockholders of the Company concerning the Offer.
Exhibit 7 Joint Press Release of the Company and Parent, dated May 27, 1999.
Exhibit 8 Letter, dated September 30, 1998 from the Company to Dennis Walczewski.
Exhibit 9 Letter Agreement, dated September 11, 1998 by and between the Company and
Christine Burns.
Exhibit 10 Letter dated July 2, 1998 from the Company to Charles Burke.
Exhibit 11 Form of Stock Option Agreement under the Company's 1992 Stock Plan.
Exhibit 12 1992 Stock Plan of the Company.
Exhibit 13 Employment Agreement dated May 27, 1999 between Owen Dempsey and Parent.
Exhibit 14 Employment Agreement dated May 27, 1999 between Christine Burns and Parent.
</TABLE>
20
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
ENDOGEN, INC.
By: /s/ OWEN A. DEMPSEY
-----------------------------------------
Owen A. Dempsey
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
Dated: June 2, 1999
19
<PAGE>
ANNEX A
ENDOGEN, INC.
30 Commerce Way
Woburn, MA 01801-1059
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S
STOCKHOLDERS IS REQUIRED IN CONNECTION WITH
THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE REQUESTED NOT TO SEND
THE COMPANY A PROXY.
This Information Statement, which is being mailed on or about June 2, 1999
to the holders of shares of the common stock, par value $0.01 per share (the
"COMMON STOCK") of Endogen, Inc., a Massachusetts corporation (the "COMPANY"),
is being furnished in connection with the designation by EWOK Acquisition Corp.,
a Massachusetts corporation ("PURCHASER") and wholly-owned Subsidiary of PerBio
Science AB, a Swedish corporation ("PARENT"), of persons to the Board of
Directors of the Company (the "BOARD"). Such designation is to be made pursuant
to an Agreement and Plan of Merger dated as of May 27, 1999 (the "MERGER
AGREEMENT") among the Company, Parent and Purchaser.
Pursuant to the Merger Agreement, among other things, the Purchaser
commenced a tender offer on June 2, 1999 to purchase all of the issued and
outstanding Common Stock at a price of $3.75 per share, net to the seller in
cash, as described in the Purchaser's Offer to Purchase dated June 2, 1999 (the
"OFFER TO PURCHASE") and the related Letter of Transmittal (which Offer to
Purchase and related Letter of Transmittal together constitute the "OFFER"). The
Offer is scheduled to expire at 12:00 midnight, New York City time, on Tuesday,
June 29, 1999, unless extended. The Offer is subject to, among other things, the
condition that at least two-thirds of all issued and outstanding shares of
Common Stock, on a fully diluted basis, be validly tendered and not withdrawn
prior to the expiration of the Offer (the "MINIMUM CONDITION"). The Merger
Agreement also provides for the Merger of Purchaser with and into the Company
(the "MERGER") as soon as practicable after the consummation of the Offer.
Following the consummation of the Merger (the "EFFECTIVE TIME"), the Company
will be the surviving corporation and a wholly-owned subsidiary of Parent. In
the Merger, each share of Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares held by Parent, by Purchaser, in the
treasury of the Company or by any subsidiary of Parent, Purchaser or the
Company, all of which will be canceled, and other than shares, if any, held by
stockholders who have perfected rights as dissenting stockholders under
Massachusetts law) will be converted into the right to receive cash in the
amount of $3.75 without interest.
The Merger Agreement provides that promptly upon the acceptance for payment
of, and payment for, any Common Stock by Purchaser pursuant to and subject to
the conditions (including the Minimum Condition) of the Offer, Purchaser will
have the right to designate such number of directors of the Company (the
"PURCHASER DESIGNEES") as will give Purchaser a majority of such directors.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company (the
"SCHEDULE 14D-9") with respect to the Offer, copies of which are being delivered
to stockholders of the Company contemporaneously herewith. Certain other
documents (including the Merger Agreement) were filed with the Securities and
Exchange Commission (the "SEC") as exhibits to
A-1
<PAGE>
the Tender Offer Statement on Schedule 14D-1 of Purchaser and Parent (the
"SCHEDULE 14D-1"). The exhibits to the Schedule 14D-9 and the Schedule 14D-1 may
be examined at, and copies thereof may be obtained from, the regional offices of
and public reference facilities maintained by the SEC (except that the exhibits
thereto cannot be obtained from the regional offices of the SEC) in the manner
set forth in Section 8 of the Offer to Purchase.
No action is required by the stockholders of the Company in connection with
the election or appointment of the Purchaser Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), requires the mailing to the Company's stockholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's stockholders.
The information contained in this Information Statement concerning Parent,
Purchaser and the Purchaser Designees has been furnished to the Company by such
persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. As set forth in the Schedule 14D-1, the
address of the principal executive offices of Parent is SE-284 80 Perstorp,
Sweden and the address of the principal executive offices of Purchaser is 3747
North Meridian Road, Rockford, Illinois 61101.
GENERAL
The Common Stock is the only class of voting securities of the Company
outstanding. Each share is entitled to one vote. As of May 24, 1999, there were
3,468,202 shares of Common Stock issued and outstanding.
THE PURCHASER DESIGNEES
The Merger Agreement provides that, promptly upon acceptance by Purchaser of
Common Stock pursuant to the Offer, if the Minimum Condition has been met,
Purchaser will have the right to designate a majority of the authorized
directors of the Company. The Offer to Purchase states that the Purchaser
Designees are Robb Anderson, Mats Fischier and Charles Granneman. It is expected
that the Purchaser Designees will assume office following the purchase by
Purchaser of such number of shares of Common Stock that satisfies the Minimum
Condition, which purchase cannot be earlier than June 29, 1999, and that, upon
assuming office, the current directors of the Company other than Mr. Owen
Dempsey will resign and the Purchaser Designees will thereafter constitute at
least a majority of the Board.
Biographical information concerning each of the Purchaser Designees is
presented below.
PURCHASER DESIGNEES
ROBB ANDERSON is the President of the Purchaser. Mr. Anderson serves as the
President of Pierce Chemical Company, an affiliate of Purchaser, and has served
as an officer of certain affiliates of Perstorp since 1978. Mr. Anderson is a
director of Purchaser and certain affiliates of Perstorp.
MATS FISCHIER is Division Manager of Perstorp Life Science, a part of the
Perstorp Group. Since 1996, Mr. Fischier has served in various capacities with
the Perstorp Group, including Division Manager of the Pernovo Division from
February 1997 to September 1998 and Division Manager of Perstorp Analytical from
January 1996 to February 1997. Prior thereto Mr. Fischier served as a Division
Manager of Nobel Industrier of Akzo Nobel.
CHARLES GRANNEMAN is the Treasurer and Secretary of the Purchaser. Mr.
Granneman has served as an officer of certain affiliates of Perstorp since 1988.
A-2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 24, 1999 certain information
regarding the ownership of shares of the Company's Common Stock by (i) each
person who, to the knowledge of the Company, owned beneficially more than 5% of
the shares of Common Stock of the Company outstanding at such date ("PRINCIPAL
STOCKHOLDERS"), (ii) each current director of the Company, (iii) each Named
Officer (as defined below) of the Company, and (iv) all directors and executive
officers as a group. To the Company's knowledge, as of May 24, 1999, none of the
Purchaser Designees owned any shares of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) STOCK OUTSTANDING(2)
- -------------------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
Owen A. Dempsey(3).................................................. 350,800 9.8%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Wallace G. Dempsey(4)............................................... 190,000 5.4%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Irwin J. Gruverman(5)............................................... 125,000 3.6%
G&G Diagnostics Corp.
30 Ossipee Road
Newton, MA 02164
Hayden H. Harris(6)................................................. 65,500 1.9%
Enterprise Management, Inc.
425 North Main Street
Ann Arbor, MI 48104
Wolfgang Woloszczuk, Ph.D.(7)....................................... 58,000 1.7%
Biomedica GmbH
Divischgasse 4
A-1210 Vienna, Austria
Avery W. Catlin(8).................................................. 39,200 1.1%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Dennis H. Walczewski(9)............................................. 33,400 *
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Charles R. Burke, Ph.D.(10)......................................... 13,500 *
Monument Partners, Inc.
1410-1 Monument Street
Concord, MA 01742
All executive officers and directors as a group (9 persons)(11)..... 875,400 23.2%
</TABLE>
- ------------------------
* Indicates less than 1%.
A-3
<PAGE>
(1) Except as indicated in footnotes to this table, the persons named in this
table have sole voting and investment power with respect to all shares of
Common Stock owned based upon information provided to the Company by the
directors, officers and Principal Stockholders.
(2) The number of shares of Common Stock deemed outstanding for this calculation
includes (i) 3,468,202 shares of Common Stock outstanding on May 24, 1999,
and (ii) all Common Stock underlying options which are currently exercisable
or will become exercisable within 60 days of May 24, 1999 by the person or
group in question.
(3) Mr. Owen Dempsey's beneficial ownership includes 95,700 shares issuable upon
the exercise of outstanding stock options exercisable on May 24, 1999 or
within 60 days thereafter.
(4) Mr. Wallace Dempsey's beneficial ownership includes 30,000 shares issuable
upon the exercise of outstanding stock options exercisable on May 24, 1999
or within 60 days thereafter.
(5) Mr. Gruverman's beneficial ownership includes 18,000 shares issuable upon
the exercise of outstanding stock options exercisable on May 24, 1999 or
within 60 days thereafter and 95,000 shares of Common Stock held by G&G
Diagnostics Limited Partnership I ("G&G"). Mr. Gruverman is the sole general
partner of G&G and has sole voting and investment power with respect to such
shares of Common Stock. Mr. Gruverman disclaims beneficial ownership of all
shares held by G&G, except with respect to his pecuniary interest therein,
if any.
(6) Mr. Harris's beneficial ownership includes 60,000 shares issuable upon the
exercise of outstanding stock options held by Mr. Harris and by Enterprise
Management, Inc. (of which Mr. Harris is President) exercisable on May 24,
1999 or within 60 days thereafter and 2,000 shares held in a trust for the
benefit of his children. Mr. Harris disclaims beneficial ownership of all of
the shares held in a trust for the benefit of his children.
(7) Dr. Woloszczuk's beneficial ownership includes 18,000 shares issuable upon
the exercise of outstanding stock options exercisable on May 24, 1999 or
within 60 days thereafter. Excludes 127,000 shares of Common Stock
beneficially owned by Biomedica GmbH ("BIOMEDICA"). Dr. Woloszczuk is an
executive officer and 20% shareholder of Biomedica. Dr. Woloszczuk disclaims
beneficial ownership of all shares held by Biomedica, except with respect to
his pecuniary interest therein.
(8) Mr. Catlin's beneficial ownership includes 38,200 shares issuable upon the
exercise of outstanding stock options exercisable on May 24, 1999 or within
60 days thereafter.
(9) Mr. Walczewski's beneficial ownership includes 32,200 shares issuable upon
the exercise of outstanding stock options exercisable on May 24, 1999 or
within 60 days thereafter and 200 shares held by his son. Mr. Walczewski
disclaims beneficial ownership of all shares held by his son.
(10) Dr. Burke's beneficial ownership includes 12,500 shares issuable upon the
exercise of outstanding stock options exercisable on May 24, 1999 or within
60 days thereafter.
(11) Includes 304,600 shares issuable upon the exercise of outstanding stock
options exercisable on May 24, 1999 or within 60 days thereafter. Excludes
shares indicated as being excluded in note 7.
A-4
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names of the directors and executive
officers of the Company, their ages as of May 24, 1999, and the positions
currently held by each such person with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Owen A. Dempsey (1)(2)............................... 41 President, Chief Executive Officer and Director
Dennis H. Walczewski (1)............................. 51 Vice President of Sales
Avery W. Catlin (1).................................. 51 Vice President, Operations and Finance, Chief
Financial Officer, Clerk and Treasurer
Christine A. Burns, Ph.D. (1)........................ 46 Vice President, Product Development and Technology
Charles R. Burke, Ph.D. (2)(4)....................... 56 Director
Wallace G. Dempsey (2)............................... 73 Director
Irwin J. Gruverman (2)(3)............................ 65 Director
Hayden H. Harris (2)(3)(4)........................... 57 Chairman of the Board
Wolfgang Woloszczuk, Ph.D. (2)(4).................... 51 Director
</TABLE>
- ------------------------
(1) Executive officers of the Company are elected annually and hold office until
the first meeting of the Board of Directors after each annual meeting of
stockholders and until their successors are elected and qualified, or until
their earlier resignation or removal.
(2) The directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors are elected
and qualified, or until their earlier resignation or removal.
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee.
Owen A. Dempsey has been President, Chief Executive Officer and a director
of the Company since February 1986. From February 1987 to December 1996, he also
served as the Company's Treasurer. Mr. Dempsey helped to launch Endogen in 1985.
Prior to joining the Company, Mr. Dempsey held positions at the International
Management Development Institute in Lausanne, Switzerland and at the IBM
Corporation. Mr. Dempsey holds an A.B. from Dartmouth College and an M.B.A. from
Stanford University.
Dennis H. Walczewski has served as Vice President of Sales of the Company
since November 1995. From March 1995 until November 1995, Mr. Walczewski served
as Director of Sales at T Cell Diagnostics, Inc., a manufacturer of diagnostic
kits and reagents for the biotechnology industry. From March 1994 until February
1995, Mr. Walczewski was Vice President of Sales of Tropix, Inc., a producer of
research kits and reagents for the biotechnology industry. From March 1987 until
January 1994, Mr. Walczewski was Area Sales Manager at Boehringer Mannheim
Corporation, a manufacturer of diagnostic kits, clinical lab equipment and
products for the biotechnology industry.
Avery W. Catlin has served as Vice President, Finance, Chief Financial
Officer, Clerk and Treasurer of the Company since December 1996. In July 1998,
he was promoted to Vice President, Operations and Finance while retaining his
other duties. From June 1992 to April 1996, Mr. Catlin held various financial
positions at Repligen Corporation, a public biopharmaceutical company, serving
the last two years as Chief Financial Officer. Earlier in his career, Mr. Catlin
held the position of Chief Financial Officer at MediSense, Inc., a
Massachusetts-based medical device company.
Christine A. Burns, Ph.D. joined Endogen in November 1998 as Vice President,
Product Development and Technology. From 1997 until November 1998, Dr. Burns
served as Vice President, Contract R&D Services for the PerSeptive Biosystems
Division of Perkin Elmer Corporation. From 1993 to 1997, Dr. Burns held senior
management positions at PerSeptive Biosystems, Inc., including Vice President,
A-5
<PAGE>
World Wide Technical Support (1995 to 1997) and Vice President of R&D, Clinical
Chemistry (1993 to 1995). From 1986 to 1993, Dr. Burns served in various
management positions at Advanced Magnetics, Inc., most recently as Director of
Operations and Development.
Charles R. Burke, Ph.D. has been a director of the Company since June 1998.
Dr. Burke is currently principal and founder of Monument Partners, Inc. From
January 1994 to December 1997, Dr. Burke was Chief Executive Officer of Research
Biochemicals International, a leading supplier of fine organic chemicals to the
neuroscience research community. From August 1990 to January 1994, Dr. Burke was
Vice President, General Manager Clinical Diagnostics at Gene-Trak Systems, Inc.,
a developer of amplified DNA probe systems for infectious testing in clinical
diagnostic laboratories. Previously, Dr. Burke held numerous management and
research positions at Molecular Devices Corporation, Allied Signal, Health and
Scientific Products Division, and Abbott Laboratories, Diagnostics Division.
Wallace G. Dempsey has been a director of the Company since February 1986.
From 1973 until May 1993, he served as the Secretary and General Attorney of
International Flavors & Fragrances, Inc. From May 1993 until April 1994, Mr.
Dempsey served as a consultant to International Flavors & Fragrances, Inc.
Irwin J. Gruverman has been a director of the Company since November 1990.
Since 1982, Mr. Gruverman has been Chairman of the Board and Chief Executive
Officer of Microfluidics International and its predecessor, Biotechnology
Development Corp. Since 1990, he has also been a General Partner of G&G
Diagnostics Funds which invests in medical diagnostics companies. Mr. Gruverman
is also a director of Fiberchem International, Inc., InVitro International and
North American Scientific, Inc.
Hayden H. Harris has been a director of the Company since March 1993 and
Chairman of the Board since November 1995. Since 1977, Mr. Harris has been
President and a director of Enterprise Management, Inc., a venture capital
management and consulting company. From 1990 to present, Mr. Harris has been
Chairman of the Board and Chief Executive Officer of Software Services
Corporation, a provider of contract software services, and since 1995 he has
served as President and a director of EDM, Inc., a venture capital management
company.
Wolfgang Woloszczuk, Ph.D. has been a director of the Company since November
1990. Dr. Woloszczuk has also served as Chief Executive Officer of Biomedica
GmbH since 1992 and of Biocis Handels GmbH since 1994. He has also served as an
executive officer of Bionova Handels GmbH since 1988. Dr. Woloszczuk was an
executive officer of Biozol Diagnostica Vertriebs GmbH from 1989 until May 1996.
Since November 1997, Dr. Woloszczuk has been President of BioNet, Inc., an
exporter of biomedical products located in Southbridge, Massachusetts. In
addition, Dr. Woloszczuk has been a Professor of medicinal chemistry at the
University of Vienna since 1989.
FAMILY RELATIONSHIPS
Wallace G. Dempsey is the father of Owen A. Dempsey. There are no other
family relationships among directors or executive officers of the Company.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met 15 times during the fiscal year ended May 31,
1999. The Board of Directors has an Audit Committee, of which Irwin Gruverman
and Hayden Harris are members. The Audit Committee oversees the accounting and
tax functions of the Company, including matters relating to the appointment and
activities of the Company's independent auditors. The Audit Committee met two
times during the fiscal year ended May 31, 1999. The Board of Directors also has
a Compensation Committee, of which Hayden Harris, Charles Burke and Wolfgang
Woloszczuk are members. The Compensation Committee reviews and makes
recommendations concerning executive compensation, and administers the Company's
1992 Stock Plan (the "1992 PLAN") together with the Board of Directors. The
A-6
<PAGE>
Compensation Committee also administers the Company's 1993 Non-Employee Director
Stock Option Plan (the "DIRECTOR PLAN"). The Compensation Committee met five
times during the fiscal year ended May 31, 1999. The Board of Directors does not
currently have a standing executive or nominating committee. Each of the
Company's directors attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors and of all Committees on which he served
during the fiscal year ended May 31, 1999.
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered for its fiscal year ended May 31, 1999 to Owen A.
Dempsey, the Company's President and Chief Executive Officer, Dennis H.
Walczewski, the Company's Vice President of Sales and Avery W. Catlin, the
Company's Vice President, Operations and Finance, Chief Financial Officer,
Treasurer and Clerk (the "NAMED OFFICERS"). No other executive officer earned a
total salary and bonus exceeding $100,000 during the fiscal year ended May 31,
1999. The Company did not grant to the Named Officers any restricted stock
awards or stock appreciation rights ("SARS") and did not make any long-term
incentive plan payouts during the fiscal years ended May 31, 1997, 1998 and
1999.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
<S> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------ ------------------- -------------------
<CAPTION>
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#) COMPENSATION ($)(2)
- -------------------------------------------- --------- ---------- ------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Owen A. Dempsey............................. 1999 $ 131,700 $ 32,320 30,000 $ --
President and Chief Executive 1998 120,000 31,067 -- 975
Officer 1997 107,692 49,913 200 --
Avery W. Catlin............................. 1999 $ 132,923 $ 22,734 20,000 $ 1,243
Vice President, Operations and 1998 124,885 20,695 12,000 1,566
Finance, Chief Financial Officer, 1997 71,285 16,819 60,200 --
Treasurer and Clerk (3)
Dennis H. Walczewski........................ 1999 $ 108,538 $ 29,495 14,000 $ 2,009
Vice President of Sales 1998 90,000 29,825 12,000 1,344
1997 90,000 47,350 200 --
</TABLE>
- ------------------------
(1) Amounts included in "Bonus" for Fiscal Year 1999 are target amounts only.
Fiscal Year 1999 ended on May 31, 1999 and information needed to calculate
actual bonus amounts for Fiscal Year 1999 was therefore not available in
time for this filing. All bonus amounts included in Fiscal Year 1998 and
Fiscal Year 1997 are actual amounts based on service during such fiscal
year, although paid in the subsequent fiscal year.
(2) Company contributions to its 401(k) plan.
(3) Mr. Catlin joined the Company as Vice President, Finance, Chief Financial
Officer, Treasurer and Clerk in December 1996.
A-7
<PAGE>
OPTIONS
The following table sets forth certain information concerning stock options
granted during the fiscal year ended May 31, 1999 to the Named Officers.
OPTIONS GRANTED IN THE LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING OPTIONS % OF TOTAL OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION
NAME GRANTED(2) EMPLOYEES IN FISCAL YEAR(3) ($/SHARE) DATE
- ----------------------------------- ------------------- --------------------------------- --------------- -----------
<S> <C> <C> <C> <C>
Owen A. Dempsey.................... 30,000 14% $ 3.81 6/24/08
Avery W. Catlin.................... 20,000 10% $ 3.81 6/24/08
Dennis H. Walczewski............... 14,000 7% $ 3.81 6/24/08
</TABLE>
- ------------------------
(1) The Company did not grant any SAR's during the fiscal year ended May 31,
1999.
(2) Stock options were granted under the 1992 Plan at an exercise price equal to
the fair market value of the Company's common stock on the date of grant.
The options have a term of ten years from the date of grant and become
exercisable as to 25% of the shares covered on each of the first four
anniversaries of the date of grant.
(3) Represents all options granted to Mr. Dempsey, Mr. Catlin and Mr. Walczewski
during fiscal year ended May 31, 1999, respectively, as a percentage of the
total options granted to employees and consultants during the same period. A
total of 209,000 options were granted to employees and consultants in fiscal
year 1999.
The following table sets forth certain information concerning stock options
held by the Named Officers on May 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS
OPTIONS AT MAY 31,
AT MAY 31, 1999(#) 1999($)(2)
-------------------------- -----------
<S> <C> <C> <C> <C> <C>
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------- ------------------- --------------- ----------- ------------- -----------
Owen A. Dempsey...................... -- -- 88,200 36,000 $ 96,875
Avery W. Catlin...................... -- -- 33,200 59,000 --
Dennis H. Walczewski................. -- -- 28,700 31,500 --
<CAPTION>
<S> <C>
NAME UNEXERCISABLE
- ------------------------------------- -----------------
Owen A. Dempsey...................... --
Avery W. Catlin...................... --
Dennis H. Walczewski................. --
</TABLE>
- ------------------------
(1) The Company has never granted any SARs.
(2) Value is based on the difference between the option exercise price and
$3.56, the fair market value of the Company's Common Stock on May 28, 1999,
the last trading day for the fiscal year ended May 31, 1999, multiplied by
the number of shares of Common Stock underlying the options.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company is entitled to $500, plus all
reasonable expenses, for each meeting of the Company's Board of Directors and
each Committee meeting that he attends. In addition,
A-8
<PAGE>
pursuant to the Director Plan, each non-employee director is automatically
granted, without further action by the Board, an option to purchase 6,000 shares
of the Company's Common Stock upon (a) the date such director is first elected
to the Board and (b) each subsequent anniversary of that director's election to
the Board. The exercise price per share of all options granted under the
Director Plan is equal to 100% of the fair market value of the Company's Common
Stock on the date such options are granted. Options granted under the Director
Plan are exercisable as to one-third of the shares subject to such option on the
date of grant and as to an additional one-third of the shares subject to the
option on each successive anniversary of the date of grant, provided that the
optionee has continuously served as a member of the Board of Directors through
such date. Notwithstanding the foregoing, those options, which were granted
under the Director Plan on November 12, 1993, were fully vested and exercisable
in full on the date of such grant.
The Chairman of the Company's Board of Directors, Hayden Harris, is entitled
to an additional $500 per meeting of the Board of Directors and $1,000 per day
for each meeting with the Company's President and Chief Executive Officer that
is not a Board or Committee meeting. Moreover, in addition to his annual option
grant under the Director Plan, the Chairman also received an option to purchase
6,000 shares of the Company's Common Stock pursuant to the 1992 Plan. These
options were granted at an exercise price equal to 100% of the fair market value
of the Company's Common Stock as of the date of grant. Provided that the
Chairman continues to serve the Company in the capacity of employee, officer,
director or consultant, the options shall vest over a period of one year from
the date of grant, in four equal quarterly installments.
Pursuant to a letter, dated as of July 2, 1998, from the Company to Charles
R. Burke, Ph.D., a director of the Company, Dr. Burke is entitled to the same
compensation paid to all non-employee directors of the Company, and is also
entitled to receive $500 per half-day meeting with the Company's President and
Chief Executive Officer which is not a Board or Committee meeting and an option
to purchase 6,000 shares of the Company's Common Stock pursuant to the 1992
Plan. These options were granted at an exercise price equal to 100% of the fair
market value of the Company's Common Stock as of the date of grant. One-third of
these options vested on the date of grant and, provided that Dr. Burke continues
to serve the Company in the capacity of employee, officer, director or
consultant, the balance of the options shall vest over a period of two years, in
two equal annual installments.
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors or its Committees.
EXECUTIVE EMPLOYMENT AGREEMENTS
On December 4, 1996, the Company entered into an employment agreement with
Avery W. Catlin pursuant to which he joined the Company (the "CATLIN
AGREEMENT"). Under the terms of the Catlin Agreement, Mr. Catlin is entitled to
receive a minimum salary of $120,000 and a minimum bonus of $34,000 for the
first year of the term and a minimum salary of $130,000 for the second year of
the term. Mr. Catlin's bonus after the first year of the term will be based on
formulas agreed to by the Company and Mr. Catlin. Mr. Catlin's salary after the
second year of the term will be determined by the Board of Directors.
Additionally, Mr. Catlin is eligible for participation in an executive incentive
pay plan and in all of the Company's welfare, benefit, retirement and savings
plans on the same basis as other employees of the Company. Pursuant to the
Catlin Agreement, and subject to the terms of a stock option agreement, Mr.
Catlin received an option to purchase 60,000 shares of Common Stock at $3.88 per
share, vesting at 25% per annum for four years. Mr. Catlin's employment by the
Company may be terminated, with or without cause, by either party upon prior
written notice. In the event Mr. Catlin is terminated by the Company other than
for cause or the death of Mr. Catlin, Mr. Catlin would be entitled to continue
receiving his salary and benefits for a period of six months following his
termination date. In the event Mr. Catlin is terminated by the Company without
cause, all of the outstanding options which have been granted to Mr. Catlin, but
which have not vested, shall vest immediately and be exercisable in full. In the
event Mr. Catlin is terminated pursuant to a change in control of the Company,
as defined in the Catlin
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<PAGE>
Agreement, Mr. Catlin would be entitled to receive a cash payment equal to his
annual salary on the date of termination and all of the outstanding options
which have been granted to Mr. Catlin, but which have not yet vested, shall vest
immediately and be exercisable in full. The initial term of the Catlin Agreement
is three years and may be automatically renewed for one year periods.
Pursuant to a letter, dated as of September 30, 1998, from the Company to
Dennis Walczewski, the Company's Vice President of Sales, Mr. Walczewski's
annual compensation was adjusted retroactively such that effective December 1,
1997 his annual base salary was increased to $99,000 and his incentive pay was
set at a maximum of $48,000. Mr. Walczewski's annual base salary as of December
1, 1998 was fixed at $106,000 and his annual incentive compensation was fixed at
a maximum of $48,000. In addition, if through no fault of his own, Mr.
Walczewski's employment is terminated, he will be entitled to a severance
package in the form of salary continuation for a period of six months from his
last date of employment, at the rate of his current annual base salary, and
medical benefits will also be continued for up to six months.
Pursuant to a letter agreement, dated as September 11, 1998, between the
Company and Christine A. Burns, Ph.D., the Company's Vice President--Product
Development and Technology, during the first year of Dr. Burns' employment her
annual base salary is set at $128,000 and her annual incentive pay was set at a
maximum of $24,000. During the second year of Dr. Burns' employment her annual
base salary will be increased to $144,000 and her incentive pay will be set at a
maximum of $24,000. In addition, if, through no fault of her own, Dr. Burns'
employment with the Company is terminated, she shall be entitled to a severance
package in the form of salary continuation for a period of six months from her
last date of employment, at the rate of her then current base salary, and
medical benefits will also be continued for up to six months.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 15, 1999, the Company entered into a distribution agreement with
Biozol Diagnostica Vertrieb GmbH ("BIOZOL") pursuant to which Biozol is the
exclusive distributor of the Company's products in Germany.
On January 29, 1999, the Company entered into a distribution agreement with
Biomedica pursuant to which Biomedica distributes the Company's products in
certain European countries.
Wolfgang Woloszczuk, a director of the Company, is currently an executive
officer and 20% shareholder of Biomedica, a 50% owner of Biozol.
STOCK OPTION ACCELERATION AND CASHOUT
Pursuant to the Company's 1992 Plan and the option agreements issued
thereunder, upon the consummation of the Offer the holders of stock options
granted under the 1992 Plan, including the executive officers of the Company and
participating directors, will receive a cash payment in connection with the
cancellation of their options. The cash payment for each option that has an
exercise price that is lower than the Offer Price will equal the difference
between the Offer Price and the exercise price of such option, multiplied by the
number of Shares subject to such option (whether vested or unvested). The
Company will make aggregate payments equal to approximately $401,390. Of that
total, Mr. Owen A. Dempsey will receive approximately $110,000 and Dr. Burns
will receive approximately $60,000. The Company will make aggregate payments to
non-employee directors under the 1992 Plan in the amount of $12,420. Of that
total, Mr. Harris will receive approximately $7,200 and Dr. Burke will receive
approximately $5,220.
Non-employee directors of the Company holding stock options granted pursuant
to the Director Plan will receive a cash payment in connection with the
cancellation of their options. The cash payment for each option that has an
exercise price that is lower than the Offer Price will equal the difference
between the Offer Price and the exercise price of such option, multiplied by the
number of vested (but not unvested)
A-10
<PAGE>
Shares subject to such option. The Company will make aggregate payments equal to
approximately $40,520. Of that total, Mr. Wallace Dempsey will receive
approximately $19,880; Mr. Hayden Harris will receive approximately $19,880; Mr.
Irwin Gruverman will receive approximately $380; and Dr. Wolfgang Woloszczuk
will receive approximately $380.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively, "REPORTING PERSONS") to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
of the Company. Such persons are required by regulations of the SEC to furnish
the Company with copies of all such filings. Based on its review of the copies
of such filings received by it with respect to the fiscal year ended May 31,
1999, the Company believes that all Reporting Persons complied with the Section
16(a) filing requirements in the fiscal year ended May 31, 1999 with the
following exception: Dr. Burke, a director of the Company, had one late report
concerning one transaction.
A-11
<PAGE>
ADAMS, HARKNESS & HILL, INC. ANNEX B
May 27, 1999
Board of Directors
Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Attention: Hayden Harris, Chairman of the Board
Members of the Board:
You have requested our opinion (the "Fairness Opinion") as to the fairness,
from a financial point of view, to the holders of common stock (the "Common
Stock"), of Endogen, Inc. (the "Company") of the consideration to be received by
holders of Common Stock, pursuant to an Agreement and Plan of Merger dated as of
May 27, 1999 (the "Agreement") among the Company, PerBio Science AB (the
"Parent"), and Ewok Acquisition Corp. (the "Purchaser"), a wholly owned
subsidiary of the Parent. The Agreement provides for (i) the commencement by
Purchaser of a tender offer (the "Tender Offer") to purchase all of the
outstanding shares of Common Stock at a price of $3.75 per share, net to the
seller in cash (the "Offer Price"), and (ii) the subsequent merger (the
"Merger") of the Purchaser into the Company, in which the remaining shares of
Common Stock will be converted and exchanged for an amount equal to the Offer
Price at the Effective Time. The Tender Offer and the Merger are collectively
referred to as the "Transaction." The terms and conditions of the Transaction
are more fully set forth in the Agreement.
Adams, Harkness & Hill, Inc., as part of its investment banking activities,
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have acted as financial advisor
to the Company in connection with the Agreement and will receive a fee for
services, which is contingent upon consummation of the Transaction. We will also
receive a fee for providing the Fairness Opinion that is not contingent upon the
consummation of the Transaction.
We are expressing no opinion as to the value of the Common Stock either now,
upon consummation of the Transaction, or at any other time. Our Fairness Opinion
as expressed herein is limited to the fairness, from a financial point of view,
of the consideration to be received by holders of the Common Stock as of the day
hereof and does not address the Company's underlying business decision to engage
in the Agreement.
In developing our Fairness Opinion, we have, among other things: (i)
reviewed the information contained in the Company's Annual Report, Form 10-KSB,
and related financial information for the fiscal year ended May 31, 1998, and
the Company's Form 10-QSB and the related unaudited financial information for
the nine month period ended February 28, 1999; (ii) analyzed and discussed
certain financial statements and other financial and operating data concerning
the Company, including forecasts, prepared by members of the senior management
of the Company; (iii) conducted due diligence discussions with members of senior
management of the Company; (iv) reviewed the historical market prices and
trading activity for the Common Stock and compared them with those of certain
publicly traded companies we deem to be relevant and comparable to the Company;
(v) reviewed the historical market prices for the Common Stock and compared them
with those of certain market indices we deem to be relevant; (vi) compared the
results of operations of the Company with those of certain companies we deem to
be relevant and comparable to the Company; (vii) compared the financial terms of
the Agreement with the financial terms of certain other mergers and acquisitions
to the extent we deemed them to be relevant and comparable to the Agreement;
(viii) participated in certain discussions among representatives of the
B-1
<PAGE>
Company and their financial and legal advisors; (ix) reviewed such other
financial studies and analyses and performed such other investigations and took
into account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions as of the date hereof.
In connection with our review and arriving at our Fairness Opinion, we have
not independently verified any information received from the Company, have
relied on such information, and have assumed that all such information is
complete and accurate in all material respects. With respect to any forecasts
reviewed relating to the prospects of the Company, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of Company management as to the future financial
performance of the Company. Our Fairness Opinion is rendered on the basis of
securities market conditions prevailing as of the date hereof and on the
conditions and prospects, financial and otherwise, of the Company as known to us
on the date hereof. We have not conducted, nor have we received copies of, any
independent valuation or appraisal of any of the assets of the Company. In
addition, we have assumed, with your consent, that any material liabilities
(contingent or otherwise, known or unknown) of the Company are as set forth in
the consolidated financial statements of the Company.
This opinion is necessarily based upon the information available to us and
facts and circumstances as they exist and are subject to evaluation on the date
hereof; events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We are not expressing any opinion
herein as to the price at which shares of Common Stock have traded or may trade
at any future time. We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring after the date hereof and do not
have any obligation to update, revise or reaffirm this opinion.
This opinion is directed to the Board of Directors of the Company and is not
intended to be and does not constitute a recommendation to any stockholder of
the Company. We were not requested to opine as to, and this opinion does not
address, the basic business decision to proceed with or effect the Transaction.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in filing with the Securities and Exchange Commission, the Schedule 14D-9
relating to the Tender Offer or the prospectus/proxy statement relating to the
Merger. Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the consideration is fair, from a financial point of view, to
the Company and the Company's stockholders.
<TABLE>
<S><C> <C>
Sincerely,
ADAMS, HARKNESS & HILL, INC.
/s/ GREGORY B. BROWN
------------------------------
Gregory B. Brown
MANAGING DIRECTOR
By:
</TABLE>
B-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Agreement and Plan of Merger and Letter Agreement each dated as of May 27,
1999 among Parent, Purchaser and the Company.
Exhibit 2 Excerpt from the Company's Proxy Statement dated as of September 25, 1998
(inclusive of pages 4, 8 and 9 thereof).
Exhibit 3 Confidential Disclosure Agreement dated as of January 11, 1999 between the
Company and Pierce.
Exhibit 4 Exclusivity Agreement dated as of May 12, 1999 by and between Pierce and the
Company.
Exhibit 5 Stockholder Agreement dated May 27, 1999 by and among Parent, Purchaser and
certain individuals listed on Exhibit A thereto.
Exhibit 6 Letter, dated June 2, 1999, from the President and Chief Executive Officer of
the Company to the stockholders of the Company concerning the Offer.
Exhibit 7 Joint Press Release of the Company and Parent, dated May 27, 1999.
Exhibit 8 Letter, dated September 30, 1998 from the Company to Dennis Walczewski.
Exhibit 9 Letter Agreement, dated September 11, 1998 by and between the Company and
Christine Burns.
Exhibit 10 Letter dated July 2, 1998 from the Company to Charles Burke.
Exhibit 11 Form of Stock Option Agreement under the Company's 1992 Stock Plan.
Exhibit 12 1992 Stock Plan of the Company.
Exhibit 13 Employment Agreement dated May 27, 1999 between Owen Dempsey and Parent.
Exhibit 14 Employment Agreement dated May 27, 1999 between Christine Burns and Parent.
</TABLE>
<PAGE>
Exhibit 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
PERBIO SCIENCE AB
EWOK ACQUISITION CORP.
AND
ENDOGEN, INC.
DATED AS OF MAY 27, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Index of Defined Terms
----------------------
<TABLE>
<S> <C>
Affiliate.................................................................................................4.6(b)
Agreement...............................................................................................Preamble
Alternative Transaction...................................................................................6.2(a)
Acquisition Agreement.....................................................................................6.2(b)
Articles of Organization..................................................................................2.5(a)
Benefit Plans............................................................................................4.15(a)
By-laws...................................................................................................2.5(b)
Certificate of Merger........................................................................................2.3
Certificates..............................................................................................3.2(b)
Closing......................................................................................................2.2
Closing Date.................................................................................................2.2
Code.....................................................................................................4.15(a)
Commitments.................................................................................................4.10
Commonly Controlled Entity...............................................................................4.15(a)
Company.................................................................................................Preamble
Company Common Stock....................................................................................Recitals
Company Intellectual Property...............................................................................4.19
Company Preferred Stock......................................................................................4.2
Company Stock Option......................................................................................7.4(a)
Company Stockholder Approval.................................................................................4.4
Confidentiality Agreement....................................................................................7.2
Dissenting Shares.........................................................................................3.1(d)
Dissenting Stockholder....................................................................................3.1(d)
Effective Time...............................................................................................2.3
Employee Stock Purchase Plan..............................................................................7.4(b)
Employment Agreements...................................................................................Recitals
Environmental Laws.......................................................................................4.12(a)
ERISA....................................................................................................4.15(a)
Exchange Act..............................................................................................1.1(b)
Expenses..................................................................................................7.7(b)
Expiration Date...........................................................................................1.1(a)
Filed SEC Documents..........................................................................................4.8
Governmental Entity..........................................................................................4.5
Hazardous Materials......................................................................................4.12(b)
Indebtedness..............................................................................................4.6(c)
Information Statement........................................................................................4.7
Intellectual Property ......................................................................................4.19
Knowledge...................................................................................................10.3
Liens.....................................................................................................4.3(a)
made available..............................................................................................10.3
material adverse affect.....................................................................................10.3
</TABLE>
<PAGE>
<TABLE>
<S> <C>
material adverse change.....................................................................................10.3
MBCL.........................................................................................................2.1
Merger..................................................................................................Recitals
Merger Consideration......................................................................................3.1(c)
Minimum Condition......................................................................................Exhibit A
Net Amount................................................................................................7.4(a)
Offer...................................................................................................Recitals
Offer Conditions..........................................................................................1.1(a)
Offer Documents...........................................................................................1.1(b)
Offer Price.............................................................................................Recitals
Option Notice...............................................................................................7.10
Parachute Gross-Up Payment..................................................................................4.17
Parent..................................................................................................Preamble
Paying Agent..............................................................................................3.2(a)
PCBs.....................................................................................................4.12(b)
Pension Plans............................................................................................4.15(a)
Permits.....................................................................................................4.11
Person......................................................................................................10.3
Plan.........................................................................................................6.7
Post-Signing Returns.........................................................................................6.3
Proxy Statement..............................................................................................4.5
Release..................................................................................................4.12(b)
Schedule 14D-1............................................................................................1.1(b)
Schedule 14D-9............................................................................................1.2(b)
SEC.......................................................................................................1.1(a)
SEC Documents.............................................................................................4.6(a)
Securities Act............................................................................................4.6(a)
Shares..................................................................................................Recitals
Stock Option Plans........................................................................................7.4(a)
Stockholder Agreement...................................................................................Recitals
Stockholders Meeting......................................................................................7.1(a)
Sub.....................................................................................................Preamble
Sub Shares..................................................................................................7.10
Sub Stock Option............................................................................................7.10
Subsidiaries..............................................................................................4.3(a)
Subsidiary..................................................................................................10.3
Superior Proposal.........................................................................................9.1(d)
Surviving Corporation........................................................................................2.1
Taxes.......................................................................................................4.16
Third Party Proposal......................................................................................6.2(a)
Warrant...................................................................................................7.4(a)
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 27, 1999 (this
"Agreement"), among PERBIO SCIENCE AB, a Swedish corporation ("Parent"), EWOK
ACQUISITION CORP., a Massachusetts corporation and a wholly owned subsidiary of
Parent ("Sub"), and ENDOGEN, INC., a Massachusetts corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement and believe that the
Merger (as defined below), is advisable and in the best interests of their
respective Stockholders;
WHEREAS, in furtherance of such acquisition, pursuant to this
Agreement, Parent has agreed to cause Sub to make a tender offer to purchase all
the outstanding shares of Common Stock, par value $.01 per share, of the Company
(the "Company Common Stock"; all the outstanding shares of Company Common Stock
being hereinafter collectively referred to as the "Shares") at a purchase price
of $3.75 per Share in U.S. dollars (the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement (as it may be amended from time to time as permitted
under this Agreement, the "Offer"); and the Board of Directors of the Company
has adopted resolutions approving the Offer and the Merger recommending that the
Company's stockholders accept the Offer and approving the acquisition of Shares
by Sub pursuant to the Offer and the Stockholder Agreement (as defined herein);
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have each approved the merger of Sub into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each Share, other than Shares owned directly or indirectly by Parent or
the Company and Dissenting Shares (as defined in Section 3.1(d)), will be
converted into the right to receive the price per share paid in the Offer;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Parent, Sub and certain
stockholders of the Company including all of the Company's executive officers
and directors are entering into a Stockholder Agreement (the "Stockholder
Agreement") pursuant to which such stockholders have, among other things, agreed
to sell or tender all of such stockholders' Shares to Sub at a cash price per
Share equal to the Offer Price, upon the terms and subject to the conditions set
forth in the Stockholder Agreement
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Sub and certain employees of
the Company are executing and delivering Employment Agreements (the "Employment
Agreements") copies of which have been delivered to the Company; and
<PAGE>
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Subject to the terms and conditions set forth in this Agreement,
within five (5) business days after the date of the public announcement, which
shall occur on the date hereof or the following day, by Parent and the Company
of this Agreement, Sub shall, and Parent shall cause Sub to, commence (within
the meaning of Rule 14d-2 under the Exchange Act (as hereinafter defined)) the
Offer, which shall expire at midnight, New York City time, on the date that is
twenty (20) business days after the date the Offer is commenced (the initial
"Expiration Date," and any expiration time and date established pursuant to an
authorized extension of the Offer as so extended, also an "Expiration Date").
The obligation of Sub to, and of Parent to cause Sub to, commence the Offer,
conduct and consummate the Offer as soon as practicable after the date hereof
and accept for payment, and pay for, any Shares tendered and not withdrawn
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Sub in its sole discretion, provided that, without the express written
consent of the Company, Sub may not waive the Minimum Condition (as defined in
Exhibit A)). Sub expressly reserves the right, subject to compliance with the
Exchange Act, to modify the terms of the Offer, except that, without the express
written consent of the Company, Sub shall not (i) reduce the number of Shares
subject to the Offer, (ii) reduce the Offer Price, (iii) add to or modify the
Offer Conditions, including the Minimum Condition, (iv) except as provided in
the next sentence, extend the Offer, if all of the Offer Conditions are
satisfied or waived, (v) change the form of consideration payable in the Offer
or (vi) amend or alter any term of the Offer in any manner materially adverse to
the holders of the Shares, provided, however, that nothing contained herein
shall prohibit Sub, in its sole discretion without the consent of the Company,
from waiving satisfaction of any condition to the Offer other than the Minimum
Condition. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) extend the Offer (each individual extension not to exceed five (5)
business days after the previously scheduled Expiration Date), if at the then
scheduled Expiration Date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(B) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer, and (C) extend the Offer on up to
two occasions in each case for period of not more than five (5) business days
beyond the latest Expiration Date if on
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<PAGE>
such Expiration Date there shall have been tendered more than the number of
Shares sufficient to satisfy the Minimum Condition but less than 90% of the
Shares; provided, Parent agrees to permanently waive the Offer Conditions.
Subject to the terms and conditions of the Offer and this Section 1.1(a), Sub
shall, and Parent shall cause Sub to, accept for payment, and pay for, all
Shares validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal (such Schedule 14D-1 and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Documents"). Parent and Sub agree that the
Offer Documents shall comply as to form in all material respects with the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder (the "Exchange Act"), and the Offer Documents, on the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by Parent or Sub
with respect to written information supplied by or on behalf of the Company or
any of its stockholders for inclusion or incorporation by reference in the Offer
Documents. Parent, Sub and the Company each agrees promptly to correct any
written information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable laws. The Company and
its counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds sufficient to accept for payment, and pay for, any and all
Shares that Sub becomes obligated to accept for payment, and pay for, pursuant
to the Offer.
1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly adopted resolutions approving this Agreement and the Stockholder
Agreement, the Offer and the Merger, determining that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company and its
stockholders and recommending that the Company's stockholders accept the Offer,
tender their Shares pursuant to the Offer and approve and adopt the Merger and
this
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Agreement (if required); provided, however, that such recommendation and
approval may be withdrawn, modified or amended to the extent that the Board of
Directors of the Company determines in good faith, after consultation with its
outside legal counsel, that failure to take such action could reasonably be
expected to result in a breach of the Board of Directors' fiduciary obligations
under applicable law and the Company terminates this Agreement pursuant to
Section 9.1(d). The Company represents that its Board of Directors has received
the opinion of Adams, Harkness & Hill, Inc. ("AH&H") dated the date of this
Agreement to the effect that, as of such date and based upon and subject to the
matters set forth therein, the cash consideration to be received by the holders
of Shares (other than Parent and its Affiliates) pursuant to the Offer and the
Merger is fair from a financial point of view to such holders, and a complete
and correct signed copy of such opinion will promptly be delivered by the
Company to Parent. The Company has been authorized by AH&H to permit the
inclusion of such opinion (or a reference thereto) in the Schedule 14D-1, the
Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter
defined).
(b) On the date the Offer Documents are filed with the SEC, or promptly
thereafter, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, the "Schedule 14D-9") containing the recommendation
described in paragraph (a) and shall mail the Schedule 14D-9 to the stockholders
of the Company to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable federal securities laws; provided,
however, that if the Board of Directors of the Company determines in good faith,
after consultation with its outside legal counsel, that the amendment or
withdrawal of such recommendation is likely to be required in order for its
members to comply with their fiduciary duties under applicable law and the
Company terminates this Agreement pursuant to Section 9.1(d), then any such
amendment or withdrawal, and any related amendment of the Schedule 14D-9, shall
not constitute a breach of this Agreement. The Schedule 14D-9 shall comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder and, on the date filed with the SEC
and on the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made by the Company
with respect to written information supplied by or on behalf of Parent or Sub
for inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any written information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable laws. Parent and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to stockholders of the Company. The Company agrees
to provide Parent and its counsel any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
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<PAGE>
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Sub and
their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will, upon
request, promptly deliver, and will use their best efforts to cause their agents
promptly to deliver, to the Company all copies of such information then in their
possession or control.
ARTICLE II
THE MERGER
2.1. The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Massachusetts Business Corporation Law
("MBCL"), Sub shall be merged with and into the Company at the Effective Time
(as defined in Section 2.3). Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the MBCL.
2.2. Closing.
The closing of the Merger (the "Closing") will take place at 10:00 a.m.
(Connecticut time) on the first business day after the day on which the last to
be satisfied or waived of the conditions set forth in Article VIII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) (the "Closing Date"),
at the offices of Wiggin & Dana, Three Stamford Plaza, Stamford, Connecticut
06911, unless another date, time or place is agreed to in writing by the parties
hereto.
2.3. Effective Time.
Subject to the provisions of this Agreement, as soon as practicable
after the Closing, the parties shall file articles of merger or other
appropriate documents (in any such case, the
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<PAGE>
"Articles of Merger") executed in accordance with the relevant provisions of the
MBCL and shall make all other filings or recordings required under the MBCL and
other applicable law. The Merger shall become effective at such time as the
Articles of Merger filed with the Secretary of the Commonwealth of the
Commonwealth of Massachusetts are duly accepted for record with the
Massachusetts Secretary of the Commonwealth (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time").
2.4. Effects of the Merger.
The Merger shall have the effects set forth in the MBCL. The purpose of
the Surviving Corporation shall be to engage in the business of research related
to, and the development of proprietary products for, laboratory and clinical use
and to engage in any other business activity now or hereafter permitted by the
Commonwealth of Massachusetts to a corporation organized under Chapter 156B of
the MBCL.
2.5. Articles of Organization and By-laws.
(a) The Articles of Organization of the Company (the "Articles of
Organization"), as in effect immediately prior to the Effective Time, shall be
the articles of organization of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law; provided, that
Parent shall be entitled, in its sole discretion, to amend and/or restate the
Articles of Organization simultaneously with the Effective Time.
(b) The by-laws of Sub (the "By-laws") as in effect immediately prior
to the Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.6. Directors.
The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
2.7. Officers.
The officers of Sub and such other persons as designated by Parent
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1. Effect on Capital Stock.
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any Shares or any shares of capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each share
of the Common Stock of the Company that is owned by the Company and each Share
that is owned by Parent or any other direct or indirect wholly owned subsidiary
of Parent shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 3.1(d), each
issued and outstanding Share (other than shares to be canceled in accordance
with Section 3.1(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price actually paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all such Shares
shall no longer be outstanding and shall be canceled and retired automatically
and shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who has neither voted in favor of the Merger nor
consented in writing thereto and otherwise complies with all the applicable
provisions of the MBCL concerning the right of holders of Company Common Stock
to dissent from the Merger and require appraisal of their Shares ("Dissenting
Shares") shall not be converted as described in Section 3.1(c) but shall become
the right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the Commonwealth of
Massachusetts. If, after the Effective Time, such Dissenting Stockholder
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the MBCL, his Shares shall be deemed
to be converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any demands
for appraisal of Shares received by the Company and (ii) if and after Sub shall
have accepted for payment Shares pursuant to and subject to the conditions of
the Offer (including the Minimum Condition), the opportunity to participate in
and direct all negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Parent, make any
payment with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
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3.2. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
commercial bank or trust company to act as paying agent in the Merger (the
"Paying Agent"). As of the Effective Time, Parent shall cause the Surviving
Corporation to deposit with the Paying Agent in separate trust for holders of
the Certificates (as hereinafter defined) cash in U.S. dollars in an amount
sufficient for the payment of the aggregate Merger Consideration for the shares
converted pursuant to Section 3.1(c) (it being understood that any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor, and the Paying Agent shall pay pursuant to irrevocable
instructions given by Sub or Parent, the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of Certificates in accordance with the terms of this Article
III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares formerly represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason except
notation thereon that a stockholder has elected to exercise his right
8
<PAGE>
to appraisal pursuant to the MBCL they shall be canceled and exchanged as
provided in this Article III.
(d) No Liability. Any funds deposited with the Paying Agent that remain
unclaimed by the former stockholders of the Company for three (3) months after
the Effective Time shall be paid to the Surviving Corporation upon demand, and
any former stockholders of the Company who have not theretofore complied with
the instructions for exchanging their Certificates provided herein shall
thereafter look only to the Surviving Corporation for payment of their claims
for the Merger Consideration set forth in Section 3.1 hereof for each Share held
by such stockholder, without any interest thereon. None of Parent, Sub, the
Company or the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article III would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 4.5)), the cash payment in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
4.1. Organization.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has all
requisite corporate power and authority to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing has not had a material adverse
effect (as defined in Section 10.3) that has not been cured and reasonably would
not be expected to have a material adverse effect or prevent or materially delay
the consummation of the Offer and/or the Merger. The Company has made available
to Parent complete and correct copies of its Articles of Organization and By-
laws, as amended to the date hereof.
4.2. Capitalization.
The authorized capital stock of the Company consists of 10,000,000
Shares. At the close of business on May 26, 1999 (a) 3,468,202 Shares were
issued and outstanding, (b) no Shares were held by the Company in its treasury,
(c) 944,450 Shares were reserved for issuance upon
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exercise of outstanding Company Stock Options (as defined in Section 7.4) and
(d) 305,000 Shares were issuable upon the exercise of outstanding Warrants (as
defined in Section 7.4. Since such date no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance, issuable or
outstanding. All outstanding Shares are, and all Shares that may be issued will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, as of the
date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company is a party or by which any of them is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or obligating
the Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company (other than as
set forth in Section 7.4).
4.3. Subsidiaries.
(a) The authorized capital stock of each of the subsidiaries of the
Company (the "Subsidiaries") is set forth on Schedule 4.3. All of the
outstanding shares of capital stock of the Subsidiaries are owned of record and
beneficially by the Company, free and clear of all mortgages, liens, pledges,
charges, encumbrances or other security interests (collectively, "Liens").
(b) Except as set forth on Schedule 4.3, since December 31, 1998 no
shares of capital stock or other voting securities of any Subsidiary were
issued, reserved for issuance, issuable or outstanding. All outstanding shares
of capital stock of the Subsidiaries are, and all such shares which may be
issued will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of any Subsidiary having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Subsidiaries may vote. As of
the date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any Subsidiary is a party or by which any of them is bound obligating
the Company or any Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of any Subsidiary or obligating the Company or any Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of any Subsidiary. Except for
the Company's interest in its Subsidiaries or as set forth on Schedule 4.3,
neither the Company nor any Subsidiary owns directly or indirectly any interest
or investment in the form of debt or equity in, nor is the Company or any
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Subsidiary subject to any obligation or requirement to provide for or to make
any such investment in, any person.
4.4. Authority.
The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby (other than, with respect to the Merger, the approval and adoption of
this Agreement by the holders of two-thirds of the Shares (the "Company
Stockholder Approval")). The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the Merger and
of the other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (in each case, other than,
with respect to the Merger, the Company Stockholder Approval). This Agreement
has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Parent and Sub, constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy laws or creditors' rights generally or by general principles of
equity.
4.5. Consents and Approvals; No Violations.
Except for filings, permits, authorizations, consents and approvals (1)
as may be required under, and other applicable requirements of, the Exchange Act
(including the filing with the SEC of the Schedule 14D-9 and a proxy or
information statement relating to any required approval by or meeting of the
Company's stockholders of this Agreement (the "Proxy Statement")), and (2) with
the Secretary of the Commonwealth of Massachusetts, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will require any filing
with, notice to, or Permit (as defined in Section 4.11), authorization, consent
or approval of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity"). Neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of the
Articles of Organization or By-laws of the Company or any of its Subsidiaries,
(b) result in the creation or imposition of any Liens upon the properties or
assets of the Company or any Subsidiary, (c) except as set forth on Schedule
4.5, result in a violation or breach of, require any notice to any party
pursuant to, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation,
acceleration or right of non-renewal or contractually require any prepayment or
offer to purchase any debt or give rise to the loss of a material benefit)
under, any of the terms, conditions or provisions of any Commitment (as defined
in Section 4.10) to which the Company or any of its Subsidiaries is a party or
by which the Company's or any of its Subsidiaries' properties or assets may be
bound, (d) violate any order, writ, injunction, decree,
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statute, rule or regulation applicable to the Company or any of its Subsidiaries
or any of their respective properties or assets or (e) result in the loss,
forfeiture, revocation, termination or diminution of any Permit (as defined in
Section 4.11) except in the case of clauses (c), (d) or (e) for failures to
fulfill requirements, losses, forfeitures, revocations, diminutions, violations,
breaches or defaults that, individually or in the aggregate, have not had an
adverse effect that has not been cured and reasonably would not be expected to
have an adverse effect or prevent or delay the consummation of the Offer and/or
the Merger.
4.6. SEC Documents; Financial Statements; Other Financial Information.
(a) The Company has filed with the SEC all reports, forms, schedules
and statements and other documents required to be filed by it (the "SEC
Documents"). As of their respective filing dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended (the Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements included in the SEC Documents complied, as of their respective filing
dates as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-QSB of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth on Schedule 4.6 or in
the SEC Documents filed and publicly available prior to the date hereof, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the SEC Documents filed and publicly
available prior to the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a balance sheet or in the notes thereto.
(b) All accounts receivable of the Company and each Subsidiary have
arisen from bona fide services provided in the ordinary course of business to
third parties which are not Affiliates (as defined in Rule 405 promulgated under
the Securities Act) of the Company or any Subsidiary or any of their officers,
directors or employees. All accounts receivable are good and collectible in the
ordinary course of business consistent with past practice at the aggregate
recorded amounts thereof, subject to reserves taken consistent with past
practices.
(c) Schedule 4.6(c) sets forth the consolidated indebtedness owed by
the Company and its Subsidiaries to any third party, and the Company's aggregate
consolidated cash and cash equivalents, each calculated as of May 24, 1999 in
accordance with generally accepted
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accounting principles, consistently applied. The term "indebtedness" shall
include indebtedness for borrowed money, reimbursement obligations with respect
to letters of credit and similar instruments, obligations incurred, issued or
assumed as the deferred purchase price of property or services (other than
accounts payable incurred in the ordinary course of business consistent with
past practice), obligations of others secured by (or, for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured)
any Lien on property or assets of the Company or any Subsidiary, capital lease
obligations, and obligations in respect of guarantees of any of the foregoing or
any "keep well" or other agreement to maintain any financial statement condition
of another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.
4.7. Information Supplied.
None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (a) the Offer Documents, (b) the
Schedule 14D-9, (c) the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") or (d) the Proxy Statement, will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting (as defined in Section 7.1) contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-
9, the Information Statement and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
4.8. Absence of Certain Changes or Events.
Except as disclosed in the SEC Documents (including exhibits thereto)
filed since January 1, 1998 and publicly available prior to the date hereof (the
"Filed SEC Documents"), and except as set forth on Schedule 4.8, since the date
of the most recent audited financial statements included in the Filed SEC
Documents, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with prior practice, and there
has not been (a) any material adverse change, (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (c) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (d) (i) any granting by
the Company or any Subsidiary to any officer of the Company of any increase in
compensation,
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except in the ordinary course of business consistent with past practice as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC Documents, (ii) any
granting by the Company or any Subsidiary to any officer, employee, director or
consultant of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in effect as
of the date of the most recent audited financial statements included in the
Filed SEC Documents or (iii) any entry by the Company or any Subsidiary into any
employment, severance or termination agreement with any officer, employee,
director or consultant, (e) any damage, destruction or loss to property, whether
or not covered by insurance, that, individually or in the aggregate, has not
been cured and would be reasonably expected to have, individually or in the
aggregate, a material adverse effect, (f) any change in accounting methods,
principles or practices by the Company or any Subsidiary, (g) any delivery of a
notice of non-renewal or any other failure to renew contracts or agreements to
which the Company or any Subsidiary is a party which are material, individually
or in the aggregate, or (h) any loss of any employee who earned more than
$75,000 in the most recent fiscal year (in salary, bonus and other cash
compensation).
4.9. Litigation.
Except as disclosed on Schedule 4.9 hereto, there is no claim, suit,
action, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries and there
is no judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary.
4.10. Contracts.
Except as filed as an exhibit to the Filed SEC Documents or set forth
on Schedule 4.10 and delivered to or made available to Parent or its counsel,
there are no (a) notes, bonds, mortgages, indentures, leases, or Permits, or (b)
other contracts, agreements or other instruments or obligations, whether written
or oral, or any amendments, supplements or restatements of any of the foregoing
((a) and (b), collectively, "Commitments") that (i) relate to real property and
involve payments in excess of $25,000 annually, (ii) relate to goods or services
provided by the Company and involve payments in excess of $25,000 annually,
(iii) relate to employees, officers, or directors of the Company or independent
contractors performing services on behalf of the Company or (iv) are otherwise
material to the business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole. Neither the Company nor any
Subsidiary is and, to the knowledge of the Company, no other party is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice or both would reasonably be expected
to cause such a violation of or default under) any material Commitment to which
it is a party or by which it or any of its properties or assets is bound. Each
Commitment constitutes a valid and binding obligation on the Company and/or the
Subsidiary party thereto and, to the knowledge of the Company, each other party
thereto, enforceable against such other party in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy laws or
creditors' rights generally or by general principles of equity.
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4.11. Compliance with Laws.
The Company and each Subsidiary is in compliance with all applicable
statutes, laws, codes, ordinances, regulations, rules, Permits, judgments,
decrees and orders of any Governmental Entity applicable to its assets,
properties, business or operations. The Company and each Subsidiary has in
effect all Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all certificates of need and authorizations under
Environmental Laws (as defined below) and exemptions from any of the foregoing
(collectively, "Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted (and the
Company and/or each Subsidiary has timely made appropriate filings for issuance
or renewal thereof). Schedule 4.11 contains a list of all Permits, and copies
thereof have been provided to Parent or its counsel. No default under any Permit
has occurred. No investigation or review by any Governmental Entity with respect
to the Company or any Subsidiary is pending or, to the knowledge of the Company,
threatened.
4.12. Environmental Matters.
Except as set forth in Schedule 4.12:
(a) the Company and each Subsidiary is, and has been, in compliance
with all applicable Environmental Laws (as defined below). The term
"Environmental Laws" means any Federal, state, provincial, regional, municipal,
local or foreign judgment, order, decree, statute, law, ordinance, rule,
regulation, code, permit, consent, approval, license, writ, decree, directive,
injunction or other enforceable requirement, including any registration
requirement, relating to: (A) Releases (as defined below) or threatened Releases
of Hazardous Materials (as defined below) into the environment; (B) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials; or (C) otherwise relating to
pollution or protection of health or safety or the environment;
(b) there has been no Release or threatened Release of Hazardous
Materials by the Company or any Subsidiary, or the knowledge of the Company by
any other party, in, on, under or affecting any property now or previously
owned, leased, controlled or operated by the Company or any Subsidiary or, to
the knowledge of the Company, any adjacent site. The term "Release" has the
meaning set forth in 42 U.S.C. (S) 9601(22). The term "Hazardous Materials"
means any pollutant, contaminant, hazardous, radioactive or toxic substance,
material, constituent or waste, or any other waste, substance, chemical or
material regulated under any Environmental Law, including (1) petroleum, crude
oil and any fractions thereof, (2) natural gas, synthetic gas and any mixtures
thereof, (3) asbestos and/or asbestos-containing material, (4) radon and (5)
polychlorinated biphenyls ("PCBs"), or materials or fluids containing PCBs;
(c) there is no pending, or, to the knowledge of the Company,
threatened claim, action, demand, investigation or inquiry by any Governmental
Entity or other person relating to any
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actual or potential violations of Environmental Law or any actual or potential
obligation to investigate or remediate a Release or threatened Release of any
Hazardous Materials;
(d) neither the Company nor any Subsidiary has assumed, whether by
contract or operation of law, any liabilities or obligations arising under
Environmental Laws in connection with formerly owned, leased or operated
properties or facilities or in connection with any formerly owned divisions,
subsidiaries, companies or other entities; and
(e) there are no underground or aboveground storage tanks, incinerators
or surface impoundments owned or operated by the Company or any Subsidiary, or
to the knowledge of the Company, by any other party at, on or under or within
any property, owned, leased, controlled or operated by the Company or any
Subsidiary, except as are in compliance with Environmental Laws and no such
tanks, incinerators or impoundments have been removed from any such property;
and
(f) neither the Company nor any Subsidiary has used any waste disposal
site, or otherwise disposed of, transported, or arranged for the transportation
of, any Hazardous Materials to any place or location, except in compliance with
all applicable Environmental Laws and for any such use, disposal, transportation
or arrangement that has not had a material adverse effect.
4.13. Absence of Changes in Benefit Plans; Labor Relations.
Except as filed as an exhibit to the Filed SEC Documents and except as
disclosed on Schedule 4.13 or as expressly provided in this Agreement, since the
date of the most recent audited financial statements included in the Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any Subsidiary of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan or arrangement providing benefits to any current or former employee,
officer or director of the Company or any Subsidiary. Except as set forth in
Schedule 4.13 or as filed as an exhibit to the Filed SEC Documents or as
expressly provided in this Agreement, there exist no employment, consulting,
severance, termination or indemnification agreements or arrangements between the
Company and any current or former employee, officer or director of the Company.
Schedule 4.13 contains a list of all amounts payable or that will or may become
payable to each director, officer or employee or former director, officer or
employee of the Company or any Subsidiary pursuant to any employment,
change-in-control, severance or termination agreement or arrangement other than
pursuant to the Employment Agreements. There are no collective bargaining or
other labor union agreements to which the Company or any Subsidiary is a party
or by which it is bound. To the knowledge of the Company, the Company has not
encountered any labor union organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
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4.14. Employment Matters; Affiliate Transactions.
(a) Schedule 4.14 sets forth a list of all directors, officers and
employees of the Company and each Subsidiary as of the date hereof and the
aggregate salary, bonus and other cash compensation paid as of May 14, 1999 and
the number of Company Stock Options and/or Warrants granted or issued to each
such employee, officer, and director in the most recently completed fiscal year
and paid and granted or issued to each such person from the beginning of the
current fiscal year to the date hereof. Since May 14, 1999, the Company has not
increased the annual salary, bonus or other cash compensation payable to any
director, officer or employee of the Company except as may be provided in the
Employment Agreements.
(b) Schedule 4.14 sets forth a list of all outstanding Company Stock
Options and Warrants as of the date hereof, showing for each such Company Stock
Option and Warrant: (i) the number of Shares issuable, (ii) the number of vested
Shares, (iii) the date of grant, (iv) the exercise price and (v) the holder
thereof.
(c) Schedule 4.14 sets forth a description of all transactions between
the Company or its Subsidiaries, on the one hand, and any of their respective
Affiliates, directors, officers, employees, or consultants, on the other hand,
in each case consummated at any time since January 1, 1998. Except as set forth
on Schedule 4.14, there are no agreements or arrangements between the Company or
its Subsidiaries, on the one hand, and any of their respective Affiliates,
directors, officers, employees or consultants, on the other hand, with respect
to any such transactions. No Affiliate, director, officer, employee or
consultant of the Company owns any interest in any asset or property (real or
personal, tangible or intangible), business or contract used or intended for use
or otherwise relating to the business currently conducted or proposed to be
conducted by the Company or any Subsidiary.
4.15. ERISA Compliance.
(a) Schedule 4.15(a) contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other benefit plans, contracts, programs, policies, practices or
arrangements, whether written or oral, funded or unfunded, maintained or
contributed to by the Company or any other person or entity that, together with
the Company, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended (the "Code") (the Company
and each such other person or entity, a "Commonly Controlled Entity"), for the
benefit of any current or former employees, officers or directors of the Company
or dependents of any such person (collectively, "Benefit Plans"). The Company
has delivered or made available to Parent true, complete and correct copies of
(i) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with the Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Benefit Plan for which such summary plan description is required and (iv) each
trust agreement and group annuity contract relating to any Benefit Plan. Each
Benefit Plan has been
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administered in all material respects in accordance with its terms. The Company
and each Commonly Controlled Entity and all the Benefit Plans are all in
compliance in all material respects, and all Benefit Plans have been operated
and administered in all material respects with applicable provisions of ERISA
and the Code, and no "reportable event," or non-exempt "prohibited transaction"
(as such terms are defined in ERISA and the Code, as applicable), or termination
has occurred with respect to any Benefit Plan, and the consummation of the
transaction entered into pursuant to this Agreement will not result in the
occurrence of any such event.
(b) Except as disclosed in Schedule 4.15(b), all Pension Plans intended
to qualify under Section 401(a) of the Code are qualified and exempt from
Federal income taxes under Section 401(a) and 501(a), respectively, of the Code,
and no event has occurred that would adversely affect its qualification or
materially increase its costs. All amendments to Pension Plans required under
ERISA and the Code to be adopted by the Company by December 31, 1994, have been
adopted. There have been no material violations of ERISA or the Code with
respect to the filing of applicable documents, notices or reports (including,
without limitation, annual reports filed on IRS From 5500) relating to any
Benefit Plan maintained by the Company or any Commonly Controlled Entity with
any Governmental Authority or the furnishing of such required documents to the
participants or beneficiaries of such Benefit Plans.
(c) Neither the Company nor any Commonly Controlled Entity has within
the five year period immediately preceding the date hereof maintained,
contributed to or been obligated to contribute to any Benefit Plan that is
subject to Title IV of ERISA or Section 412 of the Code. Neither the Company nor
any Commonly Controlled Entity is required to contribute to any "multiemployer
plan" (as defined in Section 4001(a) (3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Section 4201 of ERISA) that has
not been fully paid.
(d) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Schedule 4.15(d), (1) no such Benefit Plan
is funded through a "welfare benefits fund", as such term is defined in Section
419 (e) of the Code, (2) each such Benefit Plan that is a "group health plan",
as such term is defined in Section 5000 (b)(1) of the Code, complies
substantially with the applicable requirements of Section 4980B(f) of the Code
and (3) except as provided in writing in such plan, there are no understandings,
agreements or undertakings, written or oral, that would prevent any such plan
(including any such plan covering retirees or other former employees) from being
amended or terminated without material liability to the Company or any Commonly
Controlled Entity on or at any time after the Effective Time. Except as set
forth in Schedule 4.15(d), no Benefit Plan that is a welfare benefit plan
provides for post-retirement medical or life insurance benefits coverage to any
current or former employee, officer, or director of the Company or any dependent
of any such individual except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), and the Health
Insurance Portability and Accountability Act of 1996; and there are no qualified
beneficiaries that have elected COBRA coverage under an employee welfare benefit
plan as of the Closing Date.
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(e) Except as set forth on Schedule 4.15(e) and except with respect to
the Company Stock Options, no employee or director of the Company will be
entitled to any additional compensation or benefits or any acceleration of the
time of payment or vesting of any compensation or benefits under any Benefit
Plan as a result of the transactions contemplated by this Agreement. It shall be
assumed for purposes of the preceding sentence that no payments will be received
by, or accelerated to, any such employee or director as a result of the
termination of such individual's employment/service relationship by the
Surviving Corporation after the Effective Time.
(f) All contributions (including all employer contributions and
employee salary reduction contributions) which are due to each Benefit Plan
which is a Pension Plan have been timely paid.
(g) To the Company's knowledge, after due inquiry, there has been no
act or acts which would result in the disallowance of an income tax deduction
that would otherwise be available to the Company or the imposition of a tax, an
addition to tax or a penalty pursuant to Code Sections 4980B, 4980D, 4975, 4972,
6652, 6721 or 6723 or any predecessor provision thereof, or any regulations
promulgated thereunder, whether final, temporary or proposed.
(h) The Company does not maintain and has not ever maintained any
nonqualified deferred compensation arrangements, including, but not limited to,
"top-hat" plans within the meaning of ERISA Section 201(2).
4.16. Taxes.
Except as set forth on Schedule 4.16, Company has filed all tax returns
and reports required to be filed by it (which returns are true and complete in
all material respects) and has paid all taxes due and required to be paid by it
(other than such taxes as are being contested in good faith or with respect to
which the Company is maintaining reserves). The most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve for all taxes
payable by the Company or any Subsidiary for all taxable periods and portions
thereof through the date of such financial statements. Except as set forth on
Schedule 4.16, no deficiencies for any taxes which remain outstanding have been
proposed, asserted or assessed against the Company or any Subsidiary, and no
requests for waivers of the time to assess any such taxes are pending. Except as
set forth on Schedule 4.16, none of the Federal income tax returns of the
Company or any Subsidiary have been examined by the United States Internal
Revenue Service. As used in this Agreement, "taxes" shall mean all Federal,
state, local and foreign income, property, sales, payroll, employment, excise,
withholding and other taxes, tariffs or other governmental charges in the nature
of a tax as well as any interest, penalties and additions to tax.
4.17. No Excess Parachute Payments.
Not including any payments under the Employment Agreements, no amount
that could be received pursuant to the Benefit Plans or any executed and
delivered agreements between the
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Company or any Subsidiary and any officer, director or employee thereof in
effect as of the date hereof (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any Subsidiary who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance, change-in-control
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect would be an "excess parachute payment" (as such term is
defined in Section 280G(b) (1) of the Code). No disqualified individual is
entitled to receive any additional payment from the Company, any Subsidiary, the
Surviving Corporation, or any other person referred to in Q&A 10 under proposed
Treasury Regulation Section 1.280G-1 (a "Parachute Gross-Up Payment") in the
event that the 20 per cent parachute excise tax of Section 4999(a) of the Code
is imposed on such person. Except as set forth in Schedule 4.17, neither the
Board of Directors of the Company nor the Board of Directors of any Subsidiary
has during the six months prior to the date hereof granted to any officer,
director or employee of the Company or any Subsidiary any right to receive any
Parachute Gross-Up Payment.
4.18. Title to Properties; Condition of Assets.
(a) Except as set forth in Schedule 4.18, the Company and each
Subsidiary has good and marketable title to, or valid leasehold interests in,
all its material properties and assets except for such as are no longer used in
the conduct of its businesses or as have been disposed of in the ordinary course
of business. All such assets and properties are free and clear of all Liens
other than those set forth in Schedule 4.18.
(b) The properties and assets of the Company and its Subsidiaries are
in good repair and operating condition, and are sufficient for the conduct of
the business of the Company and the Subsidiaries as presently conducted.
(c) Except as set forth in Schedule 4.18, the Company and each
Subsidiary has complied in all material respects with the terms of all leases to
which it is a party or under which it is in occupancy, and all such leases are
in full force and effect. The Company enjoys peaceful and undisturbed possession
under all such leases.
(d) Neither the Company nor any Subsidiary owns any real property.
4.19. Intellectual Property.
(a) For the purposes of this Section 4.19, "Intellectual Property"
means (i) all patents, trademarks, trade names, and applications for any of the
foregoing, of any party, or to which it has rights and (ii) all licenses granted
by or to such party, and other agreements pertaining to any of the foregoing or
any inventions, trade secrets or other proprietary know-how to which such party
is a party or is bound. The Company has disclosed to Parent or its counsel
correct and complete copies of all applications, filings, licenses, agreements
and related correspondence and documents embodying the Company's Intellectual
Property.
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(b) Except as set forth in Schedule 4.19: (i) the Company owns or has
the right to use all of the Company's Intellectual Property necessary for the
Company to conduct its business as presently conducted; (ii) no proceedings have
been instituted, are pending or, to the best of its knowledge, threatened, which
challenge the Company's rights in respect of the aforesaid or the validity
thereof; (iii) none of the Intellectual Property owned or used by the Company is
the subject of any lien or other agreement granting rights therein to any third
party; (iv) the Company has not received notice of any charges of interference
or infringement of any Intellectual Property; (v) to the Company's knowledge, no
method or product used by the Company (A) infringes upon or otherwise violates
the Intellectual Property rights of others and the Company has not received any
claims of such infringements or violation; and (B) none of the Company's patents
is being infringed by others and none is subject to any outstanding order,
decree, judgment, stipulation or charge; (vi) the Company's employees and
consultants who are engaged to develop Intellectual Property are required to
sign confidentiality and assignment of inventions agreements in the form
previously provided Sub; (vii) the Company has no knowledge of any facts or
claims which would cause any of such patents, trademarks, or copyrights to be
invalid; and (viii) the Company's Intellectual Property was not developed under
a grant from any Governmental Entity or private source.
4.20. Non-Compete.
Except as set forth in Schedule 4.20, neither the Company nor any
Subsidiary is subject to any agreement, covenant or understanding that restricts
the Company or any Subsidiary from entering or conducting any line of business
in any location at any time.
4.21. Voting Requirements.
The affirmative vote of the holders of two-thirds of the outstanding
Shares is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve the Merger.
4.22. State Takeover Statutes.
The Board of Directors of the Company has approved the Merger and this
Agreement, and such approval is sufficient to render inapplicable to the Merger,
this Agreement and the transactions contemplated by this Agreement, the
provisions of Chapter 110C of the General Laws of the Commonwealth of
Massachusetts to the extent, if any, such Chapter is applicable to the Merger,
this Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement. To the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or the transactions contemplated by this Agreement.
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4.23. Brokers.
Except as set forth on Schedule 4.23, no broker, investment banker,
financial advisor or other person, other than AH&H, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
4.24. Opinion of Financial Advisor.
The Board of Directors of the Company has received the opinion of AH&H
dated the date of this Agreement to the effect that, as of such date and based
upon and subject to the matters set forth therein, the cash consideration to be
received by holders of Shares (other than Parent and its Affiliates) pursuant to
the Offer and the Merger is fair from a financial point of view to such holders
and a complete and correct signed copy of which opinion has been delivered to
Parent (after receipt thereof by the Company).
4.25. Year 2000.
The description of the Company's Year 2000 readiness under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000" in the Company's Form 10-KSB for the year ended May 31,
1998 is accurate and complete in all respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub each represent and warrant to the Company as follows:
5.1 Organization.
(a) Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent and Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualifications or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) could not be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger.
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(b) All of the issued and outstanding capital stock of Sub is, and at
the Effective Time will be, owned by Parent, and there are no (i) other
outstanding shares of capital stock or other voting securities of Sub, (ii)
securities of Sub convertible into or exchangeable for shares of capital stock
or other voting securities of Sub or (iii) options or other rights to acquire
from Sub, and no obligations of Sub to issue, any capital stock, other voting
securities or securities convertible into or exchangeable for capital stock or
other voting securities of Sub. Sub has made available to the Company a complete
and correct copy of Sub's articles of organization and bylaws, as amended to the
date hereof. Sub's articles of organization and bylaws so delivered are in full
force and effect and will remain in full force and effect until the Effective
Time.
5.2 Authority.
Parent and Sub have requisite power and authority to execute and
deliver this Agreement and the Stockholder Agreement, and to consummate the
transactions contemplated by this Agreement and the Stockholder Agreement. The
execution, delivery and performance of this Agreement and the Stockholder
Agreement, and the consummation of the transactions contemplated by this
Agreement and the Stockholder Agreement, have been duly authorized by all
necessary action on the part of Parent and Sub and no other proceedings on the
part of Parent and Sub are necessary to authorize this Agreement or the
Stockholder Agreement or to consummate the transactions contemplated hereby or
thereby. No vote of Parent shareholders is required to approve this Agreement or
the Stockholder Agreement or the transactions contemplated hereby or thereby.
Each of this Agreement and the Stockholder Agreement has been duly executed and
delivered by Parent and Sub and constitutes a valid and binding obligation of
Parent and Sub enforceable against Parent and Sub in accordance with its terms.
5.3 Consents and Approvals; No Violations.
Except for filings, permits, authorizations, consents and approvals as
may be required under, and other applicable requirements of, the Exchange Act
(including the filing with the SEC of the Offer Documents), the MBCL and state
takeover laws, neither the execution, delivery or performance of this Agreement
or the Stockholder Agreement by Parent and Sub, nor the consummation by Parent
and Sub of the transactions contemplated hereby or thereby will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or by-laws of Parent and Sub, (ii) require any filing with, notice
to, or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not reasonably be expected to prevent or
materially delay the consummation of the Offer and/or the Merger), (iii) result
in a violation or breach of, require any notice to any party pursuant to, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets,
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except in the case of clauses (iii) and (iv) for violations, breaches or
defaults which could not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the Offer and/or the
Merger.
5.4 Information Supplied.
None of the information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Schedule 14D-9, (iii) the Information Statement or (iv) the
Proxy Statement will, in the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Offer
Documents will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on information supplied by or on
behalf of the Company specifically for inclusion or incorporation by reference
therein.
5.5 Interim Operations of Sub.
Sub (and any other wholly owned subsidiary of Parent which may be used
to effect the Offer and the Merger pursuant to Section 2.1) was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
5.6 Brokers.
No broker, investment banker, financial advisor or other person other
than Vector Securities International, Inc., the fees and expenses of which shall
be paid by the Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
5.7 Financing.
Parent has, and on the Expiration Date will have, sufficient funds
available, directly or through finance commitments, to purchase, or to cause Sub
to purchase, all the Shares pursuant to the Offer and the Merger and to pay all
fees and expenses payable by Parent or Sub related to the transactions
contemplated by this Agreement.
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ARTICLE VI
COVENANTS
6.1 Conduct of Business.
From the date hereof to the Effective Time, the Company shall, and
shall cause each Subsidiary to, carry on its business in the ordinary course
consistent with past practice and use its best efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees as appropriate and preserve its relationships with
customers, suppliers, licensors, licensees and others having significant
business dealings with it. Without limiting the generality of the foregoing,
from the date hereof to the Effective Time, the Company shall not and shall
cause each Subsidiary not to (unless Parent shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except as
expressly permitted by this Agreement):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for Shares of its
capital stock, or (iii) purchase, redeem or otherwise acquire any Shares or any
capital stock of the Company or any Subsidiary or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Shares upon the
exercise of Company Stock Options or warrants to purchase Shares outstanding on
the date hereof in accordance with their present terms);
(c) amend its Articles of Organization or Bylaws or other comparable
charter or organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets or stock of, or by any
other manner, any business or any person or (ii) except as set forth on Schedule
6.1(d) and as otherwise provided in Section 6.1(g), any assets except for the
purchase of assets for an amount which does not exceed, individually or in the
aggregate, $100,000;
(e) except as set forth in Schedule 6.1(e), sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, except sales of inventory or sales of
immaterial assets;
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(f) (i) except as set forth in Schedule 6.1(f), incur any indebtedness
(other than pursuant to existing credit agreements) or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any Subsidiary,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the foregoing
except for short- term borrowings incurred in the ordinary course of business
consistent with past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person;
(g) except for the items listed on Schedule 6.1(g), make or agree to
make any capital expenditure or expenditures with respect to property, plant or
equipment which, individually, is in excess of $75,000 or, in the aggregate, are
in excess of $250,000;
(h) except as set forth on Schedule 6.1(h) or as required by law or as
consistent with past practice, make any material tax election or settle or
compromise any material income tax liability or take any action or position that
is inconsistent with the past tax or accounting practices of the Company;
(i) except as set forth in Schedule 6.1(i) pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved against
in the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Filed SEC Documents or incurred thereafter in the
ordinary course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any confidentiality,
standstill or similar agreements to which the Company or any Subsidiary is a
party;
(j) except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Commitment to which the Company or any
Subsidiary is a party, or waive, release or assign any rights or claims;
(k) enter into any Commitment relating to the distribution, sale or
marketing by third parties of the Company's or any Subsidiary's products or
services or enter into any contract, agreement or other commitment with any
supplier to the Company unless such contract, agreement or other commitment is
terminable upon no more than thirty (30) days notice;
(l) except as required to comply with applicable law and except as set
forth on Schedule 6.1(1), (i) adopt, enter into, terminate or amend any Benefit
Plan or other arrangement for the benefit or welfare of any director, officer or
current or former employee, (ii) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases or bonuses in the ordinary course of business
consistent with past practice), (iii) pay any benefit not provided for under any
Benefit Plan (except for bonuses in the ordinary course of business consistent
with past practice), (iv) except as permitted in clause (ii), grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation
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rights, stock based or stock related awards, performance units or restricted
stock, or the removal of existing restrictions in any Benefit Plans or agreement
or awards made thereunder) or (v) take any action other than in the ordinary
course of business to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan; or
(m) authorize any of, or commit or agree to take any of, the foregoing
actions.
6.2 No Solicitation.
(a) The Company shall, shall cause each Subsidiary to and shall direct
and use reasonable efforts to cause its and its Subsidiaries' officers,
directors, employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties other than Parent and Sub that may
be ongoing with respect to an Alternative Transaction (as hereinafter defined).
The Company shall not, shall cause each Subsidiary not to and shall not
authorize or permit any of its or its Subsidiaries' officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative retained by it to, directly or indirectly, (i) solicit,
initiate or furnish any information in response to any inquiries or the making
of any proposal that may lead to an Alternative Transaction or (ii) participate
in any discussions or negotiations regarding any proposed Alternative
Transaction; provided, however, that if, at any time prior to the acceptance for
payment of Shares pursuant to and subject to the conditions (including the
Minimum Condition) of the Offer, the Board of Directors of the Company
determines in good faith, after consultation with its outside counsel, that
action is required by reason of the Board of Directors' fiduciary duties under
applicable law, the Company may (subject to compliance with Section 6.2(c)), in
response to an unsolicited Third Party Proposal (as defined herein), (A) furnish
information with respect to the Company to the person making such Third Party
Proposal pursuant to a confidentiality agreement that is at least as protective
of the Company's interests as is the Confidentiality Agreement (as defined in
Section 7.2) and (B) participate in negotiations regarding such Alternative
Transaction; provided, further, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from complying with Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any proposed
Alternative Transaction or withdrawing its recommendation of the Offer pursuant
to Section 6.2(b). Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director, officer or employee of the Company or any Subsidiary or any investment
banker, financial advisor, attorney, accountant or other representative of the
Company, acting on behalf of the Company, shall be deemed to be a breach of this
Section 6.2(a) by the Company. For purposes of this Agreement, a "Third Party
Proposal" means a bona fide proposal from a third party, which proposal did not
result from a breach of this Section 6.2(a) and which third party the Board of
Directors of the Company determines in good faith (after consultation with AH&H
or another financial advisor of nationally recognized reputation) to be
reasonably capable of completing a Superior Proposal (as defined in Section
9.1(d)). For purposes of this Agreement, an "Alternative Transaction" means any
direct or indirect acquisition or purchase of assets of the Company and its
Subsidiaries, taken as a whole, outside the ordinary course of business or
outstanding equity securities of the Company or any Subsidiary, any tender offer
or exchange offer that if consummated would result in any person
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beneficially owning equity securities of the Company or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction that would
result in the acquisition of the Company or any Subsidiary, other than the
transactions contemplated by this Agreement and other than the acquisition of
Shares pursuant to the exercise of Company Stock Options or Warrants which are
issued and outstanding as of the date hereof.
(b) Neither the Board of Directors of the Company nor any Committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, the
approval or recommendation by such Board of Directors or such committee of the
Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Alternative Transaction or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other agreement (an "Acquisition Agreement") with respect to an Alternative
Transaction unless in connection with the taking of any such action described in
Clause (i), (ii) or (iii) of this Section 6.2(b), the Board of Directors of the
Company shall have previously terminated this Agreement pursuant to Section
9.1(d). Notwithstanding the preceding sentence, if the Company's Board
determines in its good faith judgment, after taking into consideration the
advice of its outside legal counsel, that it is required by reason of their
fiduciary duties under applicable law, the Company's Board of Directors may
subject to Section 9.1(d): (A) withdraw its recommendation of the Offer or the
Merger and the other transactions contemplated hereby, or (B) approve or
recommend or cause the Company to enter into an agreement with respect to a
Superior Proposal; provided, however, that the Company concurrently terminates
this Agreement pursuant to Section 9.1(d).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.2, the Company as promptly as
reasonably practicable shall advise Parent orally and in writing of any request
for information or of any proposal or any inquiry regarding any Alternative
Transaction and the material terms and conditions of such request, proposal or
inquiry. The Company will, to the extent reasonably practicable and not in
violation of the Board of Director's fiduciary duties under applicable law,
after consultation with its outside counsel, keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any such
request, proposal or inquiry.
(d) Nothing contained in this Section 6.2 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders, in each case with respect to any
Third Party Proposal, if (i) in the good faith judgment of the Board of
Directors of the Company, after consultation with its outside counsel, such
disclosure is required by reason of the Board of Directors' fiduciary duties
under applicable law and (ii) the Company shall have provided Parent and Sub
with reasonable advance notice of its position and proposed disclosure under the
circumstances; provided, however, that neither the Company nor its Board of
Directors nor any committee thereof shall, except as permitted by Section
6.2(b), withdraw or modify, or propose to withdraw or modify, its position with
respect to the Offer, the Merger or this Agreement or approve or recommend, or
propose to approve or recommend, an Alternative Transaction.
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6.3 Certain Tax Matters.
(a) From the date hereof until the Effective Time, (i) the Company and
each Subsidiary will file all tax returns and reports ("Post-Signing Returns")
required to be filed; (ii) the Company and each Subsidiary will timely pay all
taxes shown as due and payable on the Company's Post-Signing Returns that are so
filed; (iii) the Company and each Subsidiary will make provision for all taxes
payable by the Company for which no Post-Signing Return is due prior to the
Effective Time; and (iv) the Company will promptly notify Parent of any action,
suit, proceeding, claim or audit pending against or with respect to the Company
and each Subsidiary in respect of any tax where there is a reasonable
possibility of a determination or decision which would reasonably be expected to
have a material adverse effect on the Company's or any Subsidiary's tax
liabilities or tax attributes.
(b) The Company shall use its best efforts to obtain from all its
employees who exercised a Company Stock Option or Warrants for which the proper
amount of payroll or employment taxes were not withheld by the Company upon the
exercise of such Company Stock Option or Warrant, a properly executed IRS Form
4669 from each such employee, in which such employee certifies that such
employee has paid in full all taxes applicable to the compensation income
attributable to such exercise.
6.4 Other Actions.
The Company shall not, and shall cause each Subsidiary not to, take or
omit to take any action, the taking or omission of which would reasonably be
expected to result in (a) any of the representations and warranties of the
Company set forth in this Agreement becoming untrue or inaccurate in any
material respect or (b) any of the Offer Conditions not being satisfied (subject
to the Company's right to take actions specifically permitted by Section 6.2 or
9.1). For purposes of this Section 6.4, "in any material respect" shall mean
that claims, demands, damages, liabilities and losses arising out of such
untruth or inaccuracy will actually or may reasonably be expected to result in
damages, losses, costs and expenses (including reasonable attorney's fees and
court costs) (collectively, "Losses") suffered or incurred by the Company,
Parent or Sub, when taken as a whole, in excess of $300,000.
6.5 Advice of Changes; Filings.
The Company shall confer with Parent on a regular and frequent basis as
reasonably requested by Parent, report on operational matters and promptly
advise Parent orally and, if requested by Parent, in writing of any material
change with respect to the Company or any Subsidiary. The Company shall promptly
provide to Parent (or its counsel) copies of all filings made by the Company or
any Subsidiary with any Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
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6.6 Financial Information.
The Company shall furnish to Parent the following financial information
(all to be prepared in accordance with generally accepted accounting principles
consistently applied):
(a) as soon as available but in any event within 20 days of each
calendar month, the unaudited consolidated balance sheets, income statements and
cash flow statements of the Company, showing its financial condition as of the
close of such month and the results of operations during such month and for the
then elapsed portion of the Company's fiscal year, in each case, setting forth
the comparative figures for the corresponding month in the prior fiscal year and
the corresponding elapsed portion of the prior fiscal year; and
(b) all documents filed with or submitted to the SEC by the Company
simultaneously with such filing or submission.
6.7 Employee Benefits
Following the Closing Date, Parent may, at its option, continue the
employee benefits programs for employees of the Company as reflected on Schedule
4.15(a) annexed hereto, or, alternatively, include such employees in Parent's or
one of its Affiliate's employee benefits programs. In such connection, Parent
agrees that for purposes of any length of service requirements, waiting periods,
vesting periods or differential benefits based on length of service in any such
benefit programs, each such employee's service with the Company shall be deemed
to have been service with Parent or such Affiliate of Parent.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If the Company Stockholder Approval is required by law to
consummate the Merger, the Company will, as soon as practicable following the
consummation of the Offer, duly call, give notice of, convene and hold a meeting
of its stockholders (the "Stockholders Meeting") for the purpose of obtaining
the Company Stockholder Approval. The Company will, through its Board of
Directors, and subject to such board's fiduciary duties under applicable law
after consultation with its outside counsel, recommend to its stockholders that
the Company Stockholder Approval be given. Notwithstanding the foregoing, if Sub
or any other subsidiary of Parent shall acquire at least 90% of the outstanding
Shares, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the consummation of the Offer without a Stockholders Meeting
in accordance with Section 82 of the MBCL.
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(b) If the Company Stockholder Approval is required by law to
consummate the Merger, the Company will, at Parent's request, as soon as
practicable following consummation of the Offer, prepare and file a preliminary
Proxy Statement with the SEC and will use its best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects, unless required by law, rule, regulation or the SEC staff,
in the opinion of outside counsel; provided, that Parent shall identify its
objections and fully cooperate with the Company to create a mutually
satisfactory Proxy Statement. In connection with such preliminary proxy
statement, Proxy Statement and any amendment or supplement thereto, Parent and
Sub should promptly provide all information reasonably requested by the Company.
(c) Following the purchase of Shares, if any, pursuant to the Offer,
Parent shall ensure that all such Shares purchased continue to be held by
Parent, Sub, and/or a direct or indirect wholly-owned subsidiary of Parent until
such time as the Merger is consummated. At the Stockholders Meeting, Parent
agrees to cause all Shares purchased pursuant to the Offer and all other Shares
owned by Parent or any subsidiary of Parent to be voted in favor of the Company
Stockholder Approval.
7.2 Access to Information; Confidentiality.
Upon reasonable notice, and except as may otherwise be required by
applicable law, the Company and its Subsidiaries shall afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisers and other
representatives, reasonable access during normal business hours from the date
hereof to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall furnish promptly to Parent (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request. Except as required by law, Parent will hold, and will
cause its officers, employees, accountants, counsel, financial advisers and
other representatives and Affiliates to hold, any and all information received
from the Company, directly or indirectly, in confidence, according to the terms
of the confidentiality agreement dated as of January 11, 1999, between the
Company and Parent (the "Confidentiality Agreement").
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7.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer and the Merger, and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Stockholder Agreement or any of the other transactions contemplated by this
Agreement or the Stockholder Agreement and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Offer, the Merger, this
Agreement, the Stockholder Agreement or any other transaction contemplated by
this Agreement or the Stockholder Agreement, take all action reasonably
necessary to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger, this Agreement, the
Stockholder Agreement and the other transactions contemplated by this Agreement
or the Stockholder Agreement. Nothing in this Agreement shall be deemed to
require Parent to dispose of or hold separate any asset or collection of assets.
(b) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated by
this Agreement, including promptly furnishing the other with copies of notices
or other communications received by Parent or the Company, as the case may be,
or their respective Subsidiaries, from any third party and/or any Governmental
Entity alleging that the consent of such third party or Governmental Entity is
or may be required with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give prompt notice to the other of (i) the occurrence or non-occurrence of
any fact or event which would be reasonably likely (x) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Effective Time or (y) to
cause any covenant, condition or agreement under this Agreement not to be
complied with or satisfied and (ii) any failure of the Company,
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Parent or Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreement of the parties or the conditions to the
obligations of the parties under this Agreement.
7.4 Stock Option Plans and Warrants; Employee Stock Purchase Plan.
(a) As soon as practicable following the date hereof but in no event
later than the consummation of the Offer, the Company (or, if appropriate, the
Board of Directors of the Company or any committee administering the Stock
Option Plans (as defined below)) shall (including by adopting resolutions or
taking any other actions) take action so as to allow each outstanding option to
purchase Shares (a "Company Stock Option") heretofore granted under any stock
option, stock appreciation rights or stock purchase plan, program, arrangement,
agreement of the Company (collectively, the "Stock Option Plans") and each
outstanding warrant or other right to purchase Shares (a "Warrant") in each case
outstanding immediately prior to the date hereof: (A) to the extent then
exercisable, either (i) to be canceled immediately after consummation of the
Offer in exchange for an amount in cash, payable at the time of such
cancellation, equal to the product of (x) the number of Shares subject to such
Company Stock Option or Warrant immediately prior to the Effective Time and (y)
the excess, if any, of the price per Share to be paid in the Offer over the per
Share exercise price of such Company Stock Option or Warrant (the "Net Amount")
or (ii) to be converted immediately prior to the Effective Time into the right
solely to receive the Net Amount; provided, that no such cash payment has been
made or (B) to the extent not then exercisable, to be canceled immediately after
consummation of the Offer. The Company shall not make, or agree to make, any
payment of any kind to any holder of a Company Stock Option or a Warrant (except
for the payment described above) without the consent of Parent.
(b) As soon as practicable following the date hereof, but in no event
later than the consummation of the Offer, the Company (or if appropriate, the
Board of Directors of the Company or any committee administering the Employee
Stock Purchase Plan (as hereinafter defined)) shall take action to terminate any
open purchase periods with respect to Company Common Stock under the Company
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and to cease
payroll deductions for such purpose, so as to ensure that all shares of Company
Common Stock that have been subscribed for have been purchased, and that no
subscriptions to purchase such shares are outstanding as of the Effective Time.
(c) All Stock Option Plans and the Employee Stock Purchase Plan shall
be terminated as of the Effective Time and the provisions in any other Benefit
Plan providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
terminated as of the Effective Time. The Company shall ensure that following the
Effective Time, no holder of a Company Stock Option or Warrant nor any
participant in any Stock Option Plan or in the Employee Stock Purchase Plan
shall have any right thereunder to acquire any capital stock of the Company,
Parent or the Surviving Corporation.
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(d) The Surviving Corporation shall continue to be obligated to pay the
Net Amount to holders of any Company Stock Options or Warrants converted in
accordance with clause (y) of Section 7.4(a).
(e) The Company shall pay its portion and withhold and deposit the
proper amount of all Federal and state payroll and employment taxes required to
be paid and withheld from the Net Amount.
7.5 Indemnification, Exculpation.
(a) All rights to indemnification and exculpation (including the
advancement of expenses) from liabilities for acts or omissions occurring at or
prior to the Effective Time (including with respect to the transactions
contemplated by this Agreement) existing as of the date hereof in favor of the
current or former directors or officers of the Company as provided in its
Articles of Organization, its By-laws and the indemnification agreements set
forth in Schedule 7.5 shall be assumed by the Surviving Corporation in the
Merger, without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect without amendment,
modification or repeal in accordance with their terms; provided however, that if
any claims are asserted or made within such period, all rights to
indemnification (and to advancement of expenses) hereunder in respect of any
such claims shall continue, without diminution, until disposition of any and all
such claims.
(b) The provisions of this Section 7.5 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives.
7.6 Directors.
Promptly upon the acceptance for payment of, and payment for, any
Shares by Sub pursuant to and subject to the conditions (including the Minimum
Condition) of the Offer, Sub shall be entitled to designate such number of
directors on the Board of Directors of the Company as will give Sub, subject to
compliance with Section 14(f) of the Exchange Act, a majority of such directors,
and the Company shall, at such time, cause Sub's designees to be so elected by
its existing Board of Directors. Subject to applicable law, the Company shall
take all action requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Parent and Sub shall have provided
to the Company on a timely basis in writing all information required to be
included in the Information Statement and Schedule 14D-9 with respect to Sub's
designees). In connection with the foregoing, the Company will promptly, at the
option of Parent, either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current directors as is
necessary to enable Sub's designees to be elected or appointed to, and to
constitute a majority of, the Company's Board of Directors as provided above.
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7.7 Fees and Expenses.
(a) Except as provided below in this Section 7.7, all fees and expenses
incurred in connection with the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is consummated,
except that printing and mailing costs and expenses shall be paid by Parent or
Sub.
(b) In the event that this Agreement is terminated (i) by Parent or Sub
pursuant to Section 9.1(c), (ii) by Parent pursuant to and in accordance with
Section 9.1(b)(i)(x) if such termination results from the failure of the Offer
Conditions described in paragraphs (c), (f) or (h) of Exhibit A as a result of
any breach by the Company of any covenant or agreement (including, without
limitation, the covenants set forth in Section 6.2(b)) or any representation or
warranty made by the Company in this Agreement or (iii) pursuant to Section
9.1(d), in each case, in lieu of any liability or obligation to pay damages, the
Company shall promptly pay to Parent in immediately available funds a
termination fee including all Expenses (as defined herein) equal to One Million
and No/100 Dollars ($1,000,000.00). The Company acknowledges that the agreements
contained in this Section 7.7(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement. Accordingly, if the Company fails promptly to pay
the amount due pursuant to this Section 7.7(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for the fee set forth in this Section 7.7(b), the Company shall pay to Parent
all costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank in effect on the date such payment was required to be made. If
such a suit results in a judgment against Parent and/or Sub, Parent shall pay to
the Company all costs and expenses (including attorney's fees and expenses) in
connection with such suit. "Expenses" means all out-of-pocket expenses incurred
by Parent and Sub in connection with this Agreement, the Stockholder Agreement
and the transactions contemplated hereby and thereby, including fees and
expenses of its printer, consultants, attorneys, accountants, and other
advisors.
7.8 Public Announcements.
Parent and Sub, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
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7.9 Stop Transfer.
The Company shall not register the transfer of any certificate
representing any Subject Shares (as defined in the Stockholder Agreement),
unless such transfer is made to Parent or Sub or otherwise in compliance with
the Stockholder Agreement. The Company will inscribe upon any certificates
representing Subject Shares tendered by a Stockholder (as defined in the
Stockholder Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, $.01 PAR VALUE OF ENDOGEN, INC. REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF MAY 27, 1999 AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED, EXCEPT IN ACCORDANCE THEREWITH. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF ENDOGEN, INC."
7.10 Sub Stock Option
(a) Grant of Sub Stock Option. The Company hereby grants Sub an
irrevocable option (the "Sub Stock Option") to purchase up to 690,172 shares of
Company Common Stock (the "Sub Shares") at a price per share equal to the Offer
Price payable in cash.
(b) Exercise of Sub Stock Option. The Sub Stock Option may be
exercised, in whole or in part, at any time and from time to time after the date
on which Sub has accepted for payment the Shares tendered pursuant to the Offer
and subject to satisfaction of the Minimum Condition if, but only if, Parent and
Sub agree to permanently waive the Offer Conditions; provided that there shall
not be in effect any preliminary or final injunction or other order issued by
any Government Entity prohibiting the issuance of the Sub Shares pursuant to
this Agreement. The Sub Stock Option shall expire upon the earlier of (i) the
Effective Time, or (ii) the date upon which this Agreement is terminated in
accordance with its terms. Sub may exercise the Sub Stock Option for all or some
of the Shares by sending written notice (the "Option Notice") to the Company
specifying the number of Sub Shares it will purchase pursuant to such exercise
and the price and date not less than five (5) nor more than twenty (20) days
from the date of the Option Notice for the closing of such purchase.
(c) Closing. At any closing on the date specified under subsection (b)
of this Section 7.10, (i) Sub will make payment to the Company of the aggregate
price for the Sub Shares being purchased upon exercise of the Sub Stock Option
by wire transfer of immediately available funds to an account designated in
writing by the Company and (ii) the Company will deliver to the Sub a
certificate or certificates representing the number of shares of Company Common
Stock so purchased in the denominations designated by the Sub and receipt
evidencing payment of any requisite stock transfer taxes. At any such closing
Sub shall deliver a letter to the Company agreeing that the Sub will not offer
to sell, or otherwise dispose of, any Sub Shares acquired by it pursuant to the
Sub Stock Option in violation of the Securities Act and any applicable state
securities laws.
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(d) Adjustment. If any change in the Company Common Stock occurs by
reason of a stock dividend, split up, recapitalization, combination, exchange of
shares or the like, the number of Sub Shares and the purchase price per share
shall be adjusted appropriately.
(e) Assignment of Sub Stock Option. Sub may assign this Sub Stock
Option to any of its Affiliates. Except for an assignment to an Affiliate of
Sub, Sub may not assign the Sub Stock Option without the prior written consent
of the Company.
(f) Reservation of Sub Shares. The Company represents and warrants to
Parent and Sub that it has reserved such number of shares of Company Common
Stock as is necessary for issuance upon the exercise of the Sub Stock Option.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the prior satisfaction or waiver the following conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided that Parent and
Sub shall vote all their Shares in favor of the Merger.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to and subject to the conditions (including the
Minimum Condition) of the Offer.
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ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the terms of this Agreement by the
stockholders of the Company as follows:
(a) By mutual written consent of Parent and the Company.
(b) By either Parent or the Company: (i) if (x) as a result of the
failure of any of the Offer Conditions the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for payment
Shares pursuant to and subject to the Offer Conditions (including the Minimum
Condition) or (y) Sub shall not have accepted for payment Shares pursuant to the
Offer prior to July 31, 1999; and provided, further, that the right to terminate
this Agreement pursuant to this Section 9.1(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
proximately contributed to the failure of any such condition or if the failure
of such condition results from facts or circumstances that constitute a breach
of any representation or warranty under this Agreement by such party; or (ii) if
any Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger and such order, decree or ruling or other action shall have become final
and nonappealable.
(c) By Parent or Sub prior to Sub's obligation to accept Shares for
payment pursuant to the Offer in the event of a material breach by the Company
of any representation, warranty, covenant or other agreement contained in this
Agreement which would or reasonably would be expected to give rise to the
failure of a condition set forth in Exhibit A. For purposes of this Section
9.1(c), "material breach" shall mean that claims, demands, damages, liabilities
and losses arising out of such breach will actually or may reasonably be
expected to result in Losses suffered or incurred by the Company, Parent or Sub,
when taken as a whole, in excess of $300,000.
(d) By either Parent or the Company if, prior to the obligation of Sub
to accept Shares for payment pursuant to the Offer, the Company, after complying
with the procedures set forth in Section 6.2, (i) amends the Schedule 14D-9 or
takes other action to modify its recommendation that the Offer and the Merger
are fair to and in the best interest of the Company and its stockholders and its
recommendation that the Company's stockholders accept the Offer, tender their
shares pursuant to the Offer and approve and adopt the Merger and this Agreement
or (ii) enters into an Acquisition Agreement for an Alternative Transaction that
constitutes a Superior Proposal (as defined below). For purposes of this
Agreement, a "Superior Proposal" means any Third Party Proposal to acquire,
directly or indirectly all of the Shares or all or substantially all of the
assets of the Company; provided that (A) the Board of Directors of the Company
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determines in its good faith judgment (after consulting with AH&H or another
financial advisor of nationally recognized reputation) that such Third Party
Proposal is on terms that are more favorable to the Company's stockholders from
a financial point of view than the Offer and the Merger (taking into account all
relevant factors, including the amount and form of consideration to be received
in respect of the Shares, the relative value of any non-cash consideration, and
the timing and certainty of closing), and (B) the Board of Directors of the
Company determines in its good faith judgment (after consultation with its
outside counsel) that the failure to recommend or accept such Third Party
Proposal would be required in order for its members to comply with their
fiduciary duties under applicable law.
(e) By the Company, if Sub or Parent shall have (i) failed to commence
the Offer within five business days of the date hereof, (ii) failed to pay for
Shares pursuant to the Offer to the extent required by Section 1.1(a) hereof or
(iii) breached in any material respect any of their respective representations,
warranties, other covenants or other agreements contained in this Agreement,
which breach or failure to perform in respect of clause (iii) is incapable of
being cured or has not been cured within 30 days after the giving of written
notice to Parent or Sub, as applicable, except, in any case under clause (iii),
such breaches and failures which would not prevent the consummation of the Offer
or the Merger subject to the terms and conditions of this Agreement.
9.2 Effect of Termination.
In the event of a termination of this Agreement by either the Company
or Parent as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except with respect to the
last sentence of Section 1.2(c), Section 5.6, the last sentence of Section 7.2,
Section 7.7, Section 9.1, this Section 9.2 and Article X; provided, however,
that, except as set forth in Section 7.7, nothing herein shall relieve any party
for liability for any breach hereof.
9.3 Amendment.
This Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
obtaining the Company Stockholder Approval (if required by law), but, after any
such approval, no amendment shall be made which by law requires further approval
by such shareholders without obtaining such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
9.4 Extension; Waiver.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (i) extend the time for
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the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (iii) subject
to Section 1.1(a) and Section 9.3, waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
9.5 Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 9.1, an amendment
of this Agreement pursuant to Section 9.3 or an extension or waiver pursuant to
Section 9.4 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, however, that in the event that Sub's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 7.6, after the acceptance for payment and payment of Shares
pursuant to and subject to the Offer Conditions (including the Minimum
Condition) and prior to the Effective Time, the affirmative vote of a majority
of the directors of the Company that were not designated by Parent or Sub shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, (iii) extend the time for performance of Parent's and Sub's
respective obligations under this Agreement or (iv) take any action to amend or
otherwise modify the Company's Articles of Organization or By-laws.
ARTICLE X
MISCELLANEOUS
10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties or covenants (subject to the
succeeding sentence) in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Effective Time. This Section 10.1 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger, including Section 7.5.
10.2 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed),
sent by overnight courier (providing proof of delivery) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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if to Parent or Sub, to c/o Pierce Chemical Company
3747 North Meridian Road
Rockford, Illinois 61101
Attention: Robb Anderson, President
Telecopy No.: (815) 968-0410
with a copy to: Wiggin & Dana
Three Stamford Plaza
Stamford, CT 06911
Attention: Patricia Kavee Melick, Esq.
Telecopy No.: (203) 363-7676
and, if to the Company, to Endogen, Inc.
30 Commerce Way
Attention: Owen A. Dempsey
Telecopy No.: (781) 756-3280
with a copy to: Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110
Attention: Brian Goldstein, Esq.
Telecopy No.: (617) 248-7100
10.3 Interpretation.
When a reference is made in this Agreement to an Article or a Section,
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Unless the context otherwise
requires, words importing the singular shall include the plural, and vice versa.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person. As used in this Agreement,
"material adverse effect" means, when used in respect of the Company, any effect
or condition that, individually or in the aggregate with any other effect or
condition, is materially adverse to the assets, properties, business, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole and any occurrence that with notice or lapse of
time or both could reasonably be expected to result in any such effect or
condition. As used in this Agreement, "material adverse change" means, when used
in respect of the Company, any change or event that, individually or in the
aggregate with any other change or event, is
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materially adverse to the assets, properties, business, financial condition,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole and any occurrence that with notice or lapse of time or both could
reasonably be expected to result in any such change or event. As used in this
Agreement, the phrase "knowledge" with respect to the Company, means to the
actual knowledge of the Company, its Subsidiaries, and each of their respective
directors and officers. As used in this Agreement, the term "person" shall be
interpreted broadly and shall include any person, individual, corporation,
limited partnership, limited liability company, trust, association or other
entity or business organization of any kind or division thereof.
10.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.5 Entire Agreement; Third Party Beneficiaries.
This Agreement (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as provided in
Sections 6.7 and 7.5 are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
10.6 Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
10.7 Publicity.
Except as otherwise required by law or the rules of the Nasdaq National
Market, for so long as this Agreement is in effect, neither the Company nor
Parent shall, or shall permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
10.8 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be
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binding upon, inure to the benefit of Sub and be enforceable by the parties and
their respective successors and assigns; provided, however, that Sub may assign
its rights, interest or obligations hereunder to any other subsidiary of Parent
without first obtaining the Company's consent.
10.9 Enforcement.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.10. No Personal Liability
This Agreement shall not create or be deemed to create any personal
liability or obligation on the part of any direct or indirect stockholder of the
Company or any Subsidiary of the Company, or any of their respective officers,
directors, employees, agents or representatives.
[signature page follows]
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
PERBIO SCIENCE AB
By: /s/ Magnus Lindquist
--------------------------
Name: Magnus Lindquist
Title: Director, PerBio Science AB
Chief Financial Officer, Perstorp AB
By: /s/ Mats Fischier
--------------------------
Name: Mats Fischier
Title: Director, PerBio Science AB
Chief Executive Officer, Perstorp Life Science
EWOK ACQUISITION CORP.
By: /s/ Robb Anderson
--------------------------
Name: Robb Anderson
Title: President
By: /s/ Charles Granneman
--------------------------
Name: Charles Granneman
Title: Treasurer
ENDOGEN, INC.
By: /s/ Owen A. Dempsey
--------------------------
Name: Owen A. Dempsey
Title: President
By: /s/ Avery W. Catlin
--------------------------
Name: Avery W. Catlin
Title: Treasurer
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer
unless there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares that together with Shares subject
to the Stockholder Agreement that shall not have been tendered would constitute
two-thirds of the Shares on a fully-diluted basis (the "Minimum Condition").
Furthermore, notwithstanding any other term of the Offer, Sub shall not
be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and, except as
otherwise provided in this Agreement or under applicable law, may terminate the
Offer if, at any time after the date hereof and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exists and be continuing as of any Expiration Date (other than as a result of
any action or inaction of Parent or any of its subsidiaries that constitutes a
breach of this Agreement):
(a) there shall be instituted or pending by any person or Governmental
Entity any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer or pursuant to the Stockholder Agreement,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement or the Stockholder Agreement (including the voting provision
thereunder), or seeking to obtain from the Company, Parent or Sub any damages in
connection with the aforesaid transactions that are material in relation to the
Company, (ii) seeking to compel the Parent to dispose of or hold separate any
material portion of the business or assets of the Company, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer or purchased under the Stockholder Agreement including,
without limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company, or (iv) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material respect
any material portion of the assets, properties, business or operations of the
Company and its Subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order,
injunction or other restraint enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above; provided, however, that each of Parent and Sub shall
have used reasonable efforts to prevent the entry of any such injunction or
other court order and to appeal as promptly as possible any injunction or other
court order that may be entered;
<PAGE>
(c) there shall have occurred and continue to exist as of any
Expiration Date any material adverse change;
(d) there shall have occurred and continue to exist as of any
Expiration Date (i) any general suspension of trading in, or limitation on
prices for, securities on the New York Stock Exchange or the NASDAQ, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or any limitation by federal or state authorities on
the extension of credit by lending institutions, or a disruption of or other
event materially adversely affecting the extension of credit by lending
institutions, (iii) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States, which has and continues to materially adversely affect the trading of
securities on the NYSE involving the United States or (iv) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the representations and warranties of the Company set forth in this
Agreement shall not be true and correct at the date hereof and at the scheduled
or extended Expiration Date of the Offer as though made on or as of such date
(except for representations and warranties made as of a specified date) but only
if the respects in which the representations and warranties made by the Company
are inaccurate would in the aggregate have a Company material adverse effect and
if such breaches of representations or warranties have not been cured within
five (5) business days of written notice to Company by Parent or Sub; provided,
however that in no event shall Parent be obligated to extend the Offer for more
than one five (5) business-day extension pursuant to Section 1.1(a)(A) or beyond
July 1, 1999 in order to permit Company to cure any such breach. For purposes of
this Offer Condition, "material adverse effect" shall mean that claims, demands,
liabilities and losses arising out of such inaccuracy will actually or may
reasonably be expected to result in Losses suffered or incurred by the Company,
Parent or Sub, when taken as a whole, in excess of $300,000.
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement and such failure has a material adverse effect;
(g) this Agreement shall have been terminated in accordance with its
terms; or
(h) the Company's total stockholders equity as of May 31, 1999 shall
not be at least Five Million Five Hundred Thousand No/100 Dollars
($5,500,000.00) as determined in accordance with Company's past practice
consistently applied;
which in the reasonable judgment of Parent, in any such case, makes it
inadvisable to proceed with the Offer or the acceptance for payment or payment
for the Shares.
The foregoing conditions, other than conditions (b) and (g), are for
the sole benefit of Sub and Parent and may, subject to the terms of this
Agreement, be waived by Sub and Parent in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall
2
<PAGE>
not be deemed a waiver with respect to any other facts and circumstances and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time, except as otherwise provided in this Agreement.
3
<PAGE>
The Schedules to the Agreement and Plan of Merger dated as of May 27, 1999 among
PerBio Science AB, Ewok Acquisition Corp. and Endogen, Inc. have been omitted in
accordance with Item 601(b)(2) of Regulation S-B. Endogen, Inc. will furnish
supplementally a copy of any omitted schedule to the Securities and Exchange
Commission upon request, provided however, that Endogen, Inc. may request
confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934 for any schedule so furnished.
<PAGE>
May 27, 1999
Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Gentlemen:
This letter confirms certain understandings with respect to the
Agreement and Plan of Merger (the "MERGER AGREEMENT") dated as of even date
herewith by and among PerBio Science AB, a Swedish corporation ("PARENT"),
EWOK Acquisition Corp., a Massachusetts corporation ("Sub") and Endogen,
Inc., a Massachusetts corporation (the "COMPANY"). Each capitalized term used
herein and not otherwise defined shall have the meaning ascribed to it in the
Merger Agreement.
For the purposes of paragraph (a) to Exhibit A of the Merger Agreement,
the phrase "on a fully diluted basis" shall be defined to exclude the
following:
(1) All outstanding stock options issued pursuant to the Company's 1992
Stock Plan that are irrevocably terminated, consistent with
Section 7.4(a)(A)(i) or (B) of the Merger Agreement, effective as
of the time that Sub accepts payment, and pays for, all Shares
tendered and not withdrawn pursuant to the Offer;
(2) All outstanding options issued pursuant to the Company's 1993
Non-Employee Director Stock Option Plan that are irrevocably
terminated by the holders of those options, effective as of
the time that Sub accepts payment, and pays for, all Shares tendered
and not withdrawn pursuant to the Offer;
(3) A certain warrant to purchase 125,000 shares of common stock of the
Company held by Third Wave Technologies, Inc.; provided that such
warrant is irrevocably terminated by the holder thereof, effective
as of the time that Sub accepts for payment, and pays for, all
Shares tendered and not withdrawn pursuant to the Offer.
Sincerely yours,
PERBIO SCIENCE AB
By: /s/ Magnus Lindquist
------------------------
Name: Magnus Lindquist
Title:
EWOK ACQUISITION CORP.
By: /s/ Robb Anderson
-----------------------
Name: Robb Anderson
Title:
Accepted and agreed to:
ENDOGEN, INC.
By: /s/ Owen A. Dempsey
-------------------
Name: Owen A. Dempsey
Title: President
<PAGE>
Wallace G. Dempsey has been a director of the Corporation since February
1986. From 1973 until May 1993, he served as the Secretary and General
Attorney of International Flavors & Fragrances, Inc. From May 1993 until
April 1994, Mr. Dempsey served as a consultant to International Flavors &
Fragrances, Inc.
Irwin J. Gruverman has been a director of the Corporation since November
1990. Since 1982, Mr. Gruverman has been Chairman of the Board and Chief
Executive Officer of Microfluidics International and its predecessor,
Biotechnology Development Corp. Since 1990, he has also been a General
Partner of G&G Diagnostics Funds which invests in medical diagnostics
companies. Mr. Gruverman is also a director of Fiberchem International, Inc.,
InVitro International and North American Scientific, Inc.
Hayden H. Harris has been a director of the Corporation since March 1993
and Chairman of the Board since November 1995. Since 1997, Mr. Harris has
been President and a director of Enterprise Management, Inc., a venture
capital management and consulting company. From 1990 to present, Mr. Harris
has been Chairman of the Board and Chief Executive Officer of Software
Services Corporation, a provider of contract software services, and since
1995 he has served as President and a director of EDM, Inc., a venture
capital management company.
Wolfgang Woloszczuk, Ph.D. has been a director of the Corporation since
November 1990. Dr. Woloszczuk has also served as Chief Executive Officer of
Biomedica GmbH since 1992 and of Biocis Handels GmbH since 1994. He has also
served as an executive officer of Bionova Handels GmbH since 1988. Dr.
Woloszczuk was an executive officer of Biozol Diagnostica Vertriebs GmbH from
1989 until May 1996. Since November 1997, Dr. Woloszczuk has been President
of BioNet, Inc., an exporter of biomedical products located in Southbridge,
Massachusetts. In addition, Dr. Woloszczuk has been a Professor of medicinal
chemistry at the University of Vienna since 1989.
Family Relationships
Wallace G. Dempsey is the father of Owen A. Dempsey. There are no other
family relationships among directors or executive officers of Endogen.
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth as of September 11, 1998 certain
information regarding the ownership of shares of the Corporation's Common
Stock by (i) each person who, to the knowledge of the Corporation, owned
beneficially more than 5% of the shares of Common Stock of the Corporation
outstanding at such date ("Principal Stockholders"), (ii) each director and
nominee director the Corporation, (iii) each Named Officer (as defined below)
of the Corporation, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name and Address of Beneficial Owner Beneficial Ownership(1) Stock Outstanding(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Owen A. Dempsey (3)..................... 337,200 9.53%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Wallace G. Dempsey (4).................. 184,000 5.29%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
</TABLE>
4\Endogen 1998 Proxy Statement
<PAGE>
(3) Represents all options granted to Mr. Dempsey, Mr. Catlin and Mr.
Walczewski during the fiscal year ended May 31, 1998, respectively,
as a percentage of the total options granted to employees during
the same period. A total of 97,000 options were granted to employees
in fiscal year 1998.
The following table sets forth certain information concerning stock
options held by the Named Officers on May 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares at May 31, 1998 (#) at May 31, 1998 ($) (3)
Acquired on Value -------------------------- --------------------------
Name Exercise (#) Realized ($) (2) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Owen A. Dempsey 12,000 $31,680 77,100 17,100 $113,960 $10,060
Avery W. Catlin -- -- 15,100 57,100 900 2,700
Dennis H. Walczewski -- -- 17,100 29,100 300 300
</TABLE>
- ---------------------
(1) The Corporation has never granted any SAR's.
(2) Value is based on the difference between the option exercise price and
$4.00, the fair market value of the Corporation's Common Stock on the date
of exercise, multiplied by the number of shares exercised.
(3) Value is based on the difference between the option exercise price and
$3.94, the fair market value of the Corporation's Common Stock on May 29,
1998, the last trading day for the fiscal year ended May 31, 1998,
multiplied by the number of shares of Common Stock underlying the options.
Compensation of Directors
Each non-employee director of the Corporation is entitled to $500, plus
all reasonable expenses, for each meeting of the Corporation's Board of
Directors and each Committee meeting that he attends. In addition, pursuant
to the Director Plan, each non-employee director is automatically granted,
without further action by the Board, an option to purchase 6,000 shares of
the Corporation's Common Stock upon (a) the date such director is first
elected to the Board and (b) each subsequent anniversary of that director's
election to the Board. The exercise price per share of all options granted
under the Director Plan is equal to 100% of the fair market value of the
Corporation's Common Stock on the date such options are granted. Options
granted under the Director Plan are exercisable as to one-third of the shares
subject to the option on each successive anniversary of the date of grant,
provided that the optionee has continuously served as a member of the Board
of Directors through such date. Notwithstanding the foregoing, those options
which were granted under the Director Plan on November 12, 1993 were fully
vested and exercisable in full on the date of such grant.
The Chairman of the Corporation's Board of Directors, Hayden Harris, is
entitled to an additional $500 per meeting of the Board of Directors and
$1,000 per day for each meeting with the Corporation's President and Chief
Executive Officer that is not a Board or Committee meeting. Moreover, in
addition to his annual option grant under the Director Plan, the Chairman
also received an option to purchase 6,000 shares of the Corporation's Common
Stock pursuant to the 1992 Plan.
8\Endogen 1998 Proxy Statement
<PAGE>
These options were granted at an exercise price equal to 100% of the fair
market value of the Corporation's Common Stock as of the date of grant.
Provided that the Chairman continues to serve the Corporation in the capacity
of employee, officer, director or consultant, the options shall vest over a
period of one year from the date of grant, in four equal quarterly
installments.
In addition to his annual option grant under the Director Plan, Charles
Burke received an option to purchase 6,000 shares of the Corporation's Common
Stock pursuant to the 1992 Plan. These options were granted at an exercise
price equal to 100% of the fair market value of the Corporation's Common
Stock as of the date of grant. One-third of these options vested on the date
of grant and, provided that Dr. Burke continues to serve the Corporation in
the capacity of employee, officer, director or consultant, the balance of the
options shall vest over a period of two years, in two equal annual
installments.
Directors who are employees of the Corporation receive no additional
compensation for serving on the Board of Directors or its Committees.
Executive Employment Agreements
On December 4, 1996, the Corporation entered into an employment
agreement with Avery W. Catlin pursuant to which he joined the Corporation
(the "Catlin Agreement"). Under the terms of the Catlin Agreement, Mr. Catlin
is entitled to receive a minimum salary of $120,000 and a minimum bonus of
$34,000 for the first year of the term and a minimum salary of $130,000 for
the second year of the term. Mr. Catlin's bonus after the first year of the
term will be based on formulas agreed to by the Corporation and Mr. Catlin.
Mr. Catlin's salary after the second year of the term will be determined by
the Board of Directors. Additionally, Mr. Catlin is eligible for
participation in an executive incentive pay plan and in all of the
Corporation's welfare, benefit, retirement and savings plans on the same
basis as other employees of the Corporation. Pursuant to the Catlin
Agreement, and subject to the terms of a stock option agreement, Mr. Catlin
received an option to purchase 60,000 shares of Common Stock at $3.88 per
share, vesting at 25% per annum for four years. Mr. Catlin's employment by the
Corporation may be terminated, with or without cause, by either party upon
prior written notice. In the event Mr. Catlin is terminated by the
Corporation other than for cause or the death of Mr. Catlin, Mr. Catlin would
be entitled to continue receiving his salary and benefits for a period of six
months following his termination date. In the event Mr. Catlin is terminated
by the Corporation without cause, all of the outstanding options which have
been granted to Mr. Catlin, but which have not vested, shall vest immediately
and be exercisable in full. In the event Mr. Catlin is terminated pursuant to
a change in control of the Corporation, as defined in the Catlin Agreement,
Mr. Catlin would be entitled to receive a cash payment equal to his annual
salary on the date of termination and all of the outstanding options which
have been granted to Mr. Catlin, but which have not yet vested, shall vest
immediately and be exercisable in full. The initial term of the Catlin
Agreement is three years and may be automatically renewed for one year
periods.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, the Corporation entered into a distribution and supply
agreement with Biozol Diagnostica Vertriebs GmbH ("Biozol") under which
Biozol exclusively distributed the Corporation's products to individual
country distributors in certain European countries. Effective September 1,
1996, the agreement was amended so that the Corporation could distribute its
products directly to certain individual country distributors in Europe.
Biozol continues as the corporation's exclusive distributor in Germany.
Wolfgang Woloszczuk, a director of the Corporation, was an executive officer
of Biozol from 1989 until May 1996, and is currently an executive officer and
20% shareholder of Biomedica GmbH, a 50% owner of Biozol.
9\Endogen 1998 Proxy Statement
<PAGE>
Exhibit 3
CONFIDENTIAL DISCLOSURE AGREEMENT
This Confidential Disclosure Agreement is entered into as of the 11th day of
January, 1999, by and between Endogen, Inc., a Massachusetts Corporation (the
"Disclosing Party") and Pierce Chemical Co. (the "Recipient"). In connection
with the Recipient's desire to obtain certain information from the Disclosing
Party so that the Recipient may explore the possibility of entering into a
transaction with the Disclosing Party (which may include a financial investment
in the shares or assets of the Disclosing Party) (the "Transaction"), the
Disclosing Party has furnished and is furnishing to the Recipient certain
information and in connection with such disclosure, the parties desire to keep
such information confidential. Intending to be legally bound hereby, the parties
mutually agree as follows:
1. "Confidential Information" means all documents and other
information provided by Disclosing Party to the Recipient, both orally and in
writing, whether provided before or after the date of this Agreement, whether
tangible or intangible, and in whatever form or medium provided, as well as all
information generated by the Recipient or by its officers, directors, partners,
employees, agents or representatives (collectively, "Representatives"), that
contains, reflects or is derived from the information provided. In consideration
of the Disclosing Party's disclosure to the Recipient of the Confidential
Information, the Recipient agrees that it will keep the Confidential Information
confidential and that the Confidential Information will not, without the prior
written consent of the Disclosing Party, be disclosed by the Recipient or any of
its Representatives in any manner whatsoever, in whole or in part, and shall not
be used by the Recipient or by any of its Representatives other than in
connection with the Transaction. Moreover, the Recipient agrees to transmit the
Confidential Information only to such of the Representatives of the Recipient
who need to know the Confidential Information for the sole purpose of assisting
the Recipient in evaluating the Transaction, which Representatives shall be
informed of this Agreement and who shall have agreed in writing to be bound by
the terms hereof as if a party hereto. In any event, the Recipient shall be
fully liable for any breach of this Agreement by any of its Representatives.
Without the prior written consent of the Disclosing Party, neither the Recipient
nor any of its Representatives shall disclose to any person the fact that the
Recipient has received any of the Confidential Information or that discussions
or negotiations are occurring regarding the Transaction, including the status
thereof.
2. The Recipient agrees that, at the conclusion of its review of the
Confidential Information, or within three business days of the Disclosing
Party's request, all copies of the Confidential Information in any form
whatsoever (including without limitation any reports, memoranda or other
material prepared by the Recipient or at its direction) shall be re-delivered by
the Recipient and its Representatives back to the Disclosing Party. However, the
Recipient may retain one copy of the Confidential Information in the files of
its legal department, to be used solely in the event there is a dispute
regarding compliance with this Agreement.
3. In the event that the Recipient or anyone to whom it supplies the
Confidential Information receives a request to disclose all or any part of the
Confidential Information under the terms of a subpoena or order issued by a
court or by a governmental body, the Recipient agrees:
(a) to notify the Disclosing Party immediately of the existence,
terms and circumstances surrounding such request;
(b) to consult with the Disclosing Party on the advisability of
taking legally available steps to resist or narrow such request; and
(c) if disclosure of such Confidential Information is required to
prevent the Recipient from being held in contempt or subject to other penalty,
to furnish only such portion of the Confidential Information as, in the written
opinion of counsel satisfactory to Disclosing Party, the Recipient is legally
compelled to disclose and to exercise its best efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded to the
disclosed Confidential Information.
<PAGE>
4. During the term of this Agreement, and for a period of two (2)
years after the termination of this Agreement or any extension thereof, the
Recipient shall use the same level of care, but not less than a reasonable level
of care, to prevent the use or disclosure of Confidential Information received
under this Agreement as it exercises in protecting its own information of
similar nature and shall maintain the confidentiality of any Confidential
Information received from the other party under this Agreement, except insofar
as written approval, signed by an authorized representative, is obtained;
provided, however, that the foregoing obligation of confidentiality shall not
apply to any portion of the Confidential Information which:
(a) is or become public knowledge other than through the
unauthorized disclosure of the Recipient;
(b) was known to the Recipient, before receipt from the disclosing
party, under this Agreement;
(c) is received legally without restriction on disclosure from a
third party who has the right to make such disclosure; or
(d) subject to Paragraph 3 above, is required to be disclosed in
order to comply with a judicial order or decree or with any law or regulation of
any governmental authority.
5. Neither the Disclosing Party nor any of its Representatives has
made or makes any representation or warranty as to the accuracy or completeness
of the Confidential Information and the Recipient shall make its own independent
evaluation of the Confidential Information to determine its interest in the
Transaction. The Recipient agrees that neither the Disclosing Party nor its
Representatives shall have any liability to it or any of its Representatives
resulting from the provision or use of the Confidential Information.
6. Because any breach of the provisions of this Agreement would have
an irreparable and immediate material adverse effect upon Disclosing Party, the
effects of which could continue for many years, and because the monetary impact
of any such breach may be difficult or impossible to measure or in any event
could not make the Disclosing Party whole, the parties recognize and acknowledge
that irreparable damage may result in the event that such provisions are not
specifically enforced. Accordingly, if any dispute arises regarding compliance
with the terms of this Agreement, the parties agree that the Disclosing Party
shall be entitled, in addition to any other remedy to which it may be entitled
at law or in equity, without showing actual damage, to a temporary or permanent
injunction or injunctions with respect to non-compliance with such provisions
pending determination of such controversy and that no bond or other security
shall be required in connection with such action. If any dispute arises
concerning the rights and obligations of any party under this Agreement, such
right or obligation shall be enforceable by a decree of specific performance. In
each case, neither the Recipient nor its Representatives will oppose the
granting of any such relief, and such remedies shall be available against any
breach or threatened breach of this Agreement. The remedies provided herein are
cumulative and not exclusive of any other remedies provided at law or equity and
no failure or delay by the Disclosing Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof. The Recipient also agrees to reimburse the Disclosing
Party for all costs and expenses, including attorneys' fees, incurred by the
Disclosing Party in attempting to enforce the obligations of the Recipient or
any of its Representatives hereunder.
7. The Recipient agrees that, until and unless a definitive agreement
between the Disclosing Party and the Recipient with respect to the Transaction
has been executed and delivered, neither the Disclosing Party nor the Recipient
will be under any legal obligation of any kind whatsoever with respect to the
Transaction by virtue of this or any other written or oral expression by it or
by any of its Representatives except, in the case of this Agreement, for the
matters specifically agreed to herein. This Agreement may be modified or waived
only by a separate writing by the Disclosing Party and by the Recipient
expressly so modifying or waiving such Agreement.
<PAGE>
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS APPLICABLE TO CONTRACTS
BETWEEN RESIDENTS OF THE COMMONWEALTH OF MASSACHUSETTS THAT ARE TO BE WHOLLY
PERFORMED WITHIN SUCH STATE. THE RECIPIENT AGREES THAT ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATED IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT SOLELY
IN A COURT OF COMPETENT JURISDICTION SITTING IN THE CITY OF BOSTON, COMMONWEALTH
OF MASSACHUSETTS. THE RECIPIENT HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS
TO THE JURISDICTION OF ANY SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR
PROCEEDING IN ANY SUCH COURT, ANY OBJECTION TO VENUE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF
RESIDENCE OR DOMICILE OF ANY PARTY THERETO. THE RECIPIENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY CLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE INFORMATION OR THE TRANSACTION.
Accepted and agreed to:
Endogen, Inc.
(the "DISCLOSING PARTY")
By: /s/Owen A. Dempsey
--------------------------
Title: President & CEO
-----------------------
Date: January 12, 1999
------------------------
- -----------------------------
Pierce Chemical Co.
3747 North Meridian Rd.
Rockford, IL 61105
By: /s/Robb Anderson
--------------------------
Name
Title: President
-----------------------
Title
Date: 1/11/99
------------------------
<PAGE>
Exhibit 4
PIERCE CHEMICAL COMPANY
3747 NORTH MERIDIAN ROAD
ROCKFORD IL 61101
May 12, 1999
ENDOGEN, INC.
30 COMMERCE WAY
WOBURN MA 01801-1059
ATTENTION: OWEN A. DEMPSEY, PRESIDENT
In consideration of the time and effort expended and to be expended in
evaluating a potential transaction involving Endogen, Inc. (the "COMPANY") and
an affiliate of Pierce Chemical Company (the "INVESTOR"), the Company hereby
agrees as follows:
1. INFORMATION AND ACCESS. The Company will and will cause each of its
subsidiaries and each of their respective directors, officers, employees,
financial advisors, independent accountants, counsel, consultants and other
agents or representatives (collectively, "REPRESENTATIVES") to afford (a) to the
officers, independent certified public accountants, counsel, financing sources
and other representatives of the Investor, reasonable access to the properties,
books, records (including tax returns filed and those in preparation) and
personnel of the Company and each of its subsidiaries in order that the Investor
may have a full opportunity to make such investigation as it reasonably desires
to make and (b) to the independent certified public accountants of the Investor
reasonable access to the audit work papers and other records of the independent
certified public accountants of the Company and its subsidiaries.
2. NEGOTIATION WITH OTHERS.
(a) The Company shall, shall cause its subsidiary to and shall direct
and use reasonable efforts to cause its and its subsidiary's officers,
directors, employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties other than Investor and Investor's
affiliates that may be ongoing with respect to an Alternative Transaction (as
hereinafter defined); provided that the foregoing shall not require the Company
to communicate with any such party that it has agreed to terminate such
discussions. The Company shall not, shall cause its subsidiary not to and shall
not authorize or permit any of its or its subsidiary's officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative retained by it to, directly or indirectly, (i) solicit,
initiate or furnish any information in response to any inquiries or the making
of any proposal that may lead to an Alternative Transaction or (ii) participate
in any discussions or negotiations regarding any proposed Alternative
Transaction; provided, however, that if the Board of Directors of the Company
determines in good faith after consultation with its outside counsel, that
action is likely required by reason of the Board of Directors' fiduciary duties
under applicable law, the Company may (subject to compliance with Section 2(b)
below), in response to an unsolicited Third Party Proposal (as defined below),
(A) furnish information with respect to the Company to
<PAGE>
the person making such Third Party Proposal pursuant to a confidentiality
agreement that is at least as protective of the Company's interests as is the
Confidentiality Agreement previously entered into between the Company and the
Investor and (B) participate in negotiations regarding such an Alternative
Transaction. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any director, officer
or employee of the Company or its subsidiary or any investment banker, financial
advisor, attorney, accountant or other representative of the Company, acting on
behalf of the Company, shall be deemed to be a breach of this Section 2(a) by
the Company. For purposes of this Section 2, a "Third Party Proposal" means a
bona fide proposal from a third party, which proposal did not result from a
breach of this Section 2(a) and which third party the Board of Directors of the
Company determines in good faith to be reasonably capable of completing an
Alternative Transaction on terms that are more favorable to the Company's
stockholders than any terms previously discussed between the Company and the
Investor relating to a transaction with the Investor. For purposes of this
Section 2, an "Alternative Transaction" means any direct or indirect acquisition
or purchase of assets of the Company and its subsidiary outside the ordinary
course of business or any outstanding equity securities of the Company or its
subsidiary, any tender offer or exchange offer that if consummated would result
in any person beneficially owning equity securities of the Company or any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction that
would result in the acquisition of the Company or its subsidiary, other than the
transactions with the Investor and other than the acquisition of the Company's
capital stock pursuant to the exercise of stock options or warrants which are
issued and outstanding as of the date hereof.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 2, the Company as promptly as reasonably practical
shall advise Investor orally and in writing of any request for information or of
any proposal or any inquiry regarding any Alternative Transaction and the
material terms and conditions of such request, proposal or inquiry. The Company
will, to the extent reasonably practicable and not in violation of the Board of
Director's fiduciary duties under applicable law (after consultation with its
outside counsel, keep Investor fully informed of the status and details
(including amendments or proposed amendments) of any such request, proposal or
inquiry.
(c) The provisions of this Section 2 shall automatically terminate at
11:59 p.m. Massachusetts' time on the tenth (10th) day after the date hereof.
3. CONFIDENTIALITY; PUBLICITY; EXPENSES. The Company agrees that the
terms and existence of this letter and any discussions between the Company and
the Investor will be treated with strict confidence, and will not be disclosed
other than (a) to those officers, directors and employees of the Company who
need to know such information for the purpose of evaluating a possible
transaction involving the Company and the Investor and (b) to the Company's
advisers who agree to keep this letter confidential. Except as required by law
(and then only with as much advance notice as possible under the circumstances),
neither of the parties hereto, nor any of their affiliates, will issue any
report, statement or release pertaining to the matters contemplated by this
agreement without the prior written consent of the other party hereto.
<PAGE>
4. MISCELLANEOUS. This letter shall be governed by and construed in
accordance with the laws of the State of Massachusetts applicable to contracts
made and to be performed wholly therein. The rights and obligations of the
parties pursuant to Section 3 shall survive the termination or expiration of the
period referred to in paragraph 2, and shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
If the foregoing accurately sets forth our understanding with respect
to the subject matter hereof, kindly sign where indicated below and return such
executed copy to the undersigned.
Very truly yours,
PIERCE CHEMICAL COMPANY
By: /s/ ROBB ANDERSON
-----------------------
Name: Robb Anderson
Title: President
AGREED TO AND ACCEPTED AS OF
the date first above written
ENDOGEN, INC.
By: /s/ OWEN A. DEMPSEY
---------------------
Name: Owen A. Dempsey
Title: President
<PAGE>
Exhibit 5
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of May 27, 1999 (this "Agreement")
among PERBIO SCIENCE AB, a Swedish corporation, ("Parent"), EWOK ACQUISITION
CORP., a Massachusetts corporation and a wholly owned subsidiary of Parent
("Sub") and the individuals listed on Schedule A attached hereto (each, a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, Parent, Sub, and Endogen, Inc. (the "Company") propose to
enter into an Agreement and Plan of Merger dated as of the date hereof (as the
same may be amended or supplemented, the "Merger Agreement") providing for (i)
the making of a cash tender offer (as such offer may be amended from time to
time as permitted under the Merger Agreement, the "Offer") by Sub for all the
outstanding shares of common stock, par value $.01 per share, of the Company
("Company Common Stock") and (ii) for the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement; and
WHEREAS, each Stockholder owns the number of shares of Company Common
Stock set forth opposite his or its name on Schedule A attached hereto (such
shares of Company Common Stock, together with any other shares of capital stock
of the Company acquired by such Stockholders after the date hereof and during
the term of this Agreement (including, without limitation, through the exercise
of any stock options, warrants or similar instruments), being collectively
referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that each Stockholder enter into this Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration of
its entering into, the Merger Agreement, and in consideration of the premises
and the representations, warranties and agreements contained herein, the parties
agree as follows (capitalized terms used herein but not defined herein have the
meanings set forth in the Merger Agreement):
1. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER.
Each Stockholder hereby represents and warrants, severally and not
jointly, to Parent as of the date hereof in respect of himself or itself as
follows:
(a) AUTHORITY. The Stockholder has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Stockholder, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary action on the part of the Stockholder.
This Agreement has been duly executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder enforceable
against the Stockholder in accordance with its terms. Except for the
informational filings with the SEC, the
<PAGE>
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
(i) conflict with, or result in any violation of, or default (with or without
notice or lapse of time or both) under any provision of, any certificate or
articles of incorporation, bylaws, certificate or articles of limited
partnership, limited partnership agreement, trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets, including the Subject
Shares, (ii) require any filing with, or permit, authorization, consent or
approval of, or notice to, any federal, state or local government or any court,
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, domestic, foreign or supranational, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or assets,
including the Subject Shares. If the Stockholder is a natural person and is
married, and the Stockholder's Subject Shares constitute community property or
otherwise need spousal or other approval for this Agreement to be legal, valid
and binding, this Agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, the Stockholder's spouse,
enforceable against such spouse in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy laws or creditors' rights
generally or by general principles of equity. No trust of which such Stockholder
is a trustee requires the consent of any beneficiary to the execution and
delivery of this Agreement or to the consummation of the transactions
contemplated hereby.
(b) THE SUBJECT SHARES. The Stockholder is the record and beneficial
owner of, and has good and marketable title to, the Subject Shares set forth
opposite his or its name on Schedule A attached hereto, free and clear of any
Liens. The Stockholder does not own, of record or beneficially, any shares of
capital stock of the Company or any Subsidiary other than the Subject Shares set
forth opposite his or its name on Schedule A attached hereto. The Stockholder
has the sole right to vote such Subject Shares, and none of such Subject Shares
is subject to any voting trust or other agreement, arrangement or restriction
with respect to the voting of such Subject Shares, except as contemplated by
this Agreement.
(c) BROKERS. No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the execution of this Agreement by such Stockholder or the performance by
such Stockholder of its obligations hereunder (it being understood that Adams,
Harkness & Hill, Inc. and others disclosed to Sub pursuant to the Merger
Agreement may be entitled to certain fees and expenses in connection with the
transactions contemplated by the Merger Agreement, which fees and expenses shall
be paid by the Company as set forth in the Merger Agreement).
2. PURCHASE AND SALE OF SHARES.
Each Stockholder hereby severally agrees to tender in the Offer to Sub,
and Sub hereby agrees to purchase, subject to the terms and conditions set forth
herein, all Subject Shares set forth opposite such Stockholder's name on
Schedule A hereto at a price per Share equal to the Offer Price (as the same may
be increased by Sub). Sub may direct that such Stockholder tender
2
<PAGE>
such Subject Shares and, subject to applicable Federal securities law, not
withdraw any Subject Shares so tendered.
3. CONDITIONS.
Parent's and Sub's obligations to purchase and each Stockholders'
obligations to sell the Subject Shares pursuant to Section 2 of this Agreement
shall be subject to the prior satisfaction or waiver of the following
conditions:
(a) Sub shall have accepted the Shares for payment under the terms of
the Offer;
(b) the Minimum Condition shall have been satisfied;
(c) all regulatory approvals required by any applicable law, rule, or
regulation, including any applicable local, state, federal or foreign
regulation, shall have been obtained, and each such approval shall be final; and
(d) there exist no preliminary or permanent injunction, or any other
order by any court of competent jurisdiction, restricting, preventing or
prohibiting either the purchase, or the delivery, of the Subject Shares.
4. REPRESENTATION AND WARRANTY OF PARENT AND SUB.
(a) AUTHORITY. Parent and Sub have all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Parent and
Sub, and the consummation of the transactions contemplated hereby, have been
duly authorized by all necessary action on the part of the Parent and Sub. This
Agreement has been duly executed and delivered by the Parent and Sub and
constitutes a valid and binding obligation of the Parent and Sub enforceable
against the Parent and Sub in accordance with its terms. Except for
informational filings with the SEC, the execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, (i) conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, any certificate or articles of incorporation, bylaws,
certificate or articles of limited partnership, limited partnership agreement,
trust agreement, loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or regulation
applicable to the Parent or Sub or to the Parent's or Sub's property or assets,
(ii) require any filing with, or permit, authorization, consent or approval of,
or notice to, any federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic, foreign or supranational, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Parent or Sub or any of the Parent's or Sub's properties or assets.
3
<PAGE>
(b) BROKERS. No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission for which any
Stockholder will be liable in connection with the execution of this Agreement by
Parent and Sub or the performance by Parent and Sub of their obligations
hereunder.
(c) FINANCING. Parent has sufficient funds available, directly or
through finance commitments, to purchase, or to cause Sub to purchase, all the
Subject Shares pursuant to this Agreement and to pay all fees and expenses
payable by Parent or Sub related to the transactions contemplated by this
Agreement.
5. COVENANTS OF EACH STOCKHOLDER.
Until the termination of this Agreement in accordance with Section 10,
each Stockholder, severally and not jointly, agrees as follows:
(a) In connection with the closing of the purchase and sale
contemplated under Section 2 of this Agreement (other than pursuant to the
Offer), each Stockholder agrees to deliver, either to Sub or as directed by
Parent, all certificates evidencing the Subject Shares held by such Stockholder,
duly endorsed in blank for transfer, or accompanied by stock powers and such
other documents as may be necessary in Parent's judgment to transfer record
ownership of the Subject Shares to Sub or as directed by Parent.
(b) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
the Stockholder shall vote (or cause to be voted) the Subject Shares in favor of
the Merger, the adoption by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated by the
Merger Agreement.
(c) At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Subject Shares (and each class thereof) against (i) any Alternative
Transaction as such term is defined in Section 6.2 of the Merger Agreement, (ii)
any amendment of the Company's articles of organization or by-laws or other
proposal or transaction involving the Company, which amendment or other proposal
or transaction would be reasonably likely to impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the voting rights
of any class of Company Common Stock, or (iii) any action that would cause the
Company to breach any representation, warranty or covenant contained in the
Merger Agreement. Subject to Section 12, the Stockholder further agrees not to
enter into any agreement or take any action inconsistent with the foregoing.
(d) The Stockholder shall not, prior to the earliest of (i) the
Effective Time and (ii) the termination of the Merger Agreement in accordance
with its terms, (A) sell, transfer, give, pledge, assign or otherwise dispose of
(including by gift) (collectively, "Transfer"), or consent to
4
<PAGE>
any Transfer of, any or all of such Subject Shares or any interest therein or
enter into any contract, option or other arrangement (including any profit
sharing arrangement) with respect to the Transfer of, the Subject Shares to any
person other than pursuant to the terms of the Offer or the Merger or (B) enter
into any voting arrangement, directly or indirectly, whether by proxy, voting
agreement or otherwise, in respect of the Subject Shares, and the Stockholder
agrees not to commit or agree to take any of the foregoing actions.
(e) Such Stockholder, and any beneficiary of a revocable trust for
which such Stockholder serves as trustee, shall not take any action to revoke or
terminate such trust or take any other action which would restrict, limit or
frustrate in any way the transactions contemplated by this Agreement. Each such
beneficiary hereby acknowledges and agrees to be bound by the terms of this
Agreement applicable to it.
6. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Each Stockholder hereby irrevocably grants to, and appoints, Sub
and Robb Anderson, President of Sub, in his capacity as an officer of Sub, and
any individual who shall hereafter succeed to any such office of Sub, such
Stockholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Stockholder, to vote such Stockholder's
Subject Shares, or grant a consent or approval in respect of such Subject Shares
against (i) any Alternative Transaction as such term is defined in Section 6.2
of the Merger Agreement, (ii) any amendment of the Company's articles of
organization or by-laws or other proposal or transaction involving the Company,
which amendment or other proposal or transaction would be reasonably likely to
impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement or change in any
manner the voting rights of any class of Company Common Stock, or (iii) any
action that would cause the Company to breach any representation, warranty or
covenant contained in the Merger Agreement. The proxy granted pursuant to this
Section shall terminate upon the termination of this Agreement pursuant to
Section 10.
(b) Such Stockholder represents that there are no proxies heretofore
given in respect of such Stockholder's Subject Shares.
(c) Such Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 6 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that the holder of such irrevocable proxy may lawfully do or cause to be
done by virtue hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 41 of the Massachusetts
Business Corporation Law (the "MBCL").
5
<PAGE>
7. FURTHER ASSURANCES.
Each Stockholder will, at Parent's expense, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement.
8. CERTAIN EVENTS.
(a) Each Stockholder agrees that this Agreement and the obligations
hereunder shall attach to such Stockholder's Subject Shares and shall be binding
upon any person or entity to which legal or beneficial ownership of such Subject
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors. In
the event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the Company Common Stock, or the acquisition of additional shares of
Company Common Stock or other voting securities of the Company by any
Stockholder, the number of Subject Shares listed in Schedule A beside the name
of such Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other voting securities of the Company issued to or acquired by such
Stockholder.
(b) Each Stockholder agrees that such Stockholder will tender to the
Company, immediately after the execution hereof (or, in the event Subject Shares
are acquired subsequent to the date hereof, immediately after such acquisition),
any and all certificates representing such Stockholder's Subject Shares in order
that the Company may inscribe upon such certificates the legend in accordance
with Section 7.9 of the Merger Agreement.
9. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties without the prior written
consent of the other parties, except that (i) Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
subsidiary of Parent that may be substituted for Sub as contemplated by Section
10.8 of the Merger Agreement, and (ii) Parent may assign, in its sole
discretion, any and all of its rights, interests and obligations hereunder to
any direct or indirect wholly owned subsidiary of Parent, provided that Parent
will continue to remain primarily liable for its obligations hereunder in the
event of any assignment pursuant to this clause (ii). Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
10. TERMINATION.
This Agreement, and all rights and obligations of the parties
hereunder, shall terminate upon the date upon which the Merger Agreement is
terminated in accordance with its terms.
6
<PAGE>
11. GENERAL PROVISIONS.
(a) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered by facsimile (with confirmation
of delivery) or personally or sent by overnight courier (providing proof of
delivery) to Parent in accordance with Section 10.2 of the Merger Agreement and
to the Stockholders at their respective addresses and facsimile numbers set
forth on Schedule A attached hereto (or at such other address and facsimile
number for a party as shall be specified by like notice).
(c) INTERPRETATION. When a reference is made in this Agreement to an
Article or a Section, such reference shall be deemed made to an Article or a
Section of this Agreement, unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Unless the context otherwise
requires, words importing the singular shall include the plural, and vice versa.
Wherever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
(e) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(f) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
(g) EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses.
7
<PAGE>
12. STOCKHOLDER CAPACITY.
No person executing this Agreement who is or becomes during the term
hereof a director or officer of the Company makes any agreement or understanding
herein in his capacity as such director or officer. Each Stockholder signs
solely in his capacity as the record holder and beneficial owner of, or the
trustee of a trust whose beneficiaries are the beneficial owners of, such
Stockholder's Subject Shares and nothing herein (including, without limitation,
the provisions of Section 5(e)) shall limit or affect any actions taken by a
Stockholder in his capacity as an officer or director of the Company.
13. ENFORCEMENT.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the Commonwealth
of Massachusetts or in a Massachusetts state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the Commonwealth of Massachusetts
or any Massachusetts state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party will
not bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the Commonwealth of
Massachusetts or a Massachusetts state court and (iv) waives any right to trial
by jury with respect to any claim or proceeding related to or arising out of
this Agreement or any of the transactions contemplated hereby.
14. PUBLIC ANNOUNCEMENTS.
No Stockholder shall issue any press release or make any public
statement without the prior written consent of Parent, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
8
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Stockholders have caused this
Agreement to be duly executed and delivered as of the date first written above.
PERBIO SCIENCE AB
By:
/s/ MAGNUS LINDQUIST
- ---------------------------------------------
Name: Magnus Lindquist
Title: Director, PerBio Science AB
Chief Financial Officer, Perstorp AB
By:
/s/ MATS FISCHIER
- -------------------------------------------------------
Name: Mats Fischier
Title: Director, PerBio Science AB
Chief Executive Officer, Perstorp Life Science
EWOK ACQUISITION CORP.
By:
/s/ ROBB ANDERSON
- -------------------------
Name: Robb Anderson
Title: President
STOCKHOLDERS:
/s/ CHARLES R. BURKE
- -------------------------
Name: Charles R. Burke
/s/ CHRISTINE A. BURNS
- -------------------------
Name: Christine A. Burns
/s/ AVERY W. CATLIN
- -------------------------
Name: Avery W. Catlin
/s/ OWEN A. DEMPSEY
- -------------------------
Name: Owen A. Dempsey
9
<PAGE>
/s/ WALLACE G. DEMPSEY
- -------------------------
Name: Wallace G. Dempsey
/s/ IRWIN J. GRUVERMAN
- -------------------------
Name: Irwin J. Gruverman
/s/ WOLFGANG WOLOSZCZUK
- -------------------------
Name: Wolfgang Woloszczuk
G & G DIAGNOSTICS LIMITED PARTNERSHIP I
By: /s/ IRWIN J. GRUVERMAN
-------------------------
Name: Irwin J. Gruverman
Title: General Partner
HAYDEN H. HARRIS LIVING TRUST DTD 3/6/98
By: /s/ HAYDEN H. HARRIS
---------------------------------------------
Name: Hayden H. Harris Living Trust Dated 3/6/98
Title: Trustee
/s/ HAYDEN H. HARRIS
- ---------------------------
Name: Hayden H. Harris
10
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name and Address of Stockholder Number of Shares of Company Common
Stock Owned
<S> <C>
Charles R. Burke -1,000-
c/o Monument Partners, Inc.
1410-1 Monument Street
Concord, MA 01742
Christine A. Burns -0-
9 Salem Road
Wellesley, MA 02181
Avery W. Catlin -1,000-
241 Central Street
Hingham, MA 02043
Owen A. Dempsey -255,100-
21 Harris Street
Brookline, MA 02146
Wallace G. Dempsey -160,000-
487 Scarsdale Road
Tuckahoe, NY 10707
Irwin J. Gruverman -12,000-
16 Tanglewood Road
Needham, MA 02494
G&G Diagnostics Limited -95,000-
Partnership I
30 Ossipee Road
Newton, MA 02164
Hayden H. Harris -3,500-
c/o Enterprise Management
425 Main Street
Ann Arbor, MI 48104
Hayden H. Harris Living Trust Dated 3/6/98 -2,000-
c/o Enterprise Management
425 Main Street
Ann Arbor, MI 48104
Wolfgang Woloszczuk -40,000-
c/o Biomedica GmbH
Divischgasse 4
A-1210 Vienna
AUSTRIA
</TABLE>
<PAGE>
EXHIBIT 6
ENDOGEN, INC.
30 COMMERCE WAY
WOBURN, MA 01801-1059
June 2, 1999
To Our Stockholders:
On behalf of the Board of Directors of Endogen, Inc., a Massachusetts
corporation (the "COMPANY"), we are pleased to inform you that, on May 27, 1999,
the Company entered into an Agreement and Plan of Merger (the "MERGER
AGREEMENT") with PerBio Science AB, a Swedish corporation ("PARENT") and EWOK
Acquisition Corp., a Massachusetts corporation and a wholly-owned subsidiary of
Parent ("PURCHASER"), pursuant to which Purchaser has today commenced a cash
tender offer (the "OFFER") to purchase all of the outstanding shares (the
"SHARES") of the Company's Common Stock at $3.75 per Share. Under the terms of
the Merger Agreement, the Offer will be followed by a merger of Purchaser with
and into the Company (the "MERGER") in which any Shares not tendered will be
converted into the right to receive $3.75 per Share in cash, without interest.
Your Board of Directors has determined that the Offer and the Merger are
fair to, and in the best interests of, the Company and its stockholders, and has
approved the Offer and the Merger. The Board of Directors recommends that the
Company's stockholders accept the Offer and tender their Shares pursuant to the
Offer.
In arriving at this recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission. These
factors included, among other things, the terms and conditions of the Merger
Agreement and the fairness opinion of Adams, Harkness & Hill, Inc. ("AH&H"), the
Company's financial advisor, addressed to the Board of Directors, the text of
which is more fully described in the attached Schedule 14D-9. Stockholders are
urged to read the AH&H opinion in its entirety.
Pursuant to a Stockholder Agreement dated May 27, 1999, by and among Parent,
Purchaser and the directors and certain executive officers of the Company, these
directors and executive officers have agreed to tender and not withdraw the
Shares they own in the Offer.
In addition to the attached Schedule 14D-9 relating to the Offer, we are
enclosing the Offer to Purchase, dated June 2, 1999, of Purchaser and Parent,
together with related materials, including a Letter of Transmittal, to be used
for tendering your Shares. These documents set forth the terms and conditions of
the Offer and the Merger and provide instructions as to how to tender your
Shares. We urge you to read the enclosed materials carefully in making your
decision with respect to tendering your Shares pursuant to the Offer.
On behalf of the Board of Directors,
/s/ Owen A. Dempsey
Owen A. Dempsey
President and Chief Executive Officer
<PAGE>
Exhibit 7
CONTACTS FOR ENDOGEN:
Owen A. Dempsey, President & CEO Michelle L. Linn
Avery W. Catlin, VP Finance & CFO or Karen C.K. Drake
(781) 937-0890 Feinstein Kean Partners Inc.
website: http://www.endogen.com (617) 577-8110
website: http://www.fkpi.com
CONTACT FOR PIERCE CHEMICAL COMPANY:
Robb Anderson, President
(815) 968-0747
FOR IMMEDIATE RELEASE
PERSTORP AB MAKES OFFER TO ACQUIRE ENDOGEN, INC.
ROCKFORD, ILLINOIS AND WOBURN, MASSACHUSETTS, MAY 27, 1999 - Perstorp AB
subsidiary PerBio Science AB and Endogen, Inc. (Nasdaq: ENDG; BSE: EDG)
announced today that they have executed a definitive merger agreement that
provides for a cash tender offer for all of the outstanding shares of Endogen,
Inc. for a total transaction value of approximately $13.6 million. PerBio
Science AB, which is a leading supplier in several life-science product
segments, consists of the American companies Pierce Chemical Company of
Rockford, Illinois and HyClone Laboratories, Inc. of Logan, Utah and of the
Sweden-based company Atos Medical.
PerBio Science's offer relates to the acquisition of all of the outstanding
shares of Endogen, Inc. for $3.75 per share in cash. The tender offer will be
commenced within five business days. The tender offer will be conditional upon,
among other things, there being validly tendered and not withdrawn at least
two-thirds of the fully-diluted outstanding shares of Endogen, Inc. Upon the
successful completion of the tender offer, a subsidiary of PerBio Science AB
will be merged into Endogen, Inc. and any Endogen, Inc. shares not tendered and
purchased in the tender offer will be converted into the right to receive $3.75
per share in cash.
In connection with the execution of the merger agreement, PerBio Science AB has
entered into an agreement with directors and executive officers of Endogen, Inc.
whereby they have agreed to tender their outstanding shares in the tender offer.
As part of PerBio Science AB, Endogen, Inc. will be closely affiliated with
Pierce Chemical Company. Mr. Robb Anderson, President of Pierce Chemical
Company, said today, "The merger with Endogen, Inc. will strengthen PerBio
Science's position as a world leader providing biotechnology products for the
rapidly growing life science research and drug discovery markets. Endogen's
product portfolio adds to our existing product lines and will enable PerBio
Science to expand it's offerings of high-tech products for immunologists,
molecular biologists and cell biologist."
<PAGE>
PerBio Science AB (the former Perstorp Life Science Division) is a wholly owned
subsidiary of Perstorp AB, a global chemistry and materials technology
corporation located in Perstorp, Sweden. In October 1999, PerBio Science AB is
to be spun off to shareholders and listed on the Stockholm Exchange.
Endogen, Inc. is a supplier of specialty reagents, immunoassay test kits and
molecular research products to customers involved in biomedical research, the
biotechnology industry and pharmaceutical drug discovery.
# # #
<PAGE>
Exhibit 8
[LETTERHEAD-ENDOGEN]
September 30, 1998
Dennis Walczewski
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Subject: Compensation and Incentive
Dear Dennis:
On September 23-24th, I reviewed your compensation with the Compensation
Committee of the Board of Directors. This letter outlines an increase
retroactive to last year (12/01/97) and new compensation for the year ahead.
Effective December 1, 1997 your annual base salary has been increased 10%
from $90,000 to $99,000 which is $3,807.69 bi-weekly. Your incentive component
remains unchanged at $48,000, making up 33% of the total compensation. A copy
of the payroll adjustment form is attached for your records.
I reviewed the Q1 incentive targets and progress against those. You have
earned 100% against milestones. A copy of your report/commentary is attached
as well as a copy of the incentive matrix worksheet for your records. Today's
payroll includes three checks for you 1) bi-weekly payroll @ the new base
rate, 2) adjustment for any back pay @ the new rate, and 3) incentive pay for
Q1.
Regarding the year ahead, your annual base salary has been increased 7.1%
from $99,000 to $106,000 which is $4,076.92 bi-weekly. The effective date
of the change has been accelerated to October 1, 1998. Your incentive
component will remain unchanged at $48,000, now making up 31% of total
compensation in the year ahead. A copy of this payroll adjustment form is
attached for your records as well.
In addition, if through no fault of your own, you are no longer employed by
Endogen, then you will receive a severance package in the form of salary
continuation for a period of six months from your last date of employ, at the
rate of your then current base pay. Medical benefits will also be continued
for up to six months unless you are employed elsewhere and similarly covered.
Sincerely,
/s/Owen A. Dempsey
- ------------------
Owen A. Dempsey
President and CEO
cc: A. Catlin, C. Brenton
<PAGE>
Exhibit 9
[LETTERHEAD-ENDOGEN]
September 11, 1998
Via Federal Express
Chris Burns, Ph.D.
9 Salem Road
Wellesley, MA 02181
Dear Chris,
I appreciated speaking with you again today and look forward to working
together.
As a follow up to my offer letter dated September 1, 1998, there are two
additional items which I outlined to you during the course of our
discussions. I would like to document these additional points and would ask
your cooperation in reviewing these points and indicating your agreement if
these are, indeed, consistent with our discussion.
First of all, we discussed a compensation package covering the first two
years of employment. The first year, as set out in my previous letter, is
$128,000 base and $24,000 incentive compensation. I confirm that during the
second year of your employment, effective on the 12 month anniversary of your
start date, base pay shall be raised to $144,000 and incentive compensation
shall remain at $24,000.
Secondly, if through no fault of your own, you are no longer employed by
Endogen, then you will receive a severance package in the form of salary
continuation for a period of six months from your last date of employ, at the
rate of your then current base pay. Medical benefits will also be continued
for up to six months unless your are employed elsewhere and similarly covered.
Please note that Endogen has the right to terminate your employment,
with or without cause, at any time. The severance provision outlined above
does not apply to any dismissal for "cause". However, only the following
shall constitute "cause", for purposes of termination:
i) an intentional act of fraud, embezzlement, theft or any other
material violation of law involving dishonesty in connection with
your duties or in the course of your employment with Endogen or the
commission of a felony;
ii) intentional wrongful damage to material assets of Endogen; or
iii) intentional wrongful disclosure of material confidential
information of Endogen.
I believe this accurately covers these points. Again, we are very excited and
look forward to welcoming you to Endogen.
Sincerely,
/s/Owen A. Dempsey
- ------------------
Owens A. Dempsey
President and CEO
Agreed:
/s/Christine Burns, Ph.D. 9/14/98
------------------------- -----------
Christine Burns, Ph.D. Date
<PAGE>
Exhibit 10
[LETTERHEAD-ENDOGEN]
July 2, 1998
Charles R. Burke, Ph.D.
Monument Partners, Inc.
1410-1 Monument Street
Concord, Mass. 01742
Dear Charlie,
Thanks for your continuing interest in Endogen. You have already been a
great help to me over the past weeks and months. I know that the entire Board
of Directors is enthusiastic about your involvement. The recent meeting, I
think, highlighted best just how significant are the opportunities as well as
the challenges we face today.
Attached I have summarized for you the financial compensation available
as a director of Endogen, primarily in the form of stock options. In
addition, I have outlined proposed cash compensation on the basis of two to
three half days of consulting per month over and above the expected duties as
a director. I look forward to reviewing this together and hope that we can
move forward as proposed. We're in a great position to build a significant
life science enterprise and I think there's a lot of fun we can have along
the way.
Sincerely,
/s/Owen A. Dempsey
- ------------------
Owen A. Dempsey
President and CEO
<PAGE>
PROPOSED COMPENSATION
- ---------------------
I. SIGN-ON STOCK OPTIONS
Under Director Plan 6,000 shares @ FMV on 6/25/98
-vesting 1/3 upfront, 1/3 one year, 1/3 two years
Under 1992 Plan 6,000 shares @ FMV on 6/25/98
-vesting 1/3 upfront, 1/3 one year, 1/3 two years
II. FUTURE STOCK OPTIONS
Under Director Plan 6,000 shares annually @ FMV
-vesting 1/3 upfront, 1/3 one year, 1/3 two years
III. DIRECTOR FEES
per meeting $500 (4-5 times annually)
per committee meeting $500 (Audit Committee or
Compensation Committee)
IV. CONSULTING
two to three half-days per months?
$500 per half day
pre-approved travel or other expenses
<PAGE>
Exhibit 11
-----------
ENDOGEN, INC.
Incentive Stock Option Agreement
--------------------------------
Endogen, Inc., a Massachusetts corporation (the "Company"), hereby grants
this __________to ___________(the "Employee"), an option to purchase a maximum
of ______________shares of its Common Stock, $.01 par value, at the price of
$________________ per share, on the following terms and conditions:
1. Grant Under 1992 Stock Plan. This option is granted pursuant to and is
governed by the Company's 1992 Stock Option Plan (the "Plan") and, unless the
context otherwise requires, terms used herein shall have the same meaning as in
the Plan. Determinations made in connection with this option pursuant to the
Plan shall be governed by the Plan as it exists on this date.
2. Grant as Incentive Stock Option; Other Options. This option is intended
to qualify as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). This option is in addition to any
other options heretofore or hereafter granted to the Employee by the Company,
but a duplicate original of this instrument shall not effect the grant of
another option.
3. Extent of Option if Employment Continues. If the Employee has continued
to be employed by the Company or any Related Corporation (as such term is
defined in the Plan), on the following dates, the Employee may exercise this
option for the number of shares set opposite the applicable date:
Less than one year from - 0 shares
-------------------------------
One year but less than two
years from - shares
--------------------------------------- ----------
Two years but less than three
years from - shares
--------------------------------------- ----------
Three years but less than four
years from - shares
--------------------------------------- ----------
Four years or more from - shares
--------------------------- ----------
The foregoing rights are cumulative and, while the Employee continues to be
employed by the Company, may be exercised up to and including the date which is
ten (10) years from the date this option is granted. All of the foregoing rights
are subject to Articles 4 and 5 hereof, as appropriate, if the Employee ceases
to be employed by the Company or Related Corporation or dies or becomes disabled
while in the employ of the Company or Related Corporation.
4. Termination of Employment. If the Employee ceases to be employed by the
Company or Related Corporation, other than by reason of death or disability as
defined in Article 5 hereof, no further installments of this option shall become
exercisable and this option shall terminate after the passage of ninety (90)
days from the date employment ceases, but in no event later than the scheduled
expiration date. In such a case, the Employee's only rights hereunder shall be
those which are properly exercised before the termination of this option.
5. Death; Disability. If the Employee dies while in the employ of the
Company or Related Corporation, this option may be exercised, to the extent of
the number of shares with respect to which the Employee could have exercised it
on the date of his death, by his estate, personal representative or beneficiary
to whom this option has
<PAGE>
been assigned pursuant to Article 9 hereof, at any time within 180 days after
the date of death, but not later than the scheduled expiration date. If the
Employee ceases to be employed by the Company or Related Corporation by reason
of his disability (as defined in the Plan), this option may be exercised, to the
extent of the number of shares with respect to which he could have exercised it
on the date of the termination of his employment, at any time within 180 days
after such termination, but not later than the scheduled expiration date. At the
expiration of such 180-day period or the scheduled expiration date, whichever is
the earlier, this option shall terminate and the only rights hereunder shall be
those as to which the option was properly exercised before such termination.
6. Partial Exercise. Exercise of this option up to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that this option may not be exercised for a fraction of a share unless
such exercise is with respect to the final installment of stock subject to this
option and a fractional share (or cash in lieu thereof) must be issued to permit
the Employee to exercise completely such final installment. Any fractional share
with respect to which an installment of this option cannot be exercised because
of the limitation contained in the preceding sentence shall remain subject to
this option and shall be available for later purchase by the Employee in
accordance with the terms hereof.
7. Payment of Exercise Price. [Person signing on behalf of the Company
must initial one of the three following clauses.] The option price is payable in
United States dollars and may be paid:
(a) in cash or by check, or any combination of the foregoing,
equal in amount to the option price.
----------
(Initials)
(b) in cash, by check, by delivery of shares of the Company's
Common Stock having a fair market value (as determined by the Board of
Directors) equal as of the date of exercise to the option price, or by any
combination of the foregoing, equal in amount to the option price.
----------
(Initials)
(c) in cash, by check, by delivery of shares of the Company's
Common Stock having an aggregate fair market value (as determined by the Board
of Directors) equal as of the date of exercise to the option price, by delivery
of the Employee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or by any combination of the foregoing, equal in
amount to the option price.
----------
(Initials)
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company (i) if such Common
Stock is both subject to a substantial risk of forfeiture and not transferable
within the meaning of Section 83 of the Code, and (ii) unless such Common Stock
has been owned by the Employee free from any substantial risk of forfeiture for
at least six months.
8. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company. Such notice shall state the
election to exercise this option and the number of shares for which it is being
exercised and shall be signed by the person or persons so exercising this
option. Such notice shall be accompanied by payment of the full purchase price
of such shares, and the Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the notice shall be
received. The certificate or certificates for the shares as to which this option
shall have been so exercised shall be registered in the name of the person or
persons so exercising this option (or, if this option shall be exercised by the
Employee and if the Employee shall so request in the notice exercising this
option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship)
<PAGE>
and shall be delivered as provided above to or upon the written order of the
person or persons exercising this option. In the event this option shall be
exercised, pursuant to Article 5 hereof, by any person or persons other than the
Employee, such notice shall be accompanied by appropriate proof of the right of
such person or persons to exercise this option. All shares that shall be
purchased upon the exercise of this option as provided herein shall be fully
paid and non-assessable.
9. Option Not Transferable. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the Employee's
lifetime only the Employee can exercise this option.
10. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Employee to exercise it.
11. No Obligation to Continue Employment. The Company and any Related
Corporation are not by the Plan or this option obligated to continue the
Employee in employment.
12. No Rights as Stockholder until Exercise. The Employee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Employee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
13. Capital Changes and Business Successions. It is the purpose of this
option to encourage the Employee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this option
would not be served if such a stock dividend, merger or similar occurrence would
cause the Employee's rights hereunder to be diluted or terminated and thus be
contrary to the Employee's interest. The Plan contains extensive provisions
designed to preserve options at full value in a number of contingencies.
Therefore, provisions in the Plan for adjustment with respect to stock subject
to options and the related provisions with respect to successors to the business
of the Company are hereby made applicable hereunder and are incorporated herein
by reference. In particular, without affecting the generality of the foregoing,
it is understood that for the purposes of Articles 3 through 5 hereof, both
inclusive, employment by the Company includes employment by a Related
Corporation as defined in the Plan.
14. Early Disposition. The Employee agrees to notify the Company in
writing immediately after the Employee makes a Disqualifying Disposition of any
Common Stock received pursuant to the exercise of this option. A Disqualifying
Disposition is any disposition (including any sale) of such Common Stock before
the later of (a) two years after the date the Employee was granted this option
or (b) one year after the date the Employee acquired Common Stock by exercising
this option. The Employee also agrees to provide the Company with any
information which it shall request concerning any such disposition.
15. Withholding Taxes. If the Company in its discretion determines that it
is obligated to withhold any tax in connection with the exercise of this option,
or in connection with the transfer of, or lapse of restrictions on, any Common
Stock received by the Employee on exercise of this option, the Employee hereby
agrees that the Company may withhold from the Employee's wages or other
remuneration the appropriate amount of federal, state and local withholding
taxes. At the Company's discretion, the amount required to be withheld may be
withheld in cash from such wages or other remuneration, or in kind from the
Common Stock otherwise deliverable to the Employee on exercise of this option.
The Employee further agrees that, if the Company does not withhold an amount
from the Employee's wages or other remuneration sufficient to satisfy the
Company's withholding obligation, the Employee will reimburse the Company on
demand, in cash, for the amount underwithheld.
16. Acceleration and Vesting of Option for Business Combinations. In the
event of a sale of all or substantially all of the Company's assets, or if the
Company is to be consolidated with or acquired by another entity in a merger or
other reorganization in which the shares of the outstanding voting stock of the
Company immediately preceding the consummation of such an event are converted
into or represent securities of the surviving or resulting
<PAGE>
entity or other consideration that will not have the ability to elect a majority
of the board of directors of the surviving or resulting entity, this option
shall, immediately prior to the consummation of any of the foregoing events,
become fully vested and immediately exercisable by the Employee.
17. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and shall
be deemed given when sent by certified or registered mail, postage prepaid,
return receipt requested, to the address set forth below. The addresses for such
notices may be changed from time to time by written notice given in the manner
provided for herein.
(b) Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Agreement. This Agreement may
be modified, amended or rescinded only by a written agreement executed by both
parties.
(c) Severability. The invalidity, illegality or unenforceability
of any provision of this Agreement shall in no way affect the validity, legality
or enforceability of any other provision.
(d) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, subject to the limitations set forth in Article 9 hereof.
(e) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of the conflicts of laws thereof. The
preceding choice of law provision shall apply to all claims, under any theory
whatsoever, arising out of the relationship of the parties contemplated herein.
[Signature Page to Follow]
IN WITNESS WHEREOF the Company and the Employee have caused this
instrument to be executed, and the Employee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.
- ------------------------------ ENDOGEN, INC.
EMPLOYEE
- ------------------------------ ----------------------------
Print Name of Employee Owen A. Dempsey
President and Chief Executive Officer
- ------------------------------
Street Address
- ------------------------------
City State Zip Code
NOTE: PERSON SIGNING ON BEHALF OF THE COMPANY MUST INITIAL ONE OF THE THREE
CLAUSES UNDER ARTICLE 7 ABOVE.
<PAGE>
Exhibit 12
ENDOGEN, INC.
1992 STOCK PLAN
1. PURPOSE. This 1992 Stock Plan (the "Plan") is an amendment and
restatement of the 1989 Stock Plan of Endogen, Inc. (the "Company") and is
intended to provide incentives: (a) to the officers and other employees of the
Company, its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers,
employees and consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered by
the Board of Directors of the Company (the "Board") or, subject to
paragraph 2(D) (relating to compliance with Section 162(m) of the Code),
by a committee appointed by the Board (the "Committee"); provided, that,
to the extent required by Rule 16b-3, or any successor provision ("Rule
16b-3"), of the Securities Exchange Act of 1934, with respect to specific
grants of Stock Rights, the Plan shall be administered by a disinterested
administrator or administrators within the meaning of Rule 16b-3.
Hereinafter, all references in this Plan to the "Committee" shall mean the
Board if no Committee has been appointed. Subject to ratification of the
grant or authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under
paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph
3 to receive Non-Qualified Options and Awards and to make Purchases) to
whom Non-Qualified Options, Awards and authorizations to make Purchases
may be granted; (ii) determine the time or times at which Options or
Awards may be granted or Purchases made; (iii) determine the option price
of shares subject to each Option, which
<PAGE>
-2-
price shall not be less than the minimum price specified in paragraph 6,
and the purchase price of shares subject to each Purchase; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraphs 7 and 9) the time or times when each
Option shall become exercisable and the duration of the exercise period;
(vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, Awards and Purchases and the nature
of such restrictions, if any, and (vii) interpret the Plan and prescribe
and rescind rules and regulations relating to it. If the Committee
determines to issue a Non-Qualified Option, it shall take whatever actions
it deems necessary, under Section 422 of the Code and the regulations
promulgated thereunder, to ensure that such Option is not treated as an
ISO. The interpretation and construction by the Committee of any
provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from
time to time adopt such rules and regulations for carrying out the Plan as
it may deem best. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the
Plan or any Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such times and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee (if
consistent with applicable state law), shall be the valid acts of the
Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Stock Rights may be granted
to members of the Board consistent with the provisions of the first
sentence of paragraph 2(A) above, if applicable. All grants of Stock
Rights to members of the Board shall in all other respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Members of the Board who are either (i) eligible for Stock Rights
pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any
Stock Rights pursuant to the Plan, except that no such member shall act
upon the granting to himself of Stock Rights, but any such member may be
counted in determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the granting to him of
Stock Rights.
D. PERFORMANCE-BASED COMPENSATION. The Board, in its discretion, may
take such action as may be necessary to ensure that Stock Rights
granted under the Plan qualify as "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and
applicable regulations promulgated thereunder ("Performance-Based
Compensation"). Such action may include, in the Board's discretion,
some or all of the following (i) if the Board determines that Stock
Rights granted under the Plan generally shall constitute
Performance-Based Compensation, the Plan shall be administered, to the
extent required for such Stock Rights to constitute Performance-Based
Compensation, by a Committee consisting solely of two or more "outside
directors" (as defined in applicable regulations promulgated under
Section 162(m) of the Code), (ii) if any Non-Qualified
<PAGE>
-3-
Options with an exercise price less than the fair market value per share
of Common Stock are granted under the Plan and the Board determines that
such Options should constitute Performance-Based Compensation, such
options shall be made exercisable only upon the attainment of a
pre-established, objective performance goal established by the Committee,
and such grant shall be submitted for, and shall be contingent upon
shareholder approval and (iii) Stock Rights granted under the Plan may be
subject to such other terms and conditions as are necessary for
compensation recognized in connection with the exercise or disposition of
such Stock Right or the disposition of Common Stock acquired pursuant to
such Stock Right, to constitute Performance-Based Compensation.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any employee, officer or director (whether or not also an employee)
or consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO, a Non-Qualified Option, an Award or an authorization to make a
Purchase. Granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him from, participation in
any other grant of Stock Rights.
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,250,000, subject to adjustment as provided in
paragraph 13. Any such shares may be issued pursuant to any type of Stock Rights
granted under the Plan, so long as the number of shares so issued does not
exceed such number, as adjusted. If any Stock Right granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject to such Stock Right shall again be available for
grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation may be
granted Stock Rights to acquire, in the aggregate, more than 200,000 shares of
Common Stock under the Plan during any fiscal year of the Company. If any Stock
Right granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part or shall be repurchased by the Company, the shares subject to
such Stock Right shall be included in the determination of the aggregate number
of shares of Common Stock deemed to have been granted to such employee under the
Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time after August 10, 1992 and prior to August 9, 2002. The date of grant
of a Stock Right under the Plan will be the date specified by the Committee at
the time it grants the Stock Right; provided, however, that such date shall not
be prior to the date on which the Committee acts to approve the grant. The
Committee shall have the right, with the consent of the optionee, to convert an
ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph 16.
<PAGE>
-4-
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS. Subject to paragraph 2(D) (relating
to compliance with Section 162(m) of the Code), the exercise price per
share specified in the agreement relating to each Non-Qualified Option
granted under the Plan shall in no event be less than the minimum legal
consideration required therefor under the laws of the Commonwealth of
Massachusetts or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for
the first time by such employee during any calendar year with respect to
stock having a fair market value (determined at the time the ISOs were
granted) in excess of $100,000. The Company intends to designate any
Options granted in excess of such limitation as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the last business day for
which the prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the
Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
Nasdaq National Market List. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market
value" shall be deemed to be the fair value of the Common Stock as
determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and
offer prices of the Common Stock in private transactions negotiated at
arm's length.
<PAGE>
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7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Related Corporation, as determined under paragraph 6(B). Subject to
earlier termination as provided in paragraphs 9 and 10, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments
as the Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or
termination of the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option;
provided that the Committee shall not, without the consent of an
optionee, accelerate the exercise date of any installment of any
Option granted to any employee as an ISO (and not previously converted
into a Non-Qualified Option pursuant to paragraph 16) if such
acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code, as described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. For purposes of this paragraph 9 only,
employment shall be considered as continuing uninterrupted during any bona fide
leave of absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
re-employment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence.
<PAGE>
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ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. DEATH; DISABILITY.
A. DEATH. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the
laws of descent and distribution, at any time prior to the earlier of the
specified expiration date of the ISO or 180 days from the date of the
optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have
the right to exercise any ISO held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he
could have exercised it on that date, at any time prior to the earlier of
the specified expiration date of the ISO or 180 days from the date of the
termination of the optionee's employment. For the purposes of the Plan,
the term "disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or successor statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable
by the grantee except by will or by the laws of descent and distribution. During
the lifetime of the grantee each Stock Right shall be exercisable only by him.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
<PAGE>
-7-
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially
all of the Company's assets or otherwise (an "Acquisition"), the Committee
or the board of directors of any entity assuming the obligations of the
Company hereunder (the "Successor Board"), shall, as to outstanding
Options, either (i) make appropriate provision for the continuation of
such Options by substituting on an equitable basis for the shares then
subject to such Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionees, provide that all Options must
be exercised, to the extent then exercisable, within a specified number of
days of the date of such notice, at the end of which period the Options
shall terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price
paid upon such exercise the securities he would have received if he had
exercised his Option prior to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs, it may refrain from
making such adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, each Option will terminate immediately
prior to the consummation of such proposed action or at such other time
and subject to such other conditions as shall be determined by the
Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the
<PAGE>
-8-
number or price of shares subject to Options. No adjustments shall be
made for dividends paid in cash or in property other than securities of
the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of a Stock Right made hereunder receives shares or securities or cash
in connection with a corporate transaction described in subparagraphs A, B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, (c) at the discretion of the Committee, by delivery of
the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, (d) at the discretion of the Committee and
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Stock Right and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise, or (e) at the discretion of the
Committee, by any combination of (a), (b), (c) and (d) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b), (c), (d) or (e) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant
of the ISO in question. The holder of a Stock Right shall not have the rights of
a shareholder with respect to the shares covered by his Stock Right until the
date of issuance of a stock certificate to him for such shares. Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
<PAGE>
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15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board of
Directors of the Company on August 10, 1992, subject to approval of the Plan by
the stockholders of the Company. The Plan shall expire at the end of the day on
August 9, 2002 (except as to Options outstanding on that date). The Board may
terminate or amend the Plan in any respect at any time, except that, without the
approval of the stockholders obtained within 12 months before or after the Board
adopts a resolution authorizing any of the following actions: (a) the total
number of shares that may be issued under the Plan may not materially be
increased (except by adjustment pursuant to paragraph 13); (b) the benefits
accruing to participants under the Plan may not materially be increased; (c) the
requirements as to eligibility to participate in the Plan may not materially be
modified; (d) the provisions of paragraph 3 regarding eligibility for grants of
ISOs may not be modified; (e) the provisions of paragraph 6(B) regarding the
exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment pursuant to paragraph 13); and (f) the expiration
date of the Plan may not be extended. Except as otherwise provided in this
paragraph 15, in no event may action of the Board or stockholders alter or
impair the rights of a grantee, without his consent, under any Stock Right
previously granted to him.
16. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but shall not be limited to, extending the exercise period
or reducing the exercise price of the appropriate installments of such ISOs. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after he/she (or any transferee to whom Section 424(c)(4) of the
Code, relating to transfers to a spouse or former spouse, applies) makes a
Disqualifying Disposition, as described in Sections 421, 422 and 424 of the Code
and regulations thereunder, of any stock acquired under the Plan (or stock or
securities received in a transaction described in Section 424(b) or 424(c)(1)(B)
of the Code, relating to distributions of stock with respect to stock acquired
under the Plan and certain tax-free exchanges of stock acquired under the Plan
for other stock or securities). A Disqualifying Disposition (with certain
exceptions) is generally any disposition within two years of the date the
<PAGE>
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ISO was granted or within one year of the date the ISO was exercised, whichever
period ends later. With respect to stock or securities held jointly with right
of survivorship, a termination of such joint tenancy may constitute a
Disqualifying Disposition. This paragraph 18 shall be made binding upon the
optionee and upon any transferee of stock or securities described in this
paragraph to whom Section 424(c)(4) of the Code applies.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock acquired on the exercise of a Stock Right hereunder (or stock or
securities received in a transaction described in Section 424(b) or 424(c)(1)(B)
of the Code), or the making of a distribution or other payment with respect to
such stock or securities, the Company may withhold taxes in respect of amounts
that constitute compensation includible in gross income, whenever the Company
determines that such withholding is required. The Committee in its discretion
may condition (i) the exercise of an Option, (ii) the grant of an Award, (iii)
the making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting of restricted Common Stock acquired by exercising a Stock
Right, on the grantee's making satisfactory arrangement for such withholding.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
In addition to tax withholding, government regulations may impose
reporting or other obligations on the Company with respect to the Plan. For
example, the Company may be required to send tax information statements to
employees and former employees that exercise ISOs.
21. COMPLIANCE WITH REGULATIONS. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 and any applicable Securities and
Exchange Commission interpretations thereof. If any provision of this Plan is
deemed not to be in compliance with Rule 16b-3, the provisions shall be null and
void.
22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the Commonwealth of Massachusetts, or the laws of any jurisdiction in which
the Company or its successors in interest may be organized. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
<PAGE>
Exhibit 13
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 27th day of May, 1999, by and
between EWOK ACQUISITION CORP., a Massachusetts corporation (hereinafter
"EWOK"), and OWEN A. DEMPSEY (hereinafter "DEMPSEY").
WHEREAS, EWOK is proposing to acquire DEMPSEY's present employer,
ENDOGEN, Inc. (hereinafter "CORPORATION") in which event the operations of EWOK
and CORPORATION will merge; and
WHEREAS, assuming said merger is consummated and the contingencies set
forth in Section 8.2 below are satisfied, EWOK wishes to employ DEMPSEY as its
President under the terms and conditions set forth in this Agreement; and
WHEREAS, in such event DEMPSEY wishes to be employed by EWOK as its
President under those same terms and conditions.
NOW, THEREFORE, in consideration of the above and the promises and
agreements set forth in this Agreement, the parties agree as follows:
1 EMPLOYMENT.
EWOK agrees to employ DEMPSEY and DEMPSEY accepts employment with
EWOK as its President.
2 DUTIES AND RESPONSIBILITIES.
As President, DEMPSEY will devote his entire time, attention and
energy to such duties, shall perform the duties and assignments usually
associated with that position and such other duties and assignments,
consistent with his position as President of EWOK, as may be assigned
to him from to time-to-time by the Chairman of the Board of Directors
of EWOK or his designee. The above notwithstanding, EWOK reserves the
right following the
<PAGE>
merger to change DEMPSEY's job title after the employment date (as
defined in Section 8.2 below) provided that such does not result in a
substantial diminution of DEMPSEY's job responsibilities as they
existed on the effective date of this Agreement.
DEMPSEY will not during the term of this Agreement be engaged in
any other business or employment (including self-employment) without
the express written consent of the chairman of the Board of Directors
of EWOK or his designee. However, with the advance approval of EWOK
(through the Chairman of its Board of Directors or his designee),
DEMPSEY may serve on the Boards of Directors of charitable
organizations and/or outside corporations provided such activities do
not constitute an actual or potential conflict of interest with and/or
unduly interfere with the performance of DEMPSEY's duties and
responsibilities hereunder.
3 COMPENSATION.
3.1 BASE SALARY.
For all services rendered by DEMPSEY under this Agreement,
EWOK will pay an initial base salary of $160,000.00 per calendar
year (which shall be pro-rated for partial calendar years
hereunder), payable in equal installments on a schedule consistent
with EWOK's payroll practices for executive employees. EWOK shall
deduct from that base salary (as well as any adjustments to base
salary pursuant to Section 3.2 below) all state and federal taxes
and other assessments required by law.
3.2 ADJUSTMENTS TO BASE SALARY.
The Chairman of the Board of Directors of EWOK or his
designee shall review DEMPSEY's salary and performance on an
annual basis (commencing on or
2
<PAGE>
about January 1, 2000, and on or about January 1 of each
succeeding year while DEMPSEY remains employed by EWOK) and may,
in his discretion, make increases to the base salary based upon
DEMPSEY's performance in the preceding year. Adjustments to the
base salary, if any, shall be effective as of January 1 of the
involved year.
3.3 BONUSES.
DEMPSEY shall be entitled to earn up to an additional
$60,000.00 per calendar year in keeping with the provisions of a
bonus plan which shall, hereafter, be mutually agreed upon by
DEMPSEY and EWOK. The terms of that bonus plan (including
eligibility factors therefor) shall be agreed upon by EWOK
(through the Chairman of its Board of Directors or his designee)
and DEMPSEY within ninety (90) days of the effective date of this
Agreement.
3.4 VEHICLE ALLOWANCE.
DEMPSEY shall receive a vehicle allowance equivalent to the
sum of $10,000.00 per calendar year (which shall be pro-rated for
partial calendar years hereunder) which shall be payable as income
to DEMPSEY and, therefore, subject to the deduction of all state
and federal taxes and other assessments required by law.
4 BENEFITS AND PERQUISITES.
Subject to applicable federal and state tax regulations, DEMPSEY
shall receive the following benefits and perquisites from EWOK:
4.1 INSURANCE.
3
<PAGE>
DEMPSEY shall be eligible for medical insurance (including
coverage for eligible dependents), disability insurance and life
insurance coverages under the same terms and conditions as those
benefits are made available to similarly-situated executive
employees of EWOK.
4.2 VACATION.
DEMPSEY shall be entitled to paid vacation under the same
terms and conditions as those benefits are made available to
similarly-situated executive employees of EWOK. The use and
scheduling of that vacation by DEMPSEY shall be consistent with
requirements of his position and shall not interfere with the
performance of his responsibilities as President of EWOK.
4.3 EXPENSE ACCOUNT.
EWOK agrees to pay on DEMPSEY's behalf all reasonable and
customary business-related expenses incurred by him in the
provision of services under this Agreement. Included within this
obligation are all customer entertainment, business travel and
other expenses reasonably attributable to the provision of
services under this Agreement. Payment of expense account items
are subject to the approval of the Chairman of the Board of
Directors (or his designee) of EWOK and should be submitted by
DEMPSEY for approval on a monthly basis.
5 NON-DISCLOSURE/NON-COMPETITION.
5.1 NON-DISCLOSURE.
DEMPSEY recognizes and acknowledges that information obtained
by him during the course of his employment with EWOK, its trade
secrets, business and
4
<PAGE>
customers, is confidential information. The parties to this
Agreement further stipulate that the information referred to in
Section 5 of this Agreement is sufficiently secret that EWOK
derives economic value from the information remaining confidential
and not being generally known to other persons who can obtain
economic value from its disclosure or use. DEMPSEY also
acknowledges that EWOK has taken precautions, such as this
Agreement, to keep such information confidential. DEMPSEY will
not, both during and after the termination of this Agreement (for
whatever reason), disclose or communicate to any person, firm,
corporation or other entity, in any manner, any trade secrets,
proprietary or confidential information of EWOK, CORPORATION
and/or PerBio Science AB. Such information includes, but is not
limited to, the following:
Technical or Non-Technical Data, Formula, Patterns,
Compilations, Devices, Methods, Techniques, Drawings,
Processes, Customer Lists, Business and/or Marketing
Development Plans or Information or other data of a similar
nature or description.
The above provisions shall be inapplicable to the disclosure
of information which (1) was part of the public domain prior to
the effective date of this Agreement, (2) is required as part of a
legal proceeding (but only to the extent that the disclosure of
the information is legally compelled) and/or (3) information that
becomes part of the public domain as the result of the disclosure
of such information by third parties through no fault, direct or
indirect, of DEMPSEY.
5.2 NON-COMPETITION.
DEMPSEY acknowledges the substantial time and effort expended
by EWOK and CORPORATION in establishing the long-standing
relationships they have with their customers. DEMPSEY agrees that
during his employment with EWOK and for a period of
5
<PAGE>
one (1) year following termination of his employment with EWOK
(for whatever reason), he will not, directly or indirectly, either
for himself or for any other person, firm, partnership, agency,
corporation or other entity, compete in their lines of business
with EWOK, CORPORATION, PerBio Science AB and/or its or their
respective subsidiaries or affiliates for which DEMPSEY had
material responsibility during the course of his employment with
EWOK or CORPORATION or solicit, call upon, divert or take away or
attempt to solicit, divert or take away from EWOK, CORPORATION,
PerBio Science AB and/or its or their respective subsidiaries or
affiliates for which DEMPSEY had material responsibility during
the course of his employment with EWOK or CORPORATION any of their
actual or potential customers nor assist any other person or
entity in doing so within the United States of America. DEMPSEY
represents that his experience and capabilities are such that he
can obtain employment in a non-competitive area and that, in the
event of the termination of this Agreement, enforcement of this
covenant by way of injunction will not impair or prevent DEMPSEY
from earning a livelihood.
5.3 RIGHTS AND REMEDIES.
The parties further stipulate that the matters covered in
this Agreement are important, material, confidential and gravely
affect the successful conduct, business and good-will of EWOK
and/or PerBio Science AB. The parties agree that EWOK and/or
PerBio Science AB may enforce this Agreement by seeking equitable
and injunctive relief, as well as monetary damages, attorneys'
fees and costs of suit. The obligations set forth in this Section
5 shall survive the "term" or the termination of this Agreement
pursuant to the provisions of Sections 6 or 7 below, for whatever
reason.
5.4 SEPARABILITY.
6
<PAGE>
EWOK and DEMPSEY agree that the character, duration and
geographic scope of the provisions set forth in this Section 5 are
reasonable in light of the circumstances as they exist on the date
hereof. Should a decision, however, be made at a later date by a
court of competent jurisdiction that the character, duration or
geographic scope of said provisions is unreasonable, it is the
intention and the agreement of DEMPSEY and EWOK that the
provisions of this Section 5 shall be construed by the court in
such a manner as to impose only those restrictions on DEMPSEY's
conduct that are reasonable in light of the circumstances and as
are necessary to assure to EWOK and/or PerBio Science AB the
benefits provided under Section 5. If, in a judicial proceeding, a
court shall refuse to enforce all of the separate promises
included therein because taken together they are more extensive
than necessary to assure EWOK and/or PerBio Science AB the
intended benefits of Section 5, it is expressly understood and
agreed by the parties hereto that the provisions of Section 5
that, if eliminated, would permit the remaining separate
provisions to be enforced in such proceeding shall be deemed
eliminated for purposes of such proceeding from Section 5.
6 TERM.
The initial term of this Agreement is for a period of two (2)
years, commencing on the "employment date" (as defined in Section 8.2
below) and terminating two (2) years hence, unless sooner terminated
pursuant to the provisions of this Agreement. In the event that EWOK
does not intend to renew this agreement upon the completion of its
initial term, EWOK shall provide DEMPSEY with a minimum of ninety (90)
days advance written notice prior to the expiration date of this
Agreement's initial term; in the event of such advance written notice,
EWOK may, in its discretion, place DEMPSEY on a leave of absence for
all or any portion of that ninety (90) day period. Provided, however,
that the failure to provide the notice required hereunder shall not
result
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in the extension of the term of this Agreement unless the parties
have mutually agreed, in writing, to such an extension.
7 TERMINATION.
7.1 TERM.
The Agreement shall expire upon the expiration of its term
unless otherwise sooner terminated by the parties' written mutual
agreement or pursuant to the remaining provisions of this Section
7.
7.2 TERMINATION FOR CAUSE.
EWOK may terminate this Agreement prior to the expiration of
its term for cause without further obligation to DEMPSEY
hereunder. For purposes of this Agreement, "for cause" includes
the following:
(a) an intentional act of fraud, embezzlement, theft or any other
material violation of the law including those involving
dishonesty in connection with DEMPSEY's duties or in the
course of his employment with EWOK or the commission of a
felony; or
(b) intentional wrongful damage to material assets of EWOK; or
(c) intentional wrongful disclosure of material confidential
information of EWOK.; or
(d) intentional conduct by DEMPSEY which has resulted or may
result in financial loss and legal liability to EWOK which is
materially injurious to EWOK.
No act, or failure to act, on the part of DEMPSEY, shall be deemed
"intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by DEMPSEY not in good faith and without
reasonable belief that his action or omission was in the best
interests of EWOK. In the event of a termination "for cause" under
the provisions of this Section 7.2, DEMPSEY shall not be entitled
to the salary continuation provided in Section 7.6 below.
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7.3 TERMINATION WITHOUT CAUSE.
DEMPSEY may terminate this Agreement upon the
provision of six (6) months written notice to EWOK. Similarly,
EWOK may, in its discretion, terminate this Agreement without
cause upon the provision of six (6) months written notice to
DEMPSEY provided that EWOK thereafter complies with the
applicable provisions of Section 7.6 below.
In the event of written notice of termination by DEMPSEY or
EWOK under this Section, EWOK may, in its discretion, place
DEMPSEY on a leave of absence for all or any portion of that six
(6) month notice period up to and including the effective date of
DEMPSEY's termination from employment.
7.4 TERMINATION UPON DEATH OR DISABILITY.
EWOK may terminate this Agreement without further obligation
to DEMPSEY hereunder upon the death or permanent disability of
DEMPSEY. For purposes of this Agreement, the "permanent
disability" of DEMPSEY shall be deemed to occur if the Board of
Directors of EWOK determines, based upon competent medical
evidence, that DEMPSEY is unable to substantially perform the
services required of him, hereunder, with or without a reasonable
accommodation, for a continuous period of ninety (90) days or
more. DEMPSEY shall cooperate with EWOK in providing medical
information necessary for EWOK to assess the parties' respective
duties and obligations under the provisions of this Section.
7.5 TERMINATION BY DEMPSEY FOR "GOOD REASON"
DEMPSEY's employment under this Agreement may be terminated
for good reason (as set forth below) by written notice from him to
the Chairman of the Board of Directors of EWOK at least thirty
(30) days prior to a date of termination subsequent to the
occurrence of any of the following events:
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(a) a reasonable determination by DEMPSEY in good faith that
there has been a significant adverse change in the nature or
scope of DEMPSEY's responsibilities, authorities, powers,
functions or duties; or
(b) a reduction in DEMPSEY's monetary compensation; or
(c) the relocation of DEMPSEY's offices at which DEMPSEY is
principally employed to a location more than 50 miles from
the location where DEMPSEY is principally employed; or
(d) the failure by EWOK to pay to DEMPSEY any portion of his
current compensation or the failure by EWOK to continue in
effect any material compensation, incentive, bonus or benefit
plan in which DEMPSEY participates pursuant to the provisions
of this Agreement unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by EWOK to continue
DEMPSEY's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the
level of DEMPSEY's participation, relative to the other
participants.
The above provisions notwithstanding, "good reason" shall not be
deemed to exist if any or all of the events noted in this Section
7.5 have been agreed upon in advance by DEMPSEY and EWOK.
7.6 SALARY CONTINUATION.
Subject to the provisions of this Section 7.6, DEMPSEY will
be provided with salary continuation upon termination of this
Agreement prior to its term as specified below. If a termination
during the term of this Agreement occurs pursuant to the
provisions of Section 7.3 above due to notice of termination
provided by EWOK, or in the event that this
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Agreement is not renewed and DEMPSEY's employment is terminated at
the expiration of its initial term (as provided in Section 6
above), DEMPSEY's salary (as provided in Section 3.1 above) shall
be continued for a period of twelve (12) months from the effective
date of termination; provided, however, that in no event shall
DEMPSEY receive salary continuation if he has provided notice of
termination to EWOK pursuant to the provisions of Section 7.3 or
if the Agreement has been terminated "for cause" as specified in
Section 7.2 above. Further, in the event of DEMPSEY's termination
of this Agreement for "good reason" (as specified in Section 7.5
above), DEMPSEY's salary (as provided in Section 3.1 above) shall
be continued for a period of six (6) months from the effective
date of termination.
The above notwithstanding, DEMPSEY shall not be entitled to
the salary continuation provided in this Section 7.6 unless and
until he has signed and delivered to EWOK a binding agreement in a
form acceptable to EWOK setting forth a release of any and all
claims arising from his employment, termination from employment
and termination of this Agreement with EWOK. During the period of
salary continuation (regardless of duration), DEMPSEY shall not be
entitled to continuation of the other benefits or perquisites
provided in this Agreement unless otherwise required by law or by
the mutual agreement of the parties hereto. Further, in no event
shall DEMPSEY be entitled to receive multiple payments of salary
continuation under the provisions of this Section 7.6 should his
termination from employment with EWOK be claimed or determined to
be attributable, in whole or in part, to two or more of the
reasons specified in this Section.
7.7 PROPERTY OF THE BUSINESS.
Upon DEMPSEY's termination of employment (for any reason),
all memoranda, notes, lists, records and other documents or papers
(and all copies thereof) including items stored in computer
memories, on microfiche or by any other means, made or compiled by
or
11
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on behalf of DEMPSEY, or made available to DEMPSEY relating to
the business of EWOK, are and shall be EWOK's property and shall,
if in the possession of DEMPSEY, be promptly delivered to EWOK.
8 MODIFICATION; CONTINGENCIES AND ASSIGNMENT.
8.1 MODIFICATION.
This Agreement may not be modified except in writing signed
by both parties.
8.2 CONTINGENCIES AND ASSIGNMENT.
The obligations of DEMPSEY and EWOK under this Agreement are
contingent upon EWOK's consummation of its merger with CORPORATION
as set forth below. For purposes of this Agreement, the
consummation of that merger and DEMPSEY's "employment date" shall
be deemed to have occurred on the date, if any, on which EWOK
accepts for payment shares tendered pursuant to EWOK's tender
offer for all of the issued and outstanding common stock of
CORPORATION. In the event that said contingency is not fully
satisfied and the tender offer is not consummated, all obligations
pursuant to this Agreement and the provisions of this Agreement
shall be null, void and no longer in force or effect.
It is expressly agreed that the duties, rights and
obligations of EWOK and DEMPSEY under this Agreement shall be
transferred to any entity with which EWOK may merge on or
following the "employment date" as set forth above. Additionally,
EWOK or that entity may further assign such duties, rights and
obligations to other entities following said merger provided said
assignment is to a subsidiary of PerBio Science AB. EWOK or that
entity shall provide DEMPSEY with written notice of said
assignments; in that event, the obligations of DEMPSEY and EWOK as
set forth in this Agreement shall, thereafter, be applicable to
the entity identified in that notice. Except as specifically
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provided in this Section 8.2, the duties, rights and obligations
set forth in this Agreement shall not otherwise be assignable by
EWOK or DEMPSEY to any other corporation or other entity without
the other party's approval, in writing.
9 GOVERNING LAW.
The performance and interpretation of this Agreement shall be
construed in accordance with the laws of the State of Massachusetts.
10 WAIVER.
Waiver of any breach of the terms and conditions of this Agreement
shall not be construed to be a waiver of any preceding or succeeding
breach of the same or different term or condition of this Agreement,
and this Agreement shall continue and remain in full for and effect as
if no waiver had occurred.
11 NOTICE.
Notices shall be deemed delivered and received as of the date of
the U.S. Postal Service postmark. Any notice required by this
Agreement shall be sent by certified mail, return receipt requested,
to the following addresses:
To: EWOK
c/o Chairman of the Board
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
with a copy to:
Mr. Robb Anderson
Pierce Chemical Co.
3747 Meridian Rd.
Rockford, IL 61101
To: OWEN A. DEMPSEY
21 Harris Street
Brookline, MA 02446
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12 SEVERABILITY.
In the event any of the terms and provisions of this Agreement are
determined to be invalid or unlawful, the remaining provisions of this
Agreement will continue in full force and effect to the fullest extent
permitted by law. The parties expressly agree that a court of competent
jurisdiction may modify the provisions of this Agreement so as to make
the Agreement enforceable.
13 WARRANTY.
DEMPSEY hereby warrants that neither the entry into this
Employment Agreement nor its performance by DEMPSEY will conflict with
or result in a breach of the terms, conditions or privileges of any
agreement or other obligation of any nature to which DEMPSEY is a
party, or by which DEMPSEY is bound, including without limitation, any
employment agreements, non-competition agreements or confidentiality
agreements previously entered into by DEMPSEY.
EXECUTED on the 27th day of May, 1999.
EWOK ACQUISITION CORP., a Massachusetts corporation
By: /s/ OWEN A. DEMPSEY
Its: /s/ ROBB ANDERSON -------------------
------------------------------------------------- OWEN A. DEMPSEY
/s/ AVERY W. CATLIN
- -----------------------------------------------------
ATTEST:
14
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Exhibit 14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 27th day of May, 1999, by and
between EWOK ACQUISITION CORP., a Massachusetts corporation (hereinafter
"EWOK"), and CHRISTINE A. BURNS (hereinafter "BURNS").
WHEREAS, EWOK is proposing to acquire BURNS' present employer, ENDOGEN,
Inc. (hereinafter "CORPORATION") in which event the operations of EWOK and
CORPORATION will merge; and
WHEREAS, assuming said merger is consummated and the contingencies set
forth in Section 8.2 below are satisfied, EWOK wishes to employ BURNS as its
Vice President of Product Development and Technology under the terms and
conditions set forth in this Agreement; and
WHEREAS, in such event BURNS wishes to be employed by EWOK as its Vice
President of Development and Technology under those same terms and conditions.
NOW, THEREFORE, in consideration of the above and the promises and
agreements set forth in this Agreement, the parties agree as follows:
1 EMPLOYMENT.
EWOK agrees to employ BURNS and BURNS accepts employment with EWOK
as its Vice President of Development and Technology.
2 DUTIES AND RESPONSIBILITIES.
As Vice President of Development and Technology, BURNS will devote
her entire time, attention and energy to such duties, shall perform the
duties and assignments usually associated with that position and such
other duties and assignments, consistent with her position as Vice
President of Development and Technology of EWOK, as may be assigned to
her from to time-to-time by the Chairman of the Board of Directors of
EWOK or his
<PAGE>
designee. The above notwithstanding, EWOK reserves the right following
the merger to change BURNS' job title after the employment date (as
defined in Section 8.2 below) provided that such does not result in a
substantial diminution of BURNS' job responsibilities as they existed
on the effective date of this Agreement.
BURNS will not during the term of this Agreement be engaged in any
other business or employment (including self-employment) without the
express written consent of the chairman of the Board of Directors of
EWOK or his designee. However, with the advance approval of EWOK
(through the Chairman of its Board of Directors or his designee), BURNS
may serve on the Boards of Directors of charitable organizations and/or
outside corporations provided such activities do not constitute an
actual or potential conflict of interest with and/or unduly interfere
with the performance of BURNS' duties and responsibilities hereunder.
3 COMPENSATION.
3.1 BASE SALARY.
For all services rendered by BURNS under this Agreement, EWOK
will pay an initial base salary of $144,000.00 per calendar year
(which shall be pro-rated for partial calendar years hereunder),
payable in equal installments on a schedule consistent with EWOK's
payroll practices for executive employees. EWOK shall deduct from
that base salary (as well as any adjustments to base salary
pursuant to Section 3.2 below) all state and federal taxes and
other assessments required by law.
3.2 ADJUSTMENTS TO BASE SALARY.
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The Chairman of the Board of Directors of EWOK or his
designee shall review BURNS' salary and performance on an annual
basis (commencing on or about January 1, 2000, and on or about
January 1 of each succeeding year while BURNS remains employed by
EWOK) and may, in his discretion, make increases to the base
salary based upon BURNS' performance in the preceding year.
Adjustments to the base salary, if any, shall be effective as of
January 1 of the involved year.
3.3 BONUSES.
BURNS shall be entitled to earn up to an additional
$36,000.00 per calendar year in keeping with the provisions of a
bonus plan which shall, hereafter, be mutually agreed upon by
BURNS and EWOK. The terms of that bonus plan (including
eligibility factors therefor) shall be agreed upon by EWOK
(through the Chairman of its Board of Directors or his designee)
and BURNS within ninety (90) days of the effective date of this
Agreement.
3.4 VEHICLE ALLOWANCE.
BURNS shall receive a vehicle allowance equivalent to the sum
of $6,000.00 per calendar year (which shall be pro-rated for
partial calendar years hereunder) which shall be payable as income
to BURNS and, therefore, subject to the deduction of all state and
federal taxes and other assessments required by law.
4 BENEFITS AND PERQUISITES.
Subject to applicable federal and state tax regulations, BURNS
shall receive the following benefits and perquisites from EWOK:
4.1 INSURANCE.
3
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BURNS shall be eligible for medical insurance (including
coverage for eligible dependents), disability insurance and life
insurance coverages under the same terms and conditions as those
benefits are made available to similarly-situated executive
employees of EWOK.
4.2 VACATION.
BURNS shall be entitled to paid vacation under the same terms
and conditions as those benefits are made available to
similarly-situated executive employees of EWOK. The use and
scheduling of that vacation by BURNS shall be consistent with
requirements of her position and shall not interfere with the
performance of her responsibilities as Vice President of
Development and Technology of EWOK.
4.3 EXPENSE ACCOUNT.
EWOK agrees to pay on BURNS' behalf all reasonable and
customary business-related expenses incurred by her in the
provision of services under this Agreement. Included within this
obligation are all customer entertainment, business travel and
other expenses reasonably attributable to the provision of
services under this Agreement. Payment of expense account items
are subject to the approval of the Chairman of the Board of
Directors (or his designee) of EWOK and should be submitted by
BURNS for approval on a monthly basis.
5 NON-DISCLOSURE/NON-COMPETITION.
5.1 NON-DISCLOSURE.
4
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BURNS recognizes and acknowledges that information obtained
by her during the course of her employment with EWOK, its trade
secrets, business and customers, is confidential information. The
parties to this Agreement further stipulate that the information
referred to in Section 5 of this Agreement is sufficiently secret
that EWOK derives economic value from the information remaining
confidential and not being generally known to other persons who
can obtain economic value from its disclosure or use. BURNS also
acknowledges that EWOK has taken precautions, such as this
Agreement, to keep such information confidential. BURNS will not,
both during and after the termination of this Agreement (for
whatever reason), disclose or communicate to any person, firm,
corporation or other entity, in any manner, any trade secrets,
proprietary or confidential information of EWOK, CORPORATION
and/or PerBio Science AB. Such information includes, but is not
limited to, the following:
Technical or Non-Technical Data, Formula, Patterns,
Compilations, Devices, Methods, Techniques, Drawings,
Processes, Customer Lists, Business and/or Marketing
Development Plans or Information or other data of a similar
nature or description.
The above provisions shall be inapplicable to the disclosure
of information which (1) was part of the public domain prior to
the effective date of this Agreement, (2) is required as part of a
legal proceeding (but only to the extent that the disclosure of
the information is legally compelled) and/or (3) information that
becomes part of the public domain as the result of the disclosure
of such information by third parties through no fault, direct or
indirect, of BURNS.
5.2 NON-COMPETITION.
BURNS acknowledges the substantial time and effort expended
by EWOK and CORPORATION in establishing the long-standing
relationships they have with their
5
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customers. BURNS agrees that during her employment with EWOK and
for a period of one (1) year following termination of her
employment with EWOK (for whatever reason), she will not, directly
or indirectly, either for herself or for any other person, firm,
partnership, agency, corporation or other entity, compete in their
lines of business with EWOK, CORPORATION, PerBio Science AB and/or
its or their respective subsidiaries or affiliates for which BURNS
had material responsibility during the course of her employment
with EWOK or CORPORATION or solicit, call upon, divert or take
away or attempt to solicit, divert or take away from EWOK,
CORPORATION, PerBio Science AB and/or its or their respective
subsidiaries or affiliates for which BURNS had material
responsibility during the course of her employment with EWOK or
CORPORATION any of their actual or potential customers nor assist
any other person or entity in doing so within the United States of
America. BURNS represents that her experience and capabilities are
such that she can obtain employment in a non-competitive area and
that, in the event of the termination of this Agreement,
enforcement of this covenant by way of injunction will not impair
or prevent BURNS from earning a livelihood.
5.3 RIGHTS AND REMEDIES.
The parties further stipulate that the matters covered in
this Agreement are important, material, confidential and gravely
affect the successful conduct, business and good-will of EWOK
and/or PerBio Science AB. The parties agree that EWOK and/or
PerBio Science AB may enforce this Agreement by seeking equitable
and injunctive relief, as well as monetary damages, attorneys'
fees and costs of suit. The obligations set forth in this Section
5 shall survive the "term" or the termination of this Agreement
pursuant to the provisions of Sections 6 or 7 below, for whatever
reason.
5.4 SEPARABILITY.
6
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EWOK and BURNS agree that the character, duration and
geographic scope of the provisions set forth in this Section 5 are
reasonable in light of the circumstances as they exist on the date
hereof. Should a decision, however, be made at a later date by a
court of competent jurisdiction that the character, duration or
geographic scope of said provisions is unreasonable, it is the
intention and the agreement of BURNS and EWOK that the provisions
of this Section 5 shall be construed by the court in such a manner
as to impose only those restrictions on BURNS' conduct that are
reasonable in light of the circumstances and as are necessary to
assure to EWOK and/or PerBio Science AB the benefits provided
under Section 5. If, in a judicial proceeding, a court shall
refuse to enforce all of the separate promises included therein
because taken together they are more extensive than necessary to
assure EWOK and/or PerBio Science AB the intended benefits of
Section 5, it is expressly understood and agreed by the parties
hereto that the provisions of Section 5 that, if eliminated, would
permit the remaining separate provisions to be enforced in such
proceeding shall be deemed eliminated for purposes of such
proceeding from Section 5.
6 TERM.
The initial term of this Agreement is for a period of two (2)
years, commencing on the "employment date" (as defined in Section 8.2
below) and terminating two (2) years hence, unless sooner terminated
pursuant to the provisions of this Agreement. In the event that EWOK
does not intend to renew this agreement upon the completion of its
initial term, EWOK shall provide BURNS with a minimum of ninety (90)
days advance written notice prior to the expiration date of this
Agreement's initial term; in the event of such advance written notice,
EWOK may, in its discretion, place BURNS on a leave of absence for all
or any portion of that ninety (90) day period. Provided, however, that
the failure to provide the notice required hereunder shall not result
in the extension of the term of this Agreement unless the parties have
mutually agreed, in writing, to such an extension.
7
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7 TERMINATION.
7.1 TERM.
The Agreement shall expire upon the expiration of its term
unless otherwise sooner terminated by the parties' written mutual
agreement or pursuant to the remaining provisions of this Section
7.
7.2 TERMINATION FOR CAUSE.
EWOK may terminate this Agreement prior to the expiration of
its term for cause without further obligation to BURNS hereunder.
For purposes of this Agreement, "for cause" includes the
following:
(a) an intentional act of fraud, embezzlement, theft or any other
material violation of the law including those involving
dishonesty in connection with BURNS' duties or in the course
of her employment with EWOK or the commission of a felony; or
(b) intentional wrongful damage to material assets of EWOK; or
(c) intentional wrongful disclosure of material confidential
information of EWOK; or
(d) intentional conduct by BURNS which has resulted or may result
in financial loss and legal liability to EWOK which is
materially injurious to EWOK.
No act, or failure to act, on the part of BURNS, shall be deemed
"intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by BURNS not in good faith and without
reasonable belief that her action or omission was in the best
interests of EWOK. In the event of a termination "for cause" under
the provisions of this Section 7.2, BURNS shall not be entitled to
the salary continuation provided in Section 7.6 below.
7.3 TERMINATION WITHOUT CAUSE.
8
<PAGE>
BURNS may terminate this Agreement upon the provision of six
(6) months written notice to EWOK. Similarly, EWOK may, in its
discretion, terminate this Agreement without cause upon the
provision of six (6) months written notice to BURNS provided that
EWOK thereafter complies with the applicable provisions of Section
7.6 below.
In the event of written notice of termination by BURNS or
EWOK under this Section, EWOK may, in its discretion, place BURNS
on a leave of absence for all or any portion of that six (6) month
notice period up to and including the effective date of BURNS'
termination from employment.
7.4 TERMINATION UPON DEATH OR DISABILITY.
EWOK may terminate this Agreement without further obligation
to BURNS hereunder upon the death or permanent disability of
BURNS. For purposes of this Agreement, the "permanent disability"
of BURNS shall be deemed to occur if the Board of Directors of
EWOK determines, based upon competent medical evidence, that BURNS
is unable to substantially perform the services required of her,
hereunder, with or without a reasonable accommodation, for a
continuous period of ninety (90) days or more. BURNS shall
cooperate with EWOK in providing medical information necessary for
EWOK to assess the parties' respective duties and obligations
under the provisions of this Section.
7.5 TERMINATION BY BURNS FOR "GOOD REASON"
BURNS' employment under this Agreement may be terminated for
good reason (as set forth below) by written notice from her to the
Chairman of the Board of Directors of EWOK at least thirty (30)
days prior to a date of termination subsequent to the occurrence
of any of the following events:
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(a) a reasonable determination by BURNS in good faith that there
has been a significant adverse change in the nature or scope
of BURNS' responsibilities, authorities, powers, functions or
duties; or
(b) a reduction in BURNS' monetary compensation; or
(c) the relocation of BURNS' offices at which BURNS is
principally employed to a location more than 50 miles from
the location where BURNS is principally employed; or
(d) the failure by EWOK to pay to BURNS any portion of her
current compensation or the failure by EWOK to continue in
effect any material compensation, incentive, bonus or benefit
plan in which BURNS participates pursuant to the provisions
of this Agreement unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by EWOK to continue
BURNS' participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the
level of BURNS' participation, relative to the other
participants.
The above provisions notwithstanding, "good reason" shall not be
deemed to exist if any or all of the events noted in this Section
7.5 have been agreed upon in advance by BURNS and EWOK.
7.6 SALARY CONTINUATION.
Subject to the provisions of this Section 7.6, BURNS will be
provided with salary continuation upon termination of this
Agreement prior to its term as specified below. If a termination
during the term of this Agreement occurs pursuant to the
provisions of Section 7.3 above due to notice of termination
provided by EWOK, or in the event that this
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<PAGE>
Agreement is not renewed and BURNS' employment is terminated at
the expiration of its initial term (as provided in Section 6
above), BURNS' salary (as provided in Section 3.1 above) shall be
continued for a period of twelve (12) months from the effective
date of termination; provided, however, that in no event shall
BURNS receive salary continuation if she has provided notice of
termination to EWOK pursuant to the provisions of Section 7.3 or
if the Agreement has been terminated "for cause" as specified in
Section 7.2 above. Further, in the event of BURNS' termination of
this Agreement for "good reason" (as specified in Section 7.5
above), BURNS' salary (as provided in Section 3.1 above) shall be
continued for a period of twelve (12) months from the effective
date of termination.
The above notwithstanding, BURNS shall not be entitled to the
salary continuation provided in this Section 7.6 unless and until
she has signed and delivered to EWOK a binding agreement in a form
acceptable to EWOK setting forth a release of any and all claims
arising from her employment, termination from employment and
termination of this Agreement with EWOK. During the period of
salary continuation (regardless of duration), BURNS shall not be
entitled to continuation of the other benefits or perquisites
provided in this Agreement unless otherwise required by law or by
the mutual agreement of the parties hereto. Further, in no event
shall BURNS be entitled to receive multiple payments of salary
continuation under the provisions of this Section 7.6 should her
termination from employment with EWOK be claimed or determined to
be attributable, in whole or in part, to two or more of the
reasons specified in this Section.
7.7 PROPERTY OF THE BUSINESS.
Upon BURNS' termination of employment (for any reason), all
memoranda, notes, lists, records and other documents or papers
(and all copies thereof) including items stored in computer
memories, on microfiche or by any other means, made or compiled by
or on
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<PAGE>
behalf of BURNS, or made available to BURNS relating to the
business of EWOK, are and shall be EWOK's property and shall, if
in the possession of BURNS, be promptly delivered to EWOK.
8 MODIFICATION; CONTINGENCIES AND ASSIGNMENT.
8.1 MODIFICATION.
This Agreement may not be modified except in writing signed
by both parties.
8.2 CONTINGENCIES AND ASSIGNMENT.
The obligations of BURNS and EWOK under this Agreement are
contingent upon EWOK's consummation of its merger with CORPORATION
as set forth below. For purposes of this Agreement, the
consummation of that merger and BURNS' "employment date" shall be
deemed to have occurred on the date, if any, on which EWOK accepts
for payment shares tendered pursuant to EWOK's tender offer for
all of the issued and outstanding common stock of CORPORATION. In
the event that said contingency is not fully satisfied and the
tender offer is not consummated, all obligations pursuant to this
Agreement and the provisions of this Agreement shall be null, void
and no longer in force or effect.
It is expressly agreed that the duties, rights and
obligations of EWOK and BURNS under this Agreement shall be
transferred to any entity with which EWOK may merge on or
following the "employment date" as set forth above. Additionally,
EWOK or that entity may further assign such duties, rights and
obligations to other entities following said merger provided said
assignment is to a subsidiary of PerBio Science AB. EWOK or that
entity shall provide BURNS with written notice of said
assignments; in that event, the obligations of BURNS and EWOK as
set forth in this Agreement shall, thereafter, be applicable to
the entity identified in that notice. Except as specifically
provided in this Section 8.2, the duties, rights and
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obligations set forth in this Agreement shall not otherwise be
assignable by EWOK or BURNS to any other corporation or other
entity without the other party's approval, in writing.
9 GOVERNING LAW.
The performance and interpretation of this Agreement shall be
construed in accordance with the laws of the State of Massachusetts.
10 WAIVER.
Waiver of any breach of the terms and conditions of this Agreement
shall not be construed to be a waiver of any preceding or succeeding
breach of the same or different term or condition of this Agreement,
and this Agreement shall continue and remain in full for and effect as
if no waiver had occurred.
11 NOTICE.
Notices shall be deemed delivered and received as of the date of
the U.S. Postal Service postmark. Any notice required by this Agreement
shall be sent by certified mail, return receipt requested, to the
following addresses:
To: EWOK
c/o Chairman of the Board
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
with a copy to:
Mr. Robb Anderson
Pierce Chemical Co.
3747 Meridian Rd.
Rockford, IL 61101
To: CHRISTINE A. BURNS
9 Salem Road
Wellesley, MA 02181
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12 SEVERABILITY.
In the event any of the terms and provisions of this Agreement are
determined to be invalid or unlawful, the remaining provisions of this
Agreement will continue in full force and effect to the fullest extent
permitted by law. The parties expressly agree that a court of competent
jurisdiction may modify the provisions of this Agreement so as to make
the Agreement enforceable.
13 WARRANTY.
BURNS hereby warrants that neither the entry into this
Employment Agreement nor its performance by BURNS will conflict with or
result in a breach of the terms, conditions or privileges of any
agreement or other obligation of any nature to which BURNS is a party,
or by which BURNS is bound, including without limitation, any
employment agreements, non-competition agreements or confidentiality
agreements previously entered into by BURNS.
EXECUTED on the 27th day of May, 1999.
EWOK ACQUISITION CORP., a Massachusetts corporation
By: /s/ CHRISTINE A. BURNS
Its: /s/ ROBB ANDERSON ------------------------
------------------------------------------------ CHRISTINE A. BURNS
ATTEST:
/s/ AVERY W. CATLIN
- ----------------------------------------------------
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