-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FR8LjHnBV3TmpSg7VXxUP2e5VrNZ4617jKII3T+LCwyjDIpAG3pYO643PFyqDhJM aD5HxTmRW+TeIEPTfQ+wDQ== /in/edgar/work/20000906/0000892712-00-000129/0000892712-00-000129.txt : 20000922 0000892712-00-000129.hdr.sgml : 20000922 ACCESSION NUMBER: 0000892712-00-000129 CONFORMED SUBMISSION TYPE: PRES14A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001108 FILED AS OF DATE: 20000906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPHIDIAN PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000872947 STANDARD INDUSTRIAL CLASSIFICATION: [8731 ] IRS NUMBER: 391661164 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: PRES14A SEC ACT: SEC FILE NUMBER: 001-13835 FILM NUMBER: 717281 BUSINESS ADDRESS: STREET 1: 5445 E CHERYL PKWY CITY: MADISON STATE: WI ZIP: 53711 BUSINESS PHONE: 6082710878 MAIL ADDRESS: STREET 1: OPHIDIAN PHARMACEUTICALS INC STREET 2: 5445 EAST CHERYL PARKWAY CITY: MADISON STATE: WI ZIP: 53711 PRES14A 1 0001.txt PRELIMINARY PROXY OPHIDIAN Pharmaceuticals, Inc. SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [X] Preliminary Proxy Statement [ ] Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 OPHIDIAN PHARMACEUTICALS, INC. (Name of Registrant as Specified in its Charter) _______________________________________________________ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box) [ ] No fee required. [X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies:______________________ ______________________________________________ (2) Aggregate number of securities to which transaction applies:______________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Maximum aggregate value of consideration to be received by Registrant: $3,500,000. One fiftieth of one percent equals $700. (4) Proposed maximum aggregate value of transaction: $3,500,000 (5) Total fee paid: $700.00 [ ] Fee paid previously with preliminary materials: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: _____________________________ (2) Form, Schedule or Registration Statement No.:____________________ (3) Filing Party: _______________________________________ (4) Date Filed: _________________________________________ [Ophidian Pharmaceuticals, Inc. Letterhead] 5445 East Cheryl Parkway Madison, WI 53711 Dear Ophidian Stockholder: As you may know, Ophidian closed down its operations this May for lack of adequate financing. For several months, the Company's management and Board of Directors have diligently sought proposals for a merger and/or an asset sale transaction from a number of parties and considered a variety of possible transactions. As described in detail in the accompanying Notice of Special Meeting and attached Proxy Statement, the Board of Directors is seeking your consideration of, and strongly urging you to vote "FOR", the following two proposals, which are the culmination of that search: (1) to sell substantially all of the Company's assets to Promega Corporation, (the "Asset Sale") and (2) to authorize the Board of Directors to dissolve the Company, wind down its affairs, and effect the proposed Plan of Dissolution and Liquidation (the "Plan of Dissolution"). All of the members of the Board of Directors are firmly committed to the proposed Asset Sale and Plan of Dissolution, both of which were unanimously approved by the Board after careful consideration. We strongly believe that there is no better alternative currently available to preserve the Company's remaining cash and, more importantly, to maximize value for Ophidian's stockholders and creditors. We also believe that failure to approve the proposed Asset Sale and Plan of Dissolution, will, in all likelihood, increase costs to the Company and reduce or eliminate the amount of any possible distribution to stockholders. Your vote on each of these matters is very important. Under Delaware law, the proposed Asset Sale and Plan of Dissolution cannot be completed unless the holders of at least a majority of the outstanding shares of the Company's Common Stock vote in favor of each proposal. All unreturned proxies and abstentions will have the same effect as votes against the two proposals. Therefore, and whether or not you plan to attend the Special Meeting, please take the time to vote and return the enclosed proxy card in the accompanying postage-paid envelope. The Board of Directors unanimously and strongly urges you to vote "FOR" both proposals, and we encourage you to read the entire Proxy Statement. Your participation is extremely important. Your early response will be greatly appreciated and will allow us to effect the proposals at the lowest possible cost to you and the Company. Sincerely, Margaret van Boldrik Director and Vice President NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, NOVEMBER 8, 2000 TO THE STOCKHOLDERS: Notice is hereby given that a Special Meeting of Stockholders of Ophidian Pharmaceuticals, Inc., a Delaware corporation (the "Company" or "Ophidian"), will be held on Wednesday, November 8, 2000, at 10:00 a.m., central standard time, in the auditorium of the BioPharmaceutical Technology Center at 5445 East Cheryl Parkway, Madison, Wisconsin 53711, for the following purposes: 1. to consider and vote upon the proposed sale of substantially all of the Company's assets (the "Asset Sale") to Promega Corporation, a Wisconsin corporation ("Promega") pursuant to the terms of the Asset Purchase Agreement dated as of September 1, 2000, by and between the Company as seller and Promega as buyer (the "Purchase Agreement"), a copy of which is attached to the accompanying Proxy Statement as Exhibit A; and 2. to consider and vote upon the proposed authorization to the Company's Board of Directors to effect the dissolution and liquidation of the Company as described in the proposed Plan of Dissolution and Liquidation (the "Plan of Dissolution"), a copy of which is attached to the accompanying Proxy Statement as Exhibit B; and to transact such other business as may properly come before the meeting or any postponements or adjournments thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Pursuant to the Company's bylaws, the Board of Directors has fixed the close of business on September 29, 2000, as the record date for the determination of stockholders entitled to notice of and to vote at the meeting (the "Record Date"). Only stockholders of record at that time will be entitled to vote at the meeting or any postponement or adjournment thereof. All stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to mark, sign, date, and return the enclosed proxy as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any stockholder attending the meeting may vote in person even if such stockholder previously signed and returned a proxy. By Order of the Board of Directors, Madison, Wisconsin Susan Maynard September 29, 2000 Secretary Ophidian Pharmaceuticals, Inc. - Proxy Statement Table of Contents PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS 1 SUMMARY TERM SHEETS 1 THE ASSET SALE 1 THE DISSOLUTION AND PLAN OF DISSOLUTION AND LIQUIDATION 3 INFORMATION CONCERNING SOLICITATION, REVOCATION, AND VOTING OF PROXIES 6 RECORD DATE AND SHARES OUTSTANDING 6 VOTING, QUORUM; ABSTENTIONS; AND BROKER NON-VOTES 6 PROXY SOLICITATION 6 VOTING AND REVOCABILITY OF PROXIES 6 ADJOURNMENTS 7 INFORMATION ABOUT FORWARD-LOOKING STATEMENTS 7 RISK FACTORS RELATING TO THE ASSET SALE AND THE PLAN OF DISSOLUTION 8 ESTIMATES OF THE NET PROCEEDS FROM THE ASSET SALE AND DISTRIBUTIONS TO BE RECEIVED BY SHAREHOLDERS MAY NOT BE REALIZED 8 THE COMPANY WOULD INCUR COSTS IF THE PURCHASE AGREEMENT WERE TERMINATED BECAUSE OF THE RECEIPT BY THE COMPANY OF A SUPERIOR PROPOSAL 9 THE ASSET SALE MAY NOT BE CONSUMMATED 9 ANTICIPATED TIMING OF PLAN OF DISSOLUTION MAY NOT BE ACHIEVED 9 THERE CAN BE NO ASSURANCE THAT THE ASSET SALE AND THE PLAN OF DISSOLUTION WILL RESULT IN GREATER RETURNS TO STOCKHOLDERS THAN A CONTINUATION OF THE COMPANY AS CURRENTLY OPERATED 10 THE BOARD MAY AMEND, DELAY IMPLEMENTATION OF, OR TERMINATE THE PLAN OF DISSOLUTION EVEN IF IT IS APPROVED BY THE STOCKHOLDERS 10 STOCKHOLDERS COULD BE LIABLE TO THE EXTENT OF ANY DISTRIBUTIONS TO THEM IF CONTINGENT RESERVES ARE INSUFFICIENT TO SATISFY THE COMPANY'S LIABILITIES 10 PROPOSAL ONE - TO APPROVE THE ASSET SALE 11 DESCRIPTION OF THE ASSET SALE 11 GENERAL OVERVIEW 11 BACKGROUND AND HISTORY OF THE ASSET SALE 12 BUYER 12 PURCHASE PRICE 13 EXPECTED PROCEEDS OF THE ASSET SALE 13 EXPECTED TIMING OF THE ASSET SALE 14 REPRESENTATIONS AND WARRANTIES; CLOSING CONDITIONS 14 INDEMNIFICATION BY SELLER 14 TERMINATION OF THE PURCHASE AGREEMENT 15 GOVERNMENT APPROVALS 15 NO APPRAISAL RIGHTS 15 ACCOUNTING TREATMENT OF THE ASSET SALE 16 FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE 16 PRICE RANGE OF COMMON STOCK AND WARRANTS 16 INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON 17 VOTE REQUIRED 18 RECOMMENDATION OF THE BOARD 18 PROPOSAL TWO - APPROVAL OF THE DISSOLUTION 18 PROPOSED STOCKHOLDER ACTION 18 DESCRIPTION OF THE PLAN OF DISSOLUTION 18 BACKGROUND AND REASONS FOR THE DISSOLUTION 19 RISK FACTORS 19 DISSOLUTION AND LIQUIDATION PROCEDURE 19 ABANDONMENT OF THE PLAN OF DISSOLUTION 19 CONDUCT OF THE COMPANY FOLLOWING DISSOLUTION 20 SALE OF REMAINING ASSETS 20 PAYMENT OF CLAIMS AND OBLIGATIONS 20 DISTRIBUTIONS TO STOCKHOLDERS 21 LIQUIDATION TRUST 21 DELISTING AND TRADING OF THE COMMON STOCK AFTER DISSOLUTION 22 CONTINUING LIABILITY OF STOCKHOLDERS AFTER DISSOLUTION 22 NO APPRAISAL RIGHTS 22 REGULATORY MATTERS 22 CERTAIN FEDERAL INCOME TAX CONSEQUENCES 23 GENERAL 23 CONSEQUENCES TO THE COMPANY 23 CONSEQUENCES TO STOCKHOLDERS 24 VOTE REQUIRED 25 RECOMMENDATION OF THE BOARD 25 OTHER MATTERS 25 OTHER INFORMATION REGARDING THE COMPANY 25 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 25 CHANGES IN CONTROL 27 SELECTED FINANCIAL DATA, INCLUDING PRO FORMA INFORMATION 27 NOTES TO PRO FORMA FINANCIAL STATEMENTS 30 STOCKHOLDER PROPOSALS 31 WHERE YOU CAN FIND MORE INFORMATION 31 INFORMATION INCORPORATED BY REFERENCE 32 SIGNATURE 33 OPHIDIAN Pharmaceuticals, Inc. PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS The enclosed Proxy is solicited on behalf of the Board of Directors of Ophidian Pharmaceuticals, Inc. (the "Company" or "Ophidian") for use in connection with a Special Meeting of the Stockholders (the "Special Meeting") to be held Wednesday, November 8, 2000, at 10:00 a.m., central standard time, or at any adjournments or postponements of the Special Meeting. The Special Meeting will be held in the auditorium of the BioPharmaceutical Technology Center at 5445 East Cheryl Parkway, Madison, Wisconsin 53711. The Company's principal executive offices are also located at this site. The Company's telephone number is (608) 271-0878. These proxy solicitation materials were mailed on or about October 6, 2000, to all stockholders entitled to vote at the Special Meeting. SUMMARY TERM SHEETS The following summary terms sheet highlight selected information from this Proxy Statement and may not contain all of the information that is important to every stockholder. To understand the transactions fully and for a more complete description of the legal terms of the transactions, stockholders should read carefully this entire Proxy Statement and the attached documents. The Asset Sale Note, a copy of the "Asset Purchase Agreement" (referred to hereafter as the "Purchase Agreement") is attached to this Proxy Statement as Exhibit A. The Parties to the Asset Sale Ophidian Pharmaceuticals, Inc. Ophidian, a development stage 5445 East Cheryl Parkway corporation, was founded in 1989 Madison, WI 53711 to discover, develop, and (608) 271-0878 commercialize therapeutic products for human and animal use with a principal focus on products for infectious disease prevention and treatment. See "Where You Can Find More Information." Promega Corporation Founded in 1978, Promega provides 2800 Woods Hollow Road products and technical support for Madison, WI 53711-5399 the life sciences industry (608) 274-4330 worldwide and has annual sales in excess of $100 million. The Purchase Agreement & Price At closing Promega will pay Ophidian $1.25 million in cash, and deliver a promissory note for an additional $250,000, payable within 90 days of closing, subject to offset for any post-closing adjustments. Promega will also assume Ophidian's obligations under (a) two senior secured notes in the total original principal amount of $2 million and (b) the Company's office/lab and manufacturing leases. In exchange, Ophidian will transfer to Promega substantially all of its assets. Anticipated Closing of On the second business day after the Asset Sale Ophidian satisfies, or Promega waives, all the conditions precedent to Promega's obligation to close, but not later than November 30, 2000. Conditions to Closing The Purchase Agreement contains conditions to closing, including: (a) approval by a majority of Ophidian's stockholders and (b) other conditions customary for transactions of this type. See "Proposal One-Representations and Warranties; Closing Conditions". Indemnification Ophidian has agreed to indemnify Promega for any losses and expenses resulting from any inaccuracy, breach, or default of Ophidian's representations, warranties, covenants, obligations, or agreements in the Purchase Agreement, or Ophidian's use of its assets prior to closing. The amount of the indemnification is limited to $250,000, which may be offset against Promega's purchase price promissory note in the same amount. Termination The Purchase Agreement may be terminated prior to closing as follows: * by Promega if the closing has not occurred by November 30, 2000; * by Promega during the first 45 days based upon Promega's due diligence investigation; * by either party if the other party is in breach; * by Ophidian if it has received a "Superior Proposal, complied with the notice provisions to Promega in the Purchase Agreement and paid Promega a "Termination Fee" of $100,000; and * by mutual consent of the parties. See "Proposal One - Termination of the Purchase Agreement". Government Approvals No federal or state regulatory requirements or approvals are required for the Asset Sale other than compliance with applicable state corporate law and federal and state securities laws. Appraisal Rights Stockholders will have no appraisal rights in connection with the Asset Sale. Accounting Treatment The Asset Sale will be treated as a sale of assets and liabilities for accounting purposes. Federal Income Tax The Asset Sale will not result in Consequences any federal income tax consequences to the stockholders, but the sale will be a taxable transaction to Ophidian. However, Ophidian does not expect to incur any significant federal income tax liability because of its net operating loss carry-forwards available to offset any gain on the Asset Sale. The Dissolution and Plan of Dissolution and Liquidation Note, the "Plan of Dissolution and Liquidation" (hereafter, the "Plan" or "Plan of Dissolution") is attached, in its entirety, to this Proxy Statement as Exhibit B. Timing & Procedure Upon approval by the stockholders and completion of the Asset Sale, if completed by November 30, 2000, Ophidian will file a Certificate of Dissolution with the Secretary of State for Delaware and the Company will thereafter take steps to wind up its affairs, including liquidation of any remaining assets and payment of outstanding claims, at such times as the Board of Directors deems necessary, appropriate, or advisable. The Board of Directors may delay the dissolution upon completion of the Asset Sale or an alternative asset sale. Abandonment of the Plan The Board of Directors may abandon the Plan entirely without further stockholder action if it determines that dissolution and liquidation are not in the best interests of the stockholders. Post-Dissolution Conduct Under Delaware law, after of Ophidian dissolution Ophidian will continue to exist for three years solely for the purpose of winding up its affairs. During this time the Company's Board of Directors and officers will oversee the liquidation of the Company's assets, but will not continue its business. They will: * settle and close the Company's business; * convert to cash, by sales, as much of the Company' non-cash assets as possible; * withdraw from any jurisdiction where the Company is qualified to do business; * pay or make provision to pay the Company's expenses and other liabilities; * prosecute and defend any lawsuits; * distribute the Company's remaining assets to the stockholders; * do any other act necessary to wind up and liquidate the Company's business and affairs. See "Proposal Two-Conduct of the Company Following Dissolution." Sale of Remaining Assets Although the Board of Directors is seeking separate approval at the Special Meeting for the Asset Sale, if the Plan of Dissolution is approved by the stockholders, the Board of Directors will be authorized to sell all of the Company's assets in alternate transactions after the Company's dissolution and without further stockholder action or approval even if the stockholders fail to approve the Asset Sale or the Asset Sale is not completed as contemplated. See "Proposal Two- Sale of Remaining Assets." Payment of Claims & Before distributing any assets to Obligations stockholders, the Company will pay and discharge, or make provisions reasonably likely to provide sufficient compensation for all claims and obligations of the Company, including claims that are contingent, conditional, or unmatured, pending, or that have not arisen but are likely to arise within ten years after the Company's dissolution. See "Proposal Two-Payment of Claims and Obligations." Distributions to Once adequate provisions have been Stockholders made for payment of all the Company's claims and obligations, all of the Company's remaining assets will be distributed to stockholders in one or more distributions. Uncertainties as to the net value of the assets and the ultimate amount of the Company's liabilities make it impossible to predict with certainty the amount that will be distributed to stockholders, but the Company currently estimates that it will distribute approximately $1.00 per share in a single distribution in the first quarter of calendar year 2001. See "Proposal Two -Distributions to Stockholders." Liquidating Trust The Board of Directors may, in its absolute discretion, transfer the Company's assets to a liquidating trust after dissolution. See "Proposal Two-Liquidating Trust." Delisting of the Common Stock After dissolution, the Board of Directors will determine when to delist the Common Stock and the warrants from the NASDAQ SmallCap System and Pacific Exchange. Continuing Liability of Under Delaware law, a Stockholders stockholder's maximum liability for any claim against the Company that has not been paid or otherwise provided for will not exceed the amount actually distributed to the stockholder in dissolution. See "Proposal Two- Continuing Liability of Stockholders After Dissolution." Appraisal Rights Under Delaware law, stockholders are not entitled to appraisal rights in connection with the dissolution and Plan of Dissolution. Regulatory Matters Following stockholder approval, the Company is not subject to any federal or state regulatory requirements in dissolving the Company other than the requirement to file a Certificate of Dissolution. Federal Income Tax Until the winding up and Consequences liquidation of the Company is completed, the Company will remain subject to income tax on its taxable income. Each stockholder will recognize a capital gain or loss equal to the difference between the amount distributed to them and their adjusted tax basis in the their shares. See "Proposal Two- Certain Federal Income Tax Consequences. INFORMATION CONCERNING SOLICITATION, REVOCATION, AND VOTING OF PROXIES RECORD DATE AND SHARES OUTSTANDING Stockholders of record at the close of business on September 29, 2000 (the "Record Date"), are entitled to notice of, and to vote at, the Special Meeting. At the Record Date, of the 22,400,000 authorized shares of the Company's common stock, $0.0025 par value per share (the "Common Stock"), 1,158,249 shares of such Common Stock were issued, outstanding, and entitled to vote at the Special Meeting. VOTING, QUORUM; ABSTENTIONS; AND BROKER NON-VOTES Every stockholder of record on the Record Date is entitled, for each share of Common Stock held, to one vote for or against each matter presented at the Special Meeting . The required quorum for the transaction of business at the Special Meeting is a majority of the shares outstanding on the Record Date. Broker non-votes and shares held by persons abstaining and any other shares represented for any purpose, other than objecting to holding the meeting or transacting business at the meeting, will be counted in determining whether a quorum is present. Under Delaware law, the affirmative vote of at least a majority of the outstanding shares of Common Stock is required for approval of both the Asset Sale and the authorization to dissolve the Company and liquidate its assets pursuant to the Plan of Dissolution. Because the affirmative vote of at least a majority of all outstanding shares of Common Stock is required for approval of both proposals, broker non-votes, abstentions, and shares as to which proxy authority has been withheld all will have the same effect as votes against the two proposals. PROXY SOLICITATION The enclosed proxy is being solicited by the Company's Board of Directors, and the cost of this solicitation will be borne by the Company. The Company may reimburse expenses incurred by brokerage firms and other persons representing beneficial owners of shares in forwarding solicitation material to the beneficial owners. The Company has selected Continental Stock Transfer & Trust Company, its transfer agent, and may also retain a professional proxy solicitation firm, to assist it and its stockholders in connection with the Special Meeting. Proxies may also be solicited by certain of the Company's directors, officers, and regular employees, without additional compensation, personally, by telephone, facsimile, e-mail, or telegram. VOTING AND REVOCABILITY OF PROXIES When proxies are properly executed, dated, and returned, the shares they represent will be voted at the Special Meeting in accordance with the instructions of the stockholders. If no specific instructions are given, the shares will be voted (a) "FOR" the approval of the Asset Sale; (b) "FOR" the authorization to dissolve the Company and liquidate its assets pursuant to the Plan of Dissolution; and (c) in the discretion of the proxy holders, upon such other matters not know known or determined which may properly come before the Special Meeting. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted by (a) delivering a written notice to the Secretary of the Company or the acting secretary of the Special Meeting; or (b) giving oral notice to the presiding officer during the Special Meeting; or (c) duly executing a proxy bearing a later date; or (d) attending the Special Meeting and voting in person. The mere presence at the Special Meeting of a stockholder who has filed a proxy will not constitute a revocation. ADJOURNMENTS In the event that sufficient votes in favor of the proposals set forth in the Notice of Special Meeting of Stockholders are not received by the date of the Special Meeting, the Board of Directors may propose one or more adjournments of the Special Meeting for a period or periods of not more than 45 days in the aggregate to permit further solicitation of proxies, even though a quorum is present. Any such adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the Special Meeting to be adjourned. The proxy holders will vote the shares they represent by proxy in favor of such adjournment. The costs of any such additional solicitation and of any adjourned session will be borne by the Company. INFORMATION ABOUT FORWARD-LOOKING STATEMENTS Certain sections of this Proxy Statement contain forward-looking statements that are based on current beliefs, estimates and assumptions concerning the operations and future results of the Company, the Asset Sale, the Plan of Dissolution, estimated costs and expenses, the amount of cash expected to be distributed to stockholders and the timing of such distributions. All statements that address events or developments that are anticipated to occur in the future, including statements related to future revenues, expenses, income, earnings per share, and anticipated distributions, or statements expressing general optimism about future results, are forward-looking statements. In addition, words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. The statements described in the preceding paragraph, and the sections of this Proxy Statement referred to therein, constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Because these statements are based on a number of beliefs, estimates, and assumptions that could cause actual results to materially differ from those in the forward- looking statements, there can be no assurance that the forward-looking statements will prove to be accurate. Any number of factors could affect the Company's operations and future results and the amount and timing of cash expected to be distributed to stockholders, including the actions of third parties (including the other parties to the Asset Sale), the timely consummation of the Asset Sale, the timing and method of implementation of the Plan of Dissolution, general industry and economic conditions, changes in applicable laws, rules and regulations (including changes in tax laws) and those specific risks that are discussed in the Risk Factors detailed herein and in the Company's previous filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Proxy Statement. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information or future events. RISK FACTORS RELATING TO THE ASSET SALE AND THE PLAN OF DISSOLUTION In addition to the other information included elsewhere in this Proxy Statement, the following factors should be considered carefully in determining whether to vote in favor of the proposals to approve the Asset Sale and the Plan of Dissolution. ESTIMATES OF THE NET PROCEEDS FROM THE ASSET SALE AND DISTRIBUTIONS TO BE RECEIVED BY SHAREHOLDERS MAY NOT BE REALIZED There can be no assurance that the Asset Sale will be consummated or that any of the estimates set forth in this Proxy Statement will be realized. Shareholders, in determining whether to vote in favor of the proposals to approve the Asset Sale and the Plan of Dissolution, are cautioned not to attribute undue certainty to any estimates set forth herein. Such estimates are based on a variety of assumptions relating to the likelihood of closing the Asset Sale, the value of the Company's other remaining assets, the amount of the Company's liabilities and expenses to be paid in the future, general business and economic conditions, and other matters. The amount of proceeds from the Asset Sale and the amount to be distributed to stockholders are based on the Company's current estimates and are subject to various and significant uncertainties, many of which are beyond the Company's control, that could cause the actual results to differ materially from the Company's expectations. See "Proposal Two - Distributions to Stockholders" below. Examples of uncertainties that could cause the amount of proceeds from the Asset Sale and distributions to stockholders to be less than the Company's estimates include the following: * The Company's estimates of net proceeds from the Asset Sale and the amount of the initial cash distribution are based on estimates of the costs and expenses of the Asset Sale and the dissolution. If actual costs and expenses exceed the Company's estimates, actual net proceeds and distributions to stockholders could be less than estimated. * If liabilities of the Company that are unknown or contingent at the time of the mailing of this Proxy Statement later arise or become fixed in amount and must be satisfied or reserved for as part of the dissolution, the amount of distributions to stockholders could be reduced. * Termination of the Asset Sale or delays in consummating the Asset Sale or the Plan of Dissolution, such as delays in the closing of the Purchase Agreement, could result in additional expenses and result in lower actual distributions to stockholders than the amounts estimated by the Company. See "The Asset Sale May Not Be Consummated" and "Anticipated Timing of the Plan of Dissolution May Not be Achieved" below. For the foregoing reasons, the actual distributions to stockholders could vary materially from the Company's estimate and may be substantially less. See "Information About Forward-Looking Statements" above. THE COMPANY WOULD INCUR COSTS IF THE PURCHASE AGREEMENT WERE TERMINATED BECAUSE OF THE RECEIPT BY THE COMPANY OF A SUPERIOR PROPOSAL If the Company terminates the Purchase Agreement because it has received a "Superior Proposal" (as defined in the Purchase Agreement), the Company is obligated under the Purchase Agreement to (a) pay Promega a termination fee of $100,000 and (b) reimburse Promega for all out-of-pocket fees and expenses incurred by or on behalf of Promega in connection with the Purchase Agreement, including all reasonable fees of counsel, accountants, and consultants. In addition, the Company has incurred, and expects to continue to incur, substantial costs on its own behalf in connection with the Asset Sale. THE ASSET SALE MAY NOT BE CONSUMMATED The consummation of the Asset Sale is subject to numerous conditions. Even if the stockholders vote to approve the Asset Sale, there can be no assurance, that the Asset Sale will be consummated. If the Asset Sale is not consummated, the Company may not be able to sell its assets on terms as favorable as those provided in the Purchase Agreement, which would mean that less cash would be available for distribution to stockholders than if the Asset Sale had been consummated. ANTICIPATED TIMING OF PLAN OF DISSOLUTION MAY NOT BE ACHIEVED Even if the stockholders vote to approve the Plan of Dissolution, the Board has reserved the right, in its sole discretion, to amend, delay implementation of, or terminate the Plan of Dissolution unless it determines that such action would materially and adversely affect the stockholders' interests. Although the board of directors presently intends to dissolve the Company and implement the Plan of Dissolution as soon as practicable after the consummation of the Asset Sale, the occurrence of certain contingencies may require the board of directors to delay the Company's dissolution. For example, the filing of any stockholder litigation or additional claims by creditors may require the Company to delay its dissolution. Any such delay would likely increase the Company's costs and reduce the amount available for distribution to stockholders. THERE CAN BE NO ASSURANCE THAT THE ASSET SALE AND THE PLAN OF DISSOLUTION WILL RESULT IN GREATER RETURNS TO STOCKHOLDERS THAN A CONTINUATION OF THE COMPANY AS CURRENTLY OPERATED If the Asset Sale and the Plan of Dissolution are not approved, the Board intends to continue to manage the Company and its assets substantially as they are currently being managed and may entertain and consider indications of interest from third parties to acquire the Company or all or a portion of its assets. There can be no assurance that the Asset Sale and Plan of Dissolution will result in greater returns to the stockholders than a continuation of the Company as described above. Because the purchase price for the Company's assets under the Purchase Agreement is fixed, the Company will not be able to realize the benefits from any improvements in economic and market conditions that would increase the market value of the Company's assets. THE BOARD MAY AMEND, DELAY IMPLEMENTATION OF, OR TERMINATE THE PLAN OF DISSOLUTION EVEN IF IT IS APPROVED BY THE STOCKHOLDERS Even if the stockholders vote to approve the Plan of Dissolution, the Board has reserved the right, in its sole discretion, to amend, delay implementation of, or terminate the Dissolution Plan unless it determines that such action would materially and adversely affect the stockholders' interests. STOCKHOLDERS COULD BE LIABLE TO THE EXTENT OF ANY DISTRIBUTIONS TO THEM IF CONTINGENT RESERVES ARE INSUFFICIENT TO SATISFY THE COMPANY'S LIABILITIES Pursuant to the terms of the Plan of Dissolution, the Company will pay its expenses and fixed or other known liabilities, and, if and to the extent deemed necessary, appropriate, or desirable by the Board of Directors, in its absolute discretion, the Company may set aside assets in a contingency reserve for payment of any remaining liabilities. There can be no assurance, however, that the contingency reserve will, in fact, be sufficient. Under Delaware law, if the Company (or a liquidating trust to which the Company's assets are transferred under the Plan of Dissolution) has inadequate reserves for payment of the Company's expenses, obligations, and liabilities, each stockholder could be held personally liable for his or her pro rata share of any additional amounts owed creditors, but only to the extent of total distributions received by each stockholder. In addition, if a court holds at any time that the Company has failed to make adequate provision for its obligations and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeds the amount available from the contingency reserves and the assets of the liquidating trust, a creditor of the Company could seek an injunction against the making of distributions under the Plan of Dissolution on the grounds that the amounts to be distributed are needed to provide for the payment of the Company's expenses and liabilities. Any such action could delay or substantially diminish the cash distributions to be made to stockholders and/or holders of beneficial interests of the liquidating trust under the Plan of Dissolution. PROPOSAL ONE - TO APPROVE THE ASSET SALE Description of the Asset Sale GENERAL OVERVIEW This Proxy Statement contains a brief summary of the material aspects of the Asset Sale and of the Purchase Agreement. This summary is qualified in all respects by the text of the Purchase Agreement, a copy of which is attached to this Proxy Statement as Exhibit A. Shareholders are advised to read the entire Purchase Agreement. As described in detail in the Purchase Agreement and the schedules attached thereto, the Asset Sale provides for the sale to Promega of the following assets of the Company (the "Purchased Assets"): * all of the Company's intellectual property, including all licenses and sublicenses granted or obtained with respect thereto; * all of the Company's real estate assets, including all leaseholds, subleaseholds, security deposits, improvements, construction in progress, fixtures, and appurtenances thereto; * all of the Company's equipment, including all laboratory, farm, building, and office equipment, machinery, parts, furniture (except free-standing office filing cabinets), appliances, laboratory computers and printers (excluding office computer equipment), and laboratory and office supplies; * all of the Company's rights with respect to its contracts; and * all of the Company's rights with respect to any governmental permits, filings, qualifications, registrations, licenses, privileges, franchises, authorizations, and approvals. Under the Purchase Agreement, the Company will retain any cash on hand at the time the Asset Sale is completed, subject to certain contingent adjustments and pro-rations described below. BACKGROUND AND HISTORY OF THE ASSET SALE In 1999 the Company began Phase II Clinical Testing for its lead drug candidate for Clostridium difficile- associated disease and undertook construction of a pilot manufacturing facility capable of producing sufficient quantities of proprietary antibody, drugs, and other products for the Company's clinical and commercial use. As previously announced, the rate of patient enrollment in the clinical testing was slower than previously anticipated. In the following months, the Company has actively sought a merger or development partner that would provide the Company with sufficient operating capital, product development capabilities, and marketing resources. The Company has been unsuccessful in acquiring such a partner. On May 19, 2000, the Company announced that its Board of Directors had concluded that new financing required to continue the clinical trials and bring the nearly- completed manufacturing facility to profitability was unlikely to be obtained prior to the exhaustion of the Company's remaining cash reserves and that the Company was evaluating options to conserve those reserves by reducing expenses by curtailing or discontinuing various activities, including product development, clinical trials, and prototype manufacturing. On May 26, 2000, the Company announced that it was suspending laboratory, product development, and related operations of the Company, and was focusing on finding a merger partner, development partner, or one or mores purchasers for the Company's intellectual property and manufacturing assets. The Company's work force was reduced initially by 18 full time employees. Since this reduction in force, the Company's operations have focused on finding a merger partner, development partner, or one or more purchasers for the Company's assets. The Company has engaged numerous parties in discussions regarding such transactions. Promega was one of these parties, and in May it made an offer to purchase substantially all of the Company's assets. Following the Company's further review of other potential merger partners and/or buyers for the Company's assets and additional negotiations between the Company and Promega, the Asset Sale to Promega was approved by the Board of Directors, and the Purchase Agreement was executed by the parties on September 1, 2000, and subject to stockholder approval and other contingencies as set forth in the Purchase Agreement. BUYER The buyer is Promega Corporation, a privately held Wisconsin corporation, whose principal offices are located at 2800 Woods Hollow Road, Madison, WI 53711- 5399. Promega provides products and technical support services in the life sciences industry, including genomic research, molecular and cell biology, molecular diagnostics, drug discovery, and human identification. Promega was founded in 1978, and its annual sales exceed $100 million. Promega owns 32,813 shares or 2.8% of the Company's outstanding Common Stock. In addition, Promega's Chairman, President, and Chief Executive Officer, William A. Linton, is a former Chairman and director of the Company and beneficial owner of 64,125 shares or 5.5% of the Company's outstanding Common Stock, of which 32,813 shares are those owned by Promega over which Mr. Linton may be deemed to have voting and investment power. See "Interest of Certain Persons in Matters to be Acted Upon" below for a further discussion of the current and former relationships between Promega, Mr. Linton, and the Company. PURCHASE PRICE The purchase price to be paid by Promega to the Company pursuant to the Purchase Agreement is $3,500,000, payable at the closing of the Asset Sale as follows: * the assumption by Promega of two senior secured notes of the Company, which together have an original principal balance of $2,000,000; * the delivery of a promissory note from Promega to the Company in the amount of $250,000, payable in a single installment ninety days after closing and subject to any offset for indemnifiable damages or other obligations of the Company to Promega as provided in the Purchase Agreement; and * a cash payment from Promega to the Company of $1,250,000. EXPECTED PROCEEDS OF THE ASSET SALE As set forth above, the Company expects to receive total cash proceeds from the Asset Sale of approximately $1,500,000. This amount does not reflect any deductions, not to exceed $250,000, from the proceeds that may be made for breaches of representations and warranties discovered before or within ninety days after the closing. In addition to the estimated proceeds from the Asset Sale, the Company will also have other assets at the time of the closing of the Asset Sale, consisting primarily of cash and cash equivalents. As of June 30, 2000, the latest period for which the Company has announced its financial results, the value of this cash and cash equivalents was approximately $990,000 before the payment of liabilities. See "Pro Forma Financial Information-Pro Form Balance Sheet" below. From these other assets as they may exist at the time of the closing, the Company must retain sufficient funds to meet its obligations, including its then existing and contingent liabilities, as well as its costs of dissolution. Assets will be retained to cover (a) known or contingent and future claims, (b) professional fees and other expenses of management and dissolution, and (c) various other liabilities, expenses and obligations of the Company that will be incurred by the Company and any liquidating trust. See "Proposal Two-Distributions to Stockholders" below. After deducting (a) an estimated $500,000 to cover the above described costs and accrued expenses; and (b) up to $250,000 pursuant to the Company's obligation to indemnify Promega for ninety days after the closing for any breach of the Purchase Agreement and other liabilities, from the sum of the gross proceeds and the Company's remaining cash and cash equivalents, the Company anticipates that the total amount available for distribution to the stockholders in a single distribution upon completion of the Asset Sale and the Plan of Dissolution will be approximately $1.00 per share of the Company's outstanding common stock ($1,158,249.00 in the aggregate). See "Proposal Two- Distributions to Stockholders" below. EXPECTED TIMING OF THE ASSET SALE The Purchase Agreement provides that the closing is to occur on the second business day following the satisfaction by the Company or waiver by the Buyer of all conditions precedent to the Buyer's obligation to consummate the Asset Sale, including stockholder approval pursuant to this proxy solicitation, and in all events not later than November 30, 2000. REPRESENTATIONS AND WARRANTIES; CLOSING CONDITIONS The Purchase Agreement contains representations and warranties by the Company to Promega customary for transactions of this type, including representations regarding the Company and its assets. The parties' obligations to consummate the Asset Sale are subject to the satisfaction or waiver of conditions customary for transactions of this type, including: (a) approval by the Company's stockholders, (b) there being no court order or other governmental prohibition or restraint preventing the consummation of the transactions, (c) each of the parties having complied with or performed all required obligations (except any for which a failure to comply or perform does not have a material adverse effect on the transaction); and (d) the representations and warranties of the other party being true and correct, with certain materiality exceptions. INDEMNIFICATION BY SELLER The Purchase Agreement provides that the Company shall indemnify Promega in an amount not to exceed $250,000, which amount Promega may offset against the $250,000 purchase price promissory note from Promega to the Company, for any losses and expenses suffered by Promega resulting from (a) the inaccuracy or breach of any representation or warranty of the Company in the Purchase Agreement, (b) any breaches or default in the performance of the Company of any of its covenants, obligations, or agreements in the Purchase Agreement, (c) any liability of the Company not expressly assumed by Promega pursuant to the Purchase Agreement, or (d) the ownership or use of the Company's assets prior to the closing of the Asset Sale or any incident, occurrence, condition, or claim existing, arising, or accruing prior to the closing of the Asset Sale and relating to the operation or conduct of the Company's business, other than any liability or obligation expressly assumed by Promega pursuant to the Purchase Agreement. TERMINATION OF THE PURCHASE AGREEMENT The Purchase Agreement may be terminated at any time prior to the closing of the Asset Sale, as follows: * by mutual written consent of both parties; * by either the Company or Promega if the other party is in breach of any representation, warranty, or covenant under the Purchase Agreement and the terminating party is not then in breach; * by Promega within the first 45 days following the date of the Purchase Agreement based upon Promega's due diligence investigation; * by Promega if the Asset Sale shall not have closed on or before November 30, 2000; or * by the Company if it enters into a merger, acquisition, or other agreement to effect a "Superior Proposal," as that term is defined in the Purchase Agreement, provided that in such event the Company shall (a) deliver notice of its intent to enter into an agreement to effect the Superior Proposal, (b) allow ten business days to elapse after delivery of such notice, (c) cooperate with Promega during such ten business days with the intent of allowing Promega to agree to modify the Purchase Agreement, (d) at the end of the ten business days, and acting through its Board of Directors, continue to reasonably believe that the alternative business combination constitutes a Superior Proposal to the Asset Sale to Promega, taking into account any modifications to the terms of the Purchase Agreement as may have been proposed by Promega, and (e) pay a "Termination Fee" of $100,000 to Promega. GOVERNMENT APPROVALS No federal or state regulatory requirements or approvals must be complied with or obtained in connection with the Asset Sale other than compliance with applicable state corporate law and federal and state securities laws. NO APPRAISAL RIGHTS Under Delaware law, the Company's stockholders have no right in connection with the Asset Sale to dissent and seek appraisal of their shares of Common Stock. ACCOUNTING TREATMENT OF THE ASSET SALE The Asset Sale will be reflected on the Company's financial statements as a sale of assets and certain liabilities for accounting purposes, with a gain or loss recognized in the year in which the Asset Sale is consummated in the amount of the difference between the purchase price and the aggregate net book value of the assets sold to Promega. FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE The following summary of the material federal income tax consequences of the Asset Sale is not intended to be tax advice to any person, nor is it binding upon the Internal Revenue Service. In addition, no information is provided herein with respect to the tax consequences of the Asset Sale under applicable state, local, or foreign tax laws. The Company will recognize gain or loss from the Asset Sale in an amount equal to the difference between the amount realized by the Company from the Asset Sale and the Company's adjusted tax basis in the assets sold. The amount realized by the Company from the Asset Sale will equal the sum of (a) the money received by the Company from Promega, (b) the amount of the liabilities assumed by Promega, and (c) the aggregate amount of liabilities to which the sold assets are subject, if any. The Company will be subject to federal income tax on any gain it recognizes from the Asset Sale. However, because the Company has significant net operating loss carry-forwards available to it to offset any gain from the Asset Sale, the Company does not expect to incur any significant federal tax liability as a result of the Asset Sale. The Company's stockholders receiving liquidating distributions pursuant to the Plan of Dissolution should generally be unaffected by any gain or loss recognized by the Company on the Asset Sale. Liquidating distributions received by stockholders pursuant to the Plan of Dissolution should be treated as full payment for such stockholder's shares. Consequently, each stockholder receiving liquidating distributions will recognize gain or loss (which generally should qualify for capital gain or loss treatment) equal to the difference between the amount of the distribution and the stockholder's basis in the Company's shares. As each stockholder will have a different basis in his/her/its shares, each stockholder will be responsible for calculating his/her/its own gain or loss in connection with the liquidating distributions it receives from the Company. See "Federal Income Tax Consequences of Dissolution and Liquidation" below. Price Range of Common Stock and Warrants Preceding Announcement of Asset Sale The Asset Sale was publicly announced by the Company on September 5, 2000. The high and low sale prices are shown below for the Company's Common Stock and Warrants on September 1, 2000, the last trading day before the announcement. Common Stock Warrants High Low High Low $1.125 $0.75 $0.0938 $0.0625 Interest of Certain Persons in Matters to be Acted Upon Promega's Chairman, President, and Chief Executive Officer, William A. Linton, is a former Chairman and director of the Company. Mr. Linton resigned as Chairman and a director of the Company at the Company's Annual Shareholders' Meeting on March 23, 1999. Neither the Asset Sale nor the Plan of Dissolution were considered by the Company's Board of Directors during the time that Mr. Linton was Chairman and a director of the Company. As of September 29, 2000, Mr. Linton beneficially owns 64,125 shares of the Company's Common Stock, representing 5.5% of the outstanding Common Stock of the Company, and which includes 32,813 shares owned by Promega over which Mr. Linton may be deemed to have voting and investment power. Fitchburg Research Park Associates Limited Partnership, a Wisconsin limited partnership of which Mr. Linton is the sole general partner and with a 50% ownership interest, holds a Stock Warrant entitling it to purchase one share of the Company's Common Stock for every four shares issued to employees pursuant to the Company's Stock Option Plans. Currently, under the terms of this Stock Warrant, the partnership may purchase an additional 1,986 shares at an exercise price of $0.02 per share. In September 1991, Promega agreed to purchase shares of the Company's Common Stock conditioned upon its receipt of an exclusive and confidential first right, for a period of 10 years, to review any technology developed by the Company that is incidental to the human and animal therapeutic and diagnostic markets. "Incidental" refers to those markets that are not human or animal therapeutics or diagnostics. Promega serves various incidental markets, such as research products or food testing. The arrangement was established so that the Company's core business interests would not be encumbered by the agreement with Promega and a market could be established in incidental markets. Promega has 60 days after disclosure of a technology to review the technology and notify the Company in writing of its interest in developing the technology. The parties will then negotiate in good faith for up to 60 days thereafter regarding terms on which Promega might obtain the right to use the technology. If Promega and the Company fail to enter into an agreement within 60 days after notice of Promega's interest in the technology, the Company may attempt to license or assign the rights to the product to a third party, subject to Promega's right to first refuse the price and terms offered by a third party, exercisable within 15 days after notice thereof to Promega. The agreement with Promega will terminate at any time that Promega's ownership of the Company falls below one percent of the outstanding shares. Promega currently owns 32,813 shares of the Company's Common Stock, or 2.8% of the outstanding shares. On January 1, 1994, the Company entered into a Lease with Promega for a 10,000 square foot office/research laboratory and production facility at 5445 East Cheryl Parkway, Madison, Wisconsin. The lease provides for a five-year lease term with an option to renew the lease for an additional five-year term. In June 1998, the Company exercised this option. The facility lease described above gives Promega the right to terminate in case of a broad range of events of default by the Company, in which event the Company would lose the value of improvements and may be liable for the remaining rent even if its rights to use the premises are terminated. Vote Required Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock is required to approve the Asset Sale. Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE ASSET SALE. PROPOSAL TWO - APPROVAL OF THE DISSOLUTION AND LIQUIDATION OF THE COMPANY Proposed Stockholder Action The Company's Board of Directors (the "Board") unanimously approved the proposed dissolution and Plan of Dissolution & Liquidation (collectively and hereafter referred to as the "Plan of Dissolution") on August 28, 2000, subject to the approval of the stockholders at the Special Meeting. The Plan of Dissolution provides that upon its approval by the stockholders, the Board, without further action by the stockholders, may (a) dissolve the Company, (b) liquidate its assets, (c) pay, or provide for the payment of, any remaining, legally enforceable obligations of the Company, and (d) distribute any remaining assets to the stockholders. Under Delaware law, approval by the holders of a majority of the outstanding shares of the Company's Common Stock is required to approve the Plan of Dissolution Description of the Plan of Dissolution Certain material features of the Plan of Dissolution are summarized below. This summary is qualified in its entirety by reference to the complete text of the Plan of Dissolution and the relevant portions of the General Corporation Law of Delaware. A complete copy of the Plan of Dissolution is attached to this Proxy Statement as Exhibit B. Stockholders should carefully read the Plan of Dissolution in its entirety. BACKGROUND AND REASONS FOR THE DISSOLUTION After an extensive exploration and evaluation of various strategic alternatives that would protect the rights of creditors and enhance stockholder value, the Board adopted a resolution approving the Plan of Dissolution. The Board believes that the dissolution and liquidation of the Company would protect the Company's creditors and enhance stockholder value and is in the best interests of the Company and its stockholders. RISK FACTORS Before deciding whether to vote in favor of this proposal to dissolve and liquidate the Company pursuant to the Plan of Dissolution, stockholders should consider certain risk factors, including: * stockholder liability to the extent of any distributions if the contingency reserve is insufficient to satisfy the Company's liabilities; and * the distribution(s) to stockholders may be delayed or less than projected. See "Risk Factors Relating to the Asset Sale and Plan of Dissolution," above, for a more complete discussion of the considerations that stockholders should take into account before deciding whether to vote in favor of this proposal to dissolve and liquidate the Company. DISSOLUTION AND LIQUIDATION PROCEDURE Following approval of the Plan of Dissolution by the holders of a majority of the Common Stock and completion of the Asset Sale, the Company will file a certificate of dissolution with the Secretary of State of the State of Delaware and the dissolution will be effective. Once the certificate of dissolution is filed and the Plan of Dissolution is effective, the steps taken to wind up the Company's affairs as described below will be completed at such times as the Board, in its absolute discretion, deems necessary, appropriate, or advisable to maximize the value of the Company's assets upon liquidation; provided that such steps may not be delayed longer than is permitted by applicable law. ABANDONMENT OF THE PLAN OF DISSOLUTION By approving the Plan of Dissolution, stockholders will also be granting the Board the authority, notwithstanding the stockholders' approval of the Plan of Dissolution, to abandon the Plan of Dissolution without further stockholder action, to the extent permitted by Delaware law, if the Board of directors determines that dissolution and liquidation are not in the best interests of the Company and its stockholders. CONDUCT OF THE COMPANY FOLLOWING DISSOLUTION Once the Company's certificate of dissolution is filed and effective, the Company will cease to exist for the purpose of continuing its business, but will nevertheless continue, for a term of three years or such longer period as the Delaware Court of Chancery directs, for the purpose of winding up the Company's affairs. During this time, the Company will undertake the following tasks: * settle and close its business; * convert to cash, by sales, as much of the Company's remaining non-cash assets as possible; * withdraw from any jurisdiction where it is qualified to do business; * pay or make provision for the payment of all of the Company's expenses and liabilities; * prosecute and defend lawsuits, if any * distribute the Company's remaining assets, which should be primarily cash, but which may consist of other financial assets, to the stockholders; and * do any other act necessary to wind up and liquidate the Company's business and affairs. The Board and the remaining officers of the Company will oversee the Company's dissolution and liquidation. SALE OF REMAINING ASSETS The Plan of Dissolution gives the Board, to the fullest extent permitted by law, the authority to sell all of the Company's assets. Accordingly, stockholder approval of the Plan of Dissolution will constitute, to the fullest extent permitted by law, approval of the Company's sale of any and all of its assets remaining after the dissolution, on such terms and conditions as the Board, in its absolute discretion and without further stockholder approval, may determine. Notwithstanding the separate approval the Board is seeking at the Special Meeting for the Asset Sale, the Board will have the authority to sell all of the Company's assets in alternate transactions after the Company's dissolution pursuant to stockholder approval of the Plan of Dissolution, without further stockholder action or approval, even if either of the following should occur: * the stockholders fail to approve the Asset Sale; or * the Asset Sale is not consummated as contemplated. PAYMENT OF CLAIMS AND OBLIGATIONS. In accordance with Delaware law, before distributing any assets to stockholders, the Company will pay and discharge, or make provisions as will be reasonably likely to provide sufficient compensation for the following: * all claims and obligations, including all contingent, conditional, or unmatured contractual claims known to the Company; * any claim against the Company which is the subject of a pending action, suit, or proceeding to which the Company is a party; and * claims that have not been made known to the Company or that have not arisen, but that, based on facts known to the Company, are likely to arise or become known to the Company within ten years after the certificate of dissolution becomes effective. DISTRIBUTIONS TO STOCKHOLDERS Claims, liabilities, and expenses from operations, including operating costs, salaries, income taxes, payroll and local taxes, and miscellaneous office expenses, will continue to occur following approval of the Plan of Dissolution. The Company anticipates that expenses for professional fees and other expenses of liquidation will be significant. These expenses will reduce the amount of assets available for ultimate distribution to stockholders. Before making any distribution to stockholders, the Board must first make adequate provision for the payment, satisfaction, and discharge of all known, unascertained, or contingent debts and liabilities, including costs and expenses incurred and anticipated to be incurred in connection with the sale of any assets remaining after the dissolution. The Board will determine, in its sole discretion and in accordance with applicable law, the timing of, the amount, the kind of, and the record date for any distribution made to stockholders. Liquidating distributions will be made to stockholders on a pro rata basis. The Company is not required to pay all of its liabilities and obligations prior to making distributions to stockholders, but instead, will reserve assets in a contingency reserve deemed by management and the Board to be adequate to provide for such liabilities and obligations when due. Although the Board has not established a firm timetable for any distribution to stockholders, after the dissolution has become effective, the Board will, subject to exigencies inherent in winding up the Company's business, make a final distribution as promptly as practicable. Uncertainties as to the precise net value of the Company's assets and the ultimate amount of its liabilities make it impossible to predict with certainty the aggregate net values that will ultimately be distributed to stockholders or the timing of any distribution. Based on information presently available, the Company estimates that it will distribute an aggregate of $1.00 per share in a single distribution to holders of the Company's Common Stock. The Company anticipates that this distribution to stockholders will occur in the first quarter of calendar year 2001. See "Pro Forma Financial Information" below. Stockholders should not send their stock certificates with the enclosed proxy. Following the Company's dissolution, stockholders will be sent additional instructions for receiving distributions. LIQUIDATION TRUST If deemed advisable by the Board for any reason, the Company may, following dissolution, transfer any of its assets to a trust established for the benefit of stockholders, subject to the claims of creditors. Thereafter, these assets will be sold or distributed on terms approved by the trustees. In any event, if all of the Company's assets have not otherwise been distributed within three years after dissolution, the Company will transfer all of its remaining assets to the liquidating trust. The Board is authorized to appoint one or more trustees of the liquidating trust and to cause the Company to enter into a liquidating trust agreement with the trustee(s) on such terms and conditions as may be approved by the Board. Stockholder approval of the Plan of Dissolution will also constitute approval of any such appointment and any liquidating trust agreement. DELISTING AND TRADING OF THE COMMON STOCK AFTER DISSOLUTION The Company's Common Stock and warrants are listed for trading on the NASDAQ Stock Market's SmallCap System and the Pacific Exchange. Following dissolution, the Board will determine the appropriate time to delist the Common Stock and warrants from these exchanges. Thereafter, trading, if any, in the Common Stock and warrants would be conducted in the over-the-counter market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board." As a consequence of such delisting, an investor would likely find it more difficult to dispose of, or obtain quotations as to the price of, the Common Stock and warrants. Delisting of the Common Stock and warrants may result in lower prices for these securities than would otherwise prevail. CONTINUING LIABILITY OF STOCKHOLDERS AFTER DISSOLUTION Following the Company's dissolution and liquidation, it is possible that some claims may still exist that could be asserted against the Company. Delaware law provides that, if the assets of a corporation are distributed in connection with the dissolution of a corporation, a stockholder may be liable for claim(s) against the corporation. In such event, a stockholder's potential liability for any such claim against the Company would be limited to the lesser of (a) the stockholder's pro rata share of such claim or (b) the actual amount distributed to the stockholder in connection with the dissolution. An individual stockholder's total liability for any claims against the Company after it is dissolved will not exceed the amount actually distributed to that stockholder in the dissolution. NO APPRAISAL RIGHTS Under Delaware law, stockholders are not entitled to dissenters' or appraisal rights with respect to the Plan of Dissolution. REGULATORY MATTERS Except for the Company's filing of the certificate of dissolution with the Secretary of State of the State of Delaware, the Company is not subject to any federal or state regulatory requirements nor is it required to obtain any federal or state approval in order to consummate the dissolution. Certain Federal Income Tax Consequences GENERAL The following discussion is a general summary of the federal income tax consequences that may result from the dissolution and liquidation of the Company and the distribution of its assets to its stockholders pursuant to the Plan of Dissolution. This summary is based on the provisions of the Internal Revenue Code as currently in force, but which is subject to change. Any such change may be applied retroactively. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular stockholder or to certain types of persons subject to special treatment under federal income tax laws, such as corporations and non-US persons, nor does it address any aspects of state, local or foreign tax laws. Because any distributions made pursuant to the Plan of Dissolution may occur at various times and in more than one tax year, no assurances can be given that the tax treatment described herein will continue to apply unchanged at the time of later distributions. We have not requested a ruling from the IRS or obtained an opinion of counsel with respect to the anticipated tax treatment of the Plan of Dissolution. If any of the conclusions stated under "Certain Federal Income Tax Consequences" proves to be incorrect, the result could be increased taxation at the corporate and/or stockholder level, thus reducing the benefit to the creditors and possibly stockholders and the Company from the liquidation. This summary does not address tax consequences that may vary with, or are contingent on, individual circumstances. Accordingly, this summary does not constitute legal advice to any stockholder. The Company recommends that each stockholder consult his or her personal tax advisor regarding the specific federal, state and local tax consequences of the Plan of Dissolution. CONSEQUENCES TO THE COMPANY After the Plan of Dissolution becomes effective and until the liquidation is completed, the Company will continue to be subject to income tax on its taxable income. The Company will recognize gain or loss on sales of its property pursuant to the Plan of Dissolution. Upon distributions, if any, of property, other than cash, to stockholders pursuant to the Plan of Dissolution, the Company will recognize gain or loss as if such property was sold to stockholders at its fair market value, unless certain exceptions to the recognition of loss apply. As it is anticipated that no such exception will apply, the Company should recognize gain or loss on any distribution of property to stockholders pursuant to the Plan of Dissolution. The Company may discharge its liabilities at less than the face amount of such liabilities. The discharge of liabilities, at less than face amount, may result in the Company's realization of income to the extent of the excess of the face amount of the liabilities over the amount paid in satisfaction thereof. CONSEQUENCES TO STOCKHOLDERS As a result of the Company's liquidation, stockholders will recognize gain or loss equal to the difference between (a) the sum of the amount of cash distributed to them and the fair market value (at the time of distribution) of property distributed to them, and (b) their adjusted tax basis of their shares. The adjusted tax basis in a stockholder's shares will depend upon various factors, including the cost of the shares and the amount and nature of any distributions received from the Company with respect to the stock. Gain or loss recognized by a stockholder will be capital gain or loss, provided the shares are held as capital assets. Capital gains are long term if the stock is held for more than twelve months. For individuals, the maximum federal income tax rate applicable to long term capital gains is generally 20%. Deductions for capital losses, whether short or long term, are subject to various limitations. In the unlikely event that the Company makes any distribution of property other than cash, a stockholder's tax basis in such property immediately after the distribution will be the fair market value of such property as of the time of distribution. The gain or loss realized upon a stockholder's future sale of that property will be measured by the difference between the stockholder's tax basis in the property at the time of such sale and the sales proceeds. After the close of the Company's taxable year, the Company will provide stockholders and the IRS with a statement of the amount of cash distributed to them and the Company's best estimate as to the value of the property, if any, distributed to stockholders during that year. In the case of property, the Company will determine the fair market value based upon reports by independent appraisers or such other evidence as the Company shall elect. There is no assurance that the IRS will not challenge such valuation. As a result of such a challenge, the amount of gain or loss recognized by a stockholder might be changed. Distributions of property other than cash to a stockholder could result in a stockholder's tax liability exceeding the amount of cash he or she received, requiring him or her to meet the tax obligations from other sources. If the Company transfers assets to a liquidating trust, beneficial ownership in the trust will be distributed to the stockholders. For federal income tax purposes, stockholders would be treated at the time of transfer as having received their pro rata share of assets transferred to the liquidating trust, reduced by the amount of known liabilities assumed by the liquidating trust or to which the assets are subject. The liquidating trust itself should not be subject to tax. After formation of the liquidating trust, the stockholders must take into account, for federal income tax purposes each year, their allocable portion of any income, expense, gain or loss recognized by the trust. As a result of the transfer of property to the trust and ongoing operations of the trust, stockholders should be aware that they may be subject to tax, whether or not they have received any actual distributions from the liquidating trust with which to pay the tax. Vote Required Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock is required to approve the Plan of Dissolution. If the requisite number of stockholders approve the Plan of Dissolution, the Company will be dissolved and liquidated in accordance with the Plan of Dissolution even though individual stockholders may have voted against the proposal. The Plan of Dissolution may be amended or terminated, either before or after stockholder approval has been obtained, unless the Board determines that such amendment or termination would materially and adversely affect the stockholders' interests. Recommendation of the Board THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE PLAN OF DISSOLUTION. OTHER MATTERS The Company knows of no other matters to be submitted at the meeting. If any other matters properly come before the meeting, the proxy holders will vote the shares they represent as the Board of directors may recommend. OTHER INFORMATION REGARDING THE COMPANY The following additional information about the Company is provided as required by Regulation and Schedule 14A of the General Rules and Regulations under the Securities and Exchange Act of 1934, as amended. Voting Securities and Principal Holders Thereof The following table sets forth the beneficial ownership of the Company's securities as of September 29, 2000, by (a) each person known by the Company to be the beneficial owner of more than 5% of any class of the Company's securities, (b) the directors of the Company, (c) the executive officers of the Company, and (d) all directors and executive officers as a group. As of September 29, 2000, a total of 1,158,249 shares of the Company's Common Stock, 1,933,088 of the Company's Common Stock ($7.32) Purchase Warrants, and 125,000 of the Company's Common Stock ($2.00) Purchase Warrants were issued and outstanding. Number of Number of Number of $7.32 $2.00 Shares Warrants Warrants Name and Address of Beneficially Percentage Beneficially Percentage Beneficially Percentage Beneficial Owner Owned (1) Owned Owned (2) Owned Owned (2) Owned Dr. Margaret B. van Boldrik (3) 169,350 14.6 Eli Lilly and Company Lilly Corporate Center, Indianapolis, IN 46285 87,412 7.6 Dr. Peter Model (4) 68,190 5.6 45,000 2.3 Mr. William A. Linton (5) 64,125 5.5 Mr. Rex J. Bates (6) 55,350 4.8 9,150 * 500,000 50.0 Mr. Davis U. Merwin 54,706 4.7 9,150 * 500,000 50.0 Dr. W. Leigh Thompson (7) 2,630 * Ms. Susan P. Maynard (8) 2,286 * All Directors and Officers as a Group (4 persons) (9)(10) 252,456 20.7 63,300 3.3 1,000,000 100.0
*Less than 1%. (1) Includes ownership of shares of Common Stock plus options exercisable within 60 days of September 29, 2000. Shares of Common Stock subject to outstanding options are deemed outstanding for purposes of computing the percentage of ownership of the person holding such options but are not deemed outstanding for computing the percentage ownership for any other persons. (2) The exercise prices listed reflect the original exercise prices for these warrants prior to the eight- for-one reverse split of the Company's Common Stock effective September 20, 1999 (the "Reverse Split"). Following the Reverse Split, and pursuant to the underlying warrant agreements governing the exercise and other terms of the Company's warrants, the per share exercise prices are now $55.615 and $16.00, respectively, for the $7.32 and $2.00 Common Stock purchase warrants. (3) Dr. van Boldrik's beneficial ownership includes 158,100 shares owned by Dr. van Boldrik, 5,625 shares held by the Willem Erin Samburu Carroll van Boldrik Trust A and 5,625 shares held by the Jan Patrick Jabiru van Boldrik Carroll Trust A. Dr. van Boldrik is the sole trustee for both trusts. (4) Includes 56,875 shares held by the Model Charitable Lead Trust and Peter Model Trust II, for which Dr. Model is one of two co-trustees, and options to purchase 668 shares currently vested in the 1992 Stock Option Plan, which options expire in January 2007, and options to purchase 1,250 shares currently vested in the 1992 Stock Option Plan, which options expire in November 2009. (5) Includes 32,813 shares owned by Promega Corporation of which Mr. Linton is Chairman, President, and Chief Executive Officer and may be deemed to have voting and investment power over the shares. (6) Includes (a) options to purchase 3,125 shares currently vested in the 1992 Stock Option Plan, which options expire in July 2006; (b) options to purchase 625 shares currently vested in the 1992 Stock Option Plan, which options expire in January 2006; (c) options to purchase 625 shares currently vested in the 1992 Stock Option Plan, which options expire in January 2007; and (d) options to purchase 1,250 shares currently vested in the 1992 Stock Option Plan, which options expire in November 2009. (7) Includes (a) options to purchase 665 shares currently vested in the 1992 Stock Option Plan, which options expire in January 2006; (b) options to purchase 625 shares currently vested in the 1992 Stock Option Plan, which options expire in January 2007; and (c) options to purchase 1,250 shares currently vested in the 1992 Stock Option Plan, which options expire in November 2009. (8) Includes options to purchase 2,224 shares currently vested in the 1998 Incentive Stock Option Plan, which options expire in November 2009. (9) Address is 5445 East Cheryl Parkway, Madison, Wisconsin 53711. (10) Includes options to purchase a total of 12,307 shares, which options have vested, or will vest, within 60 days of September 29, 2000. Changes in Control On February 10, 1999, Dr. Sean Carroll, then an owner of 15.8% of the Common Stock of the Company, completed a sale of a total of 115,000 of his shares, approximately 10% of the Company's outstanding Common Stock. The purchasers were the Rex James Bates Trust, Davis U. Merwin, the Model Charitable Lead Trust, Dr. Peter Model, and the Peter Model Trust No. 2. Peter Model is the Company's Chairman and a director of the Company and a trustee for the respective trusts. Davis U. Merwin is an existing stockholder of the Company. Upon completion of the transaction, none of the purchasers were the beneficial owner of 10% or more of the Company's Common Stock. On June 7, 1999, the Company entered into separate Promissory Note and Loan Agreements with Rex J. Bates, then a director and currently a stockholder, and Davis U. Merwin, a stockholder, pursuant to which the Company borrowed $2 million on October 14, 1999, in exchange for ten-year, 10%, senior notes with warrants. The assets of the Company secure the notes. Interest on the notes for the first three years is payable in Common Stock of the Company at the then market value and thereafter in cash. The warrants for the purchase of 125,000 shares of Common Stock are exercisable for five years at $16.00 per share. Other than the above-described transactions and the proposed Asset Sale, the Company is not aware of any arrangement or plan by, with, or among any party or parties that would result in a change in control of the Company or whereby one or more persons would act in concert with respect to any matter affecting the Company. Selected Financial Data, Including Pro Forma Information The following tables set forth selected financial data on a historical basis and on a pro forma basis for the Company after giving effect to (a) the Asset Sale and (b) certain prior property dispositions. The financial data should be read in conjunction with the Company's financial statements and notes thereto incorporated by reference into this Proxy Statement. The historical financial data as of June 30, 2000, and for the nine months then ended, has been derived from unaudited financial statements, which, in the opinion of the Company's management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the unaudited interim periods. The unaudited pro forma balance sheet as of June 30, 2000, is presented as if the transactions had occurred on June 30, 2000. The unaudited pro forma operating data for the nine months ended June 30, 2000, is presented as if (a) the Asset Sale and (b) certain prior property dispositions had occurred on October 1, 1999. The pro forma information included in "Selected Financial Data" is based upon assumptions that are included in the "Notes to the Pro Forma Financial Statements" set forth below. The pro forma information is unaudited and is not necessarily indicative of what the financial position and results of operations of the Company would have been as of and for the dates or periods indicated, nor does it purport to represent the future financial position and results of operations for future dates or periods. PRO FORMA FINANCIAL INFORMATION OPHIDIAN PHARMACEUTICALS, INC. PRO FORMA BALANCE SHEET JUNE 30, 2000 (UNAUDITED) HISTORICAL PRO FORMA (June 30, 2000) ASSET SALE (June 30, 2000) ASSETS Cash and cash equivalents $ 990,179 $ 1,250,000 A $ 2,240,179 Promissory note receivable - 250,000 A 250,000 Equipment and leasehold improvements, net 4,254,361 (4,254,361) B - Patent costs, net 1,535,983 (1,535,983) C - Other assets 8,294 - 8,294 ----------- ------------ ----------- Total assets $ 6,788,817 $(4,290,344) $ 2,498,473 =========== ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 306,554 $ - $ 306,554 Accrued liabilities 197,847 - 197,847 Capital leases 10,500 (10,500) D - Senior notes 1,628,494 (1,628,494) E - Deferred revenue 354,310 (354,310) F - ----------- ------------ ------------ Total liabilities 2,497,705 (1,993,304) 504,401 Common Stock 2,895 - 2,895 Additional paid-in-capital 22,507,322 - 22,507,322 Accumulated deficit (18,219,105) (2,297,040) (20,516,145) ------------- ------------ ------------ Total stockholders' equity 4,291,112 (2,297,040) 1,994,072 Total liabilities and stockholders' equity $ 6,788,817 $(4,290,344) $ 2,498,473 See accompanying notes OPHIDIAN PHARMACEUTICALS, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 2000 (UNAUDITED) HISTORICAL PRO FORMA June 30, 2000 ASSET SALE (June 30, 2000) Revenues Sale of patents $ 1,300,000 $ - $ 1,300,000 Other 14,224 354,310 F 368,534 ------------ ----------- ------------ Total revenues 1,314,224 354,310 1,668,534 Operating expenses Cost of patents sold 83,481 - 83,481 Research and development 1,875,074 - 1,875,074 General and administrative 1,352,147 - 1,352,147 Loss on sale of assets - 2,279,844 G 2,279,844 ------------ ------------ ------------ Total operating expenses 3,310,702 2,279,844 5,590,546 Operating loss (1,996,478) (1,925,534) (3,922,012) Non-operating income, net 89,951 - 89,951 ------------ ------------ ------------ Loss before extraordinary item (1,906,527) (1,925,534) (3,832,061) Extraordinary item - early extinguishment of debt - (371,506) E (371,506) ------------ ------------ ------------ Net loss $(1,906,527) $(2,297,040) $(4,203,567) ============ ============ ============ Net loss per share - basic and diluted $ (1.65) $ (1.98) $ (3.63) ============ ============ ============ See accompanying notes Notes to Pro Forma Financial Statements A. The adjustment to cash and cash equivalents and promissory note receivable reflects the estimated gross proceeds of approximately $1,500,000 from the proposed Asset Sale. This amount does not reflect any deductions, not to exceed $250,000, from the gross proceeds that may be made pursuant to the Company's obligation, as set forth in the Purchase Agreement, to indemnify Promega for any "Indemnifiable Damages" incurred by Promega within 90 days of the closing of the Asset Sale. The Company also expects to incur an additional $500,000 of expenses for accrued taxes and other accrued costs, and estimated legal, accounting, closing, insurance, stockholder communications, and related expenses of officers and employees assigned to complete the dissolution and liquidation. The actual costs incurred could vary significantly due to uncertainties related to the timing and closing of the Asset Sale, the length of time required to complete the Plan of Dissolution, and complexities that may arise in disposing of the Company's assets if the Asset Sale is not completed. All such costs will be paid before any distribution will be made to stockholders. B. The adjustment to equipment and leasehold improvements represents the carrying value of the equipment and leasehold improvements sold. C. The adjustment to patents represents the carrying value of the patents sold. D. The adjustment to capital leases represents the carrying value of the leases assumed by Promega. E. The adjustment to senior notes represents $2,000,000 of debt assumed by Promega Corporation, offset by the $371,506 debt discount, which will be expensed upon early extinguishment of the senior notes F. The adjustment to deferred revenue represents the recognition of patent reimbursements acquisition costs that were to be recognized after issuance of certain patents. As all patents and pending patents are being sold, $354,310 of deferred revenue should be recognized. G. Represents the estimated loss on the Asset Sale. Stockholder Proposals If the Asset Sale and the Plan of Dissolution are approved and the Asset Sale and Plan of Dissolution are consummated in a timely manner, the Company does not intend to hold an annual stockholders meeting in 2001 or thereafter. If the Asset Sale and the Plan of Dissolution are not approved or if the dissolution of the Company is delayed or the Plan of Dissolution abandoned by the Board in their discretion to the extent permitted by the terms of the Plan of Dissolution and Delaware law, and if a stockholder desires to present any proposal for consideration at the Company's 2001 Annual Meeting of Stockholders, the stockholder must, in addition to satisfying any other applicable requirements, submit such proposal to the Company so that it is received at the Company's principal offices not later than September 30, 2000. Where You Can Find More Information The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Such reports, proxy statements and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at 75 Park Place, New York, New York 10007 and 500 West Madison Street, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, most of the documents filed by the Company with the SEC are available through the SEC's Electronic Data Gathering and Retrieval System ("EDGAR") at the SEC's Internet site at http://www.sec.gov. The Company furnishes stockholders with annual reports containing consolidated financial statements audited by independent certified public accountants. The Company's 1999 Annual Report, which integrated information from the Company's Annual Report on Form 10- K for the fiscal year ended September 30, 1999, was sent to shareholders on or about February 23, 2000. Stockholders should rely only on the information contained in this Proxy Statement. No person is authorized to give any information or to make any representations other than the information or representations contained herein and, if given or made, such information or representations should not be relied upon as having been authorized. This Proxy Statement does not constitute the solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such a solicitation. This Proxy Statement is dated October 8, 2000. Stockholders should not assume that the information contained in this Proxy Statement is accurate as of any later date, and the mailing and delivery of this Proxy Statement shall not, under any circumstances, create any implication to the contrary. Information Incorporated by Reference The Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999, Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1999, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000, Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 (a copy of which is being delivered to stockholders concurrently with this Proxy Statement) and Current Reports on Forms 8-K filed with the SEC on April 12, 2000, and May 26, 2000, are hereby incorporated by reference into this Proxy Statement. All documents filed by the Company with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement and prior to the completion of the vote at the Meeting shall be deemed to be incorporated by reference into this Proxy Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement. THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY STOCKHOLDER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO THE COMPANY, 5445 EAST CHERYL PARKWAY, MADISON, WI 53711, TELEPHONE (608) 271-0878. IN ORDER TO ASSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BEFORE OCTOBER 31, 2000. SIGNATURE Pursuant to the requirements of Section 14 of the Securities and Exchange Act of 1934, as amended, and Regulation 14A thereunder, the Company has caused this Proxy Statement to be mailed to the stockholders of the Common Stock and filed with the Securities and Exchange Commission. BY ORDER OF THE BOARD OF DIRECTORS Susan P. Maynard Secretary OPHIDIAN Pharmaceuticals, Inc. 5445 East Cheryl Parkway Madison, WI 53711 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS SPECIAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 8, 2000 The undersigned stockholder of Ophidian Pharmaceuticals, Inc., a Delaware corporation (the "Company"), hereby appoints Peter Model and Susan Maynard, and each of them individually, proxies, each with full power of substitution, to vote, as specified below, all shares of Common Stock of the Company held of record by the undersigned on September 29, 2000, at the Special Meeting of Stockholders of the Company to be held on November 8, 2000, at 10:00 a.m. central standard time, at 5445 East Cheryl Parkway, Madison, Wisconsin and any adjournments or postponements thereof. Please complete, date, sign, and return this proxy promptly in the envelope provided, whether you plan to attend the Special Meeting or not. If you do plan to attend, you may, of course, vote your shares in person. This proxy will be voted as directed or, if no direction is indicated, will be voted in favor of the proposed items of business. Please mark vote in box, using dark ink only, in the following manner: /X/ 1. To approve the proposed sale of substantially all of the Company's assets to Promega Corporation, a Wisconsin corporation, pursuant to the terms of the Asset Purchase Agreement dated as of September 1, 2000. / / For / / Against / / Abstain THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL. 2. To approve the proposed authorization to the Company's Board of Directors to effect the dissolution and liquidation of the Company as described in the proposed Plan of Dissolution and Liquidation. / / For / / Against / / Abstain THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL. Please complete, date, and sign this proxy and return it promptly in the accompanying envelope. Date: ______________________________ Signature(s): _________________________ _________________________ (title/capacity): _____________________ _________________________ Note: Please sign exactly as your name appears on this proxy. If signing for an estate, trust, or corporation, your title and/or capacity should be so stated. If shares are held jointly, at least one joint owner must sign. EX-99.A 2 0002.txt Exhibit A to Ophidian Pharmaceuticals, Inc. Proxy Statement EXECUTION COPY ASSET PURCHASE AGREEMENT dated as of September 1, 2000, by and between OPHIDIAN PHARMACEUTICALS, INC., as the Seller, and PROMEGA CORPORATION, as the Buyer TABLE OF CONTENTS Page ARTICLE I PURCHASE AND SALE OF ASSETS 1 1.1 Defined Terms 1 1.2 Purchased Assets 1 1.3 Excluded Assets 2 1.4 Closing 3 1.5 Assets Not Assignable 3 ARTICLE II PURCHASE PRICE 4 2.1 Payment of the Purchase Price 4 2.2 Purchase Price Allocation 4 2.3 Sales and Transfer Taxes 4 2.4 Prorations 4 2.5 Terms of the Note 5 ARTICLE III LIABILITIES 5 3.1 Assumption of Liabilities 5 3.2 Non-Assumption of Liabilities 5 3.3 Forbearance of Seller's Obligations Under Lease 5 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER 6 4.1 Ownership, Organization and Qualification 6 4.2 Authorization 6 4.3 Enforceability 6 4.4 Conflicting Obligations 6 4.5 Subsidiaries 7 4.6 Title to Assets 7 4.7 Third Party Consents 7 4.8 Financial Statements 7 4.9 Real Property; Leases 7 4.10 Personal Property 8 4.11 Intellectual Property 8 4.12 Insurance 10 4.13 Permits 10 4.14 Material Contracts 10 4.15 Litigation 11 4.16 Compliance With Law 11 4.17 Environmental Matters 11 4.18 Events Subsequent to Latest Balance Shee Date 13 4.19 Brokerage 13 4.20 Bankruptcy 13 4.21 No Bulk Sales Laws 13 4.22 Commission Filings 13 4.23 Representations and Warranties True and Correct 13 ARTICLE V REPRESENTATIONS OF THE BUYER 14 5.1 Ownership, Organization and Qualification 14 5.2 Authorization 14 5.3 Enforceability 14 5.4 Conflicting Obligations 14 5.5 Litigation 14 5.6 Brokerage 14 ARTICLE VI COVENANTS OF THE SELLER 15 6.1 Access 15 6.2 Operation of Business 15 6.3 Insurance and Maintenance of Property 15 6.4 Compliance with Laws 15 6.5 Supplemental Disclosure 15 6.6 Fulfill Conditions 15 6.7 Release of Liens 15 6.8 Documents of Transfer 15 6.9 Other Deliveries 16 6.10 Exclusive Dealing 16 6.11 Further Assurances 17 6.12 Brokerage 17 6.13 Intellectual Property Assignments 17 6.14 Transfer of Sponsorship of IND 18 ARTICLE VII COVENANTS OF THE BUYER 18 7.1 Certified Resolutions 18 7.2 Assignment, Bill of Sale and Assumption Agreement 18 ARTICLE VIII CONDITIONS OF THE BUYER'S OBLIGATION TO CLOSE 18 8.1 Representation and Warranties 18 8.2 Performance of Covenants and Obligations 18 8.3 Proceedings and Instruments Satisfactory 18 8.4 Adverse Change 18 8.5 No Litigation 19 8.6 Consents, Approvals, Certifications, Licenses and Permits 19 8.7 Good Standing Certificates 19 8.8 Opinion of Counsel 19 8.9 Financing 19 8.10 Due Diligence 19 ARTICLE IX CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE 20 9.1 Representations and Warranties 20 9.2 Performance of Covenants and Obligations 20 9.3 Proceedings and Instruments Satisfactory 20 9.4 No Litigation 20 ARTICLE X INDEMNIFICATION BY SELLER 20 10.1 Indemnification 20 10.2 Procedures for Making Claims 21 10.3 Participation in Defense of Third Party Claims 21 10.4 Survival of Representations and Indemnification 21 10.5 Offset 21 10.6 Limitation on Indemnification 22 10.7 Other Indemnification Provisions 22 ARTICLE XI TERMINATION 22 11.1 Rights to Terminate 22 11.2 Effects of Termination 23 ARTICLE XII DEFINITIONS 23 12.1 Certain Defined Terms 23 12.2 Interpretation 28 12.3 Other Terms 28 ARTICLE XIII MISCELLANEOUS 28 13.1 Survival of Representations and Warranties 28 13.2 Benefit and Assignment 28 13.3 Governing Law 28 13.4 Expenses 29 13.5 Submission to Jurisdiction 29 13.6 Notices 29 13.7 Counterparts 30 13.8 Headings 30 13.9 Amendment, Modification and Waiver 30 13.10 Mutual Release of Certain Liabilities of Each Party to the Other Upon Closing 30 13.11 Entire Agreement 30 13.12 Third-Party Beneficiaries 31 13.13 Publicity 31 13.14 Specific Performance 31 SCHEDULES: Schedule 1.2(c) - Real Estate Schedule 1.2(d) - Equipment Schedule 1.2(e) - Contracts Schedule 2.2 - Purchase Price Allocation Schedule 4.1 - Organization and Qualification Schedule 4.6 - Title to Assets Schedule 4.7 - Third Party Consents Schedule 4.8 - Financial Statements Schedule 4.9(a) - Real Estate Schedule 4.9(c) - Capital Expenditures Schedule 4.10 - Personal Property Schedule 4.11(a) - Patents Schedule 4.11(c) - Patent Exceptions Schedule 4.11(d) - Patent Infringements Schedule 4.11(e) - Patent Challenges Schedule 4.12(a) - Insurance Policies Schedule 4.13 - Permits Schedule 4.14 - Material Contracts Schedule 4.16 - Compliance With Law Schedule 4.17(a) - Environmental Compliance Schedule 4.17(d) - Disposal Practices Schedule 4.17(e) - Environmental Condition Schedule 4.18 - Subsequent Events Schedule 4.19 - Brokerage Schedule 4.22 - Commission Filings Schedule 6.3 - Ophidian Patent/Patent Application Due Dates Between 8/21/00 and 1/1/01 Schedule 8.8 - Forms of Opinion of Counsel ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of the 1st day of September, 2000, by and between PROMEGA CORPORATION, a Wisconsin corporation (the "Buyer"), and OPHIDIAN PHARMACEUTICALS, INC., a Delaware corporation (the "Seller"). RECITALS WHEREAS, the Seller is engaged in the development and manufacture of pharmaceutical products (the "Business"); WHEREAS, the Seller leases certain real property and owns and uses certain tangible and intangible assets used in the Business, including certain intellectual property, leasehold improvements, laboratory equipment and supplies, machinery and equipment, and contract rights; WHEREAS, the Buyer desires to purchase certain assets used in the Business and to assume only certain specific liabilities associated with the Business, and the Seller desires to sell and transfer to the Buyer certain of the assets used in the Business, while retaining environmental and other liabilities, all as more fully set forth below. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Buyer and the Seller hereby agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 Defined Terms. Capitalized terms used herein have the meanings set forth in Section 12.1. 1.2 Purchased Assets. Subject to the terms and conditions of this Agreement, and in reliance upon the representations, warranties, covenants and agreements made in this Agreement by the Seller and the Buyer, the Buyer shall purchase, accept and acquire from the Seller, and the Seller shall sell, transfer, convey, assign and deliver to the Buyer, all of the assets and properties of the Seller (but excluding the Excluded Assets) set forth below including the schedules attached hereto (the "Purchased Assets"), including the following: (a) All Intellectual Property (except the Ophidian corporate name and the goodwill associated with the Ophidian corporate name), including without limitation the Intellectual Property set forth in Schedule 4.11(a), all goodwill associated with respect to the Intellectual Property, licenses and sublicenses granted and obtained with respect thereto and rights thereunder, remedies against infringements thereof and rights to protection of interests therein under the laws of all jurisdictions; (b) All deposits under the Leases; (c) All leaseholds and subleaseholds, improvements, construction in progress, fixtures and appurtenances thereto, including the parcels of land the legal description of which is described on Schedule 1.2(c) attached hereto (the "Real Estate"); (d) All equipment (laboratory, farm or building), machinery, reactors, chemical manufacturing equipment, prototypes, parts, components, projects in process, furniture (except free- standing office filing cabinets), appliances, artwork, laboratory computers and computer terminals and printers (except office computer equipment), laboratory supplies, office supplies and office equipment set forth on Schedule 1.2(d) attached hereto (the "Equipment"); (e) All leases, subleases, arrangements, and other agreements of the Seller pertaining to Intellectual Property, Equipment and Real Estate, including, without limitation, installation and maintenance agreements, hardware lease or rental agreements, and those items which are listed on Schedule 1.2(e) (the "Contracts"); (f) All qualifications, registrations, filings, privileges, franchises, immunities, licenses, permits, authorizations and approvals of Governmental Authorities which pertain to the Purchased Assets and which are currently held by the Seller (the "Permits"); (g) All Records pertaining to the Intellectual Property, the Real Estate, the Equipment, the Contracts and the Permits and the master file for Seller's IND (excluding all other Records of Seller, including but not limited to, business plans, corporate financial records, corporate employment records, correspondence not pertaining to the Intellectual Property, the Real Estate, the Equipment, the Contracts, and the Permits, shareholder records and communications, corporate minute book, and batch records and amendments pertaining to Seller's IND) (the "Records"); (h) All of the Seller's rights and remedies, under warranty or otherwise, against a manufacturer, vendor or other Person for any defects in any Purchased Asset; and (i) All causes of action, choses in action and rights of recovery with respect to any of the foregoing to the extent applicable to the Purchased Assets. 1.3 Excluded Assets. The Purchased Assets shall not include, and the Seller shall retain, the following assets (the "Excluded Assets"): (a) The Seller's rights under this Agreement; (b) All of Seller's records not pertaining to the Intellectual Property, the Real Estate, the Equipment, the Contracts or the Permits, including business plans, business textbooks, business software, corporate financial records, corporate employment records, correspondence not pertaining to the Intellectual Property, the Real Estate, the Equipment, the Contracts or the Permits, shareholder records and communications, corporate minute book, and batch records and FDA amendments pertaining to the application for an IND; (c) All of Seller's prepaid insurance premiums on all of its policies, including without limitation its directors and officers insurance; (d) The Seller's environmental policies and procedures; (e) All of Sellers trademarks and associated good will; (f) The Seller's office computer equipment and free-standing filing cabinets (and their contents not otherwise included among the Purchased Assets as described herein) located in the administrative areas; (g) Any and all assets of Seller not specifically set forth as Purchased Assets herein, including but not limited to its cash and cash equivalents; and (h) The Seller's sponsorship of the IND, and the batch records and FDA amendments relating to its application for an IND. 1.4 Closing. The closing (the "Closing") of the purchase and sale of the Purchased Assets shall take place at 10:00 a.m., local time, on the Closing Date, at the offices of Michael Best & Friedrich LLP, One South Pinckney Street, Suite 700, Madison, Wisconsin 53703, or at such other time and place as may be mutually agreed to by the Buyer and the Seller. The "Closing Date" means the second business day following the satisfaction or waiver of all conditions to the obligations of the Seller to consummate the transactions contemplated hereby (other than conditions with respect to action the respective parties will take at the Closing), or such other date as may be mutually agreed to by the Buyer and the Seller. The Closing shall be effective as of 12:01 a.m. on the Closing Date; provided, however, that the Buyer shall have no further obligation under this Agreement if the conditions set forth in Article VIII have not been satisfied by the Seller or expressly waived by the Buyer on or before November 30, 2000. 1.5 Assets Not Assignable. (a) To the extent that any interest in any of the Purchased Assets is not capable of being assigned, transferred or conveyed without the consent, waiver or authorization of a third person (including a governmental, regulatory or administrative authority), or if such assignment, transfer or conveyance or attempted assignment, transfer or conveyance would constitute a breach of the terms of the agreement governing any Purchased Asset, or a violation of any law, statute, decree, rule, regulation or other governmental edict or is not immediately practicable, this Agreement shall not constitute an assignment, transfer or conveyance of such interest, or an attempted assignment, transfer or conveyance of such interest (such interests being hereinafter collectively referred to as "Restricted Interests"). The entire beneficial interest in any Purchased Assets subject to a restriction as described above, and any other interest in such Purchased Assets which are transferable notwithstanding such restriction, shall be transferred from the Seller to the Buyer as provided in this Section 1.5. (b) Anything in this Agreement to the contrary notwithstanding, the Seller shall not be obligated to transfer to the Buyer any Restricted Interests without the Buyer or the Seller first having obtained all consents, waivers and authorizations necessary for such transfers. In consultation with the Buyer as to the practicalities of proposed actions, the Seller shall use its reasonable best efforts to assist the Buyer in obtaining such consents, waivers and authorizations and to resolve any impracticalities of assignment referred to in Section 1.5(a) hereof. ARTICLE II PURCHASE PRICE 2.1 Payment of the Purchase Price. (a) The payment by the Buyer to the Seller for the Purchased Assets on the Closing Date (the "Purchase Price") shall be Three Million Five Hundred Thousand Dollars ($3,500,000) payable on the Closing Date in the following manner: (i) The assumption of two Senior Secured Notes of the Seller by the Buyer in the original principal amount of Two Million Dollars ($2,000,000); (ii) A promissory note (the "Note") from the Buyer to the Seller in the amount of Two Hundred Fifty Thousand Dollars ($250,000); and (iii) The balance of the Purchase Price shall be paid in cash to the Seller. (b) The amounts paid in cash pursuant to Section 2.1(a) shall be by wire transfer of same-day funds to an account designated in writing to the Buyer by the Seller prior to the Closing. 2.2 Purchase Price Allocation. The parties acknowledge and agree that the Purchase Price was negotiated and concluded on the basis of the component prices set forth on Schedule 2.2 in accordance with the respective fair market values of the Purchased Assets. The parties agree to report and allocate, for all federal, state and local income tax purposes (including IRS Form 8594), the Purchase Price as so allocated and will not take any inconsistent or contrary position therewith for any other purpose. 2.3 Sales and Transfer Taxes. The Seller shall pay any and all transfer, sales, purchase, use, value added, excise or similar tax imposed under the laws of the United States, or any state or political subdivision thereof, which arises out of the transfer by the Seller to the Buyer of any of the Purchased Assets. 2.4 Prorations. (a) Personal property taxes for the Purchased Assets for 2000 shall be prorated on the Closing Date based upon the taxes assessed for 2000; but if the taxes assessed for 2000 are not known on the Closing Date, such taxes shall be prorated based upon the taxes assessed for 1999. (b) The Seller shall order final readings for utility services, such as gas, electricity, water and sewer as of the Seller's close of business on the date before the Closing Date, and prorated charges for such utility services shall be reflected on the Closing Balance Sheet. 2.5 Terms of the Note. The Note shall be payable in a single installment of principal due ninety days from the Closing Date. Interest on the Note shall accrue at the lowest rate necessary to avoid the imputation of interest under the Code. ARTICLE III LIABILITIES 3.1 Assumption of Liabilities. As additional consideration for the Purchased Assets, the Buyer shall, on the Closing Date, by its execution and delivery of the Assignment, Bill of Sale and Assumption Agreement, assume and agree to pay and perform only (the "Assumed Liabilities"): (a) subject to the Buyer's due diligence rights contained herein, all written obligations of the Seller under the Leases listed on Schedule 1.2(e); (b) subject to the agreement of the holders of the Senior Secured Notes to renegotiate the terms of the Senior Secured Notes and to subordinate the notes to the Buyer's existing lenders, all on terms approved by the Buyer in its sole discretion, the Seller's obligations under the Senior Secured Notes; provided, however, that the Buyer shall not assume any obligation to the extent the existence thereof violates or is in breach of any of the representations, warranties and covenants of the Seller in this Agreement. 3.2 Non-Assumption of Liabilities. Except for the Assumed Liabilities, the Buyer shall not be responsible for, assume, pay, perform, discharge, or accept any liabilities, debts or obligations of the Seller of any kind whatsoever, whether actual, contingent, accrued, known or unknown, including, without limitation, any relating to accounts payable, interest-bearing debt, notes to Affiliates or other related Persons, interest and termination penalties on indebtedness, taxes, employee compensation, severance, pension, profit-sharing, vacation, health insurance, disability insurance or other employee benefit plans and programs, worker's compensation, breach or negligent performance of any contract, or breach of warranty relating thereto, liabilities resulting from breach of contract, torts (including, without limitation, product liability claims), illegal activity, unlawful employment or business practice, infringement of intellectual property rights, claim for environmental liability or remediation or any other liability or obligation whatsoever. All such non-assumed liabilities, debts and obligations shall remain the responsibility of the Seller which shall pay and discharge the same when and as due. 3.3 Forbearance of Seller's Obligations Under Lease. Buyer, as landlord under Seller's Lease of office and laboratory space at 5445 East Cheryl Parkway, Madison, Wisconsin, agrees to forebear all obligations of Seller arising under and pursuant to such lease from and after the date that Buyer takes full possession of the space subject to said lease, and to forgive such obligations upon Closing. In the event this Agreement is terminated, such obligations through the date of termination shall become due and payable, and if paid within 5 days thereafter, and the Lease shall continue in full force and effect without default. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER In order to induce the Buyer to enter into this Agreement, the Seller makes the following representations and warranties to the Buyer, each of which shall be deemed to be independently material and relied upon by the Buyer, regardless of any investigation made by, or information known to, the Buyer. Any matter described on the disclosure schedules attached hereto and incorporated herein shall be set forth with reference to each separate Section of this Agreement to which the matter relates. 4.1 Ownership, Organization and Qualification. The Seller is a corporation duly incorporated and validly existing under the laws of the State of Delaware, has filed with the appropriate state agency the most recent annual report required to be filed by it, has not filed articles of dissolution and has a perpetual period of existence. The Seller is qualified to transact business as foreign corporation in the jurisdictions set forth on the Schedule 4.1, and the Seller is not otherwise required to be so qualified in any other jurisdiction. 4.2 Authorization. The Seller has all necessary power and authority to enter into and perform the transactions contemplated hereby in accordance with the terms and conditions hereof. The execution and delivery of this Agreement, and the performance by the Seller of each of its obligations contained herein, have been duly approved by the Board of Directors of the Seller. Except only the vote of the shareholders of Seller, no other corporate authorization from the Seller is required for the execution and delivery of this Agreement or the performance of its obligations hereunder. 4.3 Enforceability. This Agreement and all other agreements of the Seller contemplated hereby are or, upon the execution and delivery thereof will be, the valid and binding obligations of the Seller, enforceable against it in accordance with their terms. 4.4 Conflicting Obligations. The execution and delivery of this Agreement does not, and the consummation of the sale and purchase of the Purchased Assets contemplated hereby will not: (a) conflict with or violate any provisions of the articles or certificate of incorporation or bylaws of the Seller, as amended and in effect on and as of the date hereof and on and as of the Closing Date; (b) conflict with or violate any provisions of, or result in the maturation or acceleration of, any obligations under any contract, agreement, instrument, document, lease, license, permit, indenture, or obligation, or any law, statute, ordinance, rule, regulation, code, guideline, order, arbitration award, judgment or decree, to which the Seller is subject or to which the Seller is a party; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets are subject (or result in the imposition of any Lien upon any of the Purchased Assets). 4.5 Subsidiaries.The Seller has no Subsidiaries. 4.6 Title to Assets. Except as set forth on Schedule 4.6, the Seller has good and marketable fee simple title to all of the Purchased Assets, free and clear of any Lien (other than Permitted Liens) or restriction on transfer. 4.7 Third Party Consents. Except as set forth on Schedule 4.7, no third party consents, approvals or authorizations are necessary for the execution and consummation of the transactions contemplated hereby, nor are any such consents, approvals or authorizations required in order for any of the Purchased Assets, including without limitation, the Leases and the Permits, to be assigned to the Buyer. 4.8 Financial Statements. Attached as Schedule 4.8 are complete copies of the unaudited balance sheet for June 30, 2000 (the "Latest Balance Sheet Date"). 4.9 Real Property; Leases. (a) Good Title; Condition. The Seller does not own any real property. Schedule 4.9(a) sets forth a true and correct summary description of all Real Estate leased or rented by the Seller. The description of each parcel of Real Estate describes such parcel fully and adequately. All buildings, structures and other improvements on the Real Estate are in good condition and repair (normal wear and tear excepted). The use and operation of the Real Estate as currently conducted conform to all applicable building, zoning, safety, and other laws, statutes, ordinances, rules, regulations, codes, licenses, permits, and all other restrictions and conditions. The Seller has not received any written or oral notice of, and the Seller does not know of any assessments for public improvements against the Real Estate or any written or oral notice or order by any governmental, regulatory or administrative authority, any insurance company which has issued a policy with respect to any of such properties or any board of fire underwriters or other body exercising similar functions that: (i) relates to violations of building, safety or fire ordinances or regulations; (ii) claims any defect or deficiency with respect to any of such properties; or (iii) requests the performance of any repairs, alterations or other work to or in any of such properties or in the streets bounding the same. There are no arrangements for the deferral of taxes or assessments for any of the Real Estate. There is no condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of the Real Estate pending or, to the Knowledge of the Seller, threatened. Those public utilities (including water, gas, electric, storm and sanitary sewage, and telephone utilities) required to operate the facilities of the Seller are available to such facilities, and such utilities enter the boundaries of such facilities through adjoining public streets or easement rights-of-way. Such public utilities are all connected pursuant to valid licenses or permits, are all in good working order and are adequate to service the operations of such facilities as currently conducted and permit full compliance with all requirements of law. Except where the Seller is lessee, there are no leases, subleases, licenses, concessions or other agreements (written or oral) granting to any party or parties the right to use or occupancy of any portion of each parcel of Real Estate. (b) Real Estate. On the Closing Date, for each parcel of the Real Estate that is the subject of a written lease agreement, such written agreements shall be in full force and effect, and there shall be no oral terms or other agreements in effect. (c) Capital Expenditures and Repairs. Except as set forth on Schedule 4.9(c), no capital expenditures relating to the Real Estate (excluding only normal maintenance and repair made consistently with past practice and which are required to be expended for federal income tax purposes) or remediations suggested or required by any applicable governmental, administrative or regulatory authority or insurer, in the next twelve (12) months in an amount exceeding $10,000, are necessary to conduct business at the Real Estate as it is presently conducted, nor are any such expenditures planned. 4.10 Personal Property. Schedule 4.10 sets forth all personal property of the Seller which constitute Purchased Assets. The Seller owns all property reflected on Schedule 4.10. All tangible personal property of the Seller is located upon the Seller's premises, except as otherwise set forth on Schedule 4.10. All of such tangible personal property is actually on hand. All such tangible personal property is in good condition and repair (normal wear and tear excepted). Except as set forth on Schedule 4.10, no capital expenditures relating to personal property (excluding only normal maintenance repairs made consistently with past practice and which are required to be expended for federal income tax purposes) or remediations suggested or required by any applicable governmental, administrative or regulatory authority or insurer, in the next twelve (12) months in an amount exceeding $10,000 in the aggregate, are necessary to conduct business using the personal property as it is presently conducted, nor are any such expenditures planned. 4.11 Intellectual Property. (a) Schedule 4.11(a) identifies each patent or registration which has been issued to the Seller with respect to any of its Intellectual Property, identifies each pending patent application or application for registration which the Seller has made with respect to any of its Intellectual Property, and identifies each license, agreement, or other permission that is currently in effect and which has been granted to any third party with respect to any of its Intellectual Property (together with any exceptions). The Seller has made available to the Buyer correct and complete copies of all such patents and registrations, and those applications, licenses, agreements, and permissions currently in effect (as amended to date) and has made available to the Buyer correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. (b) The Seller owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property. Each item of Intellectual Property owned or used by the Seller immediately prior to the Closing hereunder will be owned or available for use by the Buyer immediately subsequent to the Closing hereunder. The Seller has taken all actions that the Seller deemed commercially reasonable to maintain and to protect each item of Intellectual Property that it owns or uses, including, but not limited to, payment of any and all maintenance fees and annuities. (c) Except as disclosed in Schedule 4.11(c), with respect to each item of Intellectual Property required to be identified in Section 4.11(a): (i) the Seller possesses all right, title and interest in and to the item, free and clear of any Lien, license, or other restriction; (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (iii) no action, suit, opposition or reexamination proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and (iv) the Seller is not now subject to any indemnity obligation to any Person for or against any interference, infringement, misappropriation, reexamination, opposition or other conflict with respect to the item. (d) Except as disclosed in Schedule 4.11(d), the Seller has no Knowledge of any products, inventions or procedures of competitors which infringe or misappropriate any Intellectual Property of the Seller. Except as disclosed in Schedule 4.11(d), the Seller has not given formal or informal notice of infringement or sent a demand to "cease and desist" to any third party. (e) Schedule 4.11(e) identifies each and every item of Intellectual Property that any third party owns or licenses and that the Seller has pursuant to license, sublicense, agreement, or permission. The Seller has delivered to the Buyer correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With respect to each item of Intellectual Property required to be identified in Section 4.11(e): (i) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect; (ii) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 1.2 above), subject to the rights of third parties listed in Schedule 4.7; (iii) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (iv) no party to the license, sublicense, agreement, or permission has repudiated any provision thereof; (v) with respect to each sublicense, the representations and warranties set forth in subsections (i) through (iv) above are true and correct with respect to the underlying license; (vi) to the Seller's Knowledge, the underlying item of Intellectual Property is not subject to any outstanding injunction, judgment, order, decree, ruling or charge; (vii) except as set forth in Schedule 4.11(e), no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges the legality, validity, or enforceability of the underlying item of Intellectual Property; and (viii) the Seller has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission that is now in effect. 4.12 Insurance. Schedule 4.12(a) lists and contains a description of each policy of insurance owned or held by the Seller currently in effect relating to the Purchased Assets or the Real Estate (including without limitation, policies for fire and casualty, liability, umbrella coverage, and other forms of insurance) specifying the insurer, amount of coverage, type of insurance, policy number, deductible limits and any pending claim in excess of $5,000, whether or not covered by insurance (the "Insurance"). The Insurance is in full force and effect, all premiums with respect thereto covering all periods up to and including the date hereof have been paid, and no notice of cancellation or termination has been received by the Seller with respect to any such policy. The Insurance is sufficient for compliance with all requirements of law. The policies evidencing the Insurance are valid, outstanding and enforceable policies subject to the terms and conditions contained therein, and there has not occurred any act or omission of the Seller which could result in cancellation of any such policy prior to its scheduled expiration date. 4.13 Permits. Schedule 4.13 sets forth a list of all of the Permits and true and complete copies of each written document evidencing or affecting any of the Permits will be delivered to the Buyer during due diligence prior to Closing. The Seller is in compliance with the terms and conditions of all of the Permits. Except as set forth in Schedule 4.13, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in the revocation, or an adverse change in the terms or conditions, of any of the Permits, and all Permits shall continue in full force and effect in accordance with their present terms unaffected by the consummation of the transactions contemplated hereby. 4.14 Material Contracts. Schedule 4.14 identifies the following contracts and other agreements to which the Seller is a party: (a) Leases. All leases of real or personal property, including the leases described in Section 4.9 hereof; (b) Purchase Orders. A list of written or oral agreements relating to the purchase of products, services or supplies by the Seller and pertaining to the Purchased Assets; (c) Loans and Borrowing Agreements. A list of each written or oral (i) loan, credit or borrowing arrangement or agreement or (ii) agreement by which the Seller has guaranteed or otherwise became liable or contingently liable for the debt of another; and (d) Capital Expenditures. A list of all outstanding written or oral commitments by the Seller to make a capital expenditure, capital addition or capital improvement, in each case with respect to the Purchased Assets. The Seller will deliver to the Buyer a correct and complete copy of each written agreement listed on Schedule 4.14 (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 4.14 during due diligence prior to Closing. With respect to each such agreement: (i) the agreement is legal, valid, binding, enforceable and in full force and effect; (ii) subject to Section 1.5, the agreement will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (including the assignment and assumptions referred to in Articles I and III); (iii) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification or acceleration under the agreement; and (iv) no party has repudiated any provision of the agreement. 4.15 Litigation. There is not now any litigation, claim, proceeding or investigation pending, or, to the Seller's Knowledge, threatened against or relating to the ability of the Seller to perform its obligations under this Agreement. 4.16 Compliance With Law. The conduct of business at the Real Estate as currently conducted by Seller does not violate, nor is the Seller in default under, any law, statute, ordinance, rule, regulation, code, license, permit, guideline, order, arbitration award, judgment or decree, and Buyer will not after the Closing incur any Liability or obligation as a result of any such violation or default existing at the Closing or arising or accruing thereafter but based upon conditions existing at the Closing. Except as set forth on Schedule 4.16, no expenditures are anticipated which are necessary or appropriate for the continuation of the business at the Real Estate in compliance with any such law, statute, rule, regulation, code, license, permit, guidelines, order, arbitration award, judgment or decree. 4.17 Environmental Matters. (a) Environmental Compliance. Except as set forth in Schedule 4.17(a), (i) the Seller and the Leased Property have been and are in compliance with all applicable Environmental Laws; (ii) neither the Seller nor, to the Knowledge of Seller, any other Person has received any communication (either written or oral) from a Governmental Authority or other Person which alleges that the Seller or the Leased Property is not in compliance with any applicable Environmental Law; (iii) neither the Seller nor, to the Knowledge of Seller, any other person has received any notice of, nor does the Seller have Knowledge of, any past, present or future event, condition, circumstance, activity, practice, incident, action or plan which may interfere with or prevent continued compliance with all applicable Environmental Laws; (iv) neither the Seller nor, to the Knowledge of Seller, any other person is under investigation by any Governmental Authority for the failure to comply with any Environmental Law; (v) neither the Seller nor, to the Knowledge of Seller, any other person is required to take any Remedial Action by any Governmental Authority or Environmental Law; and (vi) neither the Seller nor, to the Knowledge of Seller, any other person has made any statements, warranties, or representations in any documents submitted to any Governmental Authority or submittal created pursuant to an obligation imposed by Environmental Law containing any untrue statement of material fact or omitting any statement of material fact which render the statements made misleading in connection with any Environmental Law. (b) Environmental Permits. The Seller has obtained all Environmental Permits necessary for its operations on the Leased Property as currently conducted, and all such Environmental Permits are in good standing, current, transferable, and the Seller are in compliance with all terms and conditions of such Environmental Permits. (c) Pending Litigation. There is no Environmental Claim pending or, to the Knowledge of the Seller, threatened against the Seller in connection with the Leased Property, operations or actions of the Seller or against any Person whose liability for any Environmental Claim the Seller has or may have retained or assumed either contractually or by operation of law. The Seller has not received any notice of any past, present or future event, condition, circumstance, activity, practice, incident, action or plan which may give rise to any Environmental Claim based on or related to the Leased Property. (d) Disposal Practices. Except as set forth in Schedule 4.17(d), neither the Seller nor any other Person has arranged for the disposal, treatment or recycling of, or transported for disposal, treatment or recycling, any Hazardous Waste, PCB-containing Material, petroleum substance (including crude oil or any fraction thereof), or petroleum product from the Leased Property to any other location. Except to the extent described in Schedule 4.17(d), neither the Seller nor any other Person or entity has arranged for the disposal, treatment or recycling of, or transported for disposal, treatment or recycling, any other Environmental Material from the Leased Property to any other location. With respect to any Environmental Materials identified in Schedule 4.17(d), the Seller has no notice or Knowledge that such Environmental Materials were not properly transported or disposed of at a facility authorized to receive such Environmental Materials pursuant to all Environmental Laws. (e) Environmental Condition of Property. To the Knowledge of Seller, except as described in Schedule 4.17(e), the Leased Property, including any improvements thereon, and any soil or groundwater under such properties, (i) does not contain any Environmental Material; (ii) specifically does not contain PCB- containing Material, petroleum substances, petroleum products, asbestos (or substances containing asbestos), lead or urea formaldehyde foam; (iii) does not contain any storage tanks, vessels or other facilities at, under or on the Leased Property which contain or previously contained Environmental Material; (iv) has never been used for the storage, treatment, disposal, deposit, recycling, landfilling, or dumping of any Environmental Material; (v) has never been affected by an Environmental Release of any Environmental Material; (vi) does not contain a condition that is or may be a threat to the health, safety or welfare of the public or environment; (vii) does not face any risk of contamination by any Environmental Material from any nearby property; (viii) has never been the subject of an environmental investigation, audit or assessment by a Governmental Authority; and (ix) and has never been the subject of a Remedial Action, or action to remove any Environmental Material, or an action to abate, restore, repair or remedy any condition affecting the environment. 4.18 Events Subsequent to Latest Balance Sheet Date. Except as set forth on Schedule 4.18, since the Latest Balance Sheet Date: (a) The Seller has not sold, leased, transferred, or assigned any of its assets, tangible or intangible; (b) No party (including the Seller) has accelerated, terminated, modified, or cancelled any of the Leases; (c) The Seller has not imposed any Lien upon any of its assets, tangible or intangible; (d) The Seller has not granted any license or sublicense of any rights under or with respect to any Intellectual Property; (e) The Seller has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its property; (f) The Seller has not entered into any contract for the sale of the Purchased Assets or any part thereof, whether by merger, consolidation, exchange of capital stock or otherwise (other than with respect to this Agreement); and (g) The Seller has not committed to any of the foregoing. 4.19 Brokerage. Except as described on Schedule 4.19, the Seller has not incurred, or made commitments for, any brokerage, finders' or similar fee in connection with the transaction contemplated by this Agreement. 4.20 Bankruptcy. The Seller has not filed a petition for relief under the United States Bankruptcy Code or under any state insolvency statute. 4.21 No Bulk Sales Laws. Neither the provisions of Chapter 406 of the Wisconsin Statutes nor other similar "bulk sales" laws are applicable to the acquisition of the Purchased Assets or the other transactions contemplated by this Agreement. 4.22 Commission Filings. The Seller has filed with the Commission certain reports, registration statements, proxy statements and other filings (including all notes, exhibits and schedules thereto and documents incorporated by reference therein) with the Commission since December 31, 1999 (such reports, registration, statements and other filings, together with any amendments thereto, are sometimes collectively referred to as the "Commission Filings"). Attached on Schedule 4.22 is a true and complete list of all Commission filings since December 31, 1999. 4.23 Representations and Warranties True and Correct. The representations and warranties contained herein, and all other documents, certifications, materials and statements or information given to the Buyer by or on behalf of the Seller or disclosed in this Agreement, do not include any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein in order to make the statements herein or therein, in light of the circumstances under which they are made, not misleading. ARTICLE V REPRESENTATIONS OF THE BUYER In order to induce the Seller to enter into this Agreement, the Buyer makes the following representations and warranties to the Seller, each of which shall be deemed to be independently material and relied upon by the Seller, regardless of any investigation made by, or information known to, the Seller. 5.1 Ownership, Organization and Qualification. The Buyer is a corporation duly incorporated and validly existing under the laws of the State of Wisconsin, has filed with the appropriate state agency the most recent annual report required to be filed by it, has not filed articles of dissolution and has a perpetual period of existence. 5.2 Authorization. The Buyer has all necessary power and authority to enter into and perform the transactions contemplated hereby in accordance with the terms and conditions hereof. The execution and delivery of this Agreement, and the performance by the Buyer of each of its obligations contained herein, have been duly approved by the Buyer's Board of Directors. No other corporate authorization from the Buyer is required for the execution and delivery of this Agreement or the performance of its obligations hereunder. 5.3 Enforceability. This Agreement and all other agreements of the Buyer contemplated hereby are or, upon the execution thereof, will be the valid and binding obligations of the Buyer enforceable against it in accordance with their terms. 5.4 Conflicting Obligations. The execution and delivery of this Agreement do not, and the consummation of the sale and purchase of the Purchased Assets contemplated hereby will not: (a) conflict with or violate any provisions of the certificate of incorporation of the Buyer; (b) conflict with or violate any provisions of, or result in the maturation or acceleration of, any obligations under any contract, agreement, instrument, document, lease, license, permit, indenture, or obligation, or any law, statute, ordinance, rule, regulation, code, guideline, order, arbitration award, judgment or decree, to which the Buyer is subject to or which the Buyer is a party; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject. 5.5 Litigation. There is no litigation, claim, proceeding or investigation pending, or to the Buyer's Knowledge, threatened, against the Buyer relating to its ability to perform its obligations under this Agreement. 5.6 Brokerage. The Buyer has not incurred, nor made commitment for, any brokerage, finders or similar fee in connection with the transactions contemplated by this Agreement. ARTICLE VI COVENANTS OF THE SELLER The Seller covenants and agrees with the Buyer as follows: 6.1 Access. From the date hereof and until the Closing Date, the Buyer and its authorized officers, agents and representatives shall have full access (upon reasonable prior notice) to the Real Estate and the Purchased Assets. The Seller shall cooperate with the Buyer by responding to and causing the Seller's outside auditors promptly to respond to all questions posed by the Buyer concerning the Purchased Assets. 6.2 Operation of Business. From the date hereof and until the Closing Date, without the express prior written consent of the Buyer, the Seller shall not engage in any practice, take any action or enter into any transaction involving the Purchased Assets or the Leases. Without limiting the generality of the foregoing, the Seller shall not otherwise engage in any practice, take any action or enter into any transaction of the sort described in Section 4.18. 6.3 Insurance and Maintenance of Property. From the date hereof and until the Closing Date, the Seller shall cause all property owned or leased by it to be insured against all ordinary insurable risks and shall maintain in effect all the Insurance, and shall maintain and repair all of its property in a manner consistent with past practice; provided, that the Seller, with prior consultation with Buyer, shall take those actions it deems commercially reasonable to maintain and prosecute its patents, patent applications, and other Intellectual Property and the Buyer shall pay all costs related to the same. The actions required to maintain the Intellectual Property from the date of this Agreement to the end of 2000 are shown on Schedule 6.3 to this Agreement. In addition, Seller may dispose of the Equipment currently located on the Farm Facility in the manner Seller deems reasonable, with the prior written consent of the Buyer, provided the proceeds of any such disposition, reduced by the reasonable costs incurred by Seller, be applied as a credit to Buyer at Closing. 6.4 Compliance with Laws. From the date hereof and until the Closing Date, the Seller shall comply with all applicable laws, statutes, ordinances, rules, regulations, guidelines, orders, arbitration awards, judgments and decrees applicable to, or binding upon, the Seller or its business or properties. 6.5 Supplemental Disclosure. On the Closing Date, the Seller shall inform the Buyer in writing of all information, events or actions which, if this Agreement were signed on the Closing Date, would be required to be disclosed on the Schedules in order to make the Seller's representations and warranties contained herein true and not misleading. The delivery thereof by the Seller shall not absolve the Seller from liability for breach of any representation or warranty which was untrue when made. 6.6 Fulfill Conditions. The Seller shall use its best efforts to cause to be fulfilled on or prior to the Closing each of the conditions set forth in Article VIII hereof. 6.7 Release of Liens. The Seller shall on or prior to the Closing Date deliver to the Buyer such documents as are necessary to terminate and release all Liens on the Purchased Assets except for Permitted Liens, which documents shall be in form and substance acceptable to the Buyer and shall include without limitation, all documents necessary to terminate of record any such Liens. 6.8 Documents of Transfer. On the Closing Date, the Seller shall duly execute and deliver to the Buyer the Assignment, Bill of Sale and Assumption Agreement. Any applicable sales tax, use tax or transfer fees shall be paid by the Seller at the Closing. In addition, the Seller shall execute and deliver to the Buyer at the Closing, in form and substance reasonably satisfactory to counsel for the Buyer, assignments assigning to the Buyer the following: (a) All Intellectual Property, provided that any form required by the patent office of any jurisdiction to transfer the ownership of the Intellectual Property shall be prepared at Buyer's expense; (b) All Contracts; (c) All assignable Permits; and (d) Such other Purchased Assets as the Buyer may reasonably request. 6.9 Other Deliveries. On the Closing Date, the Seller shall deliver to the Buyer the following: (a) The resolutions of the Board of Directors of the Seller authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby, certified by the secretary or the president of the Seller and evidence, satisfactory in form and substance to the Seller of the approval of the transactions contemplated by this Agreement by the Seller's shareholders; (b) Current Uniform Commercial Code and state, local and federal tax, sales and unemployment compensation tax, judgment, bankruptcy and similar lien searches showing no Liens against the Purchased Assets other than Permitted Liens; (c) All consents for the assignment of all Permits, which are necessary in order for said Permits to be assigned to the Buyer upon their present terms and the Seller shall pay all fees, charges and other costs that are required or imposed in connection with obtaining any such consent; (d) All consents for the assignment of all Leases, which are necessary in order for said Leases to be assigned to the Buyer upon their present terms and the Seller shall pay all fees, charges and other costs that are required or imposed in connection with obtaining any such consent; (e) An affidavit that the Seller is not a "foreign person" within the meaning of Section 1445 of the Code, and stating the Seller's federal taxpayer identification number, in form and substance acceptable to counsel for the Buyer; and (f) All other documents reasonably requested by counsel for the Buyer to consummate the transactions herein contemplated. 6.10 Exclusive Dealing. Neither the Seller, nor any of its agents or representatives will take, directly or indirectly, any action to initiate, continue, assist, solicit, receive, negotiate, encourage or accept any offer or inquiry from any Person (a) to engage in any Business Combination, (b) to reach any agreement or understanding (whether or not such agreement or understanding is absolute, revocable, contingent or conditional) for, or otherwise attempt to consummate, any Business Combination or (c) to furnish or cause to be furnished any information with respect to the Seller or its assets to any Person (other than as contemplated in this Agreement) who the Seller knows or has reason to believe is in the process of considering any Business Combination; provided that prior to the Closing Date, if the Board of Directors of the Seller reasonably determines the Business Combination constitutes a Superior Proposal (as defined below), then, to the extent required by the fiduciary obligations of the Board of Directors of the Seller, as determined in good faith by a majority thereof after consultation with independent counsel (who may be the Seller's regularly engaged independent counsel), the Seller may, in response to an unsolicited request, furnish non-public information, and afford access to the properties, books, records, officers, employees and representatives of the Seller, participate in discussions or negotiations regarding the Superior Proposal and, provided that the Seller has complied with the provisos to its rights to terminate this Agreement pursuant to Section 11.1(c) hereof, enter into an agreement with respect to or approve or recommend to its shareholders a Superior Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any officer or director of the Seller or any financial advisor, attorney or other advisor or representative of the Seller, whether or not such person is purporting to act on behalf of the Seller or otherwise, shall be deemed to be a breach of this Section 6.10 by the Seller. For purposes of this Agreement, "Business Combination" means any merger, consolidation or combination to which the Seller is a party which would adversely affect the Seller's ability to transfer the Purchased Assets to the Buyer, any sale, dividend, split or other disposition of capital stock or other equity interest of the Seller which would adversely affect the Seller's ability to transfer the Purchased Assets to the Buyer or any sale, dividend or other disposition of the Purchased Assets, and "Superior Proposal" means a bona fide proposal made by a third party to acquire the Seller pursuant to a tender or exchange offer, a merger, a sale of all or substantially all its assets or otherwise on terms which a majority of the members of the Board of Directors of the Seller determines, at a duly constituted meeting of the Board of Directors or by unanimous written consent, in its reasonable good faith judgment (after consultation with its financial advisor) to be more favorable to the Seller's shareholders than the transactions contemplated hereby and for which financing, to the extent required, is then committed or which, in the reasonable good faith judgment of a majority of such disinterested members of the Board of Directors of the Seller, as expressed in a resolution adopted at a duly constituted meeting of such directors, is reasonably capable of being obtained by such third party. 6.11 Further Assurances. The Seller, upon request of the Buyer, shall execute, acknowledge and deliver such other instruments as reasonably may be requested to more effectively transfer and vest in the Buyer, the Purchased Assets or to otherwise carry out the terms and conditions of this Agreement. 6.12 Brokerage. Any brokerage, finders' or similar fee incurred in connection with the transactions contemplated by this Agreement shall be promptly paid by the Seller. 6.13 Intellectual Property Assignments. On the Closing Date, the Seller shall execute and deliver to the Buyer an Intellectual Property Assignment. 6.14 Transfer of Sponsorship of IND. The Seller, upon request of the Buyer, shall execute and deliver such instruments and take other actions necessary to transfer sponsorship of its IND to Buyer or a third party identified by Buyer. ARTICLE VII COVENANTS OF THE BUYER The Buyer covenants and agrees with the Seller as follows: 7.1 Certified Resolutions. On the Closing Date, the Buyer shall deliver to the Seller a copy of the resolutions of the Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the performance by the Buyer of the transactions contemplated hereby, certified by an officer of the Buyer. 7.2 Assignment, Bill of Sale and Assumption Agreement. On the Closing Date, the Buyer shall execute and deliver to the Seller the Assignment, Bill of Sale and Assumption Agreement. ARTICLE VIII CONDITIONS OF THE BUYER'S OBLIGATION TO CLOSE The obligation of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction and fulfillment, prior to and on the Closing Date, of the following express conditions precedent: 8.1 Representation and Warranties. The representations and warranties in this Agreement made by the Seller shall be true and correct in all material respects as of and at the Closing Date with the same force and effect as though said representations and warranties had been again made on the Closing Date, and the Buyer shall have been furnished a certificate signed by the president of the Seller to that effect. 8.2 Performance of Covenants and Obligations. The Seller shall have performed and complied with all of its covenants and obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date, and the Buyer shall have been furnished a certificate signed by the president of the Seller to that effect. 8.3 Proceedings and Instruments Satisfactory. All proceedings, corporate or otherwise, to be taken in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Buyer. The Seller shall have made available to the Buyer, either directly or through its patent counsel, for examination the originals or true and correct copies of all documents which the Buyer reasonably may request in connection with the transactions contemplated by this Agreement. 8.4 Adverse Change. From and after the date of this Agreement and until the Closing Date, the Buyer (in its sole and absolute discretion) shall have determined that there has been no material adverse change in the Purchased Assets, or the Real Estate, from that disclosed to the Buyer in this Agreement, nor shall there have been any casualty to the Purchased Assets, in an amount exceeding $10,000, as a result of any loss, taking, destruction or physical damage, whether or not covered by insurance, occasioned by fire, flood, explosion, earthquake, act of God or the public enemy, or otherwise. The Buyer shall have been furnished with a certificate signed by the president of the Seller to that effect. 8.5 No Litigation. No investigation, suit, action or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain, prohibit or obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby. 8.6 Consents, Approvals, Certifications, Licenses and Permits. All necessary consents, approvals, certifications, licenses and permits with respect to the transaction contemplated hereby, including, without limitation, the transfer of the Purchased Assets to the Buyer, the absence of which would have a material adverse effect on the Buyer's rights under this Agreement, or which would constitute a breach pursuant to the provision of, or which would result in the termination or loss of any right under, any material Contract, Permit, or other obligation, or without which the Buyer would be precluded or materially impeded from obtaining the benefit of the Purchased Assets, shall have been received by the Buyer on or before the Closing Date. 8.7 Good Standing Certificates. The Seller shall have delivered to the Buyer a current certificate of good standing relative to the Seller recently certified by the Secretary of State or other appropriate governmental authority of each state or jurisdiction in which the Seller is organized or qualified to transact business. 8.8 Opinion of Counsel. On the Closing Date, the Seller shall have delivered to the Buyer the legal opinion of LaFollette Godfrey & Kahn, the Seller's corporate counsel in the form set forth on Schedule 8.8. 8.9 Financing. The Buyer shall have renegotiated the terms of the Senior Secured Notes, in each case on such terms and subject to such conditions as are satisfactory to the Buyer in its sole discretion. 8.10 Due Diligence. The Buyer shall have conducted a due diligence investigation and review of the Purchased Assets, the Assumed Liabilities, the Business and all matters pertaining thereto that the Buyer deems relevant and the results of such investigation and review shall be satisfactory to the Buyer in its sole and absolute discretion, including, without limitation, any due diligence investigation relating to the Seller's Intellectual Property (which shall be limited to the ownership and assignability thereof) and existing Environmental Claims; provided however, that the condition to closing set forth in this Section 8.10 shall be deemed waived by the Buyer unless the Buyer notifies the Seller in writing within forty-five (45) days following the date of this Agreement of its intent to terminate this Agreement. ARTICLE IX CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE The obligation of the Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction and fulfillment, prior to and on the Closing Date, of the following express conditions precedent: 9.1 Representations and Warranties. The representations and warranties in this Agreement made by the Buyer shall be true and correct in all material respects as of and at the Closing Date with the same force and effect as though said representations and warranties had been again made on the Closing Date, and the Seller shall have been furnished a certificate signed by the president of the Buyer to that effect. 9.2 Performance of Covenants and Obligations. The Buyer shall have performed and complied with all of its covenants and obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date, and the Seller shall have been furnished a certificate signed by the president of the Buyer to that effect. 9.3 Proceedings and Instruments Satisfactory. The shareholders of the Seller shall have approved the transactions contemplated by this Agreement. All proceedings, corporate or otherwise, to be taken in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Seller; and, the Buyer shall have made available to the Seller for examination the originals or true and correct copies of all documents which the Buyer reasonably may request in connection with the transactions contemplated by this Agreement. 9.4 No Litigation. No investigation, suit, action or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain, prohibit or obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby. ARTICLE X INDEMNIFICATION BY SELLER 10.1 Indemnification. Notwithstanding the Closing, and regardless of any investigation made by, or on behalf of, the Buyer, or any information known to the Buyer, the Seller, subject to the terms and conditions of this Article X, indemnifies and saves the Buyer, its shareholders, officers, directors or employees (collectively, the "Buyer" as used in this Article X) harmless from and against any and all losses, claims, damages, liabilities, costs, expenses or deficiencies including, but not limited to, reasonable attorneys' fees and other costs and expenses reasonably incident to proceedings or investigations or the defense or settlement of any claim or claims, incurred by or asserted against the Buyer or the Purchased Assets due to or resulting from any of the following: (a) the inaccuracy or breach of any representation or warranty of the Seller given in or pursuant to this Agreement; (b) any breach or default in the performance by the Seller of any of its covenants, obligations or agreements in or pursuant to this Agreement; (c) any liability or obligation of the Seller not expressly assumed by the Buyer pursuant to this Agreement; and (d) the ownership or use of the Seller's assets at any time prior to the Closing, or any incident, occurrence, condition or claim existing, arising or accruing prior to the Closing and relating to the operation or conduct of the Business or the ownership or use of the Seller's assets other than any liability or obligation of the Seller expressly assumed by the Buyer pursuant to this Agreement. The foregoing are collectively referred to as "Indemnifiable Damages." The term "Indemnifiable Damages" shall also include an amount of interest on the amount of such Indemnifiable Damages (computed before the application of this sentence), which interest shall be computed at the Applicable Rate in simple interest per annum from the Closing Date and until paid by the Seller. 10.2 Procedures for Making Claims. If and when the Buyer desires to assert a claim for Indemnifiable Damages against the Seller pursuant to the provisions of this Article X, the Buyer shall deliver to the Seller, reasonably promptly after the Buyer's receipt of a claim or specific and affirmative awareness of a potential claim, a certificate signed by an officer (the "Notice of Claim"): (a) stating that the Buyer has paid or accrued (or intends to pay or accrue) Indemnifiable Damages to which it is entitled to indemnification pursuant to this Article X and the amount thereof (to the extent then known); and (b) specifying to the extent possible (i) the individual items of loss, damage, liability, cost, expense or deficiency included in the amount so stated, (ii) the date each such item was or will be paid or accrued and (iii) the basis upon which Indemnifiable Damages are claimed. If the Seller shall object to such Notice of Claim, the Seller shall simultaneously deliver written notice of objection (the "Notice of Objection") to the Buyer within thirty (30) days after the Buyer's delivery of the Notice of Claim. The Notice of Objection shall set forth the grounds upon which the objection is based and state whether the Seller object to all or only a portion of the matter described in the Notice of Claim. If the Notice of Objection shall not have been so delivered within such fifteen (15) day period, all Seller shall be conclusively deemed to have acknowledged the correctness of the claim or claims specified in the Notice of Claim for the full amount thereof, and the Indemnifiable Damages set forth in the Notice of Claim shall be paid to the Buyer, on demand, in cash. 10.3 Participation in Defense of Third Party Claims. If any third party shall assert any claim against the Buyer which, if successful, might result in an obligation of the Seller to pay Indemnifiable Damages and which can be remedied to the sole satisfaction of the Buyer by the payment of money damages without further adverse consequence to the Buyer, the Seller, at the sole expense of the Seller, may assume the primary defense thereof with counsel reasonably acceptable to the Buyer, but only if and so long as: (i) the Seller diligently pursue the defense of such claim; and (ii) the Seller acknowledges to the Buyer in writing that the claim, if resolved or settled adversely to the Buyer, is one for which the Seller is obligated to indemnify the Buyer hereunder. If the Seller fails or is unable to so elect to assume the primary defense of any such claim, the Buyer may (but need not) do so, in which event the Buyer may defend, settle or compromise the claim, at the expense and cost of the Seller, in any such manner as the Buyer reasonably deems appropriate. 10.4 Survival of Representations and Indemnification. The Seller's obligation to pay Indemnifiable Damages shall survive the Closing of this transaction for ninety (90) days. 10.5 Offset. The Buyer shall be entitled to offset against the Note or any obligations owed by the Buyer to the Seller the sum of all Indemnifiable Damages that the Buyer is entitled to pursuant to Article X and all other obligations owed by the Buyer to the Seller under any other agreement, contract or other arrangement. No offset made by the Buyer pursuant to this Section shall constitute a default under the Note or, even if it is subsequently determined that no Indemnifiable Damages were due the Buyer, give rise to any right of acceleration under the Note or on the part of the Seller by reason of such offset. 10.6 Limitation on Indemnification. The maximum amount of Indemnifiable Damages which may be recovered by Buyer is $250,000. 10.7 Other Indemnification Provisions. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy (including without limitation any such remedy arising under Environmental Law) the Buyer may have with respect to the Seller, or the transactions contemplated by this Agreement. ARTICLE XI TERMINATION 11.1 Rights to Terminate. This Agreement may be terminated at any time prior to the Closing only as follows: (a) by mutual written consent of the Seller and the Buyer; (b) by the Seller by giving written notice to the Buyer if the Buyer is in breach of any representation, warranty or covenant under this Agreement (and the Seller is not then in breach of any representation, warranty or covenant); (c) by the Seller if the Seller enters into a merger, acquisition or other agreement (including an agreement in principle) to effect a Superior Proposal or the Board of Directors of the Seller resolves to do so; provided, however, that the Seller may not terminate this Agreement pursuant to this Section 11.1(c) unless (i) the Seller has delivered to Buyer a written notice of the Seller's intent to enter into such an agreement to effect the Superior Proposal, (ii) ten business days have elapsed following delivery to Buyer of such written notice by the Seller and (iii) during such ten-business- day period the Seller has fully cooperated with Buyer, including informing Buyer of the terms and conditions of the Business Combination and the identity of the person making the proposal for the Business Combination, with the intent of enabling Buyer to agree to a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected; provided, further, that the Company may not terminate this Agreement pursuant to this Section 11.1(c) unless at the end of such ten-business-day period the Board of Directors of the Seller continues reasonably to believe that the Business Combination constitutes a Superior Proposal when compared to the transactions contemplated hereby (taking into account any such modification as may be proposed by Buyer) and concurrently with such termination the Seller pays to Buyer the Termination Fee; (d) by the Buyer by giving written notice to the Seller if the Seller is in breach of any representation, warranty or covenant under this Agreement (and the Buyer is not then in breach of any representation, warranty or covenant); or (e) by the Buyer by giving written notice to the Seller if the Closing shall not have occurred on or before November 30, 2000. Each party's right to termination hereunder is in addition to any of the rights it may have hereunder or otherwise. 11.2 Effects of Termination. Notwithstanding any other provision of this Agreement, no termination of this Agreement shall release (i) the Seller from its obligation under Section 6.10 or Section 13.4 or (ii) any party of any Liabilities arising hereunder for any pre-termination breaches hereof or intentional misrepresentations made herein. ARTICLE XII DEFINITIONS 12.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the meanings specified in this Section 12.1 unless the context otherwise requires. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. "Agreement" means this Asset Purchase Agreement, together with all Exhibits and Schedules hereto, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof. "Assignment, Bill of Sale and Assumption Agreement" means that Assignment, Bill of Sale and Assumption Agreement, dated as of the Closing Date, between the Seller and the Buyer. "Assumed Liabilities" has the meaning set forth in Section 3.1. "Business" has the meaning set forth in the recitals to this Agreement. "Business Combination" has the meaning set forth in Section 6.10. "Buyer" has the meaning set forth in the first paragraph to this Agreement. "Closing" has the meaning set forth in Section 1.4. "Closing Date" has the meaning set forth in Section 1.4. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the United States Securities and Exchange Commission. "Commission Filings" has the meaning set forth in Section 4.22. "Contracts" has the meaning set forth in Section 1.2(e). "Environmental Claim" means any and all claims, demands, suits, actions, orders, directives, notices of noncompliance or violation, liens, investigations or administrative, regulatory or judicial proceedings by any person alleging potential liability or responsibility for enforcement, penalties, fines, forfeitures, damages, losses, costs, costs for Remedial Action, governmental response costs, natural resource damages, property damages, personal injury or bodily injury arising out of, based on or resulting from: (A) the presence, use, manufacture, processing, distribution, production, generation, handling, transport, storage, disposal, labeling, discharge, release, threatened release, treatment, control or cleanup of any Environmental Material at any location; or (B) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law; or (C) any and all claims by any person or Governmental Authority seeking damages, contribution, indemnification, costs, compensation or injunctive relief resulting from the presence or Environmental Release of any Environmental Material. "Environmental Law" means any Legal Requirement which relates to or otherwise imposes liability, obligations, responsibility, or standards with respect to zoning, land use, pollution, or the restoration, repair, remediation or protection of natural resources, human health or the environment (including ambient air, surface water, groundwater, land surface, subsurface soil strata), including without limitation, any Legal Requirement relating to the presence, use, manufacture, processing, distribution, production, generation, handling, transport, storage, disposal, labeling, discharge, release, threatened release, treatment, control or cleanup of any Environmental Material. "Environmental Material" means: (A) any petroleum substance, petroleum product, underground storage tank, underground cistern, radioactive material, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, PCB-containing Material; (B) any Hazardous Substance, Hazardous Material, Hazardous Waste or any other material, substance, chemical, waste, contaminant or pollutant which is now or hereafter defined as or determined to be hazardous, extremely hazardous, toxic, dangerous, restricted, or a nuisance, or words of similar import, under any Environmental Law; (C) any other material, substance, chemical, waste, contaminant, pollutant or exposure to which is now prohibited, limited or regulated by any Governmental Authority. "Environmental Permits" means all permits, licenses, authorizations, certifications, notices, approvals or authorizations under any Environmental Law. "Environmental Release" shall mean any release, spill, emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching or migration into the atmosphere, soil, surface water, groundwater or soil. "Equipment" has the meaning set forth in Section 1.2(d). "Excluded Assets" has the meaning set forth in Section 1.3. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "Governmental Authority" means the government of the United States of America and any other country, and any state, province, municipality or other governmental unit, or any agency, board, bureau, instrumentality, department or commission (including any court or other tribunal) of any of the foregoing. "Hazardous Material" means hazardous materials as defined under the regulations adopted pursuant to the Hazardous Materials Transportation Act. Such regulations appear at 49 C.F.R. Part 171, et seq. "Hazardous Substance" means hazardous substances as defined under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq. and under comparable state laws. "Hazardous Waste" means hazardous waste as defined under the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. 144.60, et seq. and other comparable state laws. "IND" means U.S. Food and Drug Administration ("FDA") Investigational New Drug application of Seller identified by the FDA as BB-IND 7423, together with all amendments thereto, whether active or inactive. "Indemnifiable Damages" has the meaning set forth in Section 10.1. "Insurance" has the meaning set forth in Section 4.12(a). "Intellectual Property" means all United States and foreign patents and patent applications (including international applications) that have been filed by Seller set forth in Schedule 4.11(a), including those abandoned by Seller after filing, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (ii) supporting documentation for the patents and patent applications identified in the preceding subsection (i), including laboratory notebooks, drug master documents, and similar documents, as are reasonably available to Seller, (iii) all trade secrets and know- how set forth or described in the supporting documentation identified in the preceding subsection (ii); (iv) all computer software owned or licensed by the Seller and that is either necessary to the operation of the Equipment or which was developed by or for the Seller for use with the intellectual property described in the foregoing subsections of this paragraph, (v) all copies and tangible embodiments thereof (in whatever form or medium) located at Seller's office or the office of Seller's patent counsel. Intellectual Property to be assigned includes, without limitation, the Intellectual Property set forth in the Intellectual Property Assignment. "Intellectual Property Assignment" means that certain Intellectual Property Assignment dated as of the Closing Date, between the Buyer and the Seller, in the form approved by the Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time. "IRS" means the Internal Revenue Service. "Knowledge" means, with respect to any party, the knowledge of such party after due inquiry and, if such party fails to make such inquiry, shall include the constructive knowledge of such facts as would have been learned had such due inquiry been made. "Latest Balance Sheet" means the balance sheet for the Seller dated as of the Latest Balance Sheet Date and attached in Schedule 4.8. "Latest Balance Sheet Date" has the meaning set forth in Section 4.8. "Leases" means that certain Lease Agreement dated May 26, 1999, between the Seller and Ben Scharpf, the Lease for the farm property located in Jefferson County, Wisconsin and the Lease between Buyer and Seller. "Leased Property" shall mean the Real Estate, as well as any other real estate heretofore owned or used by Seller in the conduct of the Business. "Legal Requirement" means any and all statutes, laws, codes, ordinances, regulations, rules, directives, policy, orders, judgments, writs, injunctions, rulings, decrees, bylaws or common law (whether presently in effect or hereinafter enacted, adopted, promulgated or issued) of any Governmental Authority. "Liability" means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including, without limitation, any liability for Taxes. "Lien" means any mortgage, pledge, lien, encumbrance, charge or other security interest of any kind. "Note" shall mean Buyer's non-negotiable promissory note payable to the Seller. "Notice of Claim" has the meaning set forth in Section 10.2. "Notice of Objection" has the meaning set forth in Section 10.2. "Owner" has the meaning set forth in the definition of "Subsidiary" set forth in Section 12.1. "PCB-containing Material" means polychlorinated biphenyls, including PCB-laden lubricating or hydraulic oils or transformers or other equipment which contain dielectric fluid containing polychlorinated biphenyls. "Permits" has the meaning set forth in Section 1.2(f). "Permitted Liens" means municipal and zoning ordinances, recorded easements, covenants and restrictions provided the same do not prohibit or materially interfere with the present use, or materially affect the present value, of the Real Estate and general taxes levied on or after January 1, 2000 and not yet due or payable. "Person" means an individual, partnership, corporation, limited liability company, firm, enterprise, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Purchase Price" has the meaning set forth in Section 2.1(a). "Purchased Assets" has the meaning set forth in Section 1.2. "Real Estate" has the meaning set forth in Section 1.2(c). "Records" means books of account, ledgers, forms, records, documents, files, invoices, lab notebooks, archived batch records, chemical waste disposal records, vendor or supplier lists, plans and other data which are necessary to or desirable for the ownership, use, maintenance or operation of the Purchased Assets and which are owned or used by the Seller, including, without limitation, all blueprints and specifications, all environmental control records, environmental impact reports, statements, studies and related documents, handbooks, technical manuals and data, engineering specifications and work papers, all cost information, asset history records and files, all maintenance and repair records, all correspondence, notices, citations and all other documents received from, sent to or in the Seller's possession related to the Purchased Assets in connection with any Governmental Authority (including, without limitation, federal, state, county or regional environmental protection, air or water quality control, occupational health and safety, land use, planning or zoning and any alcohol, beverage or fire prevention authorities), all plans, maps and surveys of the Real Estate, and all plans and designs of buildings, structures, fixtures and equipment. "Remedial Action" means any action taken or required to be taken as a result of Environmental Law or by demand of Governmental Authority in response to a known or suspected condition in the environment (including ambient air, surface water, groundwater, land surface or subsurface soil strata), including, without limitation, sampling, investigation, monitoring, remedial action, remediation, removal, response, restoration, repair, replacement, treatment, clean-up and corrective action. "Restricted Interests" has the meaning set forth in Section 1.5(a). "Securities Act" means the Securities Act of 1993, as amended, including any rules and regulations promulgated thereunder. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended, including any rules and regulations promulgated thereunder. "Seller" has the meaning set forth in the first paragraph to this Agreement. "Senior Secured Notes" has the meaning set forth in Section 2.1(a). "Subsidiary" means, with respect to any Person (the "Owner") any corporation or other Person of which securities or other interests having the power to elect a majority of that Person's board of directors of similar governing body, or otherwise having the power to direct the business and policies of that Person are held by the Owner or one or more of its Subsidiaries. When used without reference to a particular Person, Subsidiary" means a Subsidiary of the Seller. "Superior Proposal" has the meaning set forth in Section 6.10. "Tax" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not. "Termination Fee" has the meaning set forth in Section 13.4. 12.2 Interpretation. Unless otherwise expressly provided or unless the context requires otherwise, (a) all references in this Agreement to Articles, Sections, Schedules and Exhibits shall mean and refer to Articles, Sections, Schedules and Exhibits of this Agreement; (b) all references to statutes and related regulations shall include all amendments of the same and any successor or replacement statutes and regulations; (c) words using the singular or plural number also shall include the plural and singular number, respectively; (d) references to "hereof," "herein," "hereby" and similar terms shall refer to this entire Agreement (including the Schedules and Exhibits hereto); and (e) references to any Person shall be deemed to mean and include the successors and permitted assigns of such Person (or, in the case of a Governmental Authority, Persons succeeding to the relevant functions of such Person). 12.3 Other Terms. Except as otherwise specifically provided, each accounting term used herein shall have the meaning given to it under GAAP. ARTICLE XIII MISCELLANEOUS 13.1 Survival of Representations and Warranties. All of the representations and warranties of the parties contained in this Agreement shall survive the Closing hereunder for a period of ninety (90) days. 13.2 Benefit and Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, successors, assignees, and beneficiaries in interest; provided, however, that this Agreement may not be assigned by the either party without the prior written consent of the other party. 13.3 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Wisconsin (regardless of such State's conflict of laws principles), and without reference to any rules of construction regarding the party responsible for the drafting hereof. 13.4 Expenses. (a) Except as otherwise herein provided, all expenses incurred in connection with this Agreement or the transactions herein provided for shall be paid by the party incurring such expenses and costs. (b) Notwithstanding any provision in this Agreement to the contrary, if this Agreement is terminated by the Seller pursuant to Section 11.1(c) after receipt of a Superior Proposal, then the Seller shall reimburse the Buyer upon demand for all out-of- pocket fees and expenses incurred by or on behalf of the Buyer in connection with this Agreement and the transactions contemplated herein, including all reasonable fees of counsel, accountants, consultants, and the Seller shall pay to the Buyer the Termination Fee, as defined below, in cash, such payment to be made promptly, but not less than the second business day following the date of such termination. For purposes of this Agreement, "Termination Fee" means $100,000. 13.5 Submission to Jurisdiction. Each of the Buyer and the Seller submits to the jurisdiction of any state or federal court sitting in Madison, Wisconsin, in any action or proceeding arising out of or relating to this Agreement and all agreements and transactions contemplated hereby, and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each of the Buyer and the Seller also agrees not to bring any action or proceeding arising out of or relating to this Agreement or any agreement or transaction contemplated hereby in any other court. Each of the Buyer and the Seller waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or in equity. 13.6 Notices. Any and all notices, demands, and communications provided for herein or made hereunder shall be given in writing and shall be deemed given to a party at the earlier of (i) when actually delivered to such party, (ii) when facsimile transmitted to such party to the facsimile number indicated for such party below (or to such other facsimile number for a party as such party may have substituted by notice pursuant to this Section 13.6) or (iii) when mailed to such party by registered or certified U.S. Mail (return receipt requested) or sent by overnight courier, confirmed by receipt, and addressed to such party at the address designated below for such party (or to such other address for such party as such party may have substituted by notice pursuant to this Section 13.6): (a) If to the Buyer: General Counsel Promega Corporation 2800 Woods Hollow Road Madison, WI 53711-5399 Facsimile Number: (608) 277-2660 With a copy to: Tod B. Linstroth, Esq. Michael Best & Friedrich LLP One South Pinckney Street Suite 700 Madison, WI 53703 Facsimile Number: (608) 283-2275 (b) If to the Seller: Susan Maynard, Secretary Ophidian Pharmaceuticals, Inc. 5445 East Cheryl Parkway Madison, WI 53711 With a copy to: Michael Skindrud, Esq. LaFollette Godfrey & Kahn One East Main Street Madison, WI 53701 13.7 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, provided that all such counterparts, in the aggregate, shall contain the signatures of all parties hereto. 13.8 Headings. All Section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Agreement. 13.9 Amendment, Modification and Waiver. This Agreement may not be modified, amended or supplemented except by mutual written agreement of all the parties hereto. Any party may waive in writing any term or condition contained in this Agreement and intended to be for its benefit; provided, however, that no waiver by any party, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed as a further or continuing waiver of any such term or condition. Each amendment, modification, supplement or waiver shall be in writing signed by the party or the parties to be charged. 13.10 Mutual Release of Certain Liabilities of Each Party to the Other Upon Closing. Upon completion of Closing and without any further action to be taken by either party, each party to this Agreement hereby releases the other party, fully and completely, from those obligations and liabilities that may be owed to the other on the date of Closing under their Lease Agreement for office and laboratory space and related furniture and fixtures at 5445 East Cheryl Parkway, Madison, Wisconsin, and their Disclosure of Technology with Application to Incidental Markets Agreement dated September 23, 1991. All other liabilities between the parties, including liabilities under this Agreement, the Note and the Assignment, Bill of Sale and Assumption Agreement, shall survive the Closing as set forth herein and therein. 13.11 Entire Agreement. This Agreement and the Exhibits and Schedules attached hereto represent the full and complete agreement of the parties with respect to the subject matter hereof and supersede and replace any prior understandings and agreements among the parties with respect to the subject matter hereof and no provision or document of any kind shall be included in or form a part of such agreement unless signed and delivered to the other party by the parties to be charged. 13.12 Third-Party Beneficiaries. No third parties are intended to benefit from this Agreement, and no third-party beneficiary rights shall be implied from anything contained in this Agreement. 13.13 Publicity. The Buyer and the Seller agree that no publicity announcements concerning the terms of this Agreement or concerning the transactions contemplated hereby shall be made without the mutual consent of the Buyer and the Seller, except that Seller may make disclosures it deems necessary as a publicly traded company. 13.14 Specific Performance. Each of the Buyer and the Seller acknowledges and agrees that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Buyer and the Seller agrees that the other parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and all agreements and transactions contemplated hereby, and to enforce specifically this Agreement and all agreements and transactions contemplated hereby, and the terms and provisions hereof or thereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter (subject to the provisions set forth in Section 13.5), in addition to any other remedy to which it may be entitled, at law or in equity. [Signature Page Follows] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written. PROMEGA CORPORATION By: /s/ William A. Linton -------------------------------- William A. Linton, President OPHIDIAN PHARMACEUTICALS, INC. By: /s/ Margaret van Boldrik ------------------------------------ Margaret van Boldrik, Vice President [Exhibits and Schedules have been omitted based on Rule 601(b)(2) of Regulation S-K. Such Exhibits and Schedules are described in the Agreement. The Registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, any or all of such omitted Exhibits or Schedules.] EX-99.B 3 0003.txt Exhibit B Ophidian Pharmaceuticals, Inc. Proxy Statement OPHIDIAN PHARMACEUTICALS, INC. Plan of Dissolution and Liquidation This Plan of Dissolution and Liquidation (this "Plan") is intended to accomplish the dissolution and complete liquidation of Ophidian Pharmaceuticals, Inc., a Delaware corporation (the "Company"), in accordance with Section 275 and other applicable provisions of the General Corporation Law of Delaware ("DGCL") and Section 331 of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Approval and Adoption of the Plan by the Board of Directors. The Company's Board of Directors (the "Board") has adopted the Plan and called a meeting of the Company's holders of Common Stock, par value $0.0025, (the "Stockholders") to approve the Plan. 2. Approval of the Plan by the Stockholders. If the Plan is approved by the Stockholders, the Plan shall constitute the adopted Plan of the Company as of the date on which the Stockholder approval is obtained (the "Adoption Date"). The Company shall file a certificate of dissolution ("Certificate of Dissolution") with the Secretary of State of the State of Delaware in accordance with the DGCL immediately after the Adoption Date; provided, however, that the Board is authorized, in its absolute discretion as it deems necessary, appropriate or advisable, to delay the filing of the Certificate of Dissolution until after the Company has completed the sale of substantially all of its assets to Promega Corporation. The dissolution shall be effective upon the filing of the Certificate of Dissolution or such later date within ninety (90) days of the filing of the Certificate of Dissolution as specified in the Certificate of Dissolution (the "Effective Date"). 3. Dissolution and Liquidation Period. Following the Effective Date, the Company shall not engage in any business activities except to the extent necessary to preserve the value of its assets, wind up its business affairs, including any liquidation of its assets, and distribute its assets in accordance with this Plan. Further, after the Effective Date, the steps set forth below shall be completed at such times as the Board, in its absolute discretion, deems necessary, appropriate or advisable to maximize the value of the Company's assets upon liquidation; provided that such steps may not be delayed longer than is permitted by applicable law. Without limiting the generality of the foregoing, the Board may instruct the officers of the Company to delay the taking of any of the following steps until the Company has performed such actions as the Board or such officers determine to be necessary, appropriate or advisable for the Company to maximize the value of the Company's assets upon liquidation; provided, that such steps may not be delayed longer than is permitted by applicable law. a. The cessation of all of the Company's business activities and the withdrawal of the Company from any jurisdiction in which it is qualified to do business, except and insofar as necessary for the sale of its assets and for the proper winding up of the Company pursuant to Section 278 of the DGCL; b. The negotiation and consummation of sales of all of the assets and properties of the Company by the Company's officers, insofar and on such terms as the Board deems such sales to be necessary, appropriate or advisable; c. In accordance with Section 281(b) of the DGCL, the payment and discharge of, or provision as will be reasonably likely to provide sufficient compensation for: (1) all claims and obligations, including all contingent, conditional or unmatured contractual claims, known to the Company; (2) any claim against the Company which is the subject of a pending action, suit or proceeding to which the Company is a party; and (3) claims that have not been made known to the Company or that have not arisen but that, based on facts known to the Company, are likely to arise or to become known to the company within ten (10) years after the Effective Date. d. The distribution of remaining funds of the Company and the remaining unsold assets of the Company, if any, to its stockholders. 4. Authority of Officers and Directors. After the Effective Date, the Board and the officers of the Company shall continue in their positions for the purpose of winding up the affairs of the Company as contemplated by Delaware law. The Board may appoint officers, hire employees and retain independent contractors in connection with the winding up process, and is authorized to pay to the Company's officers, directors and employees, or any of them, compensation or additional compensation above their regular compensation, in money or other property, in recognition of the extraordinary efforts they, or any of them, will be required to undertake, or actually undertake, in connection with the successful implementation of this Plan. Adoption of this Plan by holders of a majority of the outstanding shares of Common Stock shall constitute the approval of the Company's Stockholders of the Board's authorization of the payment of any such compensation. The adoption of the Plan by the Company's Stockholders shall constitute full and complete authority for the Board and the officers of the Company, without further stockholder action, to do and perform any and all acts and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character which the Board or such officers deem necessary, appropriate or advisable: (i) to sell, dispose, convey, transfer and deliver the assets of the Company (ii) to satisfy or provide for the satisfaction of the Company's obligations in accordance with Sections 281(b) of the DGCL, (iii) to distribute all of the remaining funds of the Company and any unsold assets of the Company to the Company's stockholders, and (iv) to dissolve the Company in accordance with the laws of the State of Delaware and cause its withdrawal from all jurisdictions in which it is authorized to do business. 5. Conversion of Assets Into Cash or other Distributable Form. Subject to approval by the Board, the officers, employees and agents of the Company shall, as promptly as feasible and whether before or after the Effective Date, proceed to collect all sums due or owing to the Company, to sell and convert into cash any and all corporate assets and, out of the assets of the Company, to pay, satisfy and discharge or make adequate provision for the payment, satisfaction and discharge of all debts and liabilities of the Company pursuant to Section 3 above, including all expenses of the sale of assets and of the liquidation and dissolution provided for by the Plan. 6. Contingency Reserve. If and to the extent deemed necessary, appropriate or desirable by the Board in its absolute discretion, the Company may establish and set aside a reasonable amount (the "Contingency Reserve") for the payment of expenses and liabilities, including expenses in connection with completion of the Plan. 7. Professional Fees and Expenses. It is specifically contemplated that the Board may authorize the payment of a retainer fee to a law firm or law firms selected by the Board for legal fees and expenses of the Company, including, among other things, to cover any costs payable pursuant to the indemnification of the Company's officers or members of the Board provided by the Company pursuant to its Certificate of Incorporation and Bylaws or the DGCL or otherwise. In addition, in connection with and for the purpose of implementing and assuring completion of this Plan, the Company may, in the absolute discretion of the Board, pay any brokerage, agency and other fees and expenses of persons rendering services to the Company in connection with the collection, sale, exchange or other disposition of the Company's property and assets and the implementation of this Plan. 8. Indemnification. The Company shall continue to indemnify its officers and directors, in accordance with its Bylaws and any contractual arrangements, for actions taken in connection with this Plan and the winding up of the affairs of the Company. The Board, in its absolute discretion, is authorized to obtain and maintain insurance as may be necessary, appropriate or advisable to cover the Company's obligations hereunder. 9. Liquidating Trust. The Board may, if the Board in its absolute discretion deems it necessary, appropriate or desirable, establish a liquidating trust (the "Liquidating Trust") and transfer assets and liabilities of the Company to the Liquidating Trust for the purposes of prosecuting and defending suits, by or against the company, enabling the company to settle and close its business, to dispose of and convey the property of the Company, to discharge the liabilities of the Company and to distribute to the Company's stockholders any remaining assets. The Board shall determine, in its absolute discretion, whether and when to transfer all of the Company's remaining assets to the Liquidating Trust; provided, however, if all of the Company's assets are not distributed within three years of the Effective Date, the Company shall transfer all of its remaining assets, including any Contingency Reserve to the Liquidating Trust. The Liquidating Trust may be established by agreement with one or more Trustees selected by the Board. If the Liquidating Trust is established by agreement with one or more Trustees, the trust agreement establishing and governing the Liquidating Trust shall be in form and substance determined by the Board. In the alternative, the Board may petition the Delaware Court of Chancery for the appointment of one or more Trustees to conduct the liquidation of the Company, subject to the supervision of the Court. Whether appointed by an agreement or by the Court, the Trustees shall in general be authorized to take charge of the Company's property, and to collect the debts and property due and belonging to the Company, with power to prosecute and defend, in the name of the Company, or otherwise, all such suits as may be necessary or proper for the foregoing purposes, and to appoint an agent under it and to do all other acts which might be done by the Company that may be necessary, appropriate or advisable for the final settlement of the unfinished business of the Company. 10. Liquidating Distributions. Liquidating distributions, in cash or in kind, shall be made from time to time after the Effective Date, as provided in Section 3 above, to the Company's stockholders, pro rata in accordance with the respective number of shares then held of record; provided that in the opinion of the Board adequate provision has been made for the payment, satisfaction and discharge of all known, unascertained or contingent debts, obligations and liabilities of the Company (including costs and expenses incurred and anticipated to be incurred in connection with the sale of assets and complete liquidation of the Company). All determinations as to the time for and the amount and kind of distributions to stockholders shall be made in the exercise of the absolute discretion of the Board and in accordance with Section 281(b) of the DGCL. Any assets distributable to any creditor or stockholder of the Company who is unknown or cannot be found, or who is under a disability and for whom there is no legal representative, shall escheat to the state or be treated as abandoned property pursuant to applicable state law. 11. Abandonment of the Plan. If for any reason the Board determines that such action would be in the best interests of the Company and its stockholders, it may abandon the dissolution, the Plan and the transactions contemplated hereby, notwithstanding stockholder approval, to the extent permitted by the DGCL. Upon such abandonment, the dissolution and the Plan shall be void. 12. Liquidation under Section 331. It is intended that this Plan shall be a plan of complete liquidation within the terms of Section 331 of the Code. The Plan shall be deemed to authorize such action as, in the opinion of counsel for the Company, may be necessary to conform with the provisions of said Section 331. 13. Filing of Tax Forms. The appropriate officer of the Company is authorized and directed, within thirty (30) days after the Effective Date, to execute and file a United States Treasury Form 966 pursuant to Section 6043 of the Code and such additional forms and reports with the Internal Revenue Service as may be appropriate in connection with this Plan and the carrying out thereof. 14. Board Authorization. The Board is authorized, without further action by the Company's Stockholders, to do and perform, any and all acts, and to make, execute, deliver or adopt any and all agreements, resolutions, conveyances, certificates and other documents of every kind which are deemed necessary, appropriate or desirable, in the absolute discretion of the Board, to implement this Plan and the transactions contemplated hereby, including, without limiting the foregoing, all filings or acts required by any state or federal law or regulation to wind up its affairs. -----END PRIVACY-ENHANCED MESSAGE-----