Tuck,
I am at least as likely to misread the filings as anyone, especially in this case as I still do not understand why management gave what seems to me to be a purchase option on the co. in which thay own the majority interest.
In any case please check out the following excerpts from the last S-1/A
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Relationship with PerkinElmer
On December 14, 1999, we entered into an investment agreement and a separate sales, marketing and distribution agreement with PerkinElmer. To permit PerkinElmer to notify and train its international distribution personnel, the distribution activities under the distribution agreement became active on January 1, 2000. The investment agreement became effective on January 26, 2000, upon obtaining the requisite approval of at least 85% of our equity holders. PerkinElmer, formerly EG&G, Inc., is a global leader in analytical instruments and a leading provider of high throughput screening tools for drug discovery with marketing, sales and distribution capabilities in over 100 countries. PerkinElmer is listed and traded on the New York Stock Exchange under the symbol “PKI” and is a component of the S&P 500 Index. We believe that this relationship with PerkinElmer will help us meet our business objectives and therefore be beneficial to our shareholders. We granted PerkinElmer the right to cause us to redeem our stock pursuant to negotiations held in connection with the transaction.
Pursuant to the investment agreement, PerkinElmer purchased 1,269,841 shares of our series P preferred stock at $6.30 per share. PerkinElmer also has an option to acquire additional shares of our callable common stock from us to increase its ownership interest to 19.9% of our outstanding capital stock, on a fully diluted basis. The pricing terms of this option are identical to the redemption price of the callable common stock described below. As part of the transaction, PerkinElmer entered into purchase agreements with holders of more than 95% of our then outstanding capital stock, options and warrants, which provide PerkinElmer with the option to purchase all of our equity securities held by these holders for a period of two years. The beginning date of this option period is extended as described below.
We have effected a reclassification so that upon completion of this offering, each outstanding share of our capital stock, other than shares of capital stock held by PerkinElmer, will be converted to callable common stock and each right to receive capital stock will be converted to the callable right to receive callable common stock. Upon completion of this offering, the purchase agreements entered into between PerkinElmer and our equity holders will terminate and PerkinElmer will have the right to cause us to redeem our callable securities for a period of two years after the date PerkinElmer first can exercise this right. We designed the callable common stock to facilitate and preserve PerkinElmer’s right to acquire our equity securities in a self-effectuating manner after this offering. At the time this offering is completed, we will have only two classes of capital stock outstanding, callable common stock and common stock. PerkinElmer will be the sole shareholder of common stock and all other shareholders will hold callable common stock. If PerkinElmer exercises its right to cause us to redeem our callable common stock, all outstanding shares of callable common stock will be redeemed, leaving PerkinElmer as our sole shareholder. PerkinElmer may first exercise its 19.9% option or call right on the earlier of 181 days following completion of this offering or 270 days after January 27, 2000.
PerkinElmer can cause us to exercise the call right by notifying us and funding the redemption price through a cash capital contribution. The redemption price will be the greater of:
- 120% of the trailing 30 trading day average closing price of our callable common stock ending on the day before PerkinElmer notifies us to exercise the right;
- 120% of the last reported sales price per share on the trading day before PerkinElmer notifies us to exercise the right; and
- the following price per share based on the number of days that have elapsed after the date PerkinElmer first can exercise its right to cause us to redeem our callable common stock (i) $6.75 for one through 182 days, (ii) $7.00 for 183 through 365 days, (iii) $7.50 for 366 through 548 days, and (iv) $8.00 for 549 through 730 days.
Alternatively, the purchase price for our callable common stock paid by PerkinElmer could equal the price of any third-party offer received by us and which our board of directors is prepared to accept, whether higher or lower than the prices described above. PerkinElmer is prohibited from exercising its right until the earlier of 181 days following completion of this offering or 270 days after January 27, 2000.
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PerkinElmer may convert its shares of common stock to callable common stock and sell those shares, subject to compliance with applicable securities laws. If PerkinElmer does sell any shares of callable common stock, it will be prohibited from causing us to redeem our callable common stock for a period of 30 days after the date of the sale. If PerkinElmer sells more than 50% of its common stock, including any shares converted into callable common stock, it will no longer have the right to cause us to redeem our callable common stock, nor will it have the right to acquire up to 19.9% of our outstanding capital stock.
Notice of any proposed redemption of the callable common stock will be given by mailing a copy of the notice to the holders of record of the shares of callable common stock.
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As part of the governance agreement with PerkinElmer, we have agreed to issue and disseminate a press release announcing the redemption if PerkinElmer exercises its right. In addition, we will notify Nasdaq to suspend trading and issue stop transfer instructions to our transfer agent.
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Payment Upon Exercise of Call Rights
On or prior to the date a call notice is first sent or given to our equity holders, PerkinElmer will deposit the aggregate redemption price of the shares to be redeemed with a depositary, in trust, for payment to the holders of the callable common stock. Each holder of shares of callable common stock will be paid the redemption price within three business days following the surrender of his certificates to the depositary, together with a letter of transmittal. We may instruct the depositary that any deposit remaining unclaimed at the expiration of two years revert to our general funds. Thereafter a holder will have no claim against the depositary but will have a claim as an unsecured creditor against us for the redemption price. Once properly called, all shares of callable common stock and securities convertible into, or exercisable for, callable common stock will be deemed cancelled and no longer outstanding for any purpose, and the holders will only have the right to receive the redemption price to which they are entitled.
SMH |
