EXHIBIT 10.1
CONFIDENTIAL
AGREEMENT
This Agreement is made and dated as of April 18, 1999 among Embrex,
Inc., a North Carolina corporation ("Embrex"), Micro Cap Partners, L.P., a
Delaware limited partnership ("Micro Cap"), Palo Alto Investors, Inc., a
California corporation ("Palo Alto"), Xxxxxx Xxxxxx, a resident of Arkansas, and
Xxxxxxx X. Xxxxxxx, a resident of California. Xx. Xxxxxx and Xx. Xxxxxxx are
executing this Agreement only for purposes of Sections 3(a) and Sections 3(b)
and (c), respectively.
For good and valuable consideration, the receipt and sufficiency of
which the parties acknowledge, the parties hereby agree as follows:
1. Agreements of Embrex.
(a) As soon as practicable, but no later than Friday, April 23, 1999,
Embrex shall increase the number of directors of Embrex from seven to eight,
thereby creating a vacancy, and shall elect Xx. Xxxxxx as a director of Embrex.
(b) Embrex shall include Xx. Xxxxxx as a nominee for director at
Embrex's next Annual Meeting of Shareholders, scheduled for May 20, 1999 (the
"1999 Annual Meeting").
(c) As soon as practical, but no later than Friday, April 23, 1999,
Embrex shall amend its Amended and Restated Bylaws (restated effective May 21,
1998) so that Article III, Section 4 shall read in its entirety as follows:
"SECTION 4. Special Meetings. Special meetings of shareholders
may be called at any time by any two directors. Only business
within the purpose or purposes described in the meeting notice
specified in Section 6 of this Article may be conducted at a
special meeting of shareholders."
(d) Embrex shall immediately withdraw its preliminary proxy materials
filed with the Securities and Exchange Commission ("SEC") on April 9, 1999 and
on April 16, 1999.
(e) The Board of Directors of Embrex shall not at any time prior to
the Embrex 2000 Annual Meeting: (i) remove Xx. Xxxxxx as a director; or (ii)
amend or directly or indirectly render ineffective Article III, Section 4 of the
Embrex Amended and Restated Bylaws.
(f) If Xx. Xxxxxx shall be unable to fulfill his term as a director
of Embrex by reason of his death, disability or resignation because of
unexpected personal or family circumstances, Micro Cap shall have the right to
recommend to the Board of Directors another person or persons as candidates to
fill his vacancy and the Board of Directors shall consider such person or
persons. The Board of Directors and Micro Cap shall use their reasonable best
efforts to reach mutual agreement on a substitute for Xx. Xxxxxx and the Board
of Directors shall elect such mutually agreeable substitute to fill the vacancy
as soon as practicable.
2. Agreements of Micro Cap and Palo Alto.
(a) Micro Cap and Palo Alto shall immediately withdraw all of their
preliminary proxy materials regarding Embrex, including the preliminary proxy
materials filed with the SEC on April 14, 1999.
(b) Micro Cap and Palo Alto hereby withdraw in its entirety the
request dated December 17, 1999 that Embrex include in its proxy statement for
the 1999 Annual Meeting a proposal for Embrex to retain an investment banking
firm.
(c) Micro Cap and Palo Alto hereby withdraw in its entirety the
notice dated March 29, 1999, which was made by CEDE & Co. on behalf of Micro
Cap, regarding the presentation at the 1999 Annual Meeting of a proposal to
amend the provisions of Embrex's Bylaws pertaining to the call of special
meetings of shareholders and a proposal to retain an investment banking firm.
(d) Micro Cap and Palo Alto will not directly or indirectly make any
proposals at, or bring any matters before, the 1999 Annual Meeting.
(e) Micro Cap and Palo Alto acknowledge and agree that the only
proposals to be included in Embrex's proxy materials for the 1999 Annual Meeting
shall be the election of directors and the ratification of accountants.
(f) Micro Cap and Palo Alto acknowledge and agree that all requests
for inspection of corporate records and other information of Embrex made by or
on behalf of Micro Cap and Palo Alto have been satisfied or withdrawn.
3. Other Agreements.
(a) Xx. Xxxxxx consents and agrees to be nominated and elected, and
to serve, as a director of Embrex as contemplated by this Agreement.
(b) Xx. Xxxxxxx shall not make any proposals at, or bring any matters
before, the 1999 Annual Meeting. Xx. Xxxxxxx shall cause each of Micro Cap and
Palo Alto to perform its obligations under this Agreement.
(c) Micro Cap, Palo Alto and Xx. Xxxxxxx release Embrex, and Embrex
releases Micro Cap, Palo Alto and Xx. Xxxxxxx, from any and all claims, causes
of action, liabilities, costs and expenses, known or unknown, arising out of
related to any of the matters or materials referred to in this Agreement,
including, without limitation, relating to any proposals for the 1999 Annual
Meeting. The provisions of this Section 3(c) also shall apply to any affiliate,
director, officer, employee, agent, partner, or representative of Embrex, Micro
Cap, Palo Alto and Xx. Xxxxxxx. Nothing in this Agreement shall be construed as
an admission of any liability or otherwise by any party.
(d) This Agreement constitutes the full understanding of the parties
and a complete statement of the terms of their agreement with respect to the
subject matter contained herein and supersedes and cancels all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter. This Agreement, or any
provision hereof, may not be amended, changed, modified or waived, except by
written instrument signed by the parties hereto. This Agreement shall be
governed by and construed under the laws of the State of North Carolina.
(e) The parties acknowledge and agree that an award of money damages
would be inadequate for the breach of this Agreement, and any such breach would
cause irreparable harm; accordingly, the parties agree that in the event of any
breach of this Agreement, a party will be entitled, without the requirement of
posting a bond or other security, to equitable relief, including injunctive
relief and specific performance.
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(f) This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be deemed to be and original and
all of which counterparts taken together shall constitute but one and the same
instrument. This Agreement may be executed and delivered by facsimile.
EMBREX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
MICRO CAP PARTNERS, L.P.
By: Its General Partner,
Palo Alto Investors, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name:
Title:
PALO ALTO INVESTORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X.XXXXXXX
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