EXHIBIT 10(n)
LOCK-UP AGREEMENT
THIS AGREEMENT made and entered into as of _____________, 1998,between
HACH COMPANY, a Delaware corporation ("HACH"), and Harry T. Stephenson
(the "STOCKHOLDER"), a stockholder of ENVIRONMENTAL TEST SYSTEMS, INC., an
Indiana corporation ("ETS").
RECITALS
A. WHEREAS, Hach, Hach Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Hach ("MERGERCO"), and ETS have entered into an
Agreement and Plan of Merger dated as of January ____, 1998 (the "MERGER
AGREEMENT"), providing for the merger (the "MERGER") of ETS with and into
Mergerco and the conversion of shares of ETS Common Stocks (as defined in the
Merger Agreement) into shares of Hach Common Stocks (as defined in the Merger
Agreement) on the terms and conditions of the Merger Agreement. All capitalized
terms not otherwise defined herein shall have the meaning given them by the
Merger Agreement.
B. Hach's and Mergerco's obligations under the Merger Agreement are
conditioned upon, among other things, the Stockholder entering into this Lock-up
Agreement.
C. The Stockholder desires to enter into this Lock-up Agreement.
D. Contemporaneously herewith, the transactions contemplated in the
Merger Agreement are being consummated.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, Hach and
the Stockholder agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
represents and warrants to Hach that:
(a) Set forth on Schedule 1 attached hereto are the number of shares
of ETS Common Stocks owned by the Stockholder (including those owned of
record only, those owned beneficially only and those owned both of record
and beneficially), the numbers of the stock certificates which represent
such shares of ETS Common Stocks and, in each case in which a stock
certificate is registered in a name other than the name of the beneficial
owner of such ETS Common Stocks represented thereby, the name of such
beneficial owner.
(b) Set forth on Schedule 1 attached hereto are the number of shares
of Hach Class A Common Stock and Hach Common Stock, each par value $1.00
per share, being acquired by the Stockholder in connection with the Merger
(the "HACH SHARES"). The Hach Shares are being acquired for the account of
the beneficial owner of the shares of ETS Common Stocks with respect to
which the Hach Shares are being issued. The Shares are being acquired for
investment purposes and will not be transferred or sold except in
accordance with the requirements of the Securities Act of 1933 (the
"SECURITIES ACT").
(c) The Stockholder has not entered into any agreement or made any
commitment to sell or otherwise dispose of any of the Hach Shares and does
not know of any other Surrendering Stockholder that has entered into any
agreement or made any commitment to sell or otherwise dispose of Hach
Common Stocks delivered to such Surrendering Stockholder in connection with
the Merger.
(d) The Stockholders received and reviewed the Proxy
Statement/Prospectus included as a part of the Registration Statement (as
defined below).
2. HACH REPORTS. Hach has filed with the Securities Exchange Commission
("SEC") a registration statement on Form S-4 (together with all amendments
thereto, the "REGISTRATION STATEMENT") in connection with the registration under
the Securities Act of the shares of Hach Common Stocks to be issued pursuant to
the Merger and the Registration Statement is effective. All documents that Hach
is responsible for filing with the SEC in connection with the transactions
contemplated by the Merger Agreement comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder and the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
3. LOCK-UP.
(a) The Stockholder agrees that, without the express prior written
consent of Hach, he or she will not offer, sell, make any short sale of,
loan, encumber, grant any option for the purchase of, or otherwise dispose
of, by private placement, brokers' transaction or otherwise (the "RESALE
RESTRICTIONS"), any Hach Shares for a period of 180 days after the
Effective Time (the "LOCK-UP PERIOD"). The foregoing Resale Restrictions
are expressly agreed to preclude the holder of the Hach Shares from
engaging in any hedging or other transaction which may lead to or result in
a sale of Hach Shares during the Lock-up Period even if such Hach Shares
would be sold by someone other than the Stockholder. Such prohibited
hedging or other transactions would include without limitation any short
sale (whether or not against the box), any pledge or any purchase, sale or
grant of any right (including without limitation any put or call option)
with respect to any of the Hach Shares.
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(b) The Stockholder agrees and consents to the entry of stop transfer
instructions with the transfer agent for Hach's Common Stocks against any
transfer of shares of Hach's Common Stocks by the Stockholder in
contravention of the Resale Restrictions. The Stockholder understands that
Hach has relied upon the representations set forth in this letter in
proceeding with the Registration Statement. The Stockholder understands
that the agreements of the Stockholder are irrevocable and shall be binding
upon the Stockholder's heirs, legal representatives, successors and
assigns.
(c) Notwithstanding the foregoing, the Stockholder may transfer any
or all the Hach Shares either during his lifetime or on death by will or
intestacy to (i) his immediate family or (ii) to a trust the beneficiaries
of which are exclusively the undersigned and/or a member or members of his
immediate family, or (iii) to a charitable remainder trust the lifetime
beneficiaries of which are exclusively the undersigned and/or a member or
members of his immediate family; provided, however, that in any such case
it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding the Hach
Shares subject to the provisions of this Lock-up Agreement, and there shall
be no further transfer of such Hach Shares except in accordance with the
Lock-up Agreement. For purposes of this paragraph, "IMMEDIATE FAMILY"
shall mean spouse, lineal descendant, father, mother, brother or sister of
the transferor.
(d) Notwithstanding the foregoing, the restrictions set forth in
Section 3(a) of this Agreement shall terminate: (i) with respect to Hach
Common Stock which Stockholder holds as part of the Hach Shares, on the
third business day following the date on which the closing price of one
share of such class of stock, as quoted on The National Association of
Securities Dealers Automated Quotations - National Market System ("NASDAQ
CLOSING PRICE"), is less than [80% OF MERGER CLOSING VALUE]; (ii) with
respect to Hach Class A Common Stock which Stockholder holds as part of the
Hach Shares, on the third business day following the date on which the
NASDAQ Closing Price of one share of such class of stock is less than [80%
OF MERGER CLOSING VALUE]; or (iii) on the tenth day following written
notice from the Stockholder to Hach that a material breach of Hach's
obligations under the Merger Agreement has occurred; provided however that
Hach shall have the right to cure such breach during such ten day period.
4. RULE 145 LIMITATIONS. The Stockholder has also been advised and
agrees that if he is in fact an Affiliate (as defined in the Merger
Agreement) of ETS at the time the Merger is submitted for a vote of the
shareholders of ETS, the Hach Common Stocks received by him pursuant to the
Merger may be sold by him only (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and
other limitations of Rules 144 and 145 promulgated by the SEC under the
Securities Act or (iii) in reliance upon an exemption from registration that
is available under the Securities Act.
5. LEGENDS. Stockholder understands and agrees that stop transfer
instructions will be given to Hach transfer agent with respect to the Hach
Common Stocks to be received by me
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pursuant to the Merger and that there will be placed on the certificates
representing such shares of Hach Common Stocks, or any substitutions
therefor, a legend stating in substance as follows:
THESE SHARES WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THESE SHARES
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF SUCH RULE AND
AN AGREEMENT BETWEEN THE ORIGINAL HOLDER OF SUCH SHARES AND HACH
COMPANY. A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF HACH COMPANY.
Stockholder and Hach agree that the legend set forth above shall be
removed upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend if an effective registration
statement under the Securities Act with respect to the sale or other
disposition of the shares is one file, or Shareholder shall have delivered to
Hach (a) an opinion of counsel, in form and substance reasonably satisfactory
to Hach, to the effect that (i) the sale or disposition of the shares
represented by the surrendered certificates are the subject of an effective
registration statement under the Securities Act, or may be effected without
registration of the offering, sale and delivery of such shares under the
Securities Act, and (ii) the shares to be so transferred may be publicly
offered, sold and delivered by the transferee thereof without compliance with
the registration provisions of the Securities Act, and (b) a broker's
representation letter. Hach may waive the requirement of an opinion of
counsel depending upon the circumstances of the sale by the Stockholder of
Hach Common Stocks.
6. NOTICES. Except as otherwise provided in this Lock-up Agreement,
all notices or other communications hereunder shall be in writing and
delivered personally or sent by registered or certified mail, postage
prepaid. Unless otherwise specified by notice in writing to the other party,
such notices, if to Hach, shall be addressed to it at 5600 Lindbergh Drive,
Loveland, Colorado 80538, Attention: Corporate Secretary, and if to the
Stockholder, shall be addressed to the Stockholder at the address set forth
below the Stockholder's signature.
7. MISCELLANEOUS. This Lock-up Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. This Lock-up
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HACH COMPANY
By: ------------------------- --------------------------------------
Its:------------------------- Harry T. Stephenson
3201 East Lake Drive North
Elkhart, Indiana 46514
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