Lawsuit Filed Against Promega and Bill Linton

STATE OF WISCONSIN
CIRCUIT COURT
Nathan F. Brand
2 East Mifflin Street, Suite 901
Madison, Wisconsin 53703
FILED
07-27-2016
DANE COUNTY
CIRCUIT COURT
DANE COUNTY, WI
2016CV001978
Honorable John W Markson
Branch 1
and
Case No. ____________________
Nathan F. Brand as trustee for the Nathan
and Ana Brand Family 2011 Irrevocable
Trust and the Nathan and Ana Brand
Children Trust
and
Nathan S. Brand, LLC
3711 De Garmo Lane
Miami, Florida 33133
and
Nathan S. Brand
3711 De Garmo Lane
and
Nathan S. Brand as trustee for the Nathan F.
Brand and Dora S. Brand Descendants Trust,
the Dorothea Brand Kennedy Trust, and the
Dorothea and Robert Kennedy Children
Trust
3711 De Garmo Lane
and
Ted D. Kellner,
100 East Wisconsin Avenue, Suite 2200
Milwaukee, Wisconsin 53202
and
Case Code: 30703
Arthur L. Herbst, Jr. as trustee for Mohs

Promega Trust
737 N. Michigan Avenue, Suite 1210
Chicago, Illinois 60611
Plaintiffs,
v.
William A. Linton
2800 Woods Hollow Road
and
Promega Corporation,
a domestic corporation,
Defendants.
SUMMONS
THE STATE OF WISCONSIN:

To each person or entity named above as a defendant:
You are hereby notified that the plaintiffs named above have filed a lawsuit or other legal
action against you. The complaint, which is attached, states the nature and basis of the legal action.
Within 20 days of receiving this summons, you must respond with a written answer, as that
term is used in Chapter 802 of the Wisconsin Statutes, to the complaint. The Court may reject or
disregard an answer that does not follow the requirements of the statutes. The answer must be sent
or delivered to the Court, whose address is:
Dane County Courthouse
215 S Hamilton St., Room 1000
Madison, WI 53703;
and to Hansen Reynolds Dickinson Crueger LLC, plaintiffs attorneys, whose address is:
316 North Milwaukee Street, Suite 200
Milwaukee, Wisconsin 53202.
You may have an attorney help you or represent you.
If you do not provide a proper answer within 20 days, the Court may grant judgment against
you for the award of money or other legal action requested in the complaint, and you may lose
your right to object to anything that is or may be incorrect in the complaint. A judgment may be
enforced as provided by law. A judgment awarding money may become a lien against any real
estate you own now or in the future, and may also be enforced by garnishment or seizure of
property.
Dated this 27th day of July 2016.
HANSEN REYNOLDS DICKINSON CRUEGER LLC
Electronically Signed By: /s/Timothy M. Hansen_____
Timothy M. Hansen (SBN 1044430)
John A. Busch (SBN 1016970)
Milwaukee, WI 53202
Phone: (414) 455-7676
Email: thansen@hrdclaw.com
jbusch@hrdclaw.com
OF COUNSEL:
SUSMAN GODFREY LLP
James T. Southwick
(pro hac vice application forthcoming)
Alexander L. Kaplan
Adam Carlis
1000 Louisiana Street, Suite 5100
Phone: (713) 651-9366
Email: jsouthwick@susmangodfrey.com
akaplan@susmangodfrey.com
acarlis@susmangodfrey.com
STATE OF WISCONSIN
CIRCUIT COURT
Nathan F. Brand
FILED
07-27-2016
DANE COUNTY
CIRCUIT COURT
DANE COUNTY, WI
2016CV001978
Honorable John W Markson
Branch 1
and
Case No. ____________________
Nathan F. Brand as trustee for the Nathan and
Ana Brand Family 2011 Irrevocable Trust and
the Nathan and Ana Brand Children Trust
Case Code: 30703
and
Nathan S. Brand, LLC
3711 De Garmo Lane
and
Nathan S. Brand
3711 De Garmo Lane
and
Nathan S. Brand as trustee for the Nathan F.
Brand and Dora S. Brand Descendants Trust,
the Dorothea Brand Kennedy Trust, and the
Dorothea and Robert Kennedy Children Trust
3711 De Garmo Lane
and
Ted D. Kellner,
100 East Wisconsin Avenue, Suite 2200
Milwaukee, Wisconsin 53202
and
Arthur L. Herbst, Jr. as trustee for Mohs
Promega Trust
1
737 N. Michigan Avenue, Suite 1210

Chicago, Illinois 60611
Plaintiffs,
v.
William A. Linton
and
Promega Corporation,
a domestic corporation,
Defendants.
Complaint
Plaintiffs Nathan F. Brand, individually and as trustee for the Nathan and Ana Brand
Family 2011 Irrevocable Trust and the Nathan and Ana Brand Children Trust; Nathan S. Brand,
LLC; Nathan S. Brand, individually and as trustee for the Nathan F. Brand and Dora S. Brand
Descendants Trust, the Dorothea Brand Kennedy Trust, and the Dorothea and Robert Kennedy
Children Trust; Ted D. Kellner; and Arthur L. Herbst, Jr., as trustee for the Mohs Promega Trust
(collectively, Plaintiffs) bring this original complaint for shareholder oppression against
defendants William A. Linton (Linton) and Promega Corporation (Promega) (collectively,
Defendants).
I.
Preliminary Statement
1.
This is an action for shareholder oppression under Wisconsin Statute
180.1430(2)(b). Wisconsin law protects minority shareholders from burdensome, harsh, and
wrongful conduct by directors and controlling shareholders, and from oppressive actions that
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threaten the reasonable expectations underlying their investments.
Plaintiffs need that
protection.
2.
The Plaintiffs are (or are trustees for) current and former Wisconsin residents who
bought shares of Promega stock at various times over the past 30 years. They have patiently
waited, for decades now, to realize the fair value of their investments. Plaintiffs investments in
Promega were not donations. They expected to be treated fairly the expectation of every
shareholder who entrusts capital to a company and they expected an opportunity to share
financially in the Companys success.
3.
For many years Promega dealt fairly with its shareholders. Although Promega
did not pay dividends, it reinvested the profits into the business, grew the business, practiced
sound corporate governance, and increased shareholder value.
4.
But over the past two years, Promegas Chief Executive Officer, William A.
Linton, has bullied, lied, threatened, and manipulated his way into a controlling interest in the
company. Linton then eliminated the board of directors independent oversight by forcing out
Promegas outside directors and replacing them with company insiders completely beholden to
Linton.
5.
Now, Linton is implementing a hundred year plan under which Promega will
remain a private company until at least 2078 100 years after its founding and well beyond the
life of most shareholders. Worse, Linton intends to operate Promega in support of his pet
personal venture, the Usona Institute, a non-profit psychedelic drug research institute Linton
created in 2014. Indeed, now that Linton is the controlling shareholder, he no longer operates
Promega for the best interests of the Plaintiff shareholders, but for himself personally, Usona,
and what he calls humanity at large.
6.
Under Lintons 100-year plan, Promega and its board will not consider any
opportunity for the Plaintiffs to receive a fair return on their investment until at least 2078. In
implementing this plan, Linton and the board he now controls have acted with a lack of probity
and good faith; their actions are oppressive and prejudicial to these Plaintiffs and violate all
notions of fairness and good faith.
7.
Linton knew that Promegas shareholders and board, which had been controlled
by independent outside directors, would not support a proposal to keep the company private until
2078. So Linton set out to eliminate dissent and seize control of the company through improper
means to the detriment of the Plaintiff shareholders.
8.
To achieve those ends, in 2014 Linton championed a Dutch auction process,
through which Promega repurchased stock from shareholders at the heavily-discounted price of
between $233 and $272 per share. Recognizing that many shareholders would not voluntarily
sell their stock at such a discount, Linton undermined the integrity of the Dutch auction by
personally engaging in a pattern of harsh and wrongful conduct designed to coerce shareholders,
many of whom were Promega employees, into selling their shares at low prices, including:
Eliminating positions to force employees to sell their shares;
Telling shareholders that the Dutch auction was their last chance to receive any value for
their investment;
Misrepresenting that the Dutch auction would be oversubscribed, so shareholders needed

to tender their shares below $272; and
Withholding recent financial data demonstrating that Promegas shares were worth
significantly more than the auction price.
9.
Lintons wrongful conduct convinced shareholders to tender approximately
325,000 shares into the Dutch auction. With those shares taken out of circulation, the percentage
of shares under Lintons control substantially increased, all without Linton spending a dime of
his own money.
10.
The Plaintiffs here, as well as some other shareholders, were deeply troubled by
Lintons bad faith conduct during the Dutch auction and were concerned (correctly, as it turns
out) that Linton would use his increased control to preclude any future opportunities for them to
receive fair value for their shares.
11.
In the summer of 2015, certain of these Plaintiffs took action. They formally
asked the Promega Board of Directors to investigate Lintons conduct during the Dutch auction,
and they secured financing and made a tender offer to buy all of Promegas outstanding shares
for $625 each more than double the price Promega had offered in the Dutch auction.
12.
In response to the tender offer, the independent directors on Promegas board
began organizing a good faith response in accordance with well-accepted procedures for fair
corporate governance. The independent directors established two special committees: one to
evaluate and respond to the tender offer, another to investigate the concerns about Lintons
behavior in the 2014 Dutch auction.
13.
Bill Lintons response was quite different. Linton refused to cooperate with the
independent special committees of Promegas board. He blocked the committees efforts to

investigate his actions. He frustrated their efforts to retain professional advisors and evaluate the
tender offer. He personally attacked the independent directors and challenged their loyalty to
Promega. He threatened to remove any director who acted independently and contrary to his
100-year plan.
14.
Lintons bullying and bad faith conduct caused the independent directors to resign
en masse in September 2015. Several of the resigning board members informed Promega and
Linton that they resigned because Linton intentionally and effectively prevented them from
fulfilling their fiduciary obligations to Promegas shareholders, including the Plaintiffs.
15.
Linton used this crisis to further cement his control by filling those vacated board
seats with Promega employees under his direct control and wholly lacking in independence.
16.
Linton and his submissive new board made no attempt to negotiate a better offer
or pursue any other alternative. They simply rejected the $625 offer, despite its obvious benefit
to Promegas shareholders other than Linton. On information and belief, Linton and the new
board took none of the steps that an independent board acting in good faith is required to take in
response to a tender offer.
17.
Today, Promega is far different than when Plaintiffs invested. When Plaintiffs
invested, Promega had no majority or controlling shareholder; now, Linton controls the company
following a series of company share repurchases that increased Lintons ownership percentage
without requiring him to purchase any additional shares.
When Plaintiffs invested, and
consistently over the last three decades, Promega had independent directors overseeing the
company and monitoring Linton; today there are no independent directors.
Linton has
improperly gained complete control over a board entirely beholden to him for their jobs and
positions. Instead of building towards a fair return on shareholder investment, Linton has
declared that Promega will remain under his (and Usonas) control for decades to come.
Plaintiffs are stranded as shareholders in a valuable company but with no prospect of receiving a
fair return. Bill Linton expropriated Plaintiffs investments for his own purposes.
18.
Mr. Linton and his current boards burdensome, harsh, and wrongful conduct is a
substantial departure from the standards of fair dealing and good faith to which these Plaintiffs
are entitled and on which they relied in making their investments in Promega. The Defendants
conduct has frustrated Plaintiffs expectations as shareholders and threatens to render their
investments valueless. Plaintiffs have been pushed to their limit. Through this action the
Plaintiffs seek to protect their rights as minority shareholders and obtain a fair price for their
shares.
II.
Parties and Jurisdiction
19.
The Plaintiffs are (or are trustees for) current and former Wisconsin residents and
long-time Promega shareholders, having acquired their stock in the 1980s, 1990s, and 2000s.
20.
Plaintiff Nathan S. Brand, LLC is a Florida Limited Liability Company
headquartered in Miami, Florida. Nathan S. Brand, LLC owns 137,152 shares of Promega
common stock acquired by Nathan S. Brand.
21.
Plaintiff Nathan S. Brand (Brand) is a Florida resident and University of
Wisconsin graduate who began investing in Promega in 1990. He also serves as trustee for the
Nathan F. Brand and Dora S. Brand Descendants Trust, the Dorothea Brand Kennedy Trust, and
the Dorothea and Robert Kennedy Children Trust, each of which hold Promega shares acquired
by both Brand and his father, Nathan F. Brand. Nathan S. Brand, as trustee, is designated to act
on behalf of beneficiaries who own 123,177 shares of Promega common stock.
22.
Plaintiff Nathan F. Brand is a Madison, Wisconsin resident who attended the
University of Wisconsin and graduated from Ripon College. He began investing in Promega in
1988. He also serves as trustee for the Nathan and Ana Brand Family 2011 Irrevocable Trust
and the Nathan and Ana Brand Children Trust, both of which hold Promega shares acquired by
Nathan F. Brand and his son, Nathan S. Brand. Nathan F. Brand owns and, as trustee, is
designated to act on behalf of beneficiaries who own, 69,979 shares of Promega common stock.
23.
Plaintiff Ted D. Kellner is a Milwaukee, Wisconsin resident and University of
Wisconsin graduate. Mr. Kellner began investing in Promega in 1993. Mr. Kellner owns 32,728
shares of Promega common stock.
24.
Plaintiff Arthur L. Herbst, Jr., as trustee for Mohs Promega Trust, is an Illinois
resident. The Mohs Promega Trust holds Promega shares acquired by University of Wisconsin
graduate Frederic E. Mohs during the 1990s. Mr. Herbst, as trustee, is designated to act on
behalf of beneficiaries who own 17,284 shares of Promega common stock.
25.
Defendant Promega Corporation is a private, closely held corporation
headquartered in Dane County, Wisconsin. Promegas principal place of business is located at

2800 Woods Hollow Rd., Fitchburg, Wisconsin 53711.
26.
Defendant William A. Linton is Promega Corporations Chief Executive Officer
and the Chairman of its board of directors. Mr. Linton is a Wisconsin resident.
27.
This Court has personal jurisdiction over both defendants pursuant to Wis. Stat.
801.05(1)(b), (c), and (d), because they reside and conduct substantial, non-isolated activities
in Wisconsin. Additionally, this Court has personal jurisdiction over both defendants pursuant to
Wis. Stat. 801.05(3) because their actions within this state gave rise to Plaintiffs damages.
28.
Venue is proper in Dane County, pursuant to Wis. Stat. 801.50(2)(a) and (c)
because Plaintiffs claims arose in this county, a substantial part of the events or omissions
giving rise to Plaintiffs claims occurred in this county, and Defendants conduct substantial, nonisolated activities within this county.
III.
Factual Background
29.
Founded in 1978 and incorporated in 1980 under the name Biotec, Inc.,
Promega develops and sells products for the life sciences industry.
30.
Promegas early shareholders were primarily company employees. But Promega
needed additional capital to grow, so it reached out to potential investors, including venture
capital firms and members of the local business community.
Plaintiffs early investments in Promega Corporation
31.
The Plaintiffs began acquiring shares in Promega in the late 1980s. They were
drawn to Promega because it exhibited strong growth potential and provided an opportunity to
invest in Wisconsin.
32.
Independent Directors:
Promega was also appealing because its board was
controlled by outside directors and there was no majority or even controlling shareholder.
Independent directors are important for good corporate governance because they have fewer
opportunities for conflicts of interest, are not subject to the same pressures from company
management as those whose professional standing within the company and compensation are
determined by company management, and bring perspectives available only with distance from
the companys day-to-day operations.
33.
Until 2015, Promegas directors came from outside the company and were
independent from Lintons control. When Nathan F. Brand first acquired his shares in 1988,
Promega had five directors other than Linton and all five were outside directors:
a.
Ian R. N. Bund joined the board in 1986. Mr. Bund was not a Promega
officer or employee. He was a Managing Director at MBW Management, Inc.
b.
Donald C. Paul joined the board in 1983. Mr. Paul was not a Promega
officer or employee. He was a Vice President at Oscar Mayer.

c.
Frank J. Pelisek joined the board in 1986. Mr. Pelisek was not a Promega
officer or employee. He was a Partner in the law firm of Michael, Best & Friedrich.
d.
William S. Reznikoff joined the board in 1981. Mr. Reznikoff was not a
Promega officer or employee.
He was a biochemistry professor at Johns Hopkins
University.
e.
Robert A. Comey joined the board in 1987.
Mr. Comey was not a
Promega officer or employee. He was a Vice President at InvestAmerica Venture Group,

Inc.
34.
Plaintiffs invested in Promega expecting Promega would continue to be managed
by outside directors independent of Lintons control. Until 2015, Linton spoke in favor of
independent directors and reiterated to Plaintiffs on numerous occasions the importance of
having a board dominated by independent directors to provide oversight for shareholders.
35.
No Controlling/Majority Shareholder:
No shareholder owned a majority of
Promegas outstanding shares when Plaintiffs invested and no single shareholder could exercise
control. This is important protection for minority shareholders who might otherwise be subject
to the whims of that majority shareholder. The absence of a controlling shareholder was an
important foundation for Plaintiffs decisions to invest in Promega.
36.
In 1988, Linton was Promegas largest shareholder, but he owned only 32.5% of
the outstanding shares.
By 1995, Lintons percentage had decreased to 27.8%.
Plaintiffs
invested in Promega expecting the company would continue without a controlling shareholder.
10
37.
Future Fair Value Opportunities: When Plaintiffs invested in Promega, all signs
pointed to Promega being on a path to an IPO, sale, or merger. These events result in each
shareholder receiving (or obtaining the right to receive) his or her representative share of the
enterprises value unreduced by any minority or marketability discounts. This type of return is
referred to as fair value.
38.
By 1988, Promega already had obtained substantial equity investments from
venture capital funds, including Doan Resources L.P., MorAmerica Capital Corporation, Venture
Investors, and Silicon Valley firm Greylock Partners.
These investors provide capital to
emerging private companies anticipating a return on their investment through a transaction that
yields fair value, such as an initial public offering, merger, or sale. The fact that Promega
solicited and received capital through equity investments from venture capital funds
demonstrated to Plaintiffs and other investors that Promega was committed to provide its
shareholders with a fair value return.
39.
So too did Promegas use of stock options to attract and retain quality employees.
Promega began issuing stock options in 1981 and continued for many years. The entire premise
of Promegas stock option plan was that these options had future value tied to Promegas
performance and, if Promega succeeded, the option-holders could reap financial reward by
exercising their options and receiving value for their Promega stock.
40.
Promega and Linton continued to raise shareholder expectations about a future
fair value event long after the Brand familys initial investments.
41.
In August 1990, Promega entered into an investment agreement with the German
multinational firm Boehringer Ingelheim International GmbH (Boehringer) through which

Boehringer acquired approximately 20% of Promegas capital stock for $45 per share.
11
Promegas solicitation of an investment of this size from an investor like Boehringer, a rational
economic actor interested in earning a fair value return on its investment, demonstrated that
Promega would work to provide a fair value return to its shareholders (including Boehringer).
42.
Another aspect of the Boehringer transaction confirmed Plaintiffs expectation
that Promega would offer shareholders an opportunity to exit at a fair value: Promegas August
31, 1990 letter to shareholders announcing the transaction detailed a recent offer to purchase
Promega that the board considered in October 1989. The letter explained that the potential
purchaser sought an exchange of all Promega Shares for common stock of [the acquiring
company] on the basis of one share of Promega stock for approximately one share of the
acquiring companys stock. The acquiring companys stock was valued at $24 per share at the
time of the offer but declined to approximately $10 per share shortly after the date on which
the offer was to close.
43.
According to the August 31, 1990 letter from Promegas Board of Directors: It
was the consensus of the Directors that given the consideration offered, the performance of
Promegas business operations and the forecasted performance of business operations which
have been under development, the offer was inadequate and not in the best interest of Promega
and its shareholders. This disclosure confirmed to shareholders that Promegas board would
focus on the best interests of its shareholders as a whole when considering such opportunities.
44.
Relying on the independence of the board, the absence of a controlling
shareholder, and the evidence that Promega would provide its shareholders an opportunity to sell
their shares at fair value, the Brand Family increased its investment in the company and Ted
Kellner and Fred Mohs began investing.
12
45.
Promega and Linton continued to cultivate those expectations. Throughout the
1990s, Plaintiffs purchased additional Promega shares.

Promega plans to conduct public offerings but backs away
46.
In June 2000, Linton reached out to Nathan F. Brand, Nathan S. Brand, and Ted
Kellner to discuss Lintons plan to conduct an initial public offering of Promegas stock. Linton
told Kellner that Promega had engaged R. W. Baird & Co. to advise on the public offering.
After years of owning Promega shares (12 years for the Brand family and 7 years for Kellner), it
appeared they would receive a fair return on their investment.
47.
By June 15, 2000, Linton had identified underwriters for the IPO and contacted
the Brand family. Linton requested that both Brand and his father, Nathan F. Brand, agree to
certain lock-up restrictions to facilitate the planned Promega IPO. Nathan F. Brand agreed to
the lock-up restrictions on all 222,911 shares then under his control.
48.
On June 21, 2000, Linton informed shareholders that Promega regularly
considers transactions that would provide shareholders fair value for their shares and alerted
them to the potential for an upcoming IPO: As you know, Promega is committed to taking
every appropriate opportunity to build value in the financial returns on your holdings. As such,
Promega regularly considers various capitalization options available to continue building the
long-term strength of the company, including an initial public offering.
49.
Upon information and belief, Linton cancelled the IPO later that summer due to
market conditions.
But Lintons willingness to take Promega public confirmed Plaintiffs
expectation that they would have future opportunities for a fair value return. Based on that
understanding, both the Brand family and Kellner purchased additional shares of Promega.
13
50.
Promega continued to tell shareholders that it was working towards an initial
public offering. Promegas proxy statement for the July 11, 2000 shareholder meeting proposed
changing Promegas bylaws regarding transfer restrictions. The proxy stated: In the proposed
Amended and Restated Bylaws, after a public offering, the restrictions on transfer become null
and void and of no further effect. The bylaws were then amended to render the transfer
restrictions enforceable only until the completion of an initial public offering of the
Corporations common stock pursuant to an effective registration statement under the Securities
Act of 1933, as amended, and thereafter shall be null and void and of no further effect.
51.
On January 10, 2003, Linton again reached out to Brand to discuss a potential
IPO. Linton and Brand discussed how the market likely would value Promega, with Brand
explaining the substantial benefit to Promega shareholders that an IPO would offer. This again
confirmed Lintons then expressed long-term plan to provide a return to shareholders based upon
their percentage ownership unreduced by any discounts.
Linton abandons Promegas minority shareholders
52.
Despite the repeated reinforcement of Plaintiffs expectation that Promega would
provide shareholders with an opportunity to receive fair value for their shares, such an event
never occurred.
And shareholders have not received any other return on their investment
because, with the exception of a single dividend in 2007 following a litigation recovery, Promega
has never paid a dividend to its shareholders.
53.
By 2014, Linton had abandoned any plan to return fair value to plaintiffs.
Instead, Linton began focusing on what he calls Promegas hundred year plan.
54.
Lintons 100-year plan represents a dramatic change in Promegas trajectory.
Rather than working to return value to investors, Lintons new ambition is to ensure that
14
Promega will celebrate its 100-year anniversary as a private company, as an independent

company. The 100-year plan, by definition, rules out the IPO that Plaintiffs anticipated and
discussed with Linton, and also rules out other potential events that would yield fair value a
sale, for example during Plaintiffs lifetimes. Under Lintons new plan, Plaintiffs are blocked
from receiving a fair return on their investment until 2078, at the earliest, and maybe forever.
55.
Lintons decision to implement his 100-year plan without getting approval from
or even consulting his minority shareholders, despite having spent decades creating and
reinforcing their expectations of future fair value, demonstrates a lack of fair dealing and probity
in the affairs of the company to the prejudice of Plaintiffs.
Linton announces and implements his 100-year plan
56.
Before 2014, Linton did not have the power to force his 100-year plan on
Promega and its shareholders. That is because he owned significantly less than 50% of the
companys outstanding shares and Promegas board was controlled by outside directors. Those
directors would not shackle themselves or Promegas shareholders to a plan that prevented the
board from even considering corporate action that would result in fair value and that would
effectively cede control of Promega to a non-profit organization. So Linton set out to gain
control over Promega by increasing his stake in the company and ensuring the board acceded to
his personal preferences for Promegas future.
57.
In January 2014, Linton told the board that he wanted Promega to conduct a large
buy-back of outstanding Promega shares. Linton hoped to reduce the number of Promega
shareholders and outstanding shares, thereby increasing his own ownership percentage such that
he would obtain actual or effective control. Linton also told Promegas board for the first time
about his ultimate ambition: He wanted to obtain a controlling interest in Promega and then
15
transfer it to a non-profit organization that would conduct and support research into potential
medicinal uses for hallucinogenic drugs. Linton made similar representations to Ted Kellner
and, separately, to attorney Wayne R. Lueders, trustee of the Lore B. Seegert Marital Trust,
when Lueders contacted Linton to discuss selling the trusts shares.
58.
Upon information and belief, outside Promega director Richard Pauls, a longtime
board member and chairman of the audit committee, was so incensed by Lintons plan to keep
Promega private for many decades to come and to give effective control of Promega to a
nonprofit that Pauls resigned from Promegas board. Other board members were similarly
troubled by Lintons shifting priorities.
59.
The board refused to approve Lintons initial, large buy-back proposal and
insisted that any such program be limited to ensure that Linton would not obtain a majority of
Promegas outstanding shares. Instead, the board then filled with a majority of independent
directors insisted that any share repurchase program limit the extent of Lintons personal
ownership to 45% of Promegas outstanding shares.
60.
On May 5, 2014, Linton announced that Promega would repurchase shares
through a process typically known as a Dutch auction share repurchase. In a Dutch auction,
the company permits shareholders to tender their shares at a price within a pre-set range. The
company then has the option (but not the obligation) to purchase some or all of the tendered
shares. Consistent with the Boards directive, the Dutch auction was structured so that Lintons
personal ownership was limited to 45% of Promegas outstanding shares. This prevented Linton
from obtaining majority control over Promega without paying a premium for the benefits of
control.
16
61.
Nevertheless, Linton championed the Dutch auction because it provided an
opportunity for him to materially enhance his personal control using Promegas funds to
repurchase stock at less than fair value, so that he ultimately could obtain a controlling interest in
Promega and transfer it to his soon-to-be founded non-profit, Usona.
62.
Current Promega board member Craig Christianson confirmed this improper
motivation in conversation with Promega shareholders. As one shareholder explained:

[W]hen Mr. Linton with the boards support proposed the Dutch Auction, I strongly
disagreed with his approach, valuation and obvious conflict of interest and tried to speak
with him directly. He refused to take my call and passed me to a Mr. Craig Christianson
who as I recall was Promegas General Counsel. Although he appeared to accept most of
my concerns, he said that he had known Linton for many years, knew how strongly he
felt about his medical research organization and that as such, we were unlikely to change
his views or Promegas direction.
63.
The Dutch auction notice concealed the true impact it would have on Lintons
ownership percentage. The offering notice reported that Linton controlled 31% of Promegas
common stock, owning 719,435 shares and zero stock options. In truth, Linton controlled far
more stock. In addition to the 719,435 shares in his own name, Linton controlled tens of
thousands of additional shares, including (a) 24,000 shares held by his wife, Mary Linton,
(b) 36,501 shares held by Fitchburg Research Park Associates in which Linton holds a
controlling interest as the sole general partner, (c) 13,000 shares held by the William A. Linton
2002 Irrevocable Trust, (d) 9,000 shares held by the Linton Family Trust, and (e) 3,402 shares
held by Orion Five, LLC.
64.
Contrary to the auction notice, which represented that Promega made no
recommendation as to whether any shareholder should tender their shares, Linton personally and
improperly embarked on a campaign to pressure shareholders to sell their shares during the
Dutch auction.
17
65.
One shareholder recounted that Linton was adamant that the shareholder sell his
shares in the auction: Bill Linton called me on a Sunday morning, which was Mothers Day.
He encouraged me to sell my 6,724 shares in the Dutch auction. I told him I was not interested
at the time. He was very adamant about it. He said there was a 100 year plan in place and it
would be unlikely the company would be buying the shares in the future.
66.
Another explained that Linton called her repeatedly and pressured her to sell:
I am now 77 yrs old. At the time of the Dutch Auction, I had 1,612 shares. I did not plan to sell
them at the auction because I wanted to continue the investment in Promega and to use the stock
if my health takes a downturn in the future and I need extra care. Bill Linton called me on the
phone and said that I should sell the stock in the Dutch Auction because Promega planned to stop
buying back any stock for the next 5 or more likely 10 years. At first, I said I was not interested.
He called me again and emphasized the situation that there would be no buyback for years to
come. I felt pressured and then decided to sell 1000 shares in the auction.
67.
Yet another said Linton pressured him by insisting there would be no other
liquidity options for at least ten years: I am another former employee that received a phone call
from Bill last summer warning me that Promega would not be repurchasing stock for another ten
years, so I had better sell some in the Dutch auction if I would need the money sooner than 2024.
I felt pressured, so sold 1000 shares, keeping 1580 since Promega has always been a good
investment for growth.
68.
There are many more similar stories, and Linton has since confirmed that he
spoke with over 150 Promega shareholders during this time.

69.
Shareholders who anticipated needing cash at any point in the foreseeable future
sold at the depressed auction price so that they would not be stuck holding stock indefinitely.
18
The upshot is that Linton forced his most economically vulnerable shareholders to sell their stock
for far below its fair value by telling them there would not be any future dividends or
opportunities for liquidity.
70.
Upon information and belief, Linton also abused his authority as CEO, and acted
to further his own interest, by (a) pressuring Promega employees who owned stock to tender
their shares to the auction, and (b) retaliating against those who refused by terminating their
positions at Promega.
71.
Lintons conduct during the Dutch auction is a clear departure from the standards
of good faith, probity, and fair dealing with which Linton was obligated to comply. Linton used
his power and position as CEO to directly harm certain Promega shareholders by pressuring
them to sell their shares, and harmed all minority shareholders by increasing his shareholding
position and effective control through these improper tactics.
72.
Linton also coerced shareholders to sell for far less than their shares really were
worth. Linton and Promega concealed from their shareholders the true value of Promegas stock.
Promega did not conduct a valuation to determine a fair price for the Dutch auction. Instead,
Linton set the auction price at between $233 and $272 per share, which roughly correlated to an
out-of-date valuation that Promega previously commissioned.
73.
Linton knew that the Dutch auction price dramatically undervalued Promegas
stock. It did not matter to him, however, because he intended to retain the vast majority of his
shares. So he personally benefitted from the below-market auction price. Indeed, the lower the
auction price (and the more shares tendered) the greater the benefit to Linton.
74.
Linton not only pressured shareholders to sell, he pressured them to sell low by
misrepresenting that the Dutch auction would be oversubscribed and that Promega would acquire
19
only the lowest priced shares. In reality, however, Linton knew that the Dutch auction would not
be oversubscribed: Linton spoke to many of Promegas shareholders and knew that Promegas
largest shareholders (including Plaintiffs) did not plan to tender their shares and that many of the
smaller shareholders were very reluctant to sell.
75.
Linton also misrepresented to shareholders that he personally intended to tender
thousands of his shares at a low price, and therefore shareholders wishing to sell their shares
would need to submit them at a low price, too, or they would not be purchased. In truth, Linton
did not intend to tender a large number of shares at a low price and, in fact, did not do so.
76.
Lintons oppressive and bad faith tactics during the Dutch auction convinced
shareholders to tender approximately 325,000 shares, or nearly 15% of Promegas outstanding

shares, into the Dutch auction.
77.
Lintons improper conduct during the Dutch auction was designed to and did
increase Lintons control over Promega without requiring Linton to pay for his increased
influence. Linton personally benefitted by having the company pay to acquire Promega stock at
substantially below fair value, both because he was Promegas largest shareholder and because
his ownership interest increased as a result of these buybacks.
78.
And Lintons harsh and coercive treatment of Promegas shareholders reduced the
value of Promegas outstanding shares, injuring those shareholders who tendered their stock at
an unfairly low price as well as those shareholders who did not tender their stock and now are
suffering under Lintons increased control.
20
Linton registers his non-profit, Usona

79.
The Dutch auction was an initial step in Lintons long-term plan. The next step
occurred on July 9, 2014, when Linton registered Usona Institute, Inc. with the Wisconsin
Department of Financial Institutions.
80.
According to its website, Usona conducts and supports research into using
psychedelic drugs to meet the needs of people with psychological distress. Usonas website
offers information about LSD, psychedelic mushrooms, and other drugs that Usona intends to
study for potential medicinal value.
81.
Lintons goal in founding Usona was (and remains) to acquire a controlling
interest in Promega and then to transfer that interest to Usona. And, after founding Usona,
Linton began encouraging his shareholders, including Fred Mohs, Ted Kellner, and the Brand
family, to donate Promega shares to Usona.
82.
The connection between Usona and Promega is as clear as it is concerning to
minority shareholders: Usonas Articles of Incorporation list three directors: Linton, Promegas
CEO; Craig Christianson, Promegas general manager, North America, and corporate secretary;
and Richard Langer. Usonas Articles of Incorporation list Usonas mailing address and the
addresses of all three Usona directors as 2800 Woods Hollow Road, which is the same address as
Promegas headquarters.
83.
Promegas 2015 Corporate Mind statement provides: In 2014, Promegas
founder, chairman & CEO created Usona Institute, a non-profit medical research organization.
Usona will offer guidance for Promegas board that is focused on the shared goals to better
human life through compassionate, scientific exploration.
21
84.
Similarly, Promega distributed this diagram demonstrating Usonas influence on
Promegas management team:
85.
Troublingly for Promegas shareholders, who invested in a for-profit enterprise,
Usonas Articles of Incorporation provide: No part of the assets or net earnings of the
Corporation shall ever be used, nor shall the Corporation ever be organized or operated, for
purposes that are not exclusively charitable or educational within the meaning of section
501(c)(3). Usonas Articles of Incorporation also provide: The Corporation shall never be
operated for the primary purpose of carrying on a trade or business for profit.
86.
Plaintiffs never expected and no reasonable shareholder would expect that
their investments would be used to fund a non-profits research into hallucinogenic drugs, let
alone that Promega would itself be controlled by a non-profit.
Independent directors and shareholders question Lintons conduct
87.
Upon information and belief, longtime independent directors Paul Shain and Peter
Tong were particularly concerned by Lintons efforts to transfer a controlling interest in Promega
22
to Usona and they actively opposed his 100-year plan. Despite years of exemplary service, in
July of 2014, Linton did not nominate them for reappointment to the board.
88.
On July 19, 2014, Linton wrote to Brand and falsely explained that he chose not
to re-nominate Shain and Tong to the board because he wanted to increase board independence:
In talking with over 150 of our shareholders in the past couple of months, there was support for
a bit more independence on the part of our Directors, and that has always been my goal in
forming the board. In reality, Linton chose not to re-nominate Shain and Tong because they
were acting as proper fiduciaries and expressed concern about Lintons efforts to acquire a
majority position and transfer his interest and control to his non-profit.
89.
Indeed, despite claiming to favor independence on the part of our Directors,
Linton nominated Bruce Fetzer to the Promega board. Although technically an outsider to
Promega, Fetzer was not independent. Fetzer had a key conflict because he was on Usonas
board of trustees. Linton knew that Fetzer shared his goal of transferring control of Promega to
Usona, and Linton placed Fetzer on both Promegas board of directors and on Usonas board of
trustees to facilitate his 100-year plan.
90.
At the July 2014 annual shareholder meeting it was evident that Linton and
Promega were dramatically changing the way Promega treated its shareholders. Historically,
Promega provided shareholders with full financial statements, including the companys balance
sheet, in connection with annual shareholder meetings. At the 2014 meeting, however,
shareholders were shown only an incomplete income statement and no balance sheet.
91.
Promega also did not provide shareholders with an updated valuation of the
company in connection with the 2014 annual meeting. An updated valuation would have shown
23
that Linton had pressured Promegas shareholders to tender their shares during the Dutch auction
at well below a fair price.
92.
On September 19, 2014, Brand met with Bill Linton to discuss, among other
things, the potential for shareholder liquidity. By this time, Linton had made it clear to Brand
that a fair value event was off the table for at least another 65 years because Promega was only in
year 35 of Lintons new 100-year plan.
Brand sought to avoid the dramatic negative
consequences of Lintons 100-year plan and offered to let Promega purchase the Brand familys
shares, along with the shares of other outside shareholders, for $550 per share (still well below
fair value). Brands offer would have significantly reduced the number of outside shareholders.
Linton refused Brands offer and explained that he did not need to purchase these shares because
Promegas shareholder base was aging.
93.
By email on January 26, 2015, Linton confirmed to Kellner his 100-year plan to
have Usona hold a controlling interest in Promega and even asked Kellner to support that antishareholder endeavor. Linton wrote: Usona Institute, the medical research organization created
in July of last year, is the beneficiary of my personal holdings, with its primary affiliation with
the UW Hospitals and Clinics. When we next meet, I would like to take you through the mission
for this new organization and see if this is something that you would like to be involved with in
some way.
94.
Brand and other outside shareholders were concerned that Lintons ambition
forcing Promega to remain a private company under his and then his non-profits control through
2078 would render their shares valueless. They were also concerned that Lintons newlyexpressed focus on constituencies other than Promega and its shareholders would cause Linton
and Promega to ignore their obligations to shareholders in making decisions about the
24
companys future. These concerned shareholders began investigating ways to protect their
substantial investments in Promega.
95.
On May 1, 2015, Brand and Ted Kellner wrote the Promega board to express their
concerns about board turnover and Lintons efforts to seize control over the company for the
benefit of his non-profit, Usona. Brand and Kellner explained: During the last year, a large
group of shareholders has become increasingly concerned with the actions of management
towards shareholders. We have observed changes in composition and priorities of the Board of
Directors, changes in corporate governance, the elimination of stock valuations, inadequate
quarterly financial reports and increased activity by the company to acquire shares at a below
market price. The offering document used in the Dutch Auction last spring indicated that its
purpose was to provide some liquidity for those shareholders who needed or desired liquidity and
yet is has been made clear by the CEO during the last year that his objective is to have the
company owned by his new nonprofit, Usona, which directly conflicts with the interests of
outside shareholders.
96.
In their May 1, 2015 letter, Brand and Kellner formally requested that the board
create a fair and equitable process to buy-out the minority shareholders, which would then
permit the changes desired by the CEO. Promega refused Brands and Kellners request.
Linton improperly increased his ownership and control by granting himself additional options
97.
In addition to his conduct during the Dutch auction, Linton also increased his
ownership interests through stock options.

98.
Historically, Promega provided stock options as means to attract talented
employees. But when Linton shifted his focus to acquiring a majority interest in Promega,
25
Linton informed shareholders that Promega no longer needed stock options to entice top talent
and would discontinue its stock option program.
99.
There were 42,100 options available for granting when Linton discontinued the
program in 2014. By the summer of 2015, however, those 42,100 options had disappeared from
Promegas books.
100.
Linton refused to account for the missing options when directly asked about
them at the 2015 shareholders meeting and, instead, directed questions to the board. The board
has not responded to shareholder questions about these options.
101.
Upon information and belief, Linton took for himself the 42,100 un-granted stock
options, further increasing his control over the company, without having to pay for that
additional interest.
A shareholder group forms and offers to buy Promega
102.
Faced with Lintons 100-year plan and without any other option for fair value,
several Plaintiffs and other shareholders formed an investor group with the goal of purchasing
Promega at a fair price and then running the company for the benefit of Promegas shareholders.
103.
The investor group obtained a substantial capital commitment from Madison
Dearborn Partners, LLC, a well-respected private equity firm in Chicago, and debt financing
from Barclays Bank PLC.
104.
On July 10, 2015, the investor group wrote to the Promega board of directors and
made an opening offer to buy Promegas outstanding shares for $625 per share in cash more
than double the Dutch auction price. They requested a response from the board by July 24 and
an opportunity to meet and discuss the proposed transaction.
26
105.
On July 23, 2015, Promegas board (through its outside counsel) asked for more
time to consider the investor groups proposal.

106.
On July 24, 2015, Kellner and Brand wrote a letter to their fellow shareholders on
behalf of the investor group revealing the $625 per share offer and encouraging shareholders to
attend the July 28th annual meeting in person. The letter also identified concerns about Lintons
treatment of outside shareholders:
Over the past several months, we have been working to engage Mr. Bill Linton and the
Promega Board of Directors in a dialogue to address our growing concerns about the fair
and equitable treatment of all shareholders and our perceived divergence in alignment
between Mr. Linton and the Promega shareholders. Mr. Linton has mentioned on several
occasions his desire to keep Promega a private company under his control, in the support
of his medical research organization, Usona Institute (http://www.usonainstitue.org). To
that end in our view, he has made several changes to the Board of Directors, reduced
information flow to shareholders, and effected company-funded share repurchases
(including those held by company employees) in an apparent attempt to gain majority
control of our company.
107.
Many shareholders reached out to Kellner and Brand expressing support and a
desire to sell their shares at the $625 price. Many more lamented having sold during the Dutch
auction and recounted incidents in which Linton improperly pressured them to sell.
108.
On August 28, 2015, Kellner and Brand informed Promegas board of Lintons
harsh and wrongful treatment of Promegas shareholders:

We have been advised that many shareholders were told that there would be very limited
future liquidity, and that Mr. Lintons stated intent was to create a medical research
foundation and donate his shares to that organization effectively freezing any remaining
shareholders with an illiquid and, practically speaking, worthless security. It appears that
Mr. Lintons actions were designed to help him achieve majority control of Promega,
which we believe was inconsistent with the disclosure in the Dutch Auction materials and
placed Mr. Linton in a clear conflict of interest position.
Kellner and Brand asked the board of directors to investigate these allegations on behalf of all
shareholders.
27
109.
Meanwhile, outside shareholders also began contacting the board to express their
concerns about Lintons coercive tactics during the Dutch auction. As one shareholder explained
at the time: Im writing you today because I am concerned about something that occurred last
year. I received a phone call at home from Bill Linton. He wished me well on my retirement
from Promega and then advised me that I should participate in the Dutch auction and sell
some/all of my 2580 shares back to the company. He warned me that Promega would not be
repurchasing any shares for 7 to 10 years after the 2014 auction so if I thought I would need any
of that money, I had to act now.
110.
Another shareholder explained that Linton approached him during the Dutch
auction and said that he planned no further stock redemption offerings, and had no plan to ever
pay dividends in the future, that he would not be selling the Company to provide a shareholder
exit for at least 60 years, that he sees no future exit opportunities for shareholders to receive
fair value for their shares, and that he believed the auction would be oversubscribed, so it
might be wise not to request the higher price ($272.). This shareholder also encouraged the
board to seriously consider the $625 per share offer and that, if not satisfied, to get its own
valuation and solicit other offers.
111.
Other shareholders wrote to the board and encouraged them to accept the tender
offer. One such letter on behalf of a trust holding 17,000 Promega shares stated: In my opinion
the offer by Mr. Kellner and Mr. Brand to buy the shares at $625 indicates that there is a serious
buyer who believes that this is the minimum value of the stock with serious future potential. I
am concerned if myself as Trustee and other shareholders have been treated fairly. I would sell
my stock at $625 per share and believe the Board must take action on this offer and seriously
consider what is in the best interests of all shareholders.
28
112.
At this point, the Promega Board was faced with clear evidence of Lintons
misconduct in connection with the Dutch auction. Upon information and belief, at the urging of
Promegas shareholders, the Promega board met on or around August 27, 2015 and decided to
form two special committees to (a) investigate Lintons behavior during the Dutch auction and
(b) evaluate the investor groups purchase offer.
Linton forces the outside directors to resign and replaces them with his subordinates
113.
Consistent with recognized fiduciary duties, the Promega board special committee
evaluating the investor groups purchase offer hired an outside advisory firm Perella Weinberg
Partners L.P. to assist in its consideration of the investor groups offer. In early September
2015, representatives from Perella Weinberg spoke with representatives from the investor group
and shared the process that the special committee would use to evaluate the offer.
114.
However, in a continuing pattern of disregard for his fiduciary duties, Linton
began a campaign to stop Promegas directors from performing their obligations to Promegas
shareholders in connection with the tender offer and from investigating Lintons improper
conduct during the Dutch auction. Linton refused to cooperate with the boards investigation,
personally attacked the independent directors, threatened them with litigation, and blocked the
board from meaningfully considering the investor groups offer.
115.
Upon information and belief, Lintons mistreatment of the boards special
committees caused Perella Weinberg to resign its advisory role in early September. Perella
Weinberg notified Madison Dearborn Partners that it was no longer advising Promegas special
committee and explained that decision was motivated by Lintons improper conduct.
116.
On September 20, 2015, five of Promegas seven directors tendered their
resignation, effective September 19, 2015. The resigning directors were Richard Brown, Gail
29
Marcus, Antonio Mello, Marty Rosenberg, and Chris Van Ingen. All but Mr. Rosenberg were
independent directors.
117.
These directors resigned because Linton prevented them from performing their
fiduciary obligations and protecting the interests of shareholders.
The resigning directors
submitted a resignation letter to Promega explaining the basis for their decision.
Upon
information and belief, their resignation letter confirms that Linton abused his authority as CEO
by preventing a meaningful investigation into Lintons conduct during the Dutch auction and by
thwarting the boards attempt to conduct a good faith process of evaluating the investor groups
offer. Upon information and belief, the resigning directors also explained that Linton had
refused to allow the board to address the important issues regarding corporate governance and
CEO performance raised by Lintons conduct.
118.
Later, in November 2015, when Promega informed its shareholders that all of the
independent directors had resigned, Promega falsely claimed that the resigning directors all
have conveyed to the Company that they hold no animosity or hostility toward the Company or
its management. In truth, these board members resigned precisely because Linton improperly
interfered with their efforts to meet their fiduciary obligations to Promegas shareholders.
119.
With the resignation of five of Promegas seven directors, there were only two
remaining directors Linton and Bruce Fetzer. Linton used his relationship with Fetzer, a
trustee of the Usona Institute, to orchestrate a complete take-over of Promegas board by
replacing the directors who resigned with four Promega employees under Lintons direct control.
120.
The four replacement board members that Linton and Fetzer appointed were
(a) Craig J. Christianson, Promegas General Manager, North America, and founding board
member and current Treasurer of Usona, (b) Randall Dimond, Promegas Vice President and
30
Chief Technical Officer, (c) Penny Patterson, Promegas Senior Director for Corporate Affairs
and Marketing Services, and (d) Charles York, Promegas Vice President of Manufacturing
Operations. All four report to Linton and lack independence.
121.
Fetzer supported Lintons efforts to fill the board with his subordinates because
Fetzer had a conflict of interest. He was a member of Usonas board of trustees and Usona stood
to benefit from obtaining Lintons controlling interest in Promega something that could be
accomplished only with a board dominated by insiders who fear reprisal from Linton.
Shareholders were not given an opportunity to vote on the newly-appointed directors, because
they were appointed to fill interim vacancies vacancies caused by Linton and his oppressive
conduct.
122.
On September 28, 2015, just days after Fetzer supported Lintons slate of insiders
to replace the independent directors, Fetzer resigned from Promegas board, ceding total control
to Linton and his handpicked insider directors.
123.
Lintons successful efforts to replace Promegas independent directors with
company insiders occurred less than a year after Linton (a) admitted to Brand that Promegas
shareholders wanted more independence on the part of our [Promegas] Directors, and (b) tried
to assuage Brands concerns regarding Lintons increased ownership in Promega by promising
that an independent board has always been my [Lintons] goal in forming the board.
124.
By replacing the outside directors with Promega insiders, Linton knowingly acted
with disregard for the best interests of Plaintiffs as minority shareholders and in direct
contradiction to their expectations.
31
Lintons new board delays and then rejects the tender offer
125.
The newly-constituted board promptly replaced the Companys outside counsel
with the law firm von Briesen & Roper. On October 1, 2015, attorneys from von Briesen &
Roper contacted the investor group and asked for yet more time to consider the offer.
126.
On October 7, 2015 nearly three months after their initial bid for Promega
Kellner and Brand again wrote to the Promega board seeking a substantive response to their offer
and demanding information regarding Lintons recent board take-over:
[T]he recent developments involving the appointment of Company insiders to the Board
of Directors are, in our judgment, consistent with the historical failure of leadership at
Promega and the apparent self-dealing of its principal shareholder . . . . We believe we
are entitled to know the underlying facts about the events leading up to the mass exodus
of Promega directors notably, comprising all directors other than Mr. Linton. That type
of collective action, particularly at the beginning of the evaluation of a compelling
business combination proposal, is unprecedented and raises many troubling questions. . . .
We are gravely concerned that the newly appointed directors are all employees of the
Company reporting either directly or indirectly to Mr. Linton. A board consisting solely
of inside directors is in no position from a fiduciary perspective to consider our proposal,
particularly in light of Mr. Lintons conflict of interest and apparent desire to manage the
Company for his own personal interests.
127.
Kellner and Brand also requested (a) a copy of the board members resignation
letter; (b) a written explanation for why those board members were replaced with Promega
employees rather than independent directors; and (c) that the board convene a special
shareholder meeting pursuant to Section 180.0702(a)-(b) for the purpose of discussing the
director resignations and providing a non-binding advisory vote regarding the investor groups
proposal.
128.
Rather than engage in good faith with the investor group, Lintons board of
directors denied them access to the requested information, threatened them with litigation, and
refused to hold the requested shareholder meeting and vote.
32
129.
Instead, the new board called an informational meeting for November 6, 2015,
although very little information was provided. The meeting notice identified the following
limited purpose: Management of the company will report on specific information relating to the
companys business and affairs. No other matters will be addressed at the meeting. The meeting
is strictly for information purposes only, and no matters will be submitted to the shareholders for
action or vote at the meeting. This is reflective of Promegas recent lack of transparency
brought in with Lintons control and 100-year plan.
130.
On October 28, 2015, before the informational meeting with shareholders,
Lintons new board rejected the investor groups offer in a three-sentence letter to the investor
group. The letter stated: The Board determined that the offer was not in the best interest of our
business, our shareholders or our many constituencies. There was no suggestion from Linton or
Board that the offer was too low. Rather, the board acted in accordance with Lintons 100-year
plan, which precludes any sale at least until 2078.
131.
Linton and his insider directors effectively ruled out any sale after considering
Promegas many constituencies, no doubt including Usona, which is a self-dealing conflict

situation for Linton, without any apparent consideration of the offers adequacy. Moreover, the
board rejected the offer without ever discussing it with the investor group or seeing if the
investor group (or a competing bidder) would offer a higher price. The board also rejected the
offer without the requested shareholder vote, or even an open discussion with shareholders about
the investor groups proposal. These actions by Linton and the board demonstrate total disregard
for the interests, expectations, and desires of shareholders in favor of Lintons personal and
disloyal focus on Usona.
33
132.
On October 29, 2015, the Wisconsin State Journal published an article regarding
the boards decision to reject the investor groups offer. The article quoted UW-Madison School
of Business professor Michael Gofman, who explained the three potential reasons for the boards
decision: Option one, the board of directors thinks that the offer is too low relative to the true
value of the company and it is in the best interests of the shareholders to reject it. Option two,
they think that accepting the offer would generate value to the shareholders, but by rejecting it
they expect to receive an improved offer that would benefit existing shareholders even more,
and, a third possibility, he said, is that that directors incentives are not well aligned with the
interests of the shareholders.
133.
It is clear that option three misalignment of interests between directors and
shareholders is what motivated the boards decision here. The board was not motivated by
option one (offer too low), because it had just conducted a Dutch auction at prices less than half
what the investor group offered.
And the board subsequently released a new valuation
concluding that, as of September 30, 2015, the current value for Promega common stock on a
minority basis interest was $383 per share. Thus, the investor group offered shareholders a
substantial premium over Promegas own valuations.
134.
The board also was not motivated by option two (expecting a higher offer),
because the board made no attempt to negotiate a higher price or to entertain offers from other
potential purchasers. Indeed, there was no negotiation whatsoever. The board merely rejected
the offer and then refused to answer the investor groups questions about that decision.
Moreover, upon information and belief, the new board made this decision without taking the
expected and appropriate step of first consulting with outside investment bankers and
independent counsel.
34
135.
It was the misalignment between directors and shareholders: Linton and the board
he controlled were not concerned with the best interests of Promegas outside shareholders.
Linton and the board rejected the investor groups offer because it conflicted with Lintons own
personal interests: his personal desire to keep Promega a private company and under his and,
later, Usonas control until at least 2078. Had Linton and the board considered Promegas
shareholders, rather than facilitating Lintons plan to benefit his personal research organization,
Usona, they would have either accepted the investor groups offer or at least negotiated with the
investor group to see whether a higher price could be secured.
136.
On November 6, 2015, approximately 130 shareholders (80 in person and 50
telephonically) gathered before the Promega shareholder meeting. They discussed whether the
investor groups offer could be resurrected and how to respond to Lintons seizure of control and
plan to run the company to benefit Usona rather than Promegas shareholders:
137.
It was evident from this meeting that outside shareholders overwhelmingly
supported selling the company for $625 per share.
35
138.
At the November 6, 2015 shareholder meeting that followed, Linton and the
Promega board refused to answer a single shareholder question and failed to explain why
rejecting the investor groups offer was in the shareholders best interest. Instead, they gave
prepared remarks and instructed shareholders to email their questions to the board. After the
shareholder meeting, Kellner emailed a list of questions to the board seeking the boards
perspective on why they rejected the investor groups offer. But the board refused to answer.
139.
On January 18, 2016, Kellner and Brand wrote a letter to Promegas shareholders
reaffirming their commitment to pursuing the fair and equitable treatment of all shareholders
with regard to our investment in Promega. The letter explained that the board had provided no
meaningful explanation of why the Board rejected our offer . . . .
From a shareholder
perspective, our offered price should at least have generated further inquiry into the market value
of the company, which the company does not appear to have done.
140.
Kellner and Brand again heard from shareholders who expressed their frustration
with the boards rejection of the investor groups offer.

Linton cements his control
141.
Having rejected the investor groups offer, Linton moved to solidify his control
over Promega by further increasing his ownership percentage and by preventing any new outside
directors from jointing the board.
142.
Linton wanted to increase his control over Promega without spending his own
capital. Therefore, Linton formulated a repurchase policy to encourage shareholders to tender

their shares to Promega during certain 30-day windows. That way, Promegas capital would be
used to acquire the shares, not Lintons, but after the purchase Linton would control a larger
percentage of Promegas outstanding shares.
36
143.
Unlike the Dutch auction approved by outside directors in 2014, however,
Promegas new repurchase program places no limits on Lintons ownership percentage. Further,
the new share repurchase policy does not warn shareholders about Lintons percentage
ownership, his effective or actual control, or the risk of him acquiring even more control by
having Promega acquire additional outstanding shares.
Thus, the new repurchase program
provides Linton an opportunity to (a) increase his overall interest in Promega, which, upon
information and belief, now approaches or exceeds 50%, without spending his own money; and
(b) have Promega acquire shares at a below-market price.
144.
The first window opened in March 2016. During the 30-day window, Promega
rejected at least some shareholder offers to sell above the $383 price identified in the repurchase
policy as the most recent valuation price. Because even that valuation price is a significant
discount to the fair value of Promegas shares, and because Promega has rejected efforts by
shareholders to sell at a higher price, the share repurchase plan does not offer shareholders an
opportunity to sell their shares at a fair price. In fact, Kellner tendered his 32,728 shares for
$625 per share (the same price offered by the investor group) and Promega refused to buy even a
single share at that price.
145.
The March 2016 share repurchase continued Lintons effort to increase his
personal ownership percentage and gain control of Promega without spending any of his own
money. As of March 31, 2000, there were approximately 3,280,000 outstanding Promega
shares. By March 31, 2010, Promegas repurchase efforts reduced that number to 2,397,000. By
March 31, 2014, just before the Dutch action, the outstanding shares had fallen to 2,250,000.
Two years later, on March 31, 2016, there were only 1,887,000 outstanding shares of Promega
stock. According to Promegas 2016 Annual Report, less than a month later, on April 26, 2016,
37
Promega spent an additional $51.7 million repurchasing shares, further reducing the number of
outstanding shares by approximately 130,000 (Promega has not disclosed precisely how many
shares it purchased with that money).
146.
Lintons share repurchases since 2000 have cut in half the number of outstanding
Promega shares, thereby effectively doubling Lintons percentage ownership in the company.
As a result, Linton acquired effective control over Promega without spending any of his own
money. This directly harmed the Plaintiffs, who (as shareholders) funded Promegas repurchase
efforts but (as minority interest owners) were shut out of the control benefit that Linton seized
and are now subject to Lintons oppressive conduct.
147.
On February 22, 2016, Brand and Kellner again wrote to Bill Linton to express
their concerns about Lintons 100-year plan: It is clear that you are determined to acquire 100%
control of Promega, which is at odds with the best interests of 300 outside shareholders of the
company, many of whom have been loyal to Promega for as many as 35 years. Brand and
Kellner proposed a solution that would permit Linton to move forward with his plan, while
protecting Promegas minority shareholders: Promega would repurchase shares from all
interested shareholders for $575 per share, with the initial $385 per share paid in cash and the
remaining $190 per share paid over a 5-year period at an interest rate of 5%.
148.
On March 4, 2016, Promegas board rejected that proposal from Brand and
Kellner, claiming that the proposed transaction was not in the best interests of the Company or
its shareholders, employees or customers. This was further confirmation that Plaintiffs have no
opportunity to exit their investments at a price even approaching fair value and demonstrated that
Linton has cemented his control over Promega without paying anything, let alone a premium for
that control.
38
149.
Linton and Promega have also refused shareholder efforts to return control of
Promegas board to outside directors and have rejected efforts to place even a single outside
director on the board. In particular, on March 28, 2016, Brand tried to nominate at least one
outside director to the board. That nomination was rejected.
150.
Similarly, on April 1, 2016, Brand wrote to the board identifying potential outside
directors and asked for the boards support in working collaboratively to identify a couple of
outside directors to join the board at the next annual shareholder meeting in July. Brand
informed the board that his goal was not to create a proxy fight, but rather to jointly, with the
company, present a slate of directors that can fairly and independently represent all shareholders
moving forward. But on April 12, 2016, Craig Christianson, a board member at both Promega
and Usona, responded on behalf of Promega and rejected Mr. Brands request.
151.
Linton recently confirmed that he has no intention of bringing outside directors
back to the board, whether this year or anytime in the future.
On May 6, 2016, Linton
participated in a panel discussion hosted by the International Forum on Consciousness and

expressed contempt for both outside directors and for his shareholders. Linton identified having
outside, independent directors on the board and allowing people from the outside to own[]
stock in the company as his two mistakes and failures at Promega. When asked about what
he would have done differently, Linton said: knowing what I know now, first of all, yeah, I
would make very different selections as to board members, with the experience and the wisdom
that I have now. And not that anybody on the board was doing anything that they considered
wrong, it was just putting people in very difficult positions who were outsiders . . . .
152.
Now that Linton improperly has acquired control of Promega, Linton and the
current board are working to deprive minority shareholders from having any say in the
39
constitution of the Promega board. They have violated Promegas by-laws in order to keep
Linton and his handpicked board in control.
153.
Specifically, Article 3.09 of Promegas bylaws, titled Vacancies, provides:
Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in
the number of directors, may be filled until the next succeeding annual election by the
affirmative vote of a majority of the directors then in office. Therefore, under the bylaws, the
directors whom Fetzer and Linton appointed in September 2015 (namely, Craig Christianson,
Randall Dimond, Penny Patterson, and Charles York) can serve only until the next succeeding
annual election, which occurred at the annual meeting on July 26, 2016.
154.
But Linton and his unelected board chose not to comply with Promegas bylaws.
In a blatant example of bad faith, disloyal conduct, and self-dealing, Linton and the remaining
board members opted to deprive shareholders of their right to vote on whether the unelected
insiders whom Linton and Fetzer appointed should remain on the board. They did not put any of
the unelected directors up for election at the July 26, 2016 annual meeting as required. The
upshot is that Linton, with the uncritical support of his personally-selected insider board, now
controls Promega, and shareholders have been stripped of their right to vote on whether those
insiders should continue to serve on the board. In sum, shareholders no longer can expect that
they will be treated fairly or that Promega will be managed by independent directors, or even by
directors not wholly subservient to Linton.
Lintons conduct is oppressive and has defeated Plaintiffs expectations as shareholders
155.
Linton has taken Promega and changed its purpose from a company focused on
creating shareholder value to one increasingly focused on propping up Lintons non-profit

Usona.
40
156.
Plaintiffs are now faced with a company that looks far different than the one in
which they invested:

a.
Promega is now controlled by a single shareholder (Linton) who runs the
company and has removed all checks on his conduct by filling the board with company
insiders under his control.
b.
Linton has declared that Promega will not pay any future dividends, and
that Promega will remain a private company under Lintons control until at least 2078,
thus locking Plaintiffs as minority shareholders into an illiquid investment with no
opportunity to sell their shares at a fair price.
c.
Minority shareholders cannot even expect that Linton as the controlling
majority and his board will fairly consider future liquidity opportunities because those
opportunities conflict with Lintons personal preferences to keep the company private for
many decades to come and transfer his interest to his non-profit.
d.
Linton no longer is focused on creating shareholder value, but is instead
working to shift control of Promega to his non-profit psychedelic drug research

organization Usona.
157.
By implementing his 100-year plan, Linton has transformed Promega from a
private, closely held company into a different type of business organization altogether, focused
not on Promegas shareholders but instead on Lintons personal interests in the medical benefits
of psychedelic drugs.
158.
Although some states allow for-profit companies to change their corporate form
and re-organize as public benefit corporations, that change requires a shareholder vote and
appraisal rights for dissenting shareholders.
This protects the reasonable expectations of
41
shareholders who invested their money with the company before the change and who do not
want to participate in the newly formed public benefit company.
159.
For example, Section 362 of the Delawares General Corporation Law permits
public benefit corporations to be managed in a manner that balances the stockholders

pecuniary interests, the best interests of those materially affected by the corporations conduct,
and the public benefit or public benefits identified in its certificate of incorporation. Before an
existing company can become a public benefit corporation, however, Section 363 requires a 2/3
vote by the shareholders and obligates the company to buy-out dissenting shareholders at the
fair value of the stockholders shares of stock.
160.
Applied here, Plaintiffs invested in Promega as a private, for-profit company
dedicated to its customers and shareholders.
Lintons repurposing and reorganization of
Promega to benefit his interest in Usona is self-dealing and a marked departure from the plan on
which Plaintiffs relied when investing in the company. And by cutting off all avenues for
Plaintiffs to obtain fair value for their shares, Linton and Promega have, in substance,
expropriated Plaintiffs investment for Lintons own purposes. In Delaware and the other states
that permit companies to re-organize as so-called benefit corporations, this would require a
shareholder vote and entitle dissenting shareholders (such as Plaintiffs here) to appraisal rights.
In Wisconsin, Lintons improper conduct amounts to shareholder oppression.
IV.
Claim for Relief
Count 1 Relief Pursuant to Wis. Stat. 180.1430(2)(b) for Shareholder Oppression
Against all Defendants
161.
Plaintiffs repeat and reallege the preceding paragraphs as if fully set forth herein.
162.
Plaintiffs are shareholders in Promega.
42
163.
Linton and his handpicked board control Promega.
164.
Linton and Promega have acted and will continue to act in a manner that is
oppressive towards Plaintiffs, including by frustrating the expectations forming the basis of
Plaintiffs investments in Promega and by engaging in burdensome, harsh, and wrongful
conduct.
165.
Defendants have frustrated Plaintiffs reasonable expectations as shareholders:

a.
Plaintiffs acquired their Promega shares expecting that there would be no
controlling shareholder, thus ensuring that each plaintiff would retain a say in Promegas
operation. But Linton has seized a controlling interest in Promega and is now running the
company for his own purposes.
b.
Plaintiffs acquired their Promega shares expecting that independent
directors would hold a majority of the seats on Promegas board and use their position to
advocate for the shareholders. But Linton forced the independent directors to resign and
replaced them with Promega insiders reporting to Linton. Linton now controls the board
and uses it for his own purposes.
c.
Plaintiffs acquired their Promega shares expecting that there would be
opportunities to liquidate their stock at a fair price, including through an initial public
offering, merger, or sale. But Linton and Promega have implemented Lintons 100-year
plan, foreclosing any possibility that Plaintiffs might obtain a fair price for their shares
during their lifetimes, and certainly no sooner than 2078.
d.
Plaintiffs acquired their Promega shares expecting that Promega would
remain a reputable company in the life sciences space.
But Linton has risked that
reputation by associating Promega with research into psychedelic drugs.
43
166.
Defendants have engaged in a course of burdensome, harsh, and wrongful
conduct exhibiting a lack of probity and fair dealing in Promegas affairs:

a.
Linton and Promega falsely claimed that neither the company nor
management was taking a position as to whether shareholders should tender their shares
into the Dutch auction, when Linton, in his capacity as CEO, spoke to approximately 150
shareholders and tried to convince them to sell.
b.
Linton threatened Promega employees during the Dutch auction to coerce
them into selling their shares, and fired those who refused.
c.
Linton lied to shareholders, falsely claiming the Dutch auction would be
oversubscribed so that they would tender their shares at a lower price.

d.
Linton lied to shareholders, falsely claiming that he intended to sell a large
number of shares into the Dutch auction at a low price and therefore they needed to set a
similarly low price for their shares.
e.
Linton and Promega concealed Lintons ownership interest in the
company so that shareholders would be more likely to tender their shares into the Dutch
auction.
f.
Linton pressured and threatened outside shareholders to sell their shares
into the Dutch auction for less than fair value so that Linton could increase his ownership
interest in Promega.
g.
Linton attacked Promegas independent directors and thwarted their
investigation into Lintons oppressive conduct.

h.
Linton prevented Promegas independent directors from considering the
shareholder groups purchase offer.
44
i.
In direct contradiction to shareholders desire for more independence on
Promegas board, Linton forced Promegas outside directors to resign and replaced them
with company insiders loyal to Linton.
j.
Linton and Promega falsely reported to their shareholders that these
outside directors left on their own accord and on good terms with the company.
k.
Linton and his handpicked board of company insiders rejected the investor
groups offer without a shareholder vote or even a discussion with shareholders about the
offer.
l.
Linton and his handpicked board of company insiders rejected the investor
groups offer without first giving it fair consideration.

m.
Linton and his handpicked board of company insiders have stripped
shareholders of their right to vote on who serves on Promegas board.

n.
Linton and Promega have used share repurchase plans to cajole
shareholders into selling their stock back to the company at less than a fair price.
o.
Linton and Promega have demonstrated a lack of probity by failing to
inform shareholders that participating in Promegas share repurchase plans would lead to
Linton obtaining a controlling interest in Promega.
p.
Linton and Promega have expressly stated they have no intention of
paying future dividends, and they have removed all opportunities for shareholders to
redeem their shares at a fair price and foreclosed meaningful liquidity for at least the next
62 years.
q.
Linton and Promega are using the company to prop-up Lintons non-
profit, Usona, and intend to transfer a controlling interest in Promega to Usona.
45
167.
Through his willful and oppressive conduct, Linton has treated some of
Promegas shareholders (i.e., Plaintiffs and other minority shareholders) in a wrongful manner to
which other shareholders (i.e., Linton as the majority shareholder) were not subjected. Unlike
Plaintiffs as minority shareholders,
a.
Linton earns substantial ongoing compensation and benefits from
Promega;
b.
Linton used his position at Promega to obtain his controlling interest;
c.
Linton controls the board and thus chooses its members, whereas Plaintiffs
have been deprived of their basic right to vote on board members;

d.
Lintons 100-year plan benefits him personally as the majority who desires
to cede control to Usona, an organization founded and supported by Linton, at the

expense of minority shareholders whose shares will be rendered valueless when the
company is controlled by a non-profit; and
e.
Lintons majority stake in Promega is uniquely situated such that Linton
still maintains the optionality to sell at fair value in the future should he so desire
(whereas Plaintiffs who own illiquid minority interests in a company controlled by Linton
are completely subject to his improperly-acquired control).
168.
As a direct result of Defendants wrongful conduct, Plaintiffs are stuck as
minority shareholders in a corporation (Promega) where, despite owning a substantial portion of

the outstanding shares, they have no say in Promegas operation and no opportunity to realize a
fair return on their investment.
169.
To allow the current directors and officers to manage Promega will result in
continued oppressive conduct adversely affecting Plaintiffs and the other minority shareholders.
46
Relief Requested
170.
Plaintiffs request the following relief, as allowed pursuant to the above facts,
applicable statutes, and case law:
The remedies available under Wis. Stat. 180.1430(2)(b) and 180.1432 and the
Courts equitable powers, including, but not limited to a judicial order requiring
that Defendants acquire Plaintiffs shares at a fair value;
That the Court award compensatory damages;
That the Court award Plaintiffs their reasonable attorneys fees and costs accrued
in the prosecution of this action; and
That the Court award any other relief it deems just and equitable under the
circumstances.
47
Dated: July 27, 2016
Respectfully submitted,
HANSEN REYNOLDS DICKINSON CRUEGER LLC
Electronically Signed By: /s/Timothy M. Hansen_____
Timothy M. Hansen (SBN 1044430)
John A. Busch (SBN 1016970)
Milwaukee, WI 53202
Phone: (414) 455-7676
Email: thansen@hrdclaw.com
jbusch@hrdclaw.com
OF COUNSEL:
SUSMAN GODFREY LLP
James T. Southwick
Alexander L. Kaplan
Adam Carlis
1000 Louisiana Street, Suite 5100
Phone: (713) 651-9366
Email: jsouthwick@susmangodfrey.com
akaplan@susmangodfrey.com
acarlis@susmangodfrey.com
48

Lawsuit Filed Against Promega and Bill Linton

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Lawsuit Filed Against Promega and Bill Linton

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STATE OF WISCONSIN

Case Code: 30703

Arthur L. Herbst, Jr. as trustee for Mohs

THE STATE OF WISCONSIN:

Case Code: 30703

737 N. Michigan Avenue, Suite 1210

This is an action for shareholder oppression under Wisconsin Statute

threaten the reasonable expectations underlying their investments.

Plaintiffs need that

To achieve those ends, in 2014 Linton championed a Dutch auction process,

Eliminating positions to force employees to sell their shares;

Misrepresenting that the Dutch auction would be oversubscribed, so shareholders needed

Lintons wrongful conduct convinced shareholders to tender approximately

In response to the tender offer, the independent directors on Promegas board

independent special committees of Promegas board. He blocked the committees efforts to

When Plaintiffs invested, and

Plaintiff Nathan S. Brand, LLC is a Florida Limited Liability Company

Plaintiff Nathan S. Brand (Brand) is a Florida resident and University of

Plaintiff Nathan F. Brand is a Madison, Wisconsin resident who attended the

Plaintiff Ted D. Kellner is a Milwaukee, Wisconsin resident and University of

Defendant Promega Corporation is a private, closely held corporation

headquartered in Dane County, Wisconsin. Promegas principal place of business is located at

Defendant William A. Linton is Promega Corporations Chief Executive Officer

Promegas early shareholders were primarily company employees. But Promega

Promega was also appealing because its board was

officer or employee. He was a Managing Director at MBW Management, Inc.

officer or employee. He was a Vice President at Oscar Mayer.

Promega officer or employee.

He was a biochemistry professor at Johns Hopkins

Robert A. Comey joined the board in 1987.

Mr. Comey was not a

Promega officer or employee. He was a Vice President at InvestAmerica Venture Group,

Plaintiffs invested in Promega expecting Promega would continue to be managed

No shareholder owned a majority of

the outstanding shares.

By 1995, Lintons percentage had decreased to 27.8%.

By 1988, Promega already had obtained substantial equity investments from

These investors provide capital to

Promega and Linton continued to raise shareholder expectations about a future

multinational firm Boehringer Ingelheim International GmbH (Boehringer) through which

Another aspect of the Boehringer transaction confirmed Plaintiffs expectation

Relying on the independence of the board, the absence of a controlling

Promega and Linton continued to cultivate those expectations. Throughout the

1990s, Plaintiffs purchased additional Promega shares.

On June 21, 2000, Linton informed shareholders that Promega regularly

But Lintons willingness to take Promega public confirmed Plaintiffs

Promega continued to tell shareholders that it was working towards an initial

Despite the repeated reinforcement of Plaintiffs expectation that Promega would

Lintons 100-year plan represents a dramatic change in Promegas trajectory.

Promega will celebrate its 100-year anniversary as a private company, as an independent

On May 5, 2014, Linton announced that Promega would repurchase shares

Nevertheless, Linton championed the Dutch auction because it provided an

Current Promega board member Craig Christianson confirmed this improper

motivation in conversation with Promega shareholders. As one shareholder explained:

Contrary to the auction notice, which represented that Promega made no

spoke with over 150 Promega shareholders during this time.

Linton also misrepresented to shareholders that he personally intended to tender

shareholders to tender approximately 325,000 shares, or nearly 15% of Promegas outstanding

Linton registers his non-profit, Usona

Lintons goal in founding Usona was (and remains) to acquire a controlling

The connection between Usona and Promega is as clear as it is concerning to

Promegas 2015 Corporate Mind statement provides: In 2014, Promegas

Similarly, Promega distributed this diagram demonstrating Usonas influence on