If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule
13d-1(f) or Rule 13d-1(g), check the following box. [ ]
* The remainder of this cover page shall be filled out for a reporting
person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 2 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Discovery Fund, LP
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
WC
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
1,915,027
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
1,915,027
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,915,027
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.03%
|
14
|
TYPE OF REPORTING PERSON
PN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 3 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Discovery Fund GP, LLC
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
1,915,027
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
1,915,027
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,915,027
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.03%
|
14
|
TYPE OF REPORTING PERSON
OO
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 4 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Discovery Co-Investment Fund I, LP
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
WC
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
3,705,654
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
3,705,654
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,705,654
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.79%
|
14
|
TYPE OF REPORTING PERSON
PN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 5 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Discovery Co-Investment Fund I GP, LLC
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
3,705,654
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
3,705,654
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,705,654
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.79%
|
14
|
TYPE OF REPORTING PERSON
OO
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 6 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Fund Advisors, Inc.
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Alabama
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
5,620,681
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
5,620,681
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
5,620,681
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.82%
|
14
|
TYPE OF REPORTING PERSON
IA, CO
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 7 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Harbert Management Corporation
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Alabama
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
5,620,681
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
5,620,681
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
5,620,681
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.82%
|
14
|
TYPE OF REPORTING PERSON
CO
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 8 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Jack Bryant
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
5,620,681
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
5,620,681
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
5,620,681
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.82%
|
14
|
TYPE OF REPORTING PERSON
IN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 9 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Kenan Lucas
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
5,620,681
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
5,620,681
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
5,620,681
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.82%
|
14
|
TYPE OF REPORTING PERSON
IN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 10 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Raymond Harbert
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
5,620,681
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
5,620,681
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
5,620,681
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.82%
|
14
|
TYPE OF REPORTING PERSON
IN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 11 of 16 Pages
|
1
|
NAME OF REPORTING PERSON
Fabian Blank
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ¨
(b) ¨
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS
AF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
¨
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH:
|
7
|
SOLE VOTING POWER
10,280
|
8
|
SHARED VOTING POWER
-0-
|
9
|
SOLE DISPOSITIVE POWER
10,280
|
10
|
SHARED DISPOSITIVE POWER
-0-
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,280
|
12
|
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
¨
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 0.1%
|
14
|
TYPE OF REPORTING PERSON
IN
|
|
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 12 of 16 Pages
|
The following constitutes Amendment No. 4 to the Schedule 13D filed
by the undersigned (the “Amendment No. 4”). This Amendment No. 4 amends the Schedule 13D, filed with the Securities
and Exchange Commission on April 8, 2019 as specifically set forth herein.
Item 2.
|
IDENTITY AND BACKGROUND
|
|
|
Items 2(a) - (f) of the Schedule 13D are hereby amended and restated as follows:
|
|
|
(a), (f)
|
This Schedule 13D is being filed jointly by (i) Harbert Discovery Fund, LP, a Delaware limited partnership (the “Discovery Fund”), (ii) Harbert Discovery Fund GP, LLC, a Delaware limited liability company (the “Discovery Fund GP”), (iii) Harbert Discovery Co-Investment Fund I, LP (the “Discovery Co-Investment Fund” and together with the Discovery Fund, the “Funds”), (iv) Harbert Discovery Co-Investment Fund I GP, LLC (the “Discovery Co-Investment Fund GP” and together with the Discovery Fund GP, the “Fund GPs”), (v) Harbert Fund Advisors, Inc., an Alabama corporation (“HFA”), (vi) Harbert Management Corporation, an Alabama corporation (“HMC”), (vii) Jack Bryant, a United States citizen, (viii) Kenan Lucas, a United States citizen, (ix) Raymond Harbert, a United States citizen (collectively “Harbert”), and (x) Fabian Blank, a German citizen (“Mr. Blank” and together with Harbert, the “Reporting Persons”).
|
|
|
|
The filing of this statement should not be construed as an admission that any Reporting Person is, for the purposes of Section 13 of the Act or otherwise, the beneficial owner of the shares of Common Stock reported herein.
|
|
|
(b)
|
The principal business address for each of the Reporting Persons, with the exception of Mr. Blank, is 2100 Third Avenue North, Suite 600, Birmingham, Alabama 35203. The principal business address for Mr. Blank is Roemerstrasse 6, 56864 Bad Bertrich, Germany.
|
|
|
(c)
|
Kenan Lucas is the managing director and portfolio manager of the Discovery Fund GP and the Discovery Co-Investment Fund GP, which serve as general partner of the Discovery Fund and the Discovery Co-Investment Fund, respectively. Jack Bryant is a Senior Advisor to the Discovery Fund, and a Vice President and Senior Managing Director of HMC. Raymond Harbert is the controlling shareholder, Chairman and Chief Executive Officer of HMC, an alternative asset investment management firm that is the managing member of the Discovery Fund GP and Discovery Co-Investment Fund GP. Mr. Harbert also serves as the Chairman, Chief Executive Officer and Director of HFA, an indirect, wholly owned subsidiary of HMC, which provides the Funds with certain operational and administrative services. The principal business of each of the Funds is purchasing, holding and selling securities for investment purposes. Mr. Blank is a private investor and investment management advisor.
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 13 of 16 Pages
|
(d)
|
During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
|
|
|
(e)
|
During the last five years, none of the Reporting Persons have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and were not and are not, as a result of any such proceeding, subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
|
Item 3.
|
SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
|
|
|
Item 3 of the Schedule 13D is hereby amended and restated in its entirety as follows:
|
|
The funds for the purchase of the Common Stock by the Funds came from the working capital of the Funds, over which HFA, HMC, the Fund GPs, Jack Bryant, Kenan Lucas and Raymond Harbert, through their roles described above in Item 2(c), exercise investment discretion. No borrowed funds were used to purchase the shares of Common Stock reported in this Schedule 13D, other than borrowed funds used for working capital purposes in the ordinary course of business. The total costs of the Common Stock directly owned by the Funds is approximately $17,299,630.
|
|
The funds for the purchase of the Common Stock by Mr. Blank came from his personal funds. The total cost of the Common Stock directly owned by Mr. Blank is approximately $37,409.
|
Item 4.
|
PURPOSE OF TRANSACTION
|
|
|
Item 4 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
|
|
|
|
On September 17, 2019, Discovery Fund and Discovery Co-Investment Fund submitted to the Issuer a notice of their intention to nominate two individuals—Fabian Blank and Peter J. Clemens IV (collectively, the “Nominees”)—for election to the Board at the 2019 annual meeting of shareholders of the Issuer.
|
|
|
|
Additionally, Harbert issued a press release (the “Press Release”), announcing, among other things, its nomination of the Nominees. This description of the Press Release is qualified in its entirety by reference to the full text of the Press Release, which is attached hereto as Exhibit 2 and is incorporated by reference herein.
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 14 of 16 Pages
|
Item 5.
|
INTEREST IN SECURITIES OF THE ISSUER
|
|
|
Items 5(a) - (c) of the Schedule 13D are hereby amended and restated in their entirety as follows:
|
|
|
(a)
|
See rows (11) and (13) of the cover pages to this Schedule 13D for the aggregate number of shares of Common Stock and percentages of the Common Stock beneficially owned by each Reporting Person. The percentages used in this Schedule 13D are calculated based upon 47,556,807 shares of Common Stock outstanding as of June 1, 2019, as reported in the Issuer’s Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2019, filed with the Securities and Exchange Commission on June 10, 2019.
|
|
|
|
By reason of Harbert’s intention to solicit proxies of shareholders in favor of appointing Mr. Blank to the Board, Harbert and Mr. Blank may be deemed members of a “group” within the meaning of Section 13(d)(3) of the Act and the “group” may be deemed to beneficially own an aggregate of 5,630,961 shares of Common Stock, or approximately 11.84% of the outstanding shares of Common Stock. Harbert expressly disclaims beneficial ownership of any shares of Common Stock beneficially owned by Mr. Blank and Mr. Blank expressly disclaims beneficial ownership of any shares of Common Stock beneficially owned by Harbert.
|
|
|
(b)
|
See rows (7) through (10) of the cover pages to this Schedule 13D for the number of shares of Common Stock as to which each Reporting Person has the sole or shared power to vote or direct the vote and sole or shared power to dispose or to direct the disposition.
|
|
|
(c)
|
The transactions in the shares of Common Stock effected by Harbert since the filing of Harbert's last Schedule 13D amendment, which were all in the open market, are set forth in Annex A, and are incorporated herein by reference. Mr. Blank has not effected any transactions in the Common Stock in the past sixty days.
|
Item 6.
|
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
|
|
|
Item 6 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
|
|
|
The Reporting Persons entered into an agreement with each of the Nominees (the “Nomination Agreement”) whereby, among other things, each Nominee party to a Nomination Agreement agreed to obtain the consent of the Reporting Persons prior to any purchase or sale of securities of the Issuer occurring prior to the termination of the Nomination Agreement. This description of the Nomination Agreement is qualified in its entirety by reference to the full text of the Nomination Agreement, the form of which is attached hereto as Exhibit 3 and is incorporated by reference herein.
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 15 of 16 Pages
|
|
On September 17, 2019, the Reporting Persons entered into a Joint Filing Agreement in which, among other things, the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is filed as Exhibit 4 to this Schedule 13D and is incorporated by reference into this Item 6.
|
Item 7.
|
MATERIAL TO BE FILED AS EXHIBITS
|
|
|
Item 7 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
|
|
|
Exhibit 2:
|
Press Release
|
|
|
Exhibit 3:
|
Form of Nomination Agreement
|
|
|
Exhibit 4:
|
Joint Filing Agreement
|
|
|
|
CUSIP No. 294100102
|
SCHEDULE 13D/A
|
Page 16 of 16 Pages
|
SIGNATURES
After reasonable inquiry and to the best
of his or its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: September 17, 2019
|
Harbert Discovery Fund, LP
|
|
By: Harbert Discovery Fund GP,
LLC,
its General Partner
|
|
By: Harbert Management Corporation,
its Managing Member
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
|
|
Harbert Discovery Fund GP, LLC
|
|
|
|
By: Harbert Management Corporation,
its Managing Member
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
|
|
Harbert Discovery Co-Investment Fund I, LP
|
|
By: Harbert Discovery Co-Investment
Fund I GP, LLC, its General Partner
|
|
|
|
By: Harbert Management Corporation,
its Managing Member
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
Harbert Discovery Co-Investment Fund I GP, LLC
|
|
|
|
By: Harbert Management Corporation,
its Managing Member
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
|
|
Harbert Fund Advisors, Inc.
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
Harbert Management Corporation
|
|
By: /s/ John McCullough
Executive Vice President and
General Counsel
|
|
By: /s/ Jack Bryant
Jack Bryant
|
|
|
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By: /s/ Kenan Lucas
Kenan Lucas
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By: /s/ Raymond Harbert
Raymond Harbert
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Fabian Blank
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/s/ Fabian Blank
Fabian Blank
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Annex A
This Annex sets forth information with respect to each purchase
and sale (excluding brokerage commissions) of Common Stock which was effectuated by Harbert since the filing of Harbert's last
Schedule 13D amendment. All transactions were effectuated in the open market through a broker.
Harbert Discovery Fund, LP
Trade Date
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Common Stock
Purchased (Sold)
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Price Per Share ($)
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08/16/2019
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22,800
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3.06
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08/20/2019
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9,700
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3.11
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EXHIBIT
2
Harbert Discovery Fund Nominates Two Highly-Qualified
Independent Candidates to Enzo Biochem Board
Sends Letter to Shareholders Highlighting
Enzo’s Sustained History of Underperformance and Missteps of Current Entrenched Board and Management Team
Believes Current Leadership Has Operated Enzo
as a “Lifestyle Business” With Its Own Interests Placed Ahead of Shareholders’
HDF’s Director Candidates – Fabian
Blank and Peter Clemens – Can Help Address Depressed Stock Price and Create Significant Value for All Shareholders
Full letter available at https://cureenzo.com/
Birmingham, AL, September 17, 2019 –
Harbert Discovery Fund, LP and Harbert Discovery Co-Investment Fund I, LP (collectively “HDF”), the beneficial owner
of more than 11.8% of the outstanding shares of Enzo Biochem, Inc. (NYSE: ENZ) (“Enzo” or the “Company”),
announced today in a detailed letter to shareholders that it is nominating two director candidates for election to the Company’s
Board of Directors (the “Board”) at its 2019 Annual Meeting of Shareholders.
The full text of the letter follows:
September 17, 2019
Dear Fellow Shareholders,
Harbert Discovery Fund, LP and Harbert Discovery
Co-Investment Fund I, LP (collectively “HDF”) currently own approximately 11.8% of the outstanding shares of Enzo Biochem,
Inc. (NYSE: ENZ) (“Enzo” or the “Company”), making us the Company’s largest shareholder.
We are writing today because we believe Enzo
is deeply undervalued. This depressed valuation is, in our view, a direct result of the Company’s current Board of Directors’
(the “Board”) and management team’s persistent inability to execute Enzo’s stated strategy, deliver on
the promises of the Company’s technology and manage the cost structure of the business prudently.
For decades, Enzo has operated as a “lifestyle
business,” where management has seemingly placed its own personal and financial interests ahead of its shareholders’
best interests. The Board has repeatedly let this behavior go unchecked and has failed to hold management accountable for its clear
inability to deliver profitable growth or acceptable absolute or relative shareholder returns.
Enzo’s underperformance is not a matter
of perspective or a story requiring nuance: the Company has drastically underperformed the Russell 2000 by nearly 1,100% over the
last 30 years. Clearly, it is time for change. This is why over the last several months we have attempted to engage in substantive,
private discussions with the Company regarding the composition of the Board, in an effort to install new independent directors
who can help address the Company’s problems. Unfortunately, the Board’s ultimate response to our discussions was unproductive,
and we are now forced to pursue other options to ensure that shareholders are properly represented in the Board room.
We are nominating two highly-qualified Board
candidates – Fabian Blank and Peter Clemens – for election at the 2019 Annual Meeting of Shareholders (the “Annual
Meeting”). These independent candidates have deep operational, financial and strategic experience within the healthcare industry.
Having already studied Enzo and the challenges it faces, both candidates are prepared to bring their substantive experience to
bear to help steer the Company in the direction of long-term value creation for all shareholders. HDF believes our candidates can
immediately help improve the Company’s expense structure and implement a
growth strategy that will generate durable long-term
shareholder value. Our nominees also are well-positioned to create near-term value through a full exploration of strategic alternatives,
with a focus on potential sales of non-core assets and intellectual property.
The Case for Change at Enzo
Sustained History of Value Destruction:
It is our belief that management and the Board’s
misguided strategy and failure to execute coupled with an excessive, misaligned and unjustifiable compensation structure has resulted
in consistent value destruction for shareholders, as evidenced by Enzo’s stock price which has significantly underperformed
any relevant index or peer group comparison across any time period, going back 30 years. See Image 1: Total Shareholder Return.
Total Shareholder Return
1
History of Overpromising and Underdelivering:
Management has a long track record of hyping
various platforms and technologies in development, only to fail to deliver the promised results. While this pattern is systemic
and has repeated itself for decades, the debacle with AmpiProbe provides a current and salient example of this disappointing phenomenon.
Since 2012, Enzo has briefed investors on its
strategy to roll out a new lower cost lab-to-lab business model derived from the development of AmpiProbe:
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2012 – Management
first highlighted AmpiProbe and its significant potential in March during its second quarter earnings call.
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1 Source: Bloomberg as of August 31, 2019.
Note: 2018 Proxy Peer Group performance calculated as an equal weight index.
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2014 – Two
years after the original promise of AmpiProbe, during the fiscal Q4 2014 earnings call in October, management stated in reference
to AmpiProbe, “We hope to see the first of these tests available for marketing sometime after the first of the calendar year.”
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2015 – The
Company’s December investor presentation referred to the potential of AmpiProbe to deliver cost savings to the market, stating,
“Enzo Is Positioned to Thrive NOW.”
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2016 – AmpiProbe
had still not progressed. On the fiscal Q3 2016 earnings call held in June, management stated, “I think we are in fairly
good shape to hopefully see a comprehensive product sometime by year end or soon thereafter. And what I mean by comprehensive product
is a panel that can potentially generate revenue growth for us as a company of some size.”
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2018 – Two
and a half years later on the fiscal Q1 2019 earnings call held in December 2018, management stated, “We have been working
to now build systems that not only will be approved for a New York State approval, but also for an FDA approval and that is very
important in the totality of this process and we are moving forward in that.” This comment is particularly objectionable
considering management initially indicated that FDA approval would not be required, claiming New York State approval would suffice.
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Despite its statements over the past seven years
that AmpiProbe would drive growth and profitability for Enzo, as of today, AmpiProbe has not generated any material revenue
for the Company. In fact, Enzo’s revenues declined from $103 million in fiscal 2012 to $87 million in the LTM period
ended April 30, 2019.2
Similar to its failed promises about new products
generating growth, for years management has repeatedly pointed to strategic partnerships as a source of growth – yet nothing
has ever come to fruition.
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2014 – “We
continue to look for effective least dilutive ways to monetize many of the transformational technologies we have developed. And
as such, we continue to explore joint ventures and other forms of partnerships as a way to help advance technologies and benefit
all of us as shareholders” – Barry Weiner Q3 2014 Earnings Call.
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2016 – “Establishing
business relationships on many fronts is a key goal of the many goals that we have set forth for our team here. We are in dialog
with multiple parties. We are fortunate that we have many platform technologies that appeal and touch on different segments of
this particular marketplace and we are looking to expand those platforms into areas where we may not have the interest or the time
or the focus to expand the utility of the platforms. And so we are in dialog. And you could very well see the consummation of relationships
with a number of parties out there in the near future.” – Barry Weiner Q4 2016 Earnings Call.
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2018 – “Finally,
we have been developing cost effective approaches on various platforms, not only in molecular, but in the area of anatomical pathology,
immunohistochemistry, in flow cytometry these various platforms and business opportunities that are under development, provide
from multiple unique opportunities to partner and joint venture to exploit the commercialization capability that they present and
dialog is now currently underway to try to move these products in a more expeditious way.” – Barry Weiner Q4 2018 Earnings
Call.
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2019 – “Our
commercial efforts towards implementing our marketing plan is twofold, expanding our internal highly trained and technical sales
teams and supplementing this effort with a focused business development program to partner, collaborate and/or combine with companies
in the diagnostic testing market. In the past quarter alone we’ve held numerous discussions with many
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2 Source: Company filings.
strategic partners, many of whom we’ve
met with over the last year. Defining the scope of new relationships and building collaborations and partnerships takes time. However,
Enzo’s disruptive strategic plan is gaining market awareness and acceptance and we are confident new relationships will materialize.”
– Barry Weiner Q2 2019 Earnings Call.
We have identified dozens of Company quotes
substantively similar to the above. Despite all of these statements, to date the Company has not announced any material strategic
partnerships, further illuminating the same pattern of hype and failure that the Board has overseen for years.
This is, in our view, the behavior of a leadership
team more concerned with the self-perpetuation of a “lifestyle business” than with delivering results to shareholders,
and of a Board that has failed to provide effective oversight for years.
Failed Corporate Governance:
Enzo’s corporate governance is structured
to maintain the status quo and benefit insiders at the expense all other stakeholders. The over-tenured Board has approved a misguided
strategy and not held management accountable for years of underperformance. It is widely accepted that boards that follow corporate
governance best practices make better decisions that result in positive outcomes for all shareholders. They clearly define a company’s
strategy and hold the management team accountable for delivering on that strategy. Enzo desperately needs fresh perspective in
the boardroom in order to address numerous governance deficiencies, including:
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Dual Chairman/CEO as compared
to the overwhelming majority of Russell 3000 companies that have separated the two positions;3
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Chairman/CEO holds a 44-year
tenure;
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CFO is on the Board with
a running 43-year tenure;
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Average director tenure
is 20+ years as compared to an average of 11-13 years for the Russell 3000;4
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Average director age is
65;
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Classified Board as compared
to the majority of Russell 3000 companies that elect all their directors annually;5 and
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Shareholders do not have
the right to call a special meeting.
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Excessive Compensation for Underperformance:
Consistent losses of shareholder value, consistent
promises of successes just around the corner that never seem to arrive and a consistent lack of oversight at the Board level appear
to be the hallmarks of Enzo.
Enzo has reported operating losses every year
since 2004, with cumulative negative operating income of -$180 million, excluding legal expenses and settlements. Yet, during this
same period, the Board approved paying Chairman / CEO Elazar Rabbani and his brother-in-law CFO Barry Weiner nearly $32 million,
including a bonus every single year. This figure does not include the annual related-party payments Mr. Rabbani and Mr. Weiner
receive in exchange for leasing the Farmingdale lab facility to the Company. In 2018, Mr. Rabbani and Mr. Weiner each received
roughly $600,000 under this arrangement. Additionally, in 2018 while the stock cratered -59% over the course of the year, Mr. Rabbani
and Mr. Weiner were paid $2.7 million not including the related party payments.
______________________________________________
3 https://www.russellreynolds.com/en/Insights/thought-leadership/Documents/TCB-Corporate-Board-Practices-2019.pdf
4 https://corpgov.law.harvard.edu/2019/05/07/corporate-board-practices-in-the-sp-500-and-russell-3000-2019-edition/
5 All of the five largest U.S. mutual funds, the Council
of Institutional Investors, the largest public pension funds, and the leading proxy advisory firms (ISS and Glass Lewis) have adopted
policies that support the annual election of directors and oppose board classification. See proxy voting guidelines for
Fidelity, Vanguard, American Funds, Franklin Mutual Advisers, and T. Rowe Price; Council of Institutional Investors, Policies on
Corporate Governance (2016); CalPERS, Global Principles of Accountable Corporate Governance (2010); Institutional Shareholder Services,
U.S. Proxy Voting Summary Guidelines (2013), and Glass Lewis & Co., Proxy Paper Guidelines.
We believe this unacceptable performance coupled
with Enzo’s hallmark of declining profitability is a direct result of management’s defective strategy and lack of execution,
making the excessive compensation even more troubling. A truly independent and competent Board would not reward management for
such dramatic long-term fundamental underperformance, and would instead have long ago aligned leadership’s compensation plan
with the level of value generated for shareholders.
The Opportunity at Enzo
In spite of the decades of poor oversight and
mismanagement, Enzo has a collection of businesses and assets that, with a sound growth strategy, more prudent expense structure,
appropriate capital allocation, and effective, independent oversight could be worth significantly more than the value currently
ascribed by the market.
The bulk of the value at Enzo could be unlocked
through three factors:
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A new corporate strategy
that acknowledges Enzo’s strengths and weaknesses as well as the broader market realities;
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A sale of non-core assets;
and
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3.
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Once Enzo is generating
cash, return of excess cash to shareholders.
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Enzo’s attempts to launch a new model
for the diagnostic marketplace has overburdened the business with unnecessary expenses. Enzo has neither the scale nor the expertise
to execute on this strategy and attempting to do so puts the whole enterprise at risk. Enzo is too small today and building out
a sales force would be too costly for Enzo to successfully market the “labs to labs” business whereby Enzo will serve
as the “central capability” for smaller labs.6 Investor’s recognition of this fact is a significant
factor of the share price underperformance over the years.
Instead, Enzo should focus on the inherent strengths
of its lab’s location in a high-density population market and strong relationships with existing customers. Building on those
two strengths coupled with prudent cost cuts could return that segment to profitability.
With respect to the life sciences division,
Enzo is correct to look to strategic partnerships to accelerate growth. The failure to consummate any meaningful partnerships over
the years is, we believe, a result of management failures and weak Board oversight as well as Enzo’s highly litigious reputation
in the industry. Without change, shareholders will continue to see the pattern of promises without follow-through. However, we
believe the vast expertise and extensive networks of our candidates will put Enzo in a position to execute strategic partnerships
that can quickly accelerate growth in the life sciences division.
Enzo has a very valuable patent portfolio of
343 patents and 157 patents pending as evidenced by $117 million of settlements since 2001. Unfortunately, Enzo’s legal expenses
over that period were $99 million.7 Not only has decades of patent litigation at Enzo harmed the Company’s reputation,
impairing its ability to form partnerships for growth, but the litigation has not produced an attractive return for shareholders.
Instead of continuing to litigate, Enzo should look to monetize non-core patents. This would provide an immediate, substantial
cash inflow to the business, while also signaling to potential strategic partners that Enzo is looking to work together in good
faith in the future.
The therapeutics division has value to a strategic
buyer, but at Enzo it has proved to be a distraction to management and the Company as a whole. Instead of periodically promoting
one potential therapy or another, only to see it fail to progress beyond a Phase I or Phase II trial, Enzo should sell the division
to a buyer with a proven track record of successful therapeutic development. Divesting therapeutics would provide the best risk
adjusted value for Enzo shareholders.
______________________________________________
6 Enzo third quarter and nine months
operating results press release dated June 10, 2019.
7 SEC filings.
Following the right sizing of the clinical services
cost structure, accelerated growth in the life sciences division, the sale of non-core IP, and the sale of the therapeutics division,
Enzo could have a cash balance that matches or exceeds the current market capitalization of the business today. Under those assumptions,
shareholders are getting $87 million of revenue for free today when peers for the clinical services division and life sciences
division trade for roughly 2.2x revenue and 6.5x revenue, respectively. Applying those multiples to each segment implies nearly
3x upside from the current share price.
Clearly, there is substantial opportunity at
Enzo for all shareholders. However, the current, misguided strategy is resulting in increasing expenses and a declining cash balance.
The current Board cannot, in our view, achieve Enzo’s full potential. Immediate change is needed.
Our Solution for Enzo
It is our view that Enzo’s Board is entrenched,
detached and more focused on self-perpetuation than the concerns of other shareholders. Its seeming acceptance of negative returns,
insider dealings, and constant misallocation of capital is simply unacceptable. Each day the current Board remains in place the
status quo continues – and shareholders suffer.
HDF believes two new independent directors will
be able to refocus Enzo’s Board and swiftly deliver value for shareholders. After an extensive search, HDF has identified
two extremely qualified Board candidates who we believe, upon election and subject to their fiduciary duties, will:
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Bring new and necessary
perspectives to the Board;
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Develop a better strategic
plan for the business;
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Be immediately impactful
in addressing the Company’s bloated cost structure;
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Hold management accountable
for its performance;
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Deliver on the potential
of strategic partnerships to grow the business;
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Restructure executive
compensation in a manner that is aligned with shareholder interests; and
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Evaluate the full range
of strategic alternatives available to create shareholder value.
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HDF’s highly-qualified director candidates, who
will truly represent and act in the best interests of all shareholders, will realign the Company’s operating and growth strategy
and create significant value at Enzo, are:
Fabian Blank: Healthcare Advisor and Investor
Operational Expertise – Substantial operational
and growth experience in healthcare space
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Mr. Blank is a senior healthcare executive with a
broad and diversified operational background across multiple areas of the healthcare industry and substantial experience advising
companies like Enzo on healthcare strategy, digitalization, disruption, and growth.
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Mr. Blank is an Independent Non-Executive Director
of Georgia Healthcare Group PLC, an integrated healthcare group that is prime listed on the London Stock Exchange. His primary
focus is on guiding the group through its digitalization and growth ambitions across its services-, pharma-, laboratory- and insurance
assets.
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Mr. Blank serves as an Advisory Board Member of GYANT.com,
a US-based health tech company providing artificial intelligence enabled patient engagement services to HMOs and other healthcare
players. He is particularly focused on establishing the company’s business in Europe.
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Mr. Blank is the Non-Executive Chairman of Recover
Health Ltd., an Israeli digital health startup focused on developing a digital platform to increase the quality of life of both
stroke survivors and caregivers.
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From 2013 to 2016, Mr. Blank was the CEO and Co-owner
of the Meduna Klinik Group, a privately held clinic group specialized on post-acute services. He successfully grew revenues and
EBITDA in a highly competitive market before consummating a successful sale to a private equity buyer.
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From 2000 to 2013, he was at McKinsey & Company,
Inc., where he also served as a Partner of the firm. He served technology and healthcare clients from various settings of acute,
rehab, labs or polyclinics on growth topics, with operational presence in over 20 countries.
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He holds a graduate business management degree (Diplom
Kaufmann) from the HHL Leipzig Graduate School of Management and completed additional studies at University of Trier, Boston University’s
Questrom School of Business and ESADE in Barcelona, Spain.
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Peter (Pete) Clemens: Director of Vituro Health
Financial Expertise – Public healthcare company
CFO
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Mr. Clemens has a distinguished career in healthcare
serving in multiple senior finance roles and is a two-time public company healthcare CFO with significant turnaround, growth, operational,
and M&A experience. During his tenures, shareholders of his past companies saw annualized returns of 33.7% and 38.0%, respectively.
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He is currently the Director of Vituro Health and
Chairman of the Samford University Board of Overseers.
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From 2011 to 2015, Mr. Clemens served as the CFO of
Surgical Care Affiliates, providing valuable guidance through an IPO process, transitioning from private equity ownership, and
several years of robust growth for the company.
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From 1995 to 2010, he worked at Caremark where he
held multiple senior finance roles for over 15 years and was CFO of the company as they successfully completed a $21B merger of
equals with CVS Corporation after over a decade of tremendous growth and outsized returns to shareholders.
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Mr. Clemens previously served on the board of DSI
Renal, a privately-owned dialysis company that was sold to Fresenius in September of 2011.
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Mr. Clemens began his career in credit and lending
roles at both AmSouth Bank and Wachovia Bank.
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He holds a Bachelor’s degree from Samford University
and an MBA in Finance from Vanderbilt University.
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The status quo is not what Enzo needs. We believe
the current Board lacks the leadership, objectivity and perspective to hold management accountable and make decisions that are
in the best interests of all shareholders. For months, HDF has attempted to engage in productive dialogue with the Company to reconstruct
the Board. Our strong preference was to work privately in a constructive manner with the goal of greatly improving corporate governance
while attempting to avoid the difficulties and distractions of a proxy battle. The Company’s response has been unproductive
and discouraging, while highlighting the deep-seated issues resulting from the Company’s lack of leadership and oversight.
Without shareholder involvement, we believe
management will continue to benefit as shareholders continue to suffer. Therefore, we are nominating our candidates for election
to the Board at the 2019 Annual Meeting of Shareholders.
Sincerely,
Harbert Discovery Fund, LP
Harbert Discovery Co-Investment Fund I, LP
Kenan Lucas, Managing Director and Portfolio Manager of Harbert Discovery
Fund GP, LLC and Harbert Discovery Co-Investment Fund I GP, LLC
SECURITY HOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES FROM THE STOCKHOLDERS OF ENZO BIOCHEM,
INC. BY Harbert Discovery Fund, LP, Harbert Discovery Fund GP, LLC, Harbert discovery co-investment
fund i, lp, harbert discovery co-investment fund i gp, llc, Harbert Fund Advisors, Inc., Harbert Management Corporation, Jack Bryant,
Kenan Lucas, and Raymond Harbert WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION
RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL
BE MAILED TO STOCKHOLDERS OF ENZO BIOCHEM, INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S
WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION IS CONTAINED IN THE
SCHEDULE 13D, AS ORIGINALLY FILED ON APRIL 8, 2019 AND AS MOST RECENTLY AMENDED ON SEPTEMBER 17, 2019. EXCEPT AS OTHERWISE DISCLOSED
IN SUCH SCHEDULE 13D, THE PARTICIPANTS HAVE NO INTEREST IN ENZO BIOCHEM, INC.
Important Disclosure
THIS STATEMENT CONTAINS
OUR CURRENT VIEWS ON THE VALUE OF SECURITIES OF ENZO BIOCHEM, INC. (“ENZO”). OUR VIEWS ARE BASED ON OUR ANALYSIS OF
PUBLICLY AVAILABLE INFORMATION AND ASSUMPTIONS WE BELIEVE TO BE REASONABLE. THERE CAN BE NO ASSURANCE THAT THE INFORMATION WE CONSIDERED
IS ACCURATE OR COMPLETE, NOR CAN THERE BE ANY ASSURANCE THAT OUR ASSUMPTIONS ARE CORRECT. WE DO NOT RECOMMEND OR ADVISE, NOR DO
WE INTEND TO RECOMMEND OR ADVISE, ANY PERSON TO PURCHASE OR SELL SECURITIES AND NO ONE SHOULD RELY ON THIS STATEMENT OR ANY ASPECT
OF THIS STATEMENT TO PURCHASE OR SELL SECURITIES OR CONSIDER PURCHASING OR SELLING SECURITIES. THIS STATEMENT DOES NOT PURPORT
TO BE, NOR SHOULD IT BE READ, AS AN EXPRESSION OF ANY OPINION OR PREDICTION AS TO THE PRICE AT WHICH ENZO’S SECURITIES MAY
TRADE AT ANY TIME. AS NOTED, THIS STATEMENT EXPRESSES OUR CURRENT VIEWS ON ENZO. OUR VIEWS AND OUR HOLDINGS COULD CHANGE AT ANY
TIME WITHOUT NOTICE AND WE MAKE NO COMMITMENT TO UPDATE THIS STATEMENT IN THE EVENT OUR VIEWS OR HOLDINGS CHANGE. INVESTORS SHOULD
MAKE THEIR OWN DECISIONS REGARDING ENZO AND ITS PROSPECTS WITHOUT RELYING ON, OR EVEN CONSIDERING, ANY OF THE INFORMATION CONTAINED
IN THIS STATEMENT.
About Harbert Discovery Fund (HDF)
HDF invests in a concentrated portfolio
of publicly traded small capitalization companies in the US and Canada. We perform significant due diligence on each portfolio
company prior to investing. In addition to researching all publicly available information and meeting with management, our diligence
includes substantial primary research with industry experts, consultants, bankers, customers and competitors. We often spend months
or years researching ideas before making an investment decision and we only invest in companies that we believe are significantly
undervalued, and where there is the potential for change to enhance or accelerate value creation. In an effort to unlock this potential
value, we seek to work directly with the boards and management teams of our portfolio companies privately and collaboratively,
engaging with them on a range of factors including governance, board composition, corporate strategy, capital allocation, strategic
alternatives and operations. We have effected positive, fundamental changes at our current and past investments through this behind-the-scenes,
constructive approach. HDF currently has board representation at three of our portfolio companies. In each case, changes to the
board were agreed upon privately and it is our strong preference in every investment to avoid the unnecessary distractions and
costs of a public proxy campaign.
About Harbert Management Corporation (HMC)
HMC is an alternative asset management
firm with approximately $6.6 billion in regulatory assets under management as of September 1, 2019. HMC currently sponsors nine
distinct investment strategies with dedicated investment teams. Additional information about HMC can be found at www.harbert.net.
Investor Contact
Okapi Partners LLC
Bruce Goldfarb / Chuck Garske / Jason Alexander,
212-297-0720
info@okapipartners.com
Media Contact
Sloane & Company
Dan Zacchei / Sarah Braunstein, 212-486-9500
dzacchei@sloanepr.com / sbraunstein@sloanepr.com
EXHIBIT 3
FORM OF NOMINATION AGREEMENT
1. This
Nomination Agreement (the “Agreement”) is by and between Harbert Discovery Fund, LP and Harbert Discovery Co-Investment
Fund I, LP (“Harbert,” “we” or “us”) and []
(“you”).
2. You
agree that you are willing, should we so elect, to become a member of a slate of nominees (the “Slate”) of a Harbert
affiliate (the “Nominating Party”), which nominees shall stand for election as directors of Enzo Biochem, Inc. (the
“Corporation”) in connection with a proxy solicitation (the “Proxy Solicitation”) to be conducted in respect
of the 2019 annual meeting of shareholders of the Corporation (including any adjournment or postponement thereof or any special
meeting held in lieu thereof, the “Annual Meeting”) or appointment or election by other means. You further agree to
serve as a director of the Corporation if so elected or appointed.
3. Harbert
agrees on behalf of the Nominating Party that, so long as you actually serve on the Slate, Harbert will defend, indemnify and hold
you harmless from and against any and all losses, claims, damages, penalties, judgments, awards, settlements, liabilities, costs,
expenses and disbursements (including, without limitation, reasonable attorneys’ fees, costs, expenses and disbursements)
incurred by you in the event that you become a party, or are threatened to be made a party, to any civil, criminal, administrative
or arbitrative action, suit or proceeding, and any appeal thereof, (i) relating to your role as a nominee for director of the Corporation
on the Slate, or (ii) otherwise arising from or in connection with or relating to the Proxy Solicitation. Your right of indemnification
hereunder shall continue after the Annual Meeting has taken place but only for events that occurred prior to the Annual Meeting
and subsequent to the date hereof. Anything to the contrary herein notwithstanding, Harbert is not indemnifying you for any action
taken by you or on your behalf that occurs prior to the date hereof or subsequent to the conclusion of the Proxy Solicitation or
such earlier time as you are no longer a nominee on the Slate or for any actions taken by you as a director of the Corporation,
if you are elected. Nothing herein shall be construed to provide you with indemnification (i) if you are found to have engaged
in a violation of any provision of state or federal law in connection with the Proxy Solicitation, unless you demonstrate that
your action was taken in good faith and in a manner you reasonably believed to be in or not opposed to the best interests of electing
the Slate; (ii) if you acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if you provided false
or misleading information, or omitted material information, in the Questionnaires (as defined below) or otherwise in connection
with the Proxy Solicitation. You shall promptly notify Harbert in writing in the event of any third-party claims actually made
against you or known by you to be threatened if you intend to seek indemnification hereunder in respect of such claims. In addition,
upon your delivery of notice with respect to any such claim, Harbert shall promptly assume control of the defense of such claim
with counsel chosen by Harbert. Harbert shall not be responsible for any settlement of any claim against you covered by this indemnity
without its prior written consent. However, Harbert may not enter into any settlement of any such claim without your consent unless
such settlement includes (i) no admission of liability or guilt by you, and (ii) an unconditional release of you from
any and all liability or obligation in respect
of such claim. If you are required to enforce the obligations of Harbert in this agreement in a court of competent jurisdiction,
or to recover damages for breach of this agreement, Harbert will pay on your behalf, in advance, any and all expenses (including,
without limitation, reasonable attorneys’ fees, costs, expenses and disbursements) actually and reasonably incurred by you
in such action, regardless of whether you are ultimately determined to be entitled to such indemnification or advancement of expenses.
4. You
understand that it may be difficult, if not impossible, to replace a nominee who, such as yourself, has agreed to serve on the
Slate and, if elected, as a director of the Corporation if such nominee later changes his mind and determines not to serve on the
Slate or, if elected, as a director of the Corporation. Accordingly, Harbert is relying upon your agreement to serve on the Slate
and, if elected, as a director of the Corporation. In that regard, you will be supplied with a questionnaire (the “Harbert
Questionnaire”) in which you will provide Harbert with information necessary for the Nominating Party to make appropriate
disclosure to the Corporation and to use in creating the proxy solicitation materials to be sent to stockholders of the Corporation
and filed with the Securities and Exchange Commission in connection with the Proxy Solicitation, and may in the future be supplied
with a questionnaire from the Corporation for similar purposes (together with the Harbert Questionnaire, the “Questionnaires”).
5. You
agree that (i) upon request you will promptly complete, sign and return the Questionnaires, (ii) your responses in the Questionnaires
will be true, complete and correct in all respects, and (iii) you will provide any additional information related to the Proxy
Solicitation as may be reasonably requested by Harbert. In addition, you agree that you will execute and return a separate instrument
confirming that you consent to being nominated for election as a director of the Corporation and, if elected, consent to serving
as a director of the Corporation. Upon being notified that you have been chosen, we and the Nominating Party may forward your consent
and completed Questionnaires (or summaries thereof), to the Corporation, and we and the Nominating Party may at any time, in our
and their discretion, disclose the information contained therein, as well as the existence and contents of this Agreement. Furthermore,
you understand that we may elect, at our expense, to conduct a background and reference check on you and you agree to complete
and execute any necessary authorization forms or other documents required in connection therewith.
6. You
further agree that (i) you will treat confidentially all information relating to the Proxy Solicitation which is non-public, confidential
or proprietary in nature; (ii) you will not issue, publish or otherwise make any public statement or any other form of public communication
relating to the Corporation or the Proxy Solicitation without the prior approval of Harbert; and (iii) you will not agree to serve,
or agree to be nominated to stand for election by the Corporation or any other stockholder of the Corporation (other than Harbert
and its affiliates), as a director of the Corporation without the prior approval of Harbert.
7. With
respect to the purchase or sale of the securities of the Corporation, (i) you agree to obtain consent from Harbert prior to the
purchase or sale of any securities of the Corporation and, should Harbert provide such consent, to provide necessary information
following such purchases or sales so that we may comply with any applicable disclosure or other obligations which may
result from such investment and (ii) Harbert
or its affiliates shall prepare and complete any required disclosures including all regulatory filings related thereto at no cost
to you. With respect to any purchases made pursuant to this paragraph you agree not to dispose of any such securities prior to
the termination of this Agreement without the prior consent of Harbert.
8. Each
of us recognizes that should you be elected or appointed to the Board all of your activities and decisions as a director will be
governed by applicable law and subject to your fiduciary duties, as applicable, to the Corporation and to the stockholders of the
Corporation and, as a result, that there is, and can be, no agreement between you and Harbert that governs the decisions which
you will make as a director of the Corporation.
9. This
Agreement shall automatically terminate on the earliest to occur of (i) the conclusion of the Annual Meeting, (ii) your election
or appointment to the Board, (iii) the termination of the Proxy Solicitation or (iv) our election to not include you as part of
the Slate, provided, however, that the second and third, Harbert’s confidentiality obligations in the fifth, and the eighth,
tenth and eleventh paragraphs of this Agreement shall survive such termination.
10. This
Agreement sets forth the entire agreement between Harbert and you as to the subject matter contained herein, and cannot be amended,
modified or terminated except by a writing executed by Harbert and you.
11. This
Agreement shall be governed by the laws of the State of Alabama, without regard to the principles of the conflicts of laws thereof.
The parties agree to the exclusive jurisdiction of the state and federal courts of Birmingham, Alabama, and waive, and agree not
to plead or to make, any claim that any action or proceeding brought in the state and federal courts of Alabama, Alabama has been
brought in an improper or inconvenient forum.
[Signature Page Follows]
Agreed to as of the date the parties have signed:
HARBERT DISCOVERY FUND, LP
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By: __________________________________
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Name:
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Title:
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Date:
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HARBERT DISCOVERY CO-INVESTMENT FUND I, LP
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By: __________________________________
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Name:
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Title:
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Date:
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NOMINEE:
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Name:
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Date
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EXHIBIT 4
Joint Filing Agreement
PURSUANT TO RULE 13d-1(k)
The undersigned acknowledge
and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments
to this statement on Schedule 13D may be filed on behalf of each of the undersigned without the necessity of filing additional
joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and
for the completeness and accuracy of the information concerning him, her or it contained herein and therein, but shall not be responsible
for the completeness and accuracy of the information concerning the others, except to the extent that he, she or it knows that
such information is inaccurate.
Dated: September 17, 2019
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Harbert Discovery Fund, LP
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By: Harbert Discovery Fund GP,
LLC,
its General Partner
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By: Harbert Management Corporation,
its Managing Member
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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Harbert Discovery Fund GP, LLC
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By: Harbert Management Corporation,
its Managing Member
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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Harbert Discovery Co-Investment Fund I, LP
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By: Harbert Discovery Co-Investment
Fund I GP, LLC, its General Partner
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By: Harbert Management Corporation,
its Managing Member
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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Harbert Discovery Co-Investment Fund I GP, LLC
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By: Harbert Management Corporation,
its Managing Member
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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Harbert Fund Advisors, Inc.
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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Harbert Management Corporation
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By: /s/ John McCullough
Executive Vice President and
General Counsel
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By: /s/ Jack Bryant
Jack Bryant
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By: /s/ Kenan Lucas
Kenan Lucas
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By: /s/ Raymond Harbert
Raymond Harbert
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Fabian Blank
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/s/ Fabian Blank
Fabian Blank
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