<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 18, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CN BIOSCIENCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2833 33-0509785
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
(619) 450-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JAMES G. STEWART
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
CN BIOSCIENCES, INC.
10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
(619) 450-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
PETER H. JAKES, ESQ. FREDERICK T. MUTO, ESQ.
WILLKIE FARR & GALLAGHER COOLEY GODWARD CASTRO HUDDLESON & TATUM
ONE CITICORP CENTER 4365 EXECUTIVE DRIVE
153 EAST 53RD STREET SAN DIEGO, CALIFORNIA 92121
NEW YORK, NEW YORK 10022 (619) 550-6000
(212) 821-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / / ------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PROPOSED
MAXIMUM PROPOSED
OFFERING PRICE MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share........................... 1,840,000 shares $13.50 $24,840,000 $8,566 (3)
- ----------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Includes 240,000 shares which may be sold pursuant to the Underwriters'
over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
(3) This amount was wired to the account of the Securities and Exchange
Commission (the "Commission") at Mellon Bank in payment of the required
registration fee due in connection with this Registration Statement.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
CN BIOSCIENCES, INC.
Cross-reference sheet furnished pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus of information required by Items of Form S-1.
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ Outside Front Cover Page of Prospectus;
Underwriting
6. Dilution................................... Dilution
7. Selling Security Holders................... Not Applicable
8. Plan of Distribution....................... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to Be
Registered................................. Description of Capital Stock; Dividend
Policy
10. Interests of Named Experts and Counsel..... Not Applicable
11. Information with Respect to the
Registrant................................. Prospectus Summary; Risk Factors; Dividend
Policy; Capitalization; Selected
Consolidated Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain Transactions;
Principal Stockholders; Description of
Capital Stock; Shares Eligible for Future
Sale; Change in Accountants; Additional
Information; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
</TABLE>
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
Subject to Completion, Dated July 18, 1996
PROSPECTUS
1,600,000 SHARES
LOGO
COMMON STOCK
------------------------
All of the 1,600,000 shares of Common Stock offered hereby are being sold
by CN Biosciences, Inc. ("CN Biosciences" or the "Company"). Prior to this
offering there has been no public market for the Common Stock of the Company. It
is currently estimated that the initial public offering price will be between
$12.50 and $13.50 per share. See "Underwriting" for a discussion of the factors
to be considered in determining the initial public offering price. Application
has been made to have the Common Stock approved for quotation on the Nasdaq
National Market under the symbol "CNBI." The Underwriters have reserved up to
80,000 shares of Common Stock offered hereby for sale at the initial public
offering price, less underwriting discounts and commissions, to officers,
directors, employees and other persons designated by the Company who have
expressed an interest in purchasing shares. See "Underwriting."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts Proceeds to
Public and Commissions (1) Company (2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
- -------------------------------------------------------------------------------------------------
Total (3)...................... $ $ $
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses of the offering payable by the Company estimated
at $750,000.
(3) The Company has granted the Underwriters an option, exercisable within 30
days from the date hereof, to purchase up to 240,000 additional shares of
Common Stock on the same terms as set forth above, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public will be $ , the Underwriting Discounts and
Commissions will be $ and the Proceeds to Company will be
$ . See "Underwriting."
------------------------
The shares of Common Stock offered by the Underwriters are subject to prior
sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and to certain other
conditions. It is expected that delivery of such shares will be made through the
offices of UBS Securities LLC, 299 Park Avenue, New York, New York on or about
, 1996.
------------------------
<TABLE>
<S> <C>
UBS SECURITIES DAIN BOSWORTH
Incorporated
, 1996
</TABLE>
<PAGE> 4
[COLOR PICTURE OF COMPANY CATALOGS SURROUNDING A CIRCLE WHICH SAYS "SIX
CATALOGS THAT NO LIFE SCIENTIST SHOULD BE WITHOUT" AND CAPTION WHICH READS "THE
COMPANY'S GENERAL AND SPECIALTY CATALOGS FEATURE IN EXCESS OF 7,000 PRODUCTS
USED WORLDWIDE IN DISEASE-RELATED LIFE SCIENCES RESEARCH".]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus, including
the information under "Risk Factors." This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
in the future could differ significantly from the results discussed in such
forward-looking statements. Factors that could cause or contribute to such a
difference include, but are not limited to, those discussed in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," as well as those discussed elsewhere in this
Prospectus.
THE COMPANY
CN Biosciences, Inc. ("CN Biosciences" or the "Company") is engaged in the
development, production, marketing and distribution of a broad array of products
used worldwide in disease-related life sciences research at pharmaceutical and
biotechnology companies, academic institutions and government laboratories. The
Company's products include biochemical and biological reagents, antibodies,
assays and research kits which it sells principally through its general and
specialty catalogs under its well-established brand names, including Calbiochem
and Novabiochem. With over 7,000 products, the Company offers scientists the
convenience of obtaining from a single source both innovative and fundamental
research products, many of which are instrumental to areas of research such as
cancer, cardiovascular disease, Alzheimer's and AIDS. The Company believes it
has established a long-standing reputation in the life sciences research
products market for product quality, product reliability, extensive technical
service and strong customer support.
Industry sources estimate that there are over 300,000 scientists worldwide
currently engaged in life sciences research who utilize specialty biochemical
products such as those offered by the Company. Recent advances in understanding
physiological processes at the molecular and cellular level, genomics and the
development of other basic life sciences technologies have increased the demand
for innovative product solutions designed to assist scientists in improving the
efficiency and quality of their research. Life sciences research can often
involve experimentation carried out over months or even years, and as a result
researchers seek quality products to minimize extraneous variables in their
research protocols. Research products range broadly in complexity, purity,
scarcity, cost and function, and their availability, consistency and quality are
often critical to a project's success. In its most recent industry survey
published in 1994, Frost & Sullivan estimated that $1.6 billion was spent
worldwide in 1992 on specialty biochemical products, such as those offered by
the Company for research in biochemistry, immunology, cellular biology and
molecular biology. According to Frost & Sullivan, the compounded annual growth
rate from 1992 through 1999 for the U.S. life sciences research products market
(which represents approximately one-third of the worldwide market) is estimated
to be approximately 13%.
The Company believes that it is strategically positioned with both the
breadth of research products and critical mass that are characteristic of the
industry's larger providers, as well as the innovative research and development
capabilities that are characteristic of the industry's smaller specialty
companies. The larger companies typically generate revenues from the sale of a
broad range of equipment, laboratory supplies and other products, including
research products which compete with many of the Company's product offerings.
The smaller companies, the majority of which are substantially smaller than the
Company, typically supply a highly focused product offering to very specific
markets. Based upon the Company's strategic positioning, it believes it can
establish itself as a leading supplier of higher margin research products for
selected emerging, high growth niche research markets by offering innovative
products through specialty catalogs. In recent years, the Company has
implemented its niche research market strategy in areas that the Company
believes to be particularly strong areas of growth. In 1994, the Company
published its first specialty catalog in the area of signal transduction, which
it followed with the introduction of its Apoptosis and Combinatorial Chemistry
specialty catalogs in February 1996.
3
<PAGE> 6
The life sciences research products industry is highly fragmented and may
offer opportunities for consolidation. One key element of the Company's strategy
is the selective acquisition of companies with research and development
capabilities and product offerings in areas targeted for future growth. In
August 1995, the Company significantly expanded its immunochemical and molecular
biology capabilities with the $6.2 million cash purchase of the Oncogene
Research Products business from Oncogene Science, Inc. ("OSI"), a publicly
traded biopharmaceutical company. The acquisition of this business enhanced the
depth and breadth of the Company's scientific resources, while providing a
complementary base of products and customers which has been successfully
integrated into the Company's operations and infrastructure. As a result of this
acquisition, the Company added over 700 new product offerings, many of which are
included in the Company's Apoptosis specialty catalog.
During 1995, the Company sold products to over 6,900 accounts, including
individual research scientists, institutions, companies and distributors, filled
over 70,000 orders in 46 countries and generated sales of $27.0 million and net
income of $1.0 million. The Company's numerous products, represented by over
13,000 stock keeping units (SKUs), are principally sold through its three
general catalogs and four specialty catalogs. The Company also develops and
distributes a variety of supporting publications designed to highlight its new
products and target specific market segments with selected product offerings.
These catalogs and supporting publications are distributed utilizing the
Company's proprietary database of more than 100,000 research scientists and
institutions. The Company's customers include many leading pharmaceutical and
biotechnology companies, academic institutions and government laboratories. The
Company continually adds new products and expects to introduce in excess of 800
products during 1996. Development, marketing and distribution activities are
supported by the Company's highly experienced scientific staff, which includes
40 professionals holding Ph.D.s in a variety of life sciences disciplines, as
well as other personnel located at seven facilities in the United States,
Europe, Japan and Australia.
The Company was incorporated by Warburg, Pincus Investors, L.P.
("Warburg"), ABS MB (C-N) Limited Partnership ("ABS") and certain current and
former members of management to acquire the businesses conducted by the
Company's subsidiaries. See "Certain Transactions." The Company was incorporated
under the laws of the State of Delaware on March 11, 1992 as
Calbiochem-Novabiochem International, Inc. and changed its name to CN
Biosciences, Inc. on July 17, 1996. The Company's principal executive offices
are located at 10394 Pacific Center Court, San Diego, California 92121, and its
telephone number is (619) 450-9600.
As used in this Prospectus, references to the "Company" and "CN
Biosciences" refer to CN Biosciences, Inc. and its direct and indirect
subsidiaries, unless otherwise indicated or the context otherwise requires. The
Company's subsidiaries, all of which are wholly owned, include a U.S. operating
subsidiary based in San Diego and international subsidiaries organized under the
local laws of their jurisdiction of operation. Calbiochem(R), Novabiochem(R) and
Clinalfa(R) are registered trademarks of the Company. References are made herein
to trademarks of companies other than the Company.
4
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered............................. 1,600,000 shares
Common Stock Outstanding after the Offering...... 4,856,905 shares (1)
Use of Proceeds.................................. Repayment of all amounts outstanding under the
Company's bank credit facility (approximately
$8.2 million), working capital, general corporate
purposes and possible acquisitions.
Proposed Nasdaq National Market Symbol........... CNBI
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
PERIOD FROM INCEPTION YEARS ENDED DECEMBER 31, JUNE 30,
(MARCH 11, 1992) TO --------------------------- -----------------
DECEMBER 31, 1992 1993 1994 1995 1995 1996
--------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Sales..................................... $17,719 $22,771 $24,188 $26,966 $13,075 $16,565
Cost of sales............................. 9,691 14,195 13,183 13,185 6,691 7,602
------- ------- ------- ------- ------- -------
Gross profit.............................. 8,028 8,576 11,005 13,781 6,384 8,963
------- ------- ------- ------- ------- -------
Operating expenses:
Research and development................ 290 462 736 1,338 488 1,065
Selling, general and administrative..... 7,742 10,292 10,343 10,608 4,802 6,185
------- ------- ------- ------- ------- -------
Total operating expenses.............. 8,032 10,754 11,079 11,946 5,290 7,250
------- ------- ------- ------- ------- -------
Income (loss) from operations............. (4) (2,178) (74) 1,835 1,094 1,713
Interest expense, net..................... 61 170 326 527 159 394
------- ------- ------- ------- ------- -------
Income (loss) before income taxes......... (65) (2,348) (400) 1,308 935 1,319
Provision (benefit) for income taxes...... 401 (195) 62 291 208 462
------- ------- ------- ------- ------- -------
Net income (loss)..................... $ (466) $(2,153) $ (462) $ 1,017 $ 727 $ 857
======= ======= ======= ======= ======= =======
Pro forma net income per share............ $ .30 $ .25
======= =======
Pro forma shares used in per share
computations (2)........................ 3,367 3,477
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED (3)
------- ---------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................................................ $ 1,118 $11,545
Working capital.................................................................. 15,286 27,130
Total assets..................................................................... 32,228 42,655
Long-term debt and other obligations, net of current portion..................... 8,201 1,451
Redeemable preferred stock....................................................... 18,343 --
Common stockholders' equity (deficit)............................................ (184) 36,753
</TABLE>
- ---------------
(1) Excludes (i) 393,914 shares of Common Stock, par value $.01 per share (the
"Common Stock"), issuable upon the exercise of outstanding stock options
issued under the Company's 1992 Stock Option Plan, as amended (the "Stock
Option Plan"), (ii) an additional 359,559 shares of Common Stock reserved
for future issuance under the Company's Stock Option Plan and (iii) 3,028
shares issuable upon the exercise of an outstanding warrant.
(2) See Note 1 to notes to consolidated financial statements for an explanation
of the method used to determine the number of shares used to compute pro
forma share amounts.
(3) Adjusted to give effect to the conversion of all outstanding shares of the
Company's Series A Convertible Preferred Stock, par value $1.00 per share,
into 788,814 shares of Class A Common Stock and the subsequent conversion
into an equal number of shares of Common Stock, the exchange of all
outstanding shares of the Company's Series B Preferred Stock, par value
$1.00 per share, for 1,380,215 shares of Common Stock (at an assumed public
offering price of $13.00 per share), in each case upon the consummation of
the offering, the sale of 1,600,000 shares of Common Stock offered hereby,
and the receipt and application of the net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
------------------------
Except as otherwise specified, all information in this Prospectus assumes
no exercise of the Underwriters' over-allotment option and has been adjusted to
give effect to (i) a 2.36585-for-one stock split in the form of a stock dividend
effected on July 17, 1996, (ii) the conversion upon the consummation of this
offering of all outstanding shares of Series A Convertible Preferred Stock into
an aggregate of 788,814 shares of Class A Common Stock and subsequent conversion
into an equal number of shares of Common Stock and (iii) the exchange upon the
consummation of this offering of all outstanding shares of Series B Preferred
Stock into an aggregate of 1,380,215 shares of Common Stock. See "Description of
Capital Stock" and "Certain Transactions."
5
<PAGE> 8
RISK FACTORS
Prospective investors in the shares of Common Stock offered hereby should
carefully consider the following risk factors, in addition to the other
information appearing in this Prospectus. This Prospectus contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results in the future could differ significantly from the results
discussed in such forward-looking statements. Factors that could cause or
contribute to such a difference include, but are not limited to, those discussed
in "Risk Factors" below, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," as well as those discussed
elsewhere in this Prospectus.
Dependence on Research and Development Budgets and Government Research
Funding. The Company's customers include research scientists at pharmaceutical
and biotechnology companies, academic institutions and government and private
research laboratories. Fluctuations in the research and development budgets of
these companies and institutions can have a significant effect on the demand for
the Company's products. Such budgets are based on a wide variety of factors
including the resources available to make such expenditures, the spending
priorities among various types of research and the policies regarding such
expenditures during recessionary periods. Any decrease in life sciences research
and development expenditures by such companies and institutions could have a
material adverse effect on the Company's business, financial condition and
results of operations.
A significant portion of the Company's sales have been to research
scientists, universities, government research laboratories, private foundations
and other institutions whose funding is dependent on grants from government
agencies such as the U.S. National Institutes of Health ("NIH") and similar
domestic and international agencies. The funding associated with approved NIH
grants generally becomes available at particular times of the year, as
determined by the federal government, and may result in fluctuations in the
Company's operating results. Although research funding has increased during the
past several years, grants have, in the past, been frozen for extended periods
or have otherwise become unavailable to various institutions, sometimes without
advance notice. Furthermore, increasing political pressures to reduce or
eliminate budgetary deficits may result in reduced allocations to the NIH and
the other government agencies that fund research and development activities. If
government funding, especially NIH grants, were to become unavailable to
researchers for any extended period of time or if overall research funding were
to decrease, there could be a material adverse effect on the Company's business,
financial condition and results of operations.
Risks Inherent in Growth, Expansion and Acquisition Strategy. The Company
has sought and will continue to seek growth in sales and profitability primarily
through the internal development and acquisition of new product lines,
additional customers and new businesses. A significant portion of the Company's
historical revenue growth is attributable to internal product development,
sourcing of third-party products and, more recently, from its acquisition of the
Oncogene Research Products business. The ability of the Company to achieve its
expansion objectives and to manage its growth effectively depends upon a variety
of factors, including (i) the ability to internally develop products, (ii) the
ability to identify and license products sourced from third parties, (iii) the
ability to successfully position and market its products, (iv) the ability to
identify and consummate attractive acquisitions and (v) the ability to integrate
new businesses, facilities and personnel into existing operations. If the
Company is unable to manage growth effectively, there could be a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company competes for acquisition and expansion opportunities with other
companies that have significantly greater financial and other resources than
those of the Company. There can be no assurance that suitable acquisition or
investment opportunities will be identified, consummated, or, if consummated,
integrated successfully and profitably into the Company's operations. Moreover,
there can be no assurance that the Company's historic rate of growth or
expansion will continue, or that further growth or expansion will result in
continued profitability.
Reliance on Niche Research Market Strategy. Key elements of the Company's
strategy include the targeting and penetration of emerging life sciences niche
research markets and the continued development of the niche research markets
currently served by the Company. If the Company is unable to successfully target
and penetrate these niche research markets or is unable to continue developing
the niche research markets currently served or if the Company's new products are
not accepted by research scientists, there could be a
6
<PAGE> 9
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company currently benefits from its
participation in emerging niche research markets which, as they expand, may
attract the attention of the Company's competitors. Further, as these niche
research markets mature, products that were once innovative, thus commanding
higher margins, may become commodities.
Dependence on New Products; Rapid Technological Change. The life sciences
research products market is characterized by rapid technological change and
frequent product introductions. The Company's future success will depend, in
part, on its ability to develop and introduce, on a timely basis, products that
address the evolving needs of its customers. There can be no assurance that the
Company will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of products. The Company has
experienced, and may in the future experience, delays in the development and
introduction of products, and there can be no assurance that the Company will
keep pace with the rapid rate of change in life sciences research, and will not
experience additional delays in the future. In addition, there can be no
assurance that new products will adequately meet the requirements of the
marketplace or achieve market acceptance. Factors affecting whether such
products will be accepted by the market include use of the product by research
scientists, citation of the product in published research, the timing of market
entry of the product relative to competitive products and general trends in life
sciences research. If the Company is unable, for technological or other reasons,
to develop and introduce products in a timely manner in response to changing
market environments or customer requirements, there could be a material adverse
effect on the Company's business, financial condition and results of operations.
Dependence on Licensing as a Source of Products. Many of the Company's
products are manufactured or sold pursuant to license agreements under which the
Company pays royalties to the patent holder based upon a percentage of the
product's sales. There can be no assurance that the Company will be able to
continue to successfully identify new products developed by others, and if
identified, to negotiate license agreements on favorable terms. Additionally,
there can be no assurance that the Company will be able to renew any existing
license agreements upon their expiration. See "Business -- Intellectual
Property."
Highly Competitive Market. The market for the Company's products is highly
competitive, and the Company expects competition to increase. Furthermore,
although the life sciences research products market continues to grow, its rate
of growth in recent years has been declining and may continue to decline. The
Company competes with many other life sciences research products suppliers, both
larger and smaller than the Company. Some of the Company's competitors,
including two of its largest competitors, Sigma-Aldrich Corporation
("Sigma-Aldrich") and Boehringer Mannheim GmbH ("Boehringer"), offer a broad
range of equipment, laboratory supplies and other products, including many of
the research products offered by the Company. To the extent that researchers
exhibit loyalty to the supplier that first supplies them with a particular
research product, the Company's competitors may have an advantage over the
Company with respect to products first developed by such competitors. In
addition, many of the Company's competitors have significantly greater research
and development, marketing, financial and other resources than the Company, and
therefore represent and will continue to represent significant competition in
the Company's existing and future markets. Because of their size and the breadth
of their product offerings, certain of these companies have been able to
establish managed accounts by which, through a combination of direct computer
links and volume discounts, they seek to gain a disproportionate share of orders
for research products from particular academic institutions or pharmaceutical or
biotechnology companies. Such managed accounts raise significant competitive
barriers for the Company. The Company currently benefits from its participation
in emerging niche research markets which, as they expand, may attract the
attention of the Company's competitors.
Reliance on Catalogs, Distributors and Direct Marketing Efforts; Limited
Sales Force. The Company sells its products principally through catalogs
distributed to research scientists and laboratories, and uses only a very
limited number of salespeople in certain of its markets. There can be no
assurance that the Company would be able to successfully establish other methods
of marketing and sales of its products should it become necessary or desirable
in the future. Additionally, the Company's catalogs are generally reissued every
12 to 24 months and price adjustments between catalog publication dates have
historically been infrequent. A significant portion of the Company's
international sales are made through independent distributors over which the
Company has no control and who also represent products of other companies.
Additionally, the Company
7
<PAGE> 10
recently entered into a joint distribution agreement relating to its Apoptosis
specialty catalog. The loss of any of these distribution methods could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business."
Volatility of Bulk Sales Business. In addition to sales of its core
products in standard laboratory quantity sizes (generally ranging from 100
nanograms to 100 grams), the Company offers certain products in bulk quantities
(generally up to ten kilograms) at discounts from catalog prices. Bulk sales,
which represented 23.5% of net sales in 1995, are generally characterized as
relatively high dollar sales made to a limited number of customers. Thus, the
absence or presence of a bulk sale could have a material impact on quarterly
results. Furthermore, the Company's bulk sales business fluctuates more and is
less predictable than its core business, and the uncertain timing and volatility
of bulk sales has in the past and may continue in the future to materially
affect the Company's business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Fluctuations in Quarterly Earnings. The Company's quarterly operating
results may vary significantly from quarter to quarter as a result of a number
of factors including new editions of existing catalogs, introduction of
additional specialty catalogs and bulk sales of the Company's products. Other
factors which may affect quarterly operating results include the timing of the
U.S. Government approval of the NIH budget, lower European and academic sales
during the summer months and various holiday breaks and fluctuations in weather.
The Company's current and planned expense levels are based in part upon its
expectations as to future revenues. Consequently, if revenues in a particular
quarter do not meet expectations, the Company may not be able to adequately
adjust operating expenses to compensate for the shortfall. Operating results may
therefore vary significantly from quarter to quarter and will not necessarily be
indicative of results in subsequent periods. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Quarterly Results."
Risks Relating to International Sales and Operations. Historically, product
sales to customers outside the United States have accounted for approximately
50% of the Company's net sales, and the Company expects that international sales
will continue to account for a significant percentage of revenues in the future.
International sales and operations may be materially adversely affected by trade
restrictions, changes in tariffs and taxes, export license requirements,
difficulties in staffing and managing international operations, problems in
establishing or managing distributor relationships and general economic
conditions.
A majority of the Company's sales are denominated in U.S. dollars, with the
balance denominated in foreign currencies. Additionally, the Company publishes a
number of its catalogs priced in foreign currencies and price adjustments
between catalog publication dates to reflect fluctuations in the value of
foreign currencies relative to the U.S. dollar have historically been
infrequent. Consequently, fluctuations in the value of foreign currencies
relative to the U.S. dollar could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Risk of Patent Infringement. Because of the breadth of the Company's
product offerings and ambiguities in intellectual property law, the Company
periodically receives in the ordinary course of business notices of potential
infringement of patents held by others. Although the Company historically has
been able to satisfactorily resolve such claims and believes that any
outstanding claims will be satisfactorily resolved, there can be no assurance
that the Company may not be forced to discontinue the sale of one or more of its
products, some or all of which could be material. As the Company develops
product offerings focused on certain niche research markets, intellectual
property rights of the Company or others related to such markets may become
increasingly important, and the Company's failure to obtain and retain such
rights may have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Intellectual Property."
Dependence on Key Personnel. The Company's future success depends in
significant part on the continued service of, and on the Company's continuing
ability to attract and retain, highly qualified technical, managerial and sales
personnel. Competition for such personnel is intense in the Company's industry
and geographic locations, and there can be no assurance that the Company will be
able to retain or attract such
8
<PAGE> 11
employees in the future. The loss of key personnel or the inability to hire or
retain qualified personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management."
Influence of the Internet on Marketing and Catalogs. The Internet has begun
to change marketing patterns in a wide variety of industries. The high degree of
personal computer usage within scientific research organizations may lead to
entirely new methods of marketing and sales of research products. While the
Company has established home pages on the Internet for the Calbiochem and
Novabiochem brands and is developing an Oncogene Research Products brand home
page, the Company may not be able to keep pace with the rate of change in its
markets brought about by the Internet and may invest in catalogs or
Internet-based projects which future changes may render obsolete.
Compliance with Government Regulations. The Company is subject to various
forms of government regulations, including environmental and safety laws and
regulations and laws governing use and storage of hazardous materials. Any
violation of, and the cost of compliance with, these laws and regulations could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Because of the nature of its operations and the use of hazardous substances
in its ongoing manufacturing and research and development activities, the
Company is subject to stringent federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacturing, storage,
air emission, effluent discharge, handling and disposal of certain materials and
wastes. There can be no assurance that the Company's business, financial
condition and results of operations will not be materially adversely affected by
current or future environmental laws, rules, regulations and policies or by
liability arising out of any releases or discharges of materials that could be
hazardous. See "Business -- Government Regulation."
Product Liability Risk; Limited Insurance Coverage. Although the Company
does not sell products intended for use in humans, or, with the exception of its
Clinalfa products, sell products intended for use in human clinical trials, the
Company's business could expose it to potential liability risks. The Company
currently has only limited product liability insurance, and there can be no
assurance that it will be able to maintain such insurance or obtain additional
insurance on acceptable terms or that insurance will provide adequate coverage
against potential liabilities. A successful product liability claim or a series
of claims brought against the Company in excess of its insurance coverage limits
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Holding Company Structure. The Company is a holding company, the principal
assets of which are the capital stock of its subsidiaries, and has no
independent means of generating revenues. As a holding company, the Company
depends on dividends and other permitted payments from its subsidiaries,
including its international subsidiaries, to meet its cash needs. Under its
current bank credit facility, Calbiochem-Novabiochem Corporation, the Company's
U.S. operating subsidiary, is restricted from paying dividends and making loans
or advances to the Company, except in certain limited circumstances. The Company
maintains cash balances at its various subsidiaries based upon local results of
operations. The amount of foreign-sourced earnings to be repatriated to the
United States is determined based upon foreign entity capitalization, local cash
needs, local and U.S. tax implications and requirements for cash in the U.S.
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Control by Existing Stockholders. Upon consummation of the offering,
executive officers and directors of the Company and other holders of 5% or more
of the Common Stock will beneficially own approximately 67.6% of the Common
Stock of the Company. Because of such ownership, these officers, directors and
stockholders will effectively control the election of all members of the Board
of Directors and determine all corporate actions after the sale of the shares of
Common Stock offered hereby. Upon completion of this offering, Warburg and ABS
will beneficially own approximately 45.5% and 18.4%, respectively, of the
outstanding shares of Common Stock. See "Principal Stockholders."
Broad Discretion in Application of Net Proceeds. The net proceeds to the
Company from the sale of the shares of Common Stock offered hereby are estimated
to be approximately $18.6 million. The Company expects to use approximately $8.2
million to repay the outstanding indebtedness under its bank credit facility
9
<PAGE> 12
and the balance for working capital, general corporate purposes and possible
acquisitions. The Company has not identified specific uses for the balance of
the proceeds at this time. The Company's management and Board of Directors will
have complete discretion with respect to the application of such proceeds. See
"Use of Proceeds."
No Prior Public Market; Possible Volatility of Stock Price. Prior to this
offering there has been no public market for the Company's Common Stock, and
although the Company has applied to have the Common Stock approved for quotation
and trading on the Nasdaq National Market, there can be no assurance that, if
approved, an active public market for the Common Stock will develop or be
sustained after the offering. The initial public offering price will be
negotiated between the Company and the Representatives of the Underwriters and
may not be indicative of future market prices of the Common Stock. The trading
price of the Company's Common Stock could be subject to wide fluctuations in
response to variations in quarterly operating results, failure to meet
expectations of, or a change in recommendation by, securities analysts,
announcements of technological innovations or new products by the Company or its
competitors, government policy changes, general trends in life sciences research
and other events or factors, including factors outside the Company's control. In
addition, as in the past, stock market prices and volume may fluctuate
significantly. These broad market fluctuations may adversely affect the market
price of the Company's Common Stock. See "Shares Eligible for Future Sale" and
"Underwriting."
Shares Eligible for Future Sale; Potential for Adverse Effect on Stock
Price; Registration Rights. Sales of a substantial number of shares of Common
Stock in the public market or the prospect of such sales could adversely affect
the market price of the Common Stock. The number of shares of Common Stock
available for sale in the public market is limited by restrictions under the
Securities Act of 1933, as amended (the "Securities Act"), and lock-up
agreements under which the directors, executive officers and principal
stockholders of the Company have agreed not to sell or otherwise dispose of any
of their shares of Common Stock for a period of 180 days from the date of this
Prospectus (the "Lock-Up Period") without the prior written consent of UBS
Securities LLC. UBS Securities LLC may, in its sole discretion and at any time
without notice, release all or any portion of the securities subject to lock-up
agreements. The Company has also agreed not to issue or sell any shares of
Common Stock for a period of 180 days from the date of this Prospectus. Upon
expiration of the Lock-Up Period, and subject to the limitations imposed Rule
144 under the Securities Act ("Rule 144"), 3,130,162 shares of Common Stock held
by the Company's directors, executive officers and principal stockholders will
be eligible for immediate sale. Promptly after the completion of this offering,
the Company intends to file a registration statement on Form S-8 under the
Securities Act covering approximately 393,914 shares of Common Stock reserved
for issuance pursuant to stock options outstanding as of June 30, 1996 and
359,559 shares of Common Stock reserved for future issuance under the Stock
Option Plan. Such registration statement will automatically become effective
upon filing. Accordingly, shares registered thereunder will, subject to Rule 144
volume limitations applicable to affiliates, be available for sale in the open
market, except to the extent that such shares are subject to vesting
restrictions with the Company or certain contractual restrictions on sale or
transfer. Holders of options to purchase 246,995 shares of Common Stock have
agreed not to sell or otherwise transfer their shares obtained upon exercise of
such options during the Lock-Up Period, 161,824 of which will be exercisable
upon the expiration of such Lock-Up Period. The holders of 3,211,179 shares of
Common Stock and the holder or holders of the 3,028 shares of Common Stock
issuable upon the exercise of the Warrant are entitled to certain registration
rights with respect to such shares. If such holders, by exercising their
registration rights, cause a large number of shares to be registered and sold in
the public market, such sales could have an adverse effect on the market price
of the Common Stock. If the Company were required to include in a
Company-initiated registration shares held by such holders pursuant to the
exercise of their registration rights, such sales could have a material adverse
effect on the Company's ability to raise needed capital. See
"Management -- Stock Option Plan," "Description of Capital Stock -- Registration
Rights" and "Shares Eligible for Future Sale."
Dilution. The initial public offering price is substantially higher than
the book value per share of the Common Stock. Investors participating in this
offering will incur immediate and substantial dilution of $6.64 per share. To
the extent that outstanding options to purchase the Company's Common Stock are
exercised, there will be further dilution to such investors. See "Dilution."
10
<PAGE> 13
No Intention to Pay Dividends. The Company has never paid a cash dividend
on the Common Stock and does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. See "Dividend Policy."
Anti-Takeover Effects of Certificate of Incorporation and Delaware
Law. Under the Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Company's Board of Directors has the
authority to issue up to 5,000,000 shares of Preferred Stock and to determine
the price, rights, preferences and privileges of those shares without any
further vote or action by the stockholders. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plans to
issue shares of Preferred Stock. In addition, the Company is subject to the
provisions of Section 203 of the Delaware General Corporation Law, an
anti-takeover law. See "Description of Capital Stock."
11
<PAGE> 14
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby are estimated to be $18.6 million ($21.5 million
if the Underwriters' over-allotment option is exercised in full), assuming a
public offering price of $13.00 per share and after deducting the estimated
underwriting discounts and commissions and expenses associated with the
offering. The Company intends to use the net proceeds (i) to repay all amounts
outstanding under the Company's bank credit facility (approximately $8.2
million) and (ii) for working capital, general corporate purposes and possible
acquisitions. Pending such uses, the net proceeds of this offering will be
invested in short-term, investment grade, interest-bearing securities. The debt
to be repaid consists of $500,000 outstanding under the Company's revolving
credit facility, which bears interest at 8.25% and matures in June 1998 and $7.7
million outstanding under term loans which bear interest at 8.625%, and requires
monthly payments of principal and interest through August 2000. Borrowings under
the revolving credit facility were incurred for working capital and general
corporate purposes. Approximately $6.0 million of the term loans was incurred to
finance the Company's acquisition of the Oncogene Research Products business,
with the balance used to refinance the Company's previous credit facility.
Although the Company has from time to time engaged in discussions with respect
to possible acquisitions, it has no present understandings, commitments or
agreements, nor is it currently in negotiations with respect to any acquisition.
DIVIDEND POLICY
The Company has never paid a cash dividend on the Common Stock and does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. Instead, it intends to retain any earnings to finance the expansion of
its business and for working capital and general corporate purposes. Any payment
of dividends will be at the discretion of the Company's Board of Directors and
will depend upon earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions with respect to payment of dividends and
other factors. The Company is a holding company which conducts substantially all
of its operations through its subsidiaries. Under its bank credit facility,
Calbiochem-Novabiochem Corporation is restricted from paying cash dividends and
making loans or advances to the Company, except in certain limited
circumstances.
12
<PAGE> 15
CAPITALIZATION
The following table sets forth at June 30, 1996, the (i) actual
capitalization of the Company, (ii) pro forma capitalization of the Company
giving effect to the conversion of all outstanding shares of the Company's
Series A Convertible Preferred Stock, par value $1.00 per share (the "Series A
Convertible Preferred Stock"), into 788,814 shares of the Company's Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"), and the
subsequent conversion into an equal number of shares of Common Stock and the
exchange of all outstanding shares of the Company's Series B Preferred Stock,
par value $1.00 per share (the "Series B Preferred Stock"), for 1,380,215 shares
of Common Stock (determined by dividing the aggregate liquidation preference of
the Series B Preferred Stock ($17,942,800) by the assumed initial public
offering price of $13.00 per share), in each case upon consummation of this
offering and (iii) capitalization as adjusted to give effect to the sale of
1,600,000 shares of Common Stock offered by the Company hereby at an assumed
public offering price of $13.00 per share and the application of the estimated
net proceeds therefrom and after deducting the estimated underwriting discounts
and commissions and other estimated offering expenses. See "Use of Proceeds."
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of the Company and related notes included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt.......................... $ 1,417 $ 1,417 $ --
======= ======= =======
Long-term debt and other obligations, net of current
portion.................................................. $ 8,201 $ 8,201 $ 1,451
------- ------- -------
Stockholders' equity:
Redeemable preferred stock (1)........................... 18,343 -- --
Preferred stock, $.01 par value, no shares authorized;
5,000,000 shares authorized and no shares issued and
outstanding actual, pro forma or as adjusted.......... -- -- --
Common stock, $.01 par value; 30,000,000 shares
authorized; 1,087,876 shares issued and outstanding
actual; 3,256,905 shares issued and outstanding pro
forma; 4,856,905 shares issued and outstanding as
adjusted (2).......................................... 11 33 49
Additional paid-in capital............................... 351 18,672 37,250
Accumulated deficit...................................... (1,207) (1,207) (1,207)
Foreign currency translation adjustment.................. 757 757 757
Note receivable from stockholder......................... (96) (96) (96)
------- ------- -------
Total stockholders' equity....................... 18,159 18,159 36,753
------- ------- -------
Total capitalization............................. $26,360 $26,360 $38,204
======= ======= =======
</TABLE>
- ---------------
(1) Represents the outstanding shares of Series A Convertible Preferred Stock
and Series B Preferred Stock.
(2) Excludes (i) 393,914 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Stock Option Plan and (ii) 3,028 shares
issuable upon the exercise of an outstanding warrant.
13
<PAGE> 16
DILUTION
The pro forma net tangible book value of the Company as of June 30, 1996
was $12.3 million, or $3.77 per share. Pro forma net tangible book value per
share represents the tangible net worth (total tangible assets less total
liabilities) of the Company divided by the pro forma number of shares of Common
Stock outstanding prior to the offering. Assuming an initial offering price of
$13.00 per share, after giving effect to the offering (after deducting
underwriting discounts and commissions and estimated offering expenses), the pro
forma net tangible book value of the Company as of June 30, 1996 would have been
$30.9 million, or $6.36 per share, representing an immediate increase in net
tangible book value of $2.59 per share to existing stockholders and an immediate
dilution of $6.64 per share to the investors purchasing the shares of Common
Stock offered hereby.
The following table illustrates this dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............ $13.00
Pro forma net tangible book value per share as of June 30,
1996..................................................... $ 3.77
Increase per share attributable to the offering............ 2.59
-----
Pro forma net tangible book value per share after the
offering................................................. 6.36
------
Dilution per share to new investors........................ $ 6.64
======
</TABLE>
The following table sets forth, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock acquired from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by the new investors:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... 3,256,905 67.1% $18,886,724 47.6% $ 5.80
New investors....................... 1,600,000 32.9 20,800,000 52.4 13.00
--------- ----- ----------- -----
Total..................... 4,856,905 100.0% $39,686,724 100.0%
========= ===== =========== =====
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the pro
forma net tangible book value of the Company as of June 30, 1996 would have been
$33.8 million, or $6.63 per share, representing an immediate increase in net
tangible book value of $2.86 per share to existing stockholders and an immediate
dilution of $6.37 per share to the investors purchasing the shares of Common
Stock offered hereby. The foregoing table excludes (i) 393,914 shares of Common
Stock issuable upon the exercise of outstanding stock options issued under the
Stock Option Plan at a weighted average exercise price of approximately $.54 per
share and (ii) 3,028 shares issuable upon the exercise of an outstanding warrant
at an exercise price of $1.06 per share. Assuming all such outstanding stock
options and the warrant were exercised in full, the dilution per share of Common
Stock to new investors in the offering would be increased by $.44 per share to a
total of $7.08 per share.
14
<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
related notes included elsewhere in this Prospectus. The consolidated statement
of operations data for each of the three years in the period ended December 31,
1995 and the consolidated balance sheet data at December 31, 1994 and 1995 are
derived from the Company's consolidated financial statements, which have been
audited by Ernst & Young LLP, independent auditors, included elsewhere in this
Prospectus. The consolidated statement of operations data for the period from
inception (March 11, 1992) through December 31, 1992 and the consolidated
balance sheet data at December 31, 1992 and 1993 are derived from the Company's
audited consolidated financial statements not included in this Prospectus. The
consolidated statement of operations data for the six months ended June 30, 1995
and 1996 and the consolidated balance sheet data at June 30, 1996 have been
derived from unaudited interim financial statements and include all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial position and results of
operations at that date and for such periods. The operating results for the six
months ended June 30, 1996 are not necessarily indicative of the results to be
expected for the full year or for any future period.
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
PERIOD FROM INCEPTION DECEMBER 31, JUNE 30,
(MARCH 11, 1992) TO --------------------------- -----------------
DECEMBER 31, 1992 1993 1994 1995 1995 1996
--------------------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Sales................................... $17,719 $22,771 $24,188 $26,966 $13,075 $16,565
Cost of sales........................... 9,691 14,195 13,183 13,185 6,691 7,602
------- ------- ------- ------- ------- -------
Gross profit............................ 8,028 8,576 11,005 13,781 6,384 8,963
------- ------- ------- ------- ------- -------
Operating expenses:
Research and development.............. 290 462 736 1,338 488 1,065
Selling, general and administrative... 7,742 10,292 10,343 10,608 4,802 6,185
------- ------- ------- ------- ------- -------
Total operating expenses............ 8,032 10,754 11,079 11,946 5,290 7,250
------- ------- ------- ------- ------- -------
Income (loss) from operations........... (4) (2,178) (74) 1,835 1,094 1,713
Interest expense, net................... 61 170 326 527 159 394
------- ------- ------- ------- ------- -------
Income (loss) before income taxes....... (65) (2,348) (400) 1,308 935 1,319
Provision (benefit) for income taxes.... 401 (195) 62 291 208 462
------- ------- ------- ------- ------- -------
Net income (loss)................... $ (466) $(2,153) $ (462) $ 1,017 $ 727 $ 857
======= ======= ======= ======= ======= =======
Pro forma net income per share.......... $ .30 $ .25
======= =======
Pro forma shares used in per share
computations (1)...................... 3,367 3,477
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------------- --------
1992 1993 1994 1995 1996
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 1,238 $ 1,839 $ 935 $ 1,203 $ 1,118
Working capital........................................... 13,000 12,946 13,017 15,424 15,286
Total assets.............................................. 23,980 24,046 23,495 31,197 32,228
Long-term debt and other obligations, net of current
portion................................................. 850 2,834 3,266 8,601 8,201
Redeemable preferred stock................................ 18,025 18,175 18,463 18,343 18,343
Common stockholders' equity (deficit)..................... (24) (2,291) (2,197) (544) (184 )
</TABLE>
- ---------------
(1) See Note 1 to notes to consolidated financial statements for an explanation
of the method used to determine the number of shares used to compute pro
forma share amounts.
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis and discussion of the Company's financial condition
and results of operations should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere in this
Prospectus. This analysis and discussion contains forward-looking statements
which involve risks and uncertainties. The Company's actual results in the
future could differ significantly from the results discussed in such
forward-looking statements. Factors that could cause or contribute to such a
difference include, but are not limited to, those discussed in "Risk Factors"
and "Business," as well as those discussed below.
OVERVIEW
CN Biosciences was formed in 1992 with the purchase of the Company's
subsidiaries, including the Calbiochem biochemical and immunochemical operations
headquartered in San Diego, California, and the Novabiochem peptide operations
headquartered in Laufelfingen, Switzerland, from Biodor Holding AG, Ixora
Holding AG and Biodor US Holding Corporation. During 1993, the Company hired its
current Chief Executive Officer and reorganized its worldwide operations to
better focus its business and corporate strategy on core products. In 1993, the
Company recorded a one-time charge of approximately $2.0 million principally
related to its European operations to reserve for costs of facilities no longer
required, impaired inventory and costs of terminating employees. From 1993 to
1995, the Company invested in excess of $3.2 million for capital expenditures,
principally for infrastructure upgrades to its facilities, automated fulfillment
systems and computer information systems. The Company also hired additional
scientific personnel, particularly employees holding Ph.D.s, to enable it to
expand its internal development and manufacturing capabilities. These
initiatives contributed to improved operating results, and in 1994 the Company
commenced its niche research market strategy with the introduction of the Signal
Transduction specialty catalog.
In August 1995, the Company expanded its immunochemical and molecular
biology capabilities with the purchase of the Oncogene Research Products
business from OSI for $6.2 million cash, which was funded by bank debt. Assets
acquired included primarily inventory and property and equipment. Approximately
30 employees, including four holding Ph.D.s, all of whom were previously
employed by OSI in the Oncogene Research Products business, joined the Company
upon the consummation of the acquisition. The acquisition and successful
integration of this business enhanced the depth and breadth of the Company's
scientific resources, while providing a complementary base of products and
customers. The Company believes that, due to the highly fragmented nature of the
life sciences research products industry, significant opportunities for
consolidation exist. Based on its experience with the acquisition of the
Oncogene Research Products business, the Company believes it can capitalize on
these opportunities, although no assurances can be given that the Company will
be able to identify and successfully consummate additional acquisitions.
The Company uses general and specialty catalogs to market a broad range of
brand-name research products to life sciences researchers worldwide at
pharmaceutical and biotechnology companies, academic institutions and government
laboratories. The Company invests significantly in producing each of its
catalogs, and associated costs are capitalized and amortized over the estimated
useful life of the catalog, generally 12 to 24 months. The Company believes that
researchers tend to purchase the Company's products as a result of exposure to
multiple catalogs, as well as the Company's numerous other periodic publications
and advertisements.
Since 1993, the Company has increasingly focused its strategy on its higher
margin core business of providing standard laboratory quantity sizes of products
(generally ranging from 100 nanograms to 100 grams), and has reduced the focus
on its bulk business. Bulk quantities (generally up to ten kilograms) are
generally offered at discounts to catalog prices, and bulk sales are
characterized as relatively high dollar sales made to a limited number of
customers. Thus, the absence or presence of bulk sales has had and could have a
material impact on results of operations in any individual period.
16
<PAGE> 19
The Company maintains significant levels of inventory relative to its net
sales in order to meet short delivery times required by researchers. In
addition, products manufactured internally are made in economic batch sizes
which often represent quantities sufficient to supply more than one year of
sales. The Company's products generally have a relatively long shelf life, often
in excess of five years, and quality and storage conditions are continually
monitored to ensure that quality products are delivered to customers. The
Company regularly evaluates the level and composition of inventory to ensure
that inventory reserve levels are adequate to properly reflect their net
realizable value.
The Company's reporting currency is the U.S. dollar. Historically, a
majority of the Company's sales have been denominated in U.S. dollars, with the
balance denominated in foreign currencies. These foreign currency sales have
been effected principally by the Company's international subsidiaries. In
accordance with U.S. accounting requirements, sales denominated in foreign
currencies are translated into the local functional currency and then into U.S.
dollars, at an average exchange rate in effect during the period. In addition,
the Company incurs manufacturing costs in Swiss Francs in connection with its
Swiss operations and also incurs operating expenses in local currencies at each
of its other international locations. Thus, changes from reporting period to
reporting period in the exchange rates between various foreign currencies and
the U.S. dollar have had, and will in the future continue to have, an impact on
revenues and expenses reported by the Company, and such effect may be material
in any individual reporting period.
To the extent that the Company incurs operating expenses in local
currencies at its foreign subsidiaries, the Company has a natural hedge against
a portion of the possible fluctuation in foreign currency exchange rates of
billings in such currencies. Although the Company does not engage in significant
amounts of foreign currency hedging transactions, the Company has, from time to
time, entered into forward contracts to hedge certain of its foreign currency
exposures, principally related to fixed expense commitments of its Japanese
subsidiary.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, items from the
Company's Consolidated Statements of Operations expressed as a percentage of
sales.
<TABLE>
<CAPTION>
PERCENTAGE OF SALES
-----------------------------------------------
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Sales:
Core........................................... 67.7% 68.3% 76.5% 73.7% 81.8%
Bulk........................................... 32.3 31.7 23.5 26.3 18.2
----- ----- ----- ----- -----
Total sales...................................... 100.0 100.0 100.0 100.0 100.0
Cost of sales.................................... 62.3 54.5 48.9 51.2 45.9
----- ----- ----- ----- -----
Gross profit..................................... 37.7 45.5 51.1 48.8 54.1
Research and development....................... 2.0 3.0 5.0 3.7 6.4
Selling, general and administrative............ 45.2 42.8 39.3 36.7 37.3
----- ----- ----- ----- -----
Income (loss) from operations.................... (9.5) (0.3) 6.8 8.4 10.4
Interest expense, net............................ 0.8 1.4 2.0 1.2 2.4
----- ----- ----- ----- -----
Income (loss) before income taxes................ (10.3) (1.7) 4.8 7.2 8.0
Provision (benefit) for income taxes............. (0.9) 0.2 1.0 1.6 2.8
----- ----- ----- ----- -----
Net income (loss)......................... (9.4)% (1.9)% 3.8% 5.6% 5.2%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
Six Months Ended June 30, 1996 and 1995
Sales. Sales increased 26.7% to $16.6 million for the six-month period
ended June 30, 1996 from $13.1 million for the comparable period in 1995. This
increase resulted primarily from a 40.5% increase in core product sales,
including sales of Oncogene Research Products brand products, offset by a
decrease in bulk sales
17
<PAGE> 20
of 12.1%. Oncogene Research Products sales during the period included initial
stocking orders of approximately $295,000, principally to international
distributors, in connection with the Company's new Apoptosis specialty catalog
issued in February 1996. Sales of core products during the period, excluding
Oncogene Research Products brand sales, grew by 8.9% as compared to sales in the
comparable prior period. These gains in sales were achieved despite a general
strengthening of the U.S. dollar which had the effect of decreasing the dollar
value of sales denominated in foreign currencies recorded in the six months
ended June 30, 1996. Additional factors which management believes contributed to
the increase in sales during the period included the issuance of a new, updated
Calbiochem general catalog in February 1996, increased recognition of the
Company's specialty catalogs, and other marketing initiatives, including
advertising in various publications. The decrease in bulk sales related
primarily to the Company's decision to discontinue sales of a product which had
been provided in bulk form to the veterinary industry in order to avoid
subjecting the Company to increased costs associated with a variety of
regulatory requirements.
Gross Profit. The Company's gross profit percentage increased to 54.1% for
the six-month period ended June 30, 1996 from 48.8% for the comparable period in
1995. This increase was primarily the result of sales of the higher gross margin
Oncogene Research Products brand products, improved margins on the Company's
Calbiochem and Novabiochem brand products and a decrease in lower margin bulk
sales. Management believes that factors which contributed to improvements in
gross margins of Calbiochem and Novabiochem brand products include improved
operating efficiencies from increased volume and increased focus on higher
margin products directed to niche research markets, particularly those products
included in the Company's Signal Transduction, Apoptosis and Combinatorial
Chemistry specialty catalogs.
Research and Development. Research and development expenditures increased
118.2% to $1.1 million for the six-month period ended June 30, 1996 from
$488,000 for the comparable period in 1995. This increase resulted from
additional development activity related to Oncogene Research Products brand
products, research and development costs in connection with products included in
the Company's new Apoptosis specialty catalog launched during the period, and
increased research in the area of glycobiology. The Company anticipates
maintaining at least the current levels of spending for research and
development.
Selling, General and Administrative. Selling, general and administrative
expenditures increased 28.8% to $6.2 million for the six-month period ended June
30, 1996 from $4.8 million for the comparable period in 1995, and increased to
37.3% of sales for the period from 36.7% for the comparable period in 1995. The
dollar increase in expenses was primarily the result of incremental operational
costs relating to the Oncogene Research Products business, increased
administrative salaries and increased selling costs related to expanded
advertising programs and additional specialty catalogs launched during the
period. The increase in expenses as a percentage of sales reflected the
additional costs of increased specialty catalogs and upgraded advertising
programs, as the Company's strategy continued to emphasize expansion of its
focus on niche research markets in 1996. The Company anticipates a modest growth
in administrative expenses resulting from the Company's ongoing reporting
obligations and investor relations activities once the Common Stock becomes
publicly traded.
Interest Expense, Net. Interest expense, net increased to $394,000 for the
six-month period ended June 30, 1996 from $159,000 for the comparable period in
1995 primarily as a result of increased borrowings in connection with the
acquisition of the Oncogene Research Products business.
Income Taxes. Income tax expense increased to $462,000 for the six-month
period ended June 30, 1996 from $208,000 for the comparable period in 1995 as a
result of increased profitability and increased estimated tax rates having
utilized certain operating loss carryforwards generated in prior years.
Net Income. As a result of the above factors, net income increased 17.9% to
$857,000 for the six-month period ended June 30, 1996 from $727,000 for the
comparable period in 1995.
Years Ended December 31, 1995 and 1994
Sales. Sales increased 11.5% to $27.0 million for 1995 from $24.2 million
for 1994. This increase resulted primarily from a 24.9% increase in core product
sales, including sales of Oncogene Research Products brand
18
<PAGE> 21
products, offset by a decrease in bulk sales of 17.5%. Sales of core products
during 1995, excluding Oncogene Research Products brand products, increased by
13.5%, primarily as a result of the continuing success of the Company's niche
research market strategy and growth in sales of amino acids, peptides, linkers
and resins featured in the Company's Novabiochem general catalog. The decrease
in bulk sales was related primarily to the Company's decision to discontinue
sales of a product which had been provided in bulk form to the veterinary
industry in order to avoid subjecting the Company to increased costs associated
with a variety of regulatory requirements. Gains in sales included the results
of a general weakening of the U.S. dollar which had the effect of increasing the
dollar value of sales denominated in foreign currencies recorded in 1995.
Gross Profit. The Company's gross profit percentage increased to 51.1% for
1995 from 45.5% for 1994. This increase was primarily the result of sales of the
higher gross margin Oncogene Research Products brand products for a portion of
the year and increased gross margins in the Company's core and bulk operations
as a result of continued improvement in operating efficiencies subsequent to the
Company's restructuring in 1993. In particular, the Company experienced
improvement in margins of certain products featured in the Company's Novabiochem
general catalog, many of which were manufactured by the Company's Swiss
subsidiary, which was substantially restructured in 1993.
Research and Development. Research and development expenditures increased
81.8% to $1.3 million for 1995 from $736,000 for 1994. This increase resulted
from increased research and development related to Oncogene Research Products
brand products for a portion of the year, and research and development costs of
products developed for inclusion in the Apoptosis specialty catalog being
prepared for launch in 1996. This increase included salaries of additional
scientific personnel, as well as increased costs of materials and expenses.
Selling, General and Administrative. Selling, general and administrative
expenditures increased 2.6% to $10.6 million for 1995 from $10.3 million for
1994, and decreased to 39.3% of sales for 1995 from 42.8% for 1994. The dollar
increase in selling, general and administrative was the result of adding the
Oncogene Research Products business' operations for a portion of the year,
offset by reductions in operating costs of the Company's Swiss subsidiary in
1995 compared to 1994. The decrease as a percentage of sales reflects the
continued results of the Company's 1993 restructuring and incremental sales
which did not result in comparable growth in expenses.
Interest Expense, Net. Interest expense, net increased to $527,000 for 1995
from $326,000 for 1994 primarily as a result of additional borrowings in
connection with the acquisition of the Oncogene Research Products business.
Income Taxes. Income tax expense increased to $291,000 for 1995 from
$62,000 for 1994 as a result of increased profitability in 1995.
Net Income (Loss). As a result of the above factors, net income increased
to $1,017,000 for 1995 from a net loss of $462,000 for 1994.
Years Ended December 31, 1994 and 1993
Sales. Sales increased 6.2% to $24.2 million for 1994 from $22.8 million
for 1993. This increase resulted primarily from a 7.1% increase in core product
sales, as well as an increase in bulk sales of 4.3%. The increase in core
products sales resulted primarily from the initial introduction of the Company's
Signal Transduction specialty catalog in March 1994. Gains in sales included the
results of a general weakening of the U.S. dollar which had the effect of
increasing the dollar value of sales denominated in foreign currencies recorded
in 1994.
Gross Profit. The Company's gross profit percentage increased to 45.5% for
1994 from 37.7% for 1993. This increase was primarily the result of the 1993
restructuring, a portion of which was included in 1993 cost of sales, and
improvements in operations, particularly at the Company's Swiss manufacturing
operation and the installation of automated order fulfillment and other systems.
Research and Development. Research and development expenditures increased
59.3% to $736,000 for 1994 from $462,000 for 1993. This increase reflected the
Company's expansion of its scientific staff and product development operations,
particularly in San Diego, California.
19
<PAGE> 22
Selling, General and Administrative. Selling, general and administrative
expenditures were $10.3 million for 1994 and 1993, but decreased to 42.8% of
sales for 1994 from 45.2% for 1993. This decrease in selling, general and
administrative as a percentage of sales reflects the results of the 1993
restructuring and incremental sales which did not result in comparable growth in
expenses.
Interest Expense, Net. Interest expense, net increased to $326,000 for 1994
from $170,000 for 1993 primarily as a result of equipment leases for the
Company's San Diego manufacturing facility, as well as additional bank
borrowings for working capital purposes.
Income Taxes. Income tax expense increased to $62,000 for 1994 from a
benefit of $195,000 for 1993 as a result of improved financial performance in
1994. Income tax expense represented minimum taxes due in the various taxing
jurisdictions.
Net Loss. As a result of the above factors, the net loss of $462,000 for
1994 improved from the net loss of $2.2 million for 1993.
QUARTERLY RESULTS
The following tables present the Company's unaudited quarterly consolidated
results of operations, in dollars and as a percentage of sales, for the ten
quarters ended June 30, 1996. This information has been prepared by the Company
on a basis consistent with the Company's audited consolidated financial
statements and, in the opinion of management, includes all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation
of the results for such periods.
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales:
Core.......... $ 4,030 $4,232 $ 4,150 $4,096 $ 4,813 $4,827 $ 5,293 $5,693 $ 6,597 $6,949
Bulk.......... 2,086 2,349 1,745 1,500 1,923 1,512 1,572 1,333 1,621 1,398
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total sales..... 6,116 6,581 5,895 5,596 6,736 6,339 6,865 7,026 8,218 8,347
Cost of sales... 3,380 3,503 3,144 3,156 3,508 3,183 3,224 3,270 3,794 3,808
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Gross profit.... 2,736 3,078 2,751 2,440 3,228 3,156 3,641 3,756 4,424 4,539
Research and
development... 192 147 186 211 218 270 401 449 541 524
Selling,
general and
administrative.. 2,489 2,658 2,557 2,639 2,264 2,539 2,785 3,020 3,015 3,170
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income (loss)
from
operations.... 55 273 8 (410) 746 347 455 287 868 845
Interest
expense,
net........... 53 72 90 111 74 85 157 211 206 188
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income (loss)
before income
taxes......... 2 201 (82) (521) 672 262 298 76 662 657
Provision
(benefit) for
income
taxes......... 3 42 2 15 150 58 66 17 198 264
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net income
(loss).... $ (1) $ 159 $ (84) $ (536) $ 522 $ 204 $ 232 $ 59 $ 464 $ 393
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales:
Core.......... 65.9% 64.3% 70.4% 73.2% 71.5% 76.1% 77.1% 81.0% 80.3% 83.3%
Bulk.......... 34.1 35.7 29.6 26.8 28.5 23.9 22.9 19.0 19.7 16.7
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total sales..... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales... 55.3 53.3 53.3 56.4 52.1 50.3 47.0 46.5 46.2 45.6
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Gross profit.... 44.7 46.7 46.7 43.6 47.9 49.7 53.0 53.5 53.8 54.4
Research and
development... 3.1 2.2 3.2 3.8 3.2 4.2 5.8 6.4 6.6 6.3
Selling,
general and
administrative.. 40.7 40.4 43.4 47.1 33.6 40.1 40.6 43.0 36.7 38.0
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income (loss)
from
operations.... 0.9 4.1 0.1 (7.3) 11.1 5.4 6.6 4.1 10.5 10.1
Interest
expense,
net........... 0.9 1.1 1.5 2.0 1.1 1.3 2.3 3.0 2.5 2.2
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income (loss)
before income
taxes......... 0.0 3.0 (1.4) (9.3) 10.0 4.1 4.3 1.1 8.0 7.9
Provision
(benefit) for
income
taxes......... 0.0 0.6 0.0 0.3 2.2 0.9 0.9 0.3 2.4 3.2
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net income
(loss).... 0.0% 2.4% (1.4)% (9.6)% 7.8% 3.2% 3.4% 0.8% 5.6% 4.7%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
The Company's quarterly operating results may vary significantly from
quarter to quarter as a result of a number of factors including new product
offerings, new additions of existing catalogs, introduction of additional
specialty catalogs and bulk sales. Other factors which may affect quarterly
operating results include the timing of the U.S. Government approval of the NIH
budget, lower European and academic sales during the summer months and various
holiday breaks and fluctuations in weather. The Company's current and planned
expense levels are based in part upon its expectations as to future revenues.
Consequently, if revenues in a particular quarter do not meet expectations, the
Company may not be able to adequately adjust operating expenses to compensate
for the shortfall. Operating results may therefore vary significantly from
quarter to quarter and will not necessarily be indicative of results in
subsequent periods.
In addition, sales of bulk products offered by the Company could cause
fluctuations in the level of bulk sales from quarter to quarter, and such sales
could have a significant impact on results of operations in any specific
quarter. For example, bulk sales in the quarter ended March 31, 1996 of $1.6
million were approximately 15.8% lower than bulk sales of $1.9 million in the
comparable quarter in the prior year and 23.1% higher than bulk sales of $1.3
million in the preceding quarter ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company used $239,000 of cash in operating activities in 1993 and
$29,000 of cash in operating activities in 1994. Since 1994, the Company has
financed its operations primarily from cash provided by operations, which
contributed $97,000 in the six months ended June 30, 1996 and $2.0 million in
1995. Net cash used in investing activities was $158,000 in the six months ended
June 30, 1996, $6.8 million in 1995, $1.2 million in 1994 and $1.0 million in
1993. During 1995, the Company acquired the Oncogene Research Products business
in a purchase transaction requiring an investment of approximately $6.2 million.
Investing activities, other than the purchase of the Oncogene Research Products
business, consisted primarily of capital expenditures for property and
equipment, principally in connection with infrastructure upgrades. Net cash
provided by financing activities was $2,000 in the six months ended June 30,
1996, $5.1 million in 1995, $232,000 in 1994 and $2.0 million in 1993,
consisting primarily of borrowings from financial institutions, offset by
repayments. During 1995, the Company incurred $6.0 million of additional debt in
connection with the purchase of the Oncogene Research Products business.
The Company is a holding company, the principal assets of which are the
capital stock of its subsidiaries, and has no independent means of generating
revenues. As a holding company, the Company depends on dividends and other
permitted payments from its subsidiaries, including its international
subsidiaries, to meet its cash needs. Under its current bank credit facility,
Calbiochem-Novabiochem Corporation is restricted from
21
<PAGE> 24
paying dividends and making loans or advances to the Company, except in certain
limited circumstances. The Company maintains cash balances at its various
subsidiaries based upon local results of operations. The amount of
foreign-sourced earnings to be repatriated to the United States is determined
based upon foreign entity capitalization, local cash needs, local and U.S. tax
implications and requirements for cash in the U.S. operations.
At June 30, 1996, the Company had cash of $1.1 million and working capital
of $15.3 million. Calbiochem-Novabiochem Corporation had term debt outstanding
with a bank of approximately $7.7 million, plus borrowings under a line of
credit of $500,000. The line of credit provides for borrowings up to a maximum
of $2.0 million, based upon percentages of eligible accounts receivable and
inventory. At June 30, 1996, $1.5 million was available under this line of
credit. The line of credit expires in June 1998, and will convert to an
unsecured $5.0 million line of credit upon the successful completion of a public
offering of Common Stock resulting in gross proceeds in excess of $20.0 million.
All bank borrowings (approximately $8.2 million at June 30, 1996) are expected
to be repaid out of the net proceeds from this offering.
The Company believes that its existing capital resources together with the
anticipated net proceeds from this offering will be sufficient to fund its
operations through at least 1997. If, however, the Company were to undertake a
significant acquisition or if working capital or other capital requirements are
greater than currently anticipated, the Company could be required to seek
additional funds through sales of equity, debt or convertible securities or
increased credit facilities. There can be no assurance that additional financing
will be available or that, if available, the financing will be on terms
favorable to the Company and its stockholders.
22
<PAGE> 25
BUSINESS
THE COMPANY
CN Biosciences, Inc. ("CN Biosciences" or the "Company") is engaged in the
development, production, marketing and distribution of a broad array of products
used worldwide in disease-related life sciences research at pharmaceutical and
biotechnology companies, academic institutions and government laboratories. The
Company's products include biochemical and biological reagents, antibodies,
assays and research kits which it sells principally through its general and
specialty catalogs under its well-established brand names, including Calbiochem
and Novabiochem. With over 7,000 products, the Company offers scientists the
convenience of obtaining from a single source both innovative and fundamental
research products, many of which are instrumental to areas of research such as
cancer, cardiovascular disease, Alzheimer's and AIDS. The Company believes it
has established a long-standing reputation in the life sciences research
products market for product quality, product reliability, extensive technical
service and strong customer support.
The Company believes that it is strategically positioned with both the
breadth of research products and critical mass that are characteristic of the
industry's larger providers, as well as the innovative research and development
capabilities that are characteristic of the industry's smaller specialty
companies. Based upon this strategic positioning, the Company believes it can
establish itself as a leading supplier of higher margin research products to
selected emerging, high growth niche research markets by offering innovative
products through specialty catalogs. In recent years, the Company has
implemented its niche research market strategy in areas such as signal
transduction, apoptosis and combinatorial chemistry. The Company intends to
continue to penetrate emerging niche research markets through internal
development and the selective acquisitions of companies with products in areas
targeted for future growth. The Company's successful acquisition and integration
of the Oncogene Research Products business is an example of the implementation
of this strategy. As a result of this acquisition, the Company significantly
expanded its capabilities in molecular biology and immunology, and added over
700 new product offerings, many of which are included in the Company's Apoptosis
specialty catalog.
A key element of the Company's growth strategy is to leverage certain
existing assets of the Company including (i) its comprehensive general catalog
product offerings, customer base and reputation, (ii) its global manufacturing
and distribution infrastructure, including its highly automated order
fulfillment system and (iii) the scientific expertise of its staff in
immunochemistry, biochemistry, molecular biology and synthetic peptides. During
1995, the Company sold products to over 6,900 accounts, filled over 70,000
orders in 46 countries and generated sales of $27.0 million and net income of
$1.0 million. The Company's development, marketing and distribution activities
are supported by the Company's highly experienced scientific staff, which
includes 40 professionals holding Ph.D.s in a variety of life sciences
disciplines, as well as other personnel located at seven facilities in the
United States, Europe, Japan and Australia.
INDUSTRY OVERVIEW
The life sciences research industry has experienced dramatic advances in
biology and chemistry over the past three decades, particularly as they relate
to the understanding of the origin of diseases at the molecular and cellular
level. These advances have led to the rapid expansion of drug discovery programs
and the development of new methodologies of research. Industry sources estimate
that there are over 300,000 scientists worldwide currently engaged in life
sciences research. In 1995, U.S. pharmaceutical and biotechnology companies
spent over $18 billion on research and development. In addition, academic
institutions and government laboratories receive a portion of their research
funding from organizations such as the NIH, which had a budget for 1995
exceeding $11 billion. Over the past ten years, the NIH budget has grown at a
compounded annual rate of approximately 7.5%. In its most recent industry survey
published in 1994, Frost & Sullivan estimated that $1.6 billion was spent
worldwide in 1992 on specialty biochemical products, such as those offered by
the Company for research in biochemistry, immunology, cellular biology and
molecular biology. According to Frost & Sullivan, the compound annual growth
rate from 1992 through 1999 for the U.S. life sciences research products market
(which represents approximately one-third of the worldwide market) is estimated
to be approximately 13%. Furthermore, the Company believes that certain segments
of life sciences research, such as apoptosis, signal transduction and
combinatorial chemistry, are particularly strong areas of growth.
23
<PAGE> 26
Life sciences researchers utilize specialty biochemical products to conduct
their research. These research products range broadly in complexity, purity,
scarcity, cost and function, and their availability and quality are often
critical to a project's success. Furthermore, recent advances in understanding
physiological processes at the molecular and cellular level, genomics and the
development of other basic life sciences technologies have increased the demand
for innovative product solutions designed to assist scientists in improving the
efficiency and quality of their research. Examples of such solutions include
specific protein or peptide fragments, monoclonal antibodies or DNA probes
tailored to a given research protocol that would be too time consuming or
complex for a researcher to prepare at his or her own lab bench. Other examples
include kits designed to reduce complex multi-step procedures, thereby
shortening the time required for experiments, improving the quality of
information provided in many cases and ensuring repeatability of the experiment
in subsequent research. The Company believes that researchers are typically
concerned primarily with product performance, quality, rapid availability, time
savings and the value added by innovative products such as specialized assays
and research kits, and are relatively less sensitive to price. Because life
sciences research can often involve experimentation carried out over months or
even years, and because researchers seek to minimize extraneous variables in
their research protocols, the consistency of research products is essential. As
a result, the Company believes that researchers tend to exhibit loyalty to the
supplier that first supplies them with a particular research product.
The life sciences research products industry is highly fragmented. The
industry is comprised of several very large public companies and a large number
of smaller companies which are typically privately held. The larger companies
typically generate revenues from the sale of a broad range of equipment,
laboratory supplies and other products, including research products which
compete with many of the Company's product offerings. These larger suppliers
generally place greater emphasis on high-revenue generating products and on the
breadth of their product offering than on providing innovative products early to
market. The smaller companies, the majority of which are substantially smaller
than the Company, typically supply a highly focused product offering to very
specific market niches. These smaller companies generally specialize in
addressing the emerging needs of life sciences researchers by emphasizing
innovative products. Such smaller companies often lack the distribution network
and capital resources required to grow beyond providing a limited and highly
specialized offering to a relatively narrow market. As the market expands and
the need to cost-effectively distribute products to a larger, more
geographically diverse customer base increases, the Company believes that
customer access will be increasingly difficult for smaller companies lacking
significant marketing and distribution infrastructure. The Company believes that
the industry's fragmented structure and underlying dynamics may create
opportunities for consolidation.
STRATEGY
CN Biosciences' goal is to become a leading provider of innovative research
products to the life sciences research market. To achieve this goal, CN
Biosciences' strategy includes the following elements:
Target Emerging, High Growth Niche Research Markets. The Company seeks to
establish leading positions early in the evolution of the market's faster
growing, higher margin niche research markets. The Company identifies a
potentially attractive niche research market through a comprehensive review by
its scientific personnel and interaction with the Company's Technology Council
and network of other scientific advisers. In deciding which niche research
markets to pursue, the Company considers a number of factors, including
potential market size, synergies with existing areas of research, resources
required to develop both the product offering and related catalog and the
potential for establishing a leading position early in the market's development.
Once the Company has identified a niche research market, it assembles a targeted
product offering from its existing products, new products developed by its own
scientific staff and products sourced from third parties. These products are
then distributed primarily through specialty catalogs designed to provide
scientists working in a specific field with a single comprehensive source
integrating both innovative products often not found elsewhere and a broad range
of related products. During 1996, the Company introduced new specialty catalogs
for the niche research markets of apoptosis and combinatorial chemistry, and
issued an updated version of its Signal Transduction specialty catalog. The
Company expects to follow these specialty catalogs with product offerings to
researchers studying glycobiology and is investigating other niche research
24
<PAGE> 27
markets such as neuroimmunology. CN Biosciences seeks to be first to
comprehensively market products in each of its targeted niche research markets
and to be in a leading position early in such market's development.
Expansion of Product Offerings to Existing Customer Base. The Company
intends to expand sales through the introduction of new product offerings to its
existing customer base. The Company's new product development efforts, both for
its specialty and general catalogs, are supported by its significant commitment
to research and development. New product ideas are generated through active
dialogues among the Company, its customers and its extensive network of
scientific advisers, participation in national and international conferences,
and comprehensive reviews of selected scientific literature. The Company
believes that successfully penetrating further niche research markets will, in
addition to generating revenues from sales of products contained in its
specialty catalogs, also increase the number of research scientists and
institutions seeking to license their discoveries to the Company for production
and distribution, and generate increased sales of products in the Company's
comprehensive general catalogs.
Pursue Strategic Acquisitions. The Company intends to penetrate emerging
niche research markets and expand product offerings to existing customers
through the selective acquisition of companies with research and development
capabilities and product offerings in areas targeted for future growth. In
August 1995, the Company consummated the strategic acquisition of the Oncogene
Research Products business, which has enabled the Company to substantially
expand its offerings of assays, kits, monoclonal antibodies and polyclonal
antibodies. The Company believes that, due to the highly fragmented nature of
the life sciences research products industry, significant opportunities for
consolidation exist, although no assurances can be made that the Company will be
able to identify and successfully consummate additional acquisitions. A
significant portion of the industry's innovative research and development is
conducted by the industry's smaller companies, which are generally focused on a
specific niche research market with a tailored product offering. These companies
are typically privately held, and generate less than $10 million in annual
revenues. The Company has numerous contacts with many of these smaller research
products companies for which the Company often acts as a distributor or
licensee, and believes that these relationships may facilitate both the
identification and consummation of acquisitions.
Maximize Operating Efficiencies. The Company's investment in and refinement
of its product sourcing, procurement, production, inventory management and order
fulfillment capabilities, as well as its worldwide distribution network and
computer systems will continue to enable the Company to operate more cost-
effectively and to achieve greater service efficiency at higher sales volumes.
Additionally, the Company believes that this infrastructure provides
opportunities for the Company to service and support increased net sales without
the need for commensurate increases in expenses. The Company utilizes a
"technology center" concept for each brand which allows for product development,
customer service, technical support and brand-specific marketing capabilities at
its manufacturing locations, while retaining centralization of many
administrative and routine operations at its San Diego headquarters.
CORE COMPETENCIES
The Company believes that its past success is attributable to a number of
factors, including:
Experienced Management Team, Scientific Staff and Network of Scientific
Advisers. The Company's executive officers have an average of over ten years of
experience in the research products industry. In addition, over the past three
years, the Company has expanded its scientific staff to include 40 professionals
holding Ph.D.s in a variety of life sciences disciplines. With its expanded
scientific staff and its particular expertise in immunochemistry, biochemistry,
molecular biology and synthetic peptides, the Company is able to offer a broad
range of products and to support such product offerings with both a high level
of scientific content in its catalogs and knowledgeable technical support
personnel. The Company regularly interacts with a network of scientific advisers
within the life sciences research industry including its four member Technology
Council, members of academic institutions with which the Company collaborates,
as well as its customers. These interactions have enabled the Company to
identify the specialized needs of researchers in several emerging fields of life
sciences research and to provide innovative product solutions to facilitate
research in these targeted areas.
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<PAGE> 28
Merchandising and Marketing Expertise. The Company believes its skill in
positioning and merchandising its products has enabled it to expand its share of
the life sciences research products market. The Company employs a variety of
marketing techniques to enable it to produce catalogs that the Company believes
are more informative and more visually appealing than those of its competitors.
In structuring its catalog offerings, the Company effectively combines basic
product information with a significant amount of related scientific reference
data and technical advice. In addition, with each new edition of the Company's
catalogs, the Company has increased the level of indexes and cross
references -- by application, product category and individual product -- and
developed a variety of color coded reference aids, all of which are designed to
facilitate the ease with which a scientist can find the product needed to
conduct his or her research. Capitalizing on these skills, its established
catalog brand names and its comprehensive list of product offerings, the Company
has identified opportunities to target high growth emerging niche research
markets using specialty catalogs to more effectively bring its products to the
attention of research scientists.
Total Quality Management, Technical Service and Customer Support. Research
scientists require that the products used in their research conform to exacting
quality standards. The Company utilizes its Total Quality Management program to
ensure that customers receive consistent, high quality products which meet or
exceed customer requirements and catalog specifications. Quality control
functions designed to provide controls over the products distributed, whether
internally manufactured or externally sourced, have been fully integrated into
the Company's development and manufacturing process. In addition, the Company
provides extensive technical service to customers, primarily over the telephone,
in situations where customers have questions regarding complex product
applications, research protocols and background regarding use of the Company's
products. The Company also provides strong customer support through its customer
service staff of trained professionals at various worldwide locations, who are
primarily responsible for answering customer telephone inquiries, receiving
orders and following up on general product matters.
Highly Automated Order Fulfillment. The nature of life sciences research
and the rapid pace with which it is conducted is such that results achieved one
day may subtly change the course of the scientist's experiments for the next
day. As a result, research scientists will often require specific research
products delivered on short notice, and the speed and accuracy with which such
products are delivered can affect the success or failure of the researcher's
work. The Company has a highly automated order fulfillment system capable of
delivering substantially all customer orders worldwide on a next-day basis. The
Company believes that this system enables the Company to compete with its larger
competitors and gives it a competitive advantage over its smaller competitors,
while at the same time making the Company an attractive distribution outlet for
these smaller companies.
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<PAGE> 29
PRODUCTS
The Company sells over 7,000 products represented by over 13,000 stock
keeping units (SKUs). Through the ongoing efforts of its scientific and
technical staff, its contacts with researchers in academic and commercial
research laboratories and its open dialogue with scientific advisers, the
Company continually adds new products to its product offerings.
The broad categories of the Company's products include:
<TABLE>
<CAPTION>
PRODUCT CATEGORY DESCRIPTION OF PRODUCTS
------------------------------- ----------------------------------------------------
<S> <C>
Biochemicals................... Includes 25 major categories of products comprised
of enzymes, proteins, detergents, inhibitors,
antibiotics and others.
Immunochemicals................ Includes monoclonal and polyclonal antibodies,
antibodies to various receptor proteins, signaling
proteins, glycoproteins, proto-oncogenes, enzymes,
neurotoxins and others.
Amino Acids and Peptides....... Includes Fmoc and Boc amino acid derivatives and
hundreds of biologically active peptides.
Kits and Assays................ Includes a family of free radical marker ELISA kits
for oxidative stress research as well as a rapidly
growing line of ELISA kits for use in apoptosis
research such as NMP, Fas and cdk1.
Resins and Linkers............. Includes tentagel and polystyrene resins, together
with a variety of trityl linkers.
</TABLE>
The Company's products are marketed through four brands, each targeting
different segments of life sciences research, although some overlap exists
between the markets and products of each brand.
- Calbiochem. Calbiochem brand products target the immunology, cell biology
and biochemistry segments of life sciences research. Calbiochem has been
providing research products for over 40 years and is a well-recognized
name in the life sciences research industry.
- Novabiochem. The Company's Novabiochem brand covers products for the
biochemistry and peptide chemistry segments of life sciences research.
Novabiochem brand products have been offered since 1986.
- Oncogene Research Products. The Company currently co-brands Oncogene
Research Products with the Calbiochem brand. These products target the
immunology and molecular biology segments of life sciences research.
- Clinalfa. The Company's Clinalfa brand offers biologically active
peptides and related biological products for use in limited human trials
for research purposes. Clinalfa products are distributed principally in
Europe.
In addition to sales of its core products in standard laboratory quantity
sizes (generally from 100 nanograms to as large as 100 grams), the Company
offers certain products in bulk quantities (generally up to ten kilograms) at
discounts from catalog prices. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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<PAGE> 30
PRODUCT POSITIONING AND MARKETING
The Company's products are principally sold through its three general and
four specialty catalogs. The Company also periodically distributes a number of
other publications to supplement its catalogs. The following table identifies
each of the Company's catalogs and gives the most recent publication dates, the
approximate number of copies published, the approximate number of products
included, the principal product focus and the brand names featured:
SUMMARY OF CATALOGS
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE
CATALOGS NUMBER
CATALOGS LAST PUBLISHED PUBLISHED OF PRODUCTS PRINCIPAL PRODUCT FOCUS BRAND NAMES
---------------------- --------------- --------- ----------- ----------------------- --------------------
<S> <C> <C> <C> <C> <C>
GENERAL
Calbiochem March 1996 158,000 3,070 Biochemicals and - Calbiochem
Immunochemicals - Novabiochem
- Oncogene Research
Products
Novabiochem September 1994 64,000 2,000 Peptides, Boc and Fmoc - Novabiochem
Amino Acids and Peptide
Synthesis Reagents
Oncogene Research March 1995 40,000 900 Antibodies, Markers, - Oncogene Research
Products Reagents and Kits Products
SPECIALTY
Signal Transduction April 1996 85,000 1,400 G Proteins, Kinases, - Calbiochem
Nitric Oxide, Calcium - Novabiochem
Metabolism and p53 - Oncogene Research
Products
Apoptosis February 1996 60,000 330 Antibodies, Assays, - Calbiochem
ELISAs, Kits and - Oncogene Research
Reagents Products
Combinatorial February 1996 20,000 110 Resins, Linkers, Fmoc - Novabiochem
Chemistry Amino Acids and Peptide
Synthesis Reagents
Clinalfa March 1996 8,000 40 Biologically Active - Clinalfa
Peptides
</TABLE>
General Catalogs
The Company utilizes general catalogs summarizing the complete product
offerings under each of its principal brands to reach a broad audience of life
sciences research scientists. The following is a brief summary of each of the
Company's three general catalogs:
- Calbiochem General Catalog. The Calbiochem general catalog has been
published since 1954. The March 1996 catalog summarizes the Company's
offering of approximately 3,070 biochemicals and immunochemicals,
including more than 700 products new to the catalog. Approximately
158,000 copies of the most recent edition of catalog have been published.
The Calbiochem general catalog combines Calbiochem brand products, along
with selected Oncogene Research Products and Novabiochem brand products,
to provide a broad offering to research scientists. Important product
categories contained in this catalog include G-proteins, calcium
metabolism, protein kinases, nitric oxide and protein phosphates.
- Novabiochem General Catalog. The Novabiochem general catalog summarizes
the Company's 2,000 item product offering of resins, amino acid
derivatives and reagents for peptide synthesis, as well as biologically
active peptides and enzyme substrates and inhibitors. Published since
1986, 64,000 copies of the last edition of the Novabiochem general
catalog were published in September 1994. The Novabiochem general catalog
is scheduled to be updated in the fourth quarter of 1996. The catalog
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<PAGE> 31
includes unique "synthesis notes" prepared by the Company which provide a
comprehensive and current review of solid phase peptide synthesis
methodology.
- Oncogene Research Products General Catalog. Approximately 900 products
are included in this catalog which focuses primarily on scientific
research in the areas of cancer, heart disease, signal transduction and
neurobiology. Approximately 40,000 copies of the March 1995 catalog have
been published. The Oncogene Research Products general catalog is
scheduled to be updated in the fourth quarter of 1996. Key products in
the catalog include antibodies, assays, kits, peptides and probes.
Specialty Catalogs
Commencing in 1994, with the publication of its first specialty catalog in
the area of signal transduction, the Company's strategy has included the
development of specialty catalogs focused on niche research markets to meet the
specific needs of researchers in newer, high growth areas of life sciences
research. One key element of this strategy has been to significantly increase
the scientific background data contained in its catalogs, so that researchers
view the Company's catalogs not only as compendiums of product listings, but
also as significant technical resources. A recent implementation of this
strategy is the Company's Apoptosis specialty catalog which contains text-book
quality descriptions, illustrations and schematics of central elements in the
current understanding of the phenomenon of apoptosis, as well as detailed
methods and protocols for some of the most commonly utilized procedures needed
to conduct research in this area.
- Signal Transduction Specialty Catalog. Approximately 1,400 products from
the Calbiochem, Novabiochem and Oncogene Research Products brands have
been integrated into this specialty catalog which addresses the needs of
researchers doing work in signal transduction. Approximately 85,000
copies of the Company's third edition of this catalog were published in
April 1996 and contained over 500 products new to the catalog focusing on
this growing area of scientific research. Over the past several years,
the level of signal transduction research has grown as scientists in many
disciplines have increasingly focused on the impact on their research of
both intercellular and intracellular communication. In addition to
detailed product listings, the catalog provides literature reviews,
product structures, molecular weights, application comments, technical
protocols and comparative tables of use to many signal transduction
researchers.
- Apoptosis Specialty Catalog. The newest of the Company's specialty
catalogs focuses on research in the area of apoptosis. Apoptosis, or
"programmed cell death," is a process whereby various stimuli activate a
genetic program to implement a specific series of events that culminate
in the death and efficient disposal of a cell with minimal damage to
surrounding cells or tissue. Apoptosis is essential for normal
development of cells, and disruption to the apoptotic process can lead to
a spectrum of defects thought by some researchers to be important to
various diseases including cancer, AIDS and Alzheimer's. The potential
for drugs that modulate the regulation of apoptosis provides a new and
growing opportunity for the treatment of many disease states, and the
Company anticipates continued growth in this area of research. The
February 1996 catalog combines existing Calbiochem and Oncogene Research
Products brand products with newly developed, innovative products focused
on addressing this new and growing area of scientific research.
Approximately 60,000 copies of the Apoptosis specialty catalog have been
published. The catalog includes extensive literature citations, materials
and methods, information and scientific diagrams to assist the researcher
working in this relatively new field of study. The Company's Apoptosis
specialty catalog is printed in two versions, one marketed exclusively
under the Calbiochem name and another marketed jointly under the
Calbiochem and Amersham International plc names.
- Combinatorial Chemistry Specialty Catalog. Combinatorial chemistry has
emerged as a powerful new tool used by pharmaceutical companies in the
drug discovery process. The Company's February 1996 Combinatorial
Chemistry catalog, 20,000 copies of which have been published, provides
approximately 110 products focused primarily on solid supports,
condensation reagents, resins and linkers of interest to companies
utilizing combinatorial chemistry techniques.
- Clinalfa Specialty Catalog. This catalog contains Clinalfa brand products
which capitalize upon existing strengths in the Company's manufacturing
capabilities to provide a selection of ultra-pure peptides of
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<PAGE> 32
interest to a specialized group of researchers focused on human clinical
research applications, principally in the European market. Approximately
8,000 copies of the March 1996 Clinalfa specialty catalog have been
published. The Company's Clinalfa brand product offering is produced
under appropriate good manufacturing practices ("GMP") which meet the
requirements of government regulations and its clinical research
customers in this area.
Other Publications
In addition to its general and specialty catalogs, the Company utilizes its
internal staff in developing and distributing a variety of supporting
publications designed to highlight its new products and target specific market
segments with selected product offerings. These publications include:
- Biologics. The Calbiochem brand general biochemical and immunochemical
newsletter is published two to three times per year and is distributed to
the entire Calbiochem mailing list, including biochemists,
neurobiologists, biologists and immunologists. This broad-based
publication introduces new product offerings under the Calbiochem brand
(including inhibitors, enzymes and detergents) and also includes updated
scientific articles and references.
- Pathways. This Calbiochem brand publication is published one to two times
per year and is distributed to a targeted list of signal transduction
researchers. This publication introduces the Company's newest products
for various aspects of signal transduction research, including
G-proteins, calcium metabolism, protein kinases, protein phosphatases and
other product categories.
- Flagship Brochures. The Company's Flagship Brochures present the complete
product line of five areas within signal transduction that the Company
has singled out for special market emphasis, comprised of protein
kinases, calcium metabolism, G-proteins, nitric oxide and protein
phosphatases. The first of these brochures was introduced by the Company
in October 1995.
- Technical Bulletins. The Company maintains more than 50 Technical
Bulletins relating to Calbiochem brand products. These are two to six
page publications that focus on specific products and product lines,
including detergents, protease inhibitors, lipoproteins and ionophores.
These publications are used for targeted direct mailings as well as for
distribution at trade shows, scientific conferences and exhibitions.
- Letters, Innovations and Technical Notes. These are an interrelated trio
of support publications for Novabiochem brand products and are
distributed to customers interested in peptide synthesis and
combinatorial chemistry. Letters is published two to three times per year
to inform customers of the Company's new and innovative products being
developed for use in their drug discovery programs. Each edition features
new linkers, resins and amino acid derivative products useful for a
variety of peptide and small molecule synthesis techniques. Innovations
is published four to six times per year and provides a much more
expansive description of the products introduced in Letters. It includes
procedures for new product use along with up-to-date literature
references. Novabiochem Technical Notes are released one or two times per
year and are based on the most recent techniques used in solid phase
peptide synthesis or solid phase organic synthesis. Novabiochem Technical
Notes contain detailed descriptions, explanations and suggestions for
using certain Novabiochem brand products.
- Oncogene Research Products Publications. Oncogene Research Product
brand's New Product Guide is published one to two times per year and is
widely distributed to researchers studying cell cycle, cell
proliferation, apoptosis and signal transduction as well as to Oncogene
Research Products customers studying heart disease and metastasis, tumor
suppressor genes and neuroimmunology. A variety of applications brochures
and mailers focusing on the Oncogene Research Products brand are
distributed six to eight times per year, focusing on various new and
existing product portfolios applicable to select market segments,
including proteases, apoptosis kits, cdk1 and ELISAs.
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<PAGE> 33
DEVELOPMENT OF NEW PRODUCTS
The Company maintains research and development centers in San Diego,
California, Cambridge, Massachusetts and Laufelfingen, Switzerland. The
Company's research scientists internally develop new products, source new
products from third parties and refine manufacturing techniques for existing
products. The Company introduced over 1,100 new products in 1995 including over
700 products introduced as a result of the acquisition of the Oncogene Research
Products business and expects to introduce in excess of 800 new products in
1996. The Company's historical experience indicates that a significant number of
its products have relatively long life cycles, often in excess of five years.
The Company identifies potential new products from many sources, including
through customer input, its Technology Council and extensive network of
scientific advisers, review of selected scientific literature, established
relationships with research institutes and universities and participation in
industry trade shows.
Product introductions are developed and monitored by the Company and
offered under one of the Company's brand names and through one or more of its
catalogs and supporting publications. The following table illustrates both the
breadth of the Company's product offerings from its 1996-1997 Calbiochem general
catalog published in March 1996 and the extent to which products not previously
offered through this catalog were added.
1996-1997 CALBIOCHEM GENERAL CATALOG PRODUCT OFFERINGS
<TABLE>
<CAPTION>
TOTAL NUMBER PRODUCTS
PRODUCT CLASS OF PRODUCTS NEW TO CATALOG
------------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Amino Acids........................................................ 62 --
Antibiotics........................................................ 46 1
Antibodies (monoclonal and polyclonal)............................. 470 245
Buffers............................................................ 30 --
Carbohydrates...................................................... 57 --
Chromatography Reagents............................................ 7 --
Detergents......................................................... 92 4
Dyes, Stains and Probes............................................ 68 11
Enzyme Inhibitors.................................................. 369 106
Enzyme Substrates.................................................. 98 19
Enzymes............................................................ 204 29
Growth Factors and Cytokines....................................... 56 17
Hormones and Steroids.............................................. 18 --
Immunochemicals.................................................... 533 117
Ionophores and Channel Formers..................................... 40 12
Lipids and Phospholipids........................................... 43 --
Nucleotides and Bases.............................................. 94 --
Neurochemicals..................................................... 110 70
Neurotoxins........................................................ 100 13
Organics and Inorganics............................................ 42 --
Peptides........................................................... 171 31
Plant Biology Reagents............................................. 13 --
Protein and Nucleic Acid Mod....................................... 35 5
Proteins and Derivatives........................................... 147 47
Signal Transduction Reagents....................................... 124 8
Vitamins and Coenzymes............................................. 20 --
Miscellaneous...................................................... 21 6
----- ---
Total...................................................... 3,070 741
============ ==============
</TABLE>
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SALES AND DISTRIBUTION
Catalogs and Supporting Publications. The Company markets its products
directly to its customers through the delivery of its catalogs and supporting
publications. The Company believes that the quality and presentation of its
catalogs represent a competitive advantage. The Company devotes significant
resources to creating and designing catalogs that have a high degree of
scientific and technical content and are, the Company believes, considerably
more visually appealing than those of its competitors. The Company's catalogs
generally are extensively indexed and cross referenced -- by application,
product category and individual product -- and contain a variety of color coded
reference aids which are designed to facilitate the ease with which a scientist
can find the product needed to conduct his or her research. In addition, new
product offerings are extensively highlighted. Catalogs generally contain
detailed technical information concerning the catalog's products, including
current citations to scientific research papers in which the products have been
used, as well as background information regarding focused areas of research in
which various subgroups of research products may be utilized. Catalogs are
published for distribution in the United States with pricing in U.S. dollars. In
addition, a number of the Company's catalogs and brochures are printed for
foreign distribution with pricing in local currencies.
The Company's marketing communications group utilizes in-house desktop
publishing systems in coordination with the Company's management information
systems and databases to assist in the production of camera-ready masters of
certain catalogs and publications. This enables the Company to revise and
reprint certain catalogs in 12 to 18 month cycles and to distribute other
publications more frequently. To further differentiate its publications from
those of many of its competitors, the Company has increasingly shifted to high
quality four color printing for its catalogs and brochures, and utilizes its
internal staff to significantly increase their graphic content.
The Company directly distributes its catalogs and supporting publications
using its proprietary database containing profiles of more than 100,000 research
scientists and institutions. The Company believes that a substantial portion of
its revenue represents sales to repeat customers. During 1995, the Company sold
products to more than 6,900 accounts, with more than 70% of these customers
making purchases multiple times during the year. The Company also selectively
mails catalogs and other publications to potential customers, information about
whom is obtained from trade shows, responses to Company advertisements, foreign
distributors and sales representatives, and the Company's home pages on the
Internet. The Company also advertises its catalogs in scientific journals,
publicizes them at industry trade shows and other scientific functions and
utilizes its network of sales representatives, distributors and industry
contacts to attract additional potential customers whose profiles can then be
added to the Company's database.
Sales Offices and Customer Service Representatives. In addition to its San
Diego headquarters, the Company maintains sales and customer support offices in
Cambridge, Massachusetts, Switzerland, the United Kingdom, Germany, Australia
and Japan. The Company's staff of 22 customer service representatives receive
telephone orders directly from customers. The customer service representatives
utilize a computerized data-entry system which enables them to immediately
access detailed customer and product information, quote prices and check product
availability. The Company has the ability to process standing orders and to
schedule periodic shipments according to the needs of its customers. Orders are
also submitted by mail and fax. Standard payment terms are net 30 days, but the
Company also accepts Visa, MasterCard and American Express. The Company employs
a limited sales force of seven individuals, principally in the United States and
Europe, and has a network of 50 independent foreign distributors who resell the
Company's products to their customers in selected markets.
Technical Support. The Company employs a staff of 11 technical service
specialists throughout its worldwide locations who are available during business
hours to consult with research scientists concerning the use of the Company's
products. These service specialists (eight of which hold Ph.D.s) are actively
involved in the development and are knowledgeable about the use of the Company's
products. Technical support is also available through the Company's foreign
sales offices and distributors.
Internet. The Company maintains home pages on the Internet for the
Calbiochem and Novabiochem brands with information about the Company and its
products and catalogs and is developing an Oncogene
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<PAGE> 35
Research Products brand home page. The Company believes that the Internet may
become an increasingly important channel of customer communication and intends
to further develop its Internet presence to keep pace with changes in technology
and the market for its products.
CUSTOMERS
During 1995 the Company sold products to over 6,900 accounts including
individual research scientists, institutions, companies and distributors
worldwide. No single account exceeded 10% of the Company's total sales for the
year ended December 31, 1995 or the six months ended June 30, 1996. The Company
maintains extensive local databases of current and potential customers which are
utilized for targeted mailings of catalogs and other publications. Selected
customers of the Company include research scientists at:
<TABLE>
<CAPTION>
GOVERNMENT AND OTHER
PHARMACEUTICAL BIOTECHNOLOGY ACADEMIC RESEARCH INSTITUTIONS
- ---------------------- ----------------------- --------------------------- -------------------------------
<S> <C> <C> <C>
Abbott Laboratories Amgen Columbia University Dana Farber Cancer Institute
Eli Lilly and Company Biogen Incorporated Harvard University Food and Drug Administration
GlaxoWellcome Chiron Corporation Johns Hopkins University Massachusetts General Hospital
Merck & Company Genentech Incorporated University of California Mayo Clinic
Pfizer & Company Genetics Institute University of Michigan National Institutes of Health
SmithKline Beecham Genzyme University of Pennsylvania The Scripps Research Institute
</TABLE>
COLLABORATIONS
An important part of the Company's business is its many collaborations with
institutions and life sciences researchers. These collaborations range from
licensing and producing products discovered by a single research scientist to
joint marketing and distribution arrangements.
Amersham International plc. In connection with the Company's targeting of
the apoptosis niche research market, the Company entered into a distribution
agreement in March 1996 with Amersham International plc ("Amersham"), a U.K.
based health science company (total 1995 company-wide sales of over L350
million) which, among other things, supplies products to the life sciences
research market. In connection with this distribution agreement, the Company's
Apoptosis specialty catalog is printed in two versions, one marketed exclusively
by the Company under the Calbiochem name and another marketed jointly under the
Calbiochem and Amersham names. The Company believes that Amersham's worldwide
network of sales representatives with specialized knowledge of the assays and
kits markets will contribute to the Company's future success in the apoptosis
niche research market. In addition, the distribution agreement contemplates that
the Company and Amersham will enter into further collaborative agreements under
which the Company would add Amersham-developed products to the Apoptosis
specialty catalog, and the Company and Amersham would jointly develop new
products.
The Scripps Research Institute. In September 1995, the Company entered into
a sublicense agreement with The Scripps Research Institute which will allow it
to produce various enzymes, substrates and other products of interest to
research scientists working in the field of glycobiology, through the use of
recombinant technology. The availability of such products, which will be
manufactured and distributed by the Company on an exclusive basis in the
research products market, will be combined with additional products to provide
research scientists with cost-effective tools needed to study complex
carbohydrates. Recent publications have focused on the potential of glycobiology
in the area of pharmaceutical drug discovery research. The Company believes that
its offering of these important products through its general and a new specialty
catalog may establish the Company as a leader in the growing niche research
market of glycobiology.
Other. In addition to featuring products developed internally by the
Company's research and development staff, the Company offers products developed
through a wide range of sources. Accordingly, the identification of new and
useful products developed by others is an important part of its business.
Drawing on its connections in the industry and its multi-disciplined expertise,
the Company is constantly evaluating and searching out these products. Once
these products are identified, the Company will either license the technology
and distribution rights and produce the products in its own manufacturing
facilities or purchase
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<PAGE> 36
manufactured products wholesale and distribute such products to the Company's
customers. In either case, the end products will ultimately be sold under one of
the Company's brand names. Providers of these products generally will be
individual research scientists or specialty companies which lack adequate
manufacturing and distribution facilities. Through a collaboration with the
Company, these individuals and smaller companies achieve wider distribution of
their products while continuing to focus on developing innovative products.
TECHNOLOGY COUNCIL AND CONSULTING ARRANGEMENT
The Company has a Technology Council composed of a number of leading
research scientists in the areas of molecular biology, immunology, cell biology
and biochemistry. The primary purpose of the Technology Council is to provide
independent, external, scientific guidance to the Company, and assist in the
decision making process related to niche research market definition, areas of
product focus and development, and general trends in many areas of scientific
research. The Company's scientific and management staff consult with members of
the Technology Council frequently on an informal basis in the normal course of
operations to address current market trends, current trends in science, broad
strategic areas of Company, including its product offerings, and industry focus
and to review the Company's current view of the life sciences research market.
Each member of the Technology Council receives $500 for each formal Technology
Council meeting attended.
The members of the Company's Technology Council are:
William H. Beers, Ph.D., the Chairman of the Company's Technology Council,
has served as Senior Vice President and Chief Operating Officer of The Scripps
Research Institute since 1991. Prior to joining The Scripps Research Institute
in 1987 as a Member of the Departments of Cell Biology and Molecular Biology,
Dr. Beers was a Professor of Biology and Cell Biology at the New York University
Medical School for nine years. Dr. Beers also presently serves as Director of
the Foundation for Medical Research, Washington, D.C., Treasurer and Member of
the Board of Trustees for the Skaggs Institute for Research, member of the Board
of Scientific Advisors of Allegheny-Singer Research Institute, Pittsburgh,
trustee of National University, San Diego and Chairman of the Torrey Pines
Institute for Molecular Studies. Dr. Beers earned his Ph.D. in Biochemistry and
Pharmacology from Rockefeller University and obtained an A.B. in Biochemical
Sciences from Harvard University.
Dennis R. Burton, Ph.D., has served as a Member of the Departments of
Immunology and Molecular Biology at The Scripps Research Institute since 1991
and was a lecturer at Oxford University and the University of Sheffield for ten
years before joining The Scripps Research Institute. Dr. Burton earned his Ph.D.
in Physical Chemistry from University of Lund (Lund, Sweden) and obtained a B.S.
in Chemistry from Oxford University. Dr. Burton is the author of 140 published
scientific papers.
Norton B. Gilula, Ph.D., has served as the Dean of Graduate Studies and the
Chairman of the Department of Cell Biology at The Scripps Research Institute
since 1991. Prior to joining The Scripps Research Institute as a Member of the
Department of Molecular Biology, Dr. Gilula was a Professor of Cell Biology at
Baylor College of Medicine for six years. Dr. Gilula presently is the
Editor-in-Chief of the Journal of Cell Biology, an editor of Current Opinion in
Cell Biology and is on the Scientific Advisory Board of the Wills Foundation.
Dr. Gilula earned his Ph.D. in Physiology from the University of California,
Berkeley and earned a B.A. and M.A. in Physiology and Chemistry from Southern
Illinois University. Dr. Gilula is the author of over 100 published scientific
papers.
Chi-Huey Wong, Ph.D., has served as Chairman of the Department of Chemistry
at The Scripps Research Institute since 1989. Before joining The Scripps
Research Institute as a Member of the Department of Chemistry in 1989, Dr. Wong
served as an Assistant, Associate and then full Professor of Chemistry at Texas
A&M University for seven years. Dr. Wong presently is the Editor-in-Chief of the
Journal of Bioorganic and Medicinal Chemistry and is a founding scientist of
Combichem, a provider of combinatorial chemistry products. Dr. Wong earned his
Ph.D. in Organic Chemistry from the Massachusetts Institute of Technology
("MIT") and obtained his B.A. in Chemistry and Biochemical Science and M.S. in
Biochemical Science at the National Taiwan University. Dr. Wong is the author of
247 published scientific papers and one book and holds 34 patents.
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<PAGE> 37
When the Technology Council was formed in October 1993, each member of the
Technology Council, other than the Chairman, received options to purchase 11,829
shares of Common Stock at an exercise price of $.42 per share. At such time, the
Chairman of the Technology Council, Dr. Beers, received options to purchase
23,659 shares at an exercise price of $.42 per share.
In addition to formal and informal consultations with the members of the
Technology Council, the Company has extensive contacts throughout the life
sciences research industry who also provide guidance and feedback regarding many
aspects of the Company's business. These contacts include senior researchers at
a number of institutions including Cold Spring Harbor Laboratories, Dana Farber
Cancer Institute, Harvard University, MIT, University of California and the Salk
Institute. The Company also utilizes consultants with specific scientific
expertise, particularly in the area of new product development and trends in
specific areas of scientific research.
The Company currently has a consulting agreement with Robert A. Weinberg,
Ph.D. Dr. Weinberg is a Professor of Biology at MIT and a Member of the
Whitehead Institute for Biomedical Research in Cambridge, Massachusetts. Dr.
Weinberg is world renowned for his research in cancer biology and cell cycle. He
has received thirty-two individual awards and honors during his career. In
addition to his research and academic duties at MIT, Dr. Weinberg serves on the
Board of Scientific Advisors to Hoffman-LaRoche, Inc., as an honorary Director
of the American Cancer Society, on the Scientific and Academic Advisory
Committee at the Weitzmann Institute of Science, as an Awards Assembly Member of
the General Motors Cancer Research Foundation and on the Research Advisory Board
Massachusetts General Hospital. Dr. Weinberg is the author of 250 published
scientific papers. During 1996, Dr. Weinberg is providing guidance and
assistance to the Company, principally relating to the Oncogene Research
Products business, under a consulting agreement providing for compensation
aggregating $10,000.
MANUFACTURING AND QUALITY ASSURANCE
The Company has manufacturing facilities in San Diego, California,
Cambridge, Massachusetts and Laufelfingen, Switzerland. All products are
distributed from either the Company's North American distribution center in San
Diego or the Company's European distribution center in Nottingham, U.K. For the
twelve-month period ended May 31, 1996, the Company's level of total outstanding
product backorders averaged approximately $370,000, calculated by averaging
backorder amounts at each month end during the period. The Company ships
products in accordance with customer requests, generally next-day or second-day
delivery, using principally United Parcel Service and Federal Express. Based on
the Company's monthly shipping statistics, over 99% of customer orders are
accurately fulfilled.
The Company produces products through its internal manufacturing process
and selective sourcing of additional products that can be more cost effectively
included in the product offering by purchasing from outside suppliers. Initial
batches of externally sourced products may be subject to inspection by the
Company's quality control personnel, and subsequent purchases are monitored to
ensure consistent quality of supply. In substantially all cases, members of the
Company's scientific staff have physically visited the manufacturing facility of
suppliers from whom the Company purchases sourced product. In addition, periodic
inspections of supplier facilities may be performed in connection with the
Company's supplier management process. Based upon 1995 sales data, approximately
45% of the Company's sales were derived from internally manufactured products.
The level of manufacturing content in individual products produced internally
varies depending upon the state of raw materials purchased. In some cases, such
as the production of peptides, internally synthesized biochemicals and
antibodies, assays and kits produced at the Company's Cambridge, Massachusetts
facility, the entire manufacturing process is controlled by the Company. In
other cases, it is more cost effective for the Company to purchase materials in
various states of completion and provide "value-added" manufacturing processes
such as purification, lyophilization and subdivision/packaging prior to delivery
to customers.
The Company's manufacturing activities consist primarily of antibody
production, synthesis of chemical compounds, synthesis of peptides and amino
acids and assembly of assays and kits. In the case of certain products provided
primarily to pharmaceutical and diagnostic customers from the Company's Swiss
manufacturing facility, appropriate GMP manufacturing guidelines are adhered to.
In addition, the Swiss facility has
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<PAGE> 38
received ISO 9001 certification of policies and procedures utilized in the
procurement, manufacturing and distribution of products. The Company also
maintains a central quality assurance department in its San Diego headquarters,
with the principal focus of ensuring that quality processes are maintained
worldwide which ensure consistent, high quality product is delivered in
connection with all product offerings.
FULFILLMENT AND INTEGRATED INFORMATION SYSTEMS
The Company has a highly automated order fulfillment system capable of
delivering substantially all customer orders worldwide on a next-day basis. The
Company believes that this system enables the Company to compete with its larger
competitors and gives it a competitive advantage over its smaller competitors,
while at the same time making the Company an attractive distribution outlet for
these smaller companies.
The Company utilizes an Oracle-based relational database system to manage
substantially all operations of the Company's U.S. and international locations.
The Company's U.S., U.K., German and Swiss operations are part of a network that
is linked together through the use of leased phone lines with back-up
capabilities. The Company's information systems provide integrated on-line
automation of major business operations including purchasing, receiving,
production planning, inventory management, manufacturing, quality control, order
entry, shipping, sales analysis and all financial systems. This system allows
the Company to enter orders for any product brand from any of its networked
locations, and provides for invoicing of customers in any of the currencies
quoted in the various product catalogs. In addition, the Company has an
integrated software interface between the primary information system and the
computer software which organizes products to be picked from the automated
fulfillment system maintained at the Company's North American distribution
center in San Diego, California.
COMPETITION
The market for the Company's products is highly competitive, and the
Company expects competition to increase. Furthermore, although the life sciences
research products market continues to grow, its rate of growth in recent years
has been declining and may continue to decline. The Company competes with many
other life sciences research products suppliers, both larger and smaller than
the Company. Some of the Company's competitors, including two of its largest
competitors, Sigma-Aldrich and Boehringer, offer a broad range of equipment,
laboratory supplies and products, including many of the research products
offered by the Company. To the extent that researchers exhibit loyalty to the
supplier that first supplies them with a particular research product, the
Company's competitors may have an advantage over the Company with respect to
products first developed by such competitors. In addition, many of the Company's
competitors have significantly greater research and development, marketing,
financial and other resources than the Company, and therefore represent and will
continue to represent significant competition in the Company's existing and
future markets. Because of their size and the breadth of their product
offerings, certain of these companies have been able to establish managed
accounts by which, through a combination of direct computer links and volume
discounts, they seek to gain a disproportionate share of orders for research
products from a particular academic institution or pharmaceutical or
biotechnology company. Such managed accounts raise significant competitive
barriers for the Company. The Company currently benefits from its participation
in emerging niche research markets which, as they expand, may attract the
attention of the Company's competitors.
GOVERNMENT REGULATION
The Company is subject to governmental regulation under the Occupational
Safety and Health Act, the Environmental Protection Act, the Toxic Substances
Control Act, and other similar laws of general application, as to all of which
the Company believes itself to be in material compliance. Any failure by the
Company to comply with such laws could have a material adverse effect on the
Company's business, financial condition and results of operations.
Because of the nature of its operations and the use of hazardous substances
in its ongoing manufacturing and research and development activities, the
Company is subject to stringent federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacturing, storage,
air emission, effluent discharge,
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<PAGE> 39
handling and disposal of certain materials and wastes. There can be no assurance
that the Company's business, financial condition and results of operations will
not be materially adversely affected by current or future environmental laws,
rules, regulations and policies or by liability arising out of any releases or
discharges of materials that could be hazardous.
The Company's products are generally sold for non-human research purposes
and do not subject the Company to the regulatory requirements of the U.S. Food
and Drug Administration (the "FDA"). In certain limited situations, the
Company's Clinalfa products are sold to U.S. customers involved in limited human
clinical research which requires that the Company's customer obtain FDA approval
of an Investigational New Drug application (IND). Products sold to such
customers are produced by the Company at its Swiss manufacturing facilities in
material compliance with appropriate GMPs. Clinalfa products supplied to non-
U.S. customers for similar human clinical research are also subject to
applicable regulatory requirements and production is also done in material
compliance with appropriate GMPs.
INTELLECTUAL PROPERTY
Although the Company owns certain patents and licenses patents from others,
none of these patents individually, nor in the aggregate, are material to the
Company's operations. Due to the rapid pace of technological change in the field
of biotechnology, the degree of protection that a patent provides is uncertain,
and requires the Company to continually develop and seek out new technologies.
The Company has obtained the rights to products and technologies under a number
of license agreements with academic institutions, private and public
foundations, biotechnology companies and others. The Company intends to continue
its current practice of licensing technologies and products as a supplement to
its own internally developed innovations.
A number of the Company's products, including Oncogene Research Products
antibodies, are manufactured under license agreements which provide for payment
of royalties based upon the product's sales. As of June 30, 1996, the Company
had in excess of 175 license agreements which provided for royalty payments
generally ranging from 5% to 7% of net sales of such products. During the year
ended December 31, 1995 and the six months ended June 30, 1996, the Company paid
an aggregate of $120,000 and $174,000, respectively, as royalties pursuant to
license agreements.
Because of the breadth of the Company's product offerings and ambiguities
in intellectual property law, the Company periodically receives in the ordinary
course of business notices of potential infringement of patents held by others.
Although the Company historically has been able to satisfactorily resolve such
claims and believes that any outstanding claims will be satisfactorily resolved,
there can be no assurance that the Company may not be forced to discontinue the
sale of one or more of its products, some or all of which could be material. As
the Company develops product offerings focused on certain niche research
markets, intellectual property rights of the Company or others related to such
markets may become increasingly important, and the Company's failure to obtain
and retain such rights may have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's significant registered trademarks are its Calbiochem,
Novabiochem and Clinalfa brand names. In connection with the Oncogene Research
Products acquisition, OSI granted the Company the right to use the phrase
"Oncogene Research Products" for a three-year period which will expire in August
1998. All new Oncogene Research Products promotional materials, including the
Apoptosis specialty catalog, and all packaged products now identify Oncogene
Research Products as a product line of Calbiochem. The Company intends to
develop a strategy to transition its Oncogene Research Products brand and does
not anticipate that such transition will have an adverse effect on the Company's
business, financial condition and results of operations.
HUMAN RESOURCES
As of June 30, 1996, the Company employed 188 persons on a full-time and
part-time basis, including 40 employees who hold Ph.D.s. None of the Company's
employees are covered by a collective bargaining agreement, and the Company
considers relations with its employees to be good.
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<PAGE> 40
FACILITIES
The Company leases approximately 60,000 square feet of space in San Diego,
California, for use as its corporate headquarters, North American distribution
center and technology center (including manufacturing facilities) for the
Calbiochem brand. This lease expires in June 2008 and may be renewed for two
five-year terms at the option of the Company.
The Company also leases approximately 10,000 square feet of space in
Cambridge, Massachusetts for use as a technology center (including manufacturing
facilities) for the Oncogene Research Products brand. Such space is subleased
from OSI pursuant to a sublease agreement expiring in August 1998. The sublease
may be renewed, at the Company's option, for additional one-year terms through
2003. In connection with the OSI sublease, the Company entered into a Shared
Services Agreement which provides that OSI will share certain building
facilities with the Company, in exchange for the Company's contributing to the
costs of such shared facilities. The Company also leases approximately 3,000
square feet of additional laboratory space in Cambridge under a three-year
lease.
The Company leases approximately 7,500 square feet of space in Nottingham,
U.K., for use as its European distribution center and a sales office under a
lease expiring in February 2009. The Company leases approximately 2,100 square
meters of space in Laufelfingen, Switzerland. The Novabiochem brand technology
center (including manufacturing facilities) occupies 1,500 square meters of this
space under a lease expiring in June 2004. The remaining approximately 600
square meters has been unoccupied since the restructuring of the Company's Swiss
operations in 1993, and is under lease until June 2000. The Company also rents
space for sales offices in Australia, Japan and Germany on a short-term basis.
The Company believes that its properties are generally in good condition,
are well maintained, and are suitable and adequate to carry on its business.
LEGAL PROCEEDINGS
The Company is not currently a party to any legal proceedings.
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<PAGE> 41
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the Company's
executive officers and directors as of June 30, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Stelios B. Papadopoulos.... 55 Chairman of the Board; Chief Executive Officer and President
James G. Stewart........... 43 Vice President, Administration; Chief Financial Officer and
Secretary
John T. Snow............... 52 Vice President, New Business Development
Ben Matzilevich............ 48 Vice President, Market Development -- Niche Applications
Douglas J. Greenwold....... 54 Vice President, Sales and Marketing
Frederick L. 42 Director
Bryant(1)(3).............
Joseph P. Landy(1)(3)...... 35 Director
S. Joshua Lewis(2)......... 34 Director
Robert E. McGill, III(2)... 65 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Stock Option Committee.
Stelios B. Papadopoulos has served as Chairman of the Board, Chief
Executive Officer and President of the Company since January 1993. From June
1992 to December 1992, Mr. Papadopoulos served as President of Fisher Scientific
Worldwide Inc. (now Fisher Scientific International Inc.) ("Fisher") and was
responsible for the day-to-day operations of Fisher's worldwide organization
which provides equipment, laboratory supplies, and various other products to
customers in the life sciences research market. From May 1989 to June 1992, Mr.
Papadopoulos served as President of Fisher Scientific Company, the principal
operating unit of Fisher. Prior to joining Fisher Scientific Company, Mr.
Papadopoulos served in a number of companies involved in the life sciences
industry including Instrumentation Laboratory and Orion Research.
James G. Stewart has served as Vice President, Administration, Chief
Financial Officer and Secretary of the Company since June 1995. From April 1994
to April 1995, Mr. Stewart served as Vice President -- Finance and Chief
Financial Officer of Fightertown Entertainment, Inc., and from October 1988 to
April 1994, Mr. Stewart served as Vice President -- Finance and Chief Financial
Officer of VERTEQ, Inc. Mr. Stewart is a certified public accountant and a
former partner of Arthur Young & Company (now Ernst & Young LLP).
John T. Snow, Ph.D., has served as Vice President, New Business Development
of the Company since March 1992, and was Vice President, Marketing and Sales of
the Company from April 1989 until March 1992. Dr. Snow has been employed by the
Company and its predecessors in various other capacities since 1975 and is the
author and co-author of over 40 published scientific papers.
Ben Matzilevich has served as Vice President, Market Development -- Niche
Applications since joining the Company in April 1995, and has served as General
Manager of the Oncogene Research Products business since its acquisition in
August 1995. From August 1993 to March 1995, Mr. Matzilevich served as Vice
President -- Sales and Marketing with Endogen, Inc., a producer and seller of
research products for the study of cytokines. In November 1989, Mr. Matzilevich
co-founded Biosource International, Inc., a research products company, and
through August 1993, was primarily responsible for day-to-day operations,
product development and development of the sales and marketing organization.
Prior to founding Biosource, Mr. Matzilevich held various positions at
NEN/E. I. du Pont de Nemours and Company and acted as an industry consultant to
a number of research products companies serving the life sciences research
industry.
Douglas J. Greenwold has served as Vice President, Sales and Marketing of
the Company since January 1994. From 1990 to 1993, Mr. Greenwold was employed in
various capacities, including Vice President -- Sales and Marketing, Research
Products Americas at Life Technologies, Inc., a supplier of research products to
39
<PAGE> 42
the life sciences research market. Prior to joining Life Technologies, Mr.
Greenwold held a number of sales and marketing positions at Survival Technology,
Inc., a supplier of cardiac monitoring and drug delivery technologies and Xerox
Corporation.
Frederick L. Bryant has served as a director of the Company since March
1992. Since December 1993, he has been principally employed as a General Partner
of ABS Partners, L.P., the general partner of ABS Capital Partners, L.P., a
private equity fund. For more than five years prior to that date, he was
principally employed as a Managing Director of Alex. Brown & Sons Incorporated,
investing private equity funds. Mr. Bryant also serves as a director of
Transaction Systems Architects, Inc. and several privately held companies.
Joseph P. Landy has served as a director of the Company since March 1992.
Since January 1994, Mr. Landy has been a Managing Director of E.M. Warburg,
Pincus & Co., Inc., where he has been employed in various capacities since 1985.
Mr. Landy also serves as a director of Level One Communications, Inc., Nova
Corporation and several privately held companies.
S. Joshua Lewis has served as a director of the Company since June 1995.
Mr. Lewis is a Vice President of E.M. Warburg, Pincus & Co., Inc. where he has
been employed in various capacities since 1989. Mr. Lewis also serves as a
director of Cambridge Neuroscience, Inc.
Robert E. McGill, III has served as a director of the Company since
November 1995. For more than the past five years, Mr. McGill has served as a
member of the Board of Managers of seven variable annuity managed separate
accounts and a Trustee of five mutual funds sponsored by The Travelers Insurance
Company. From 1989 to December 1994, Mr. McGill served as Executive Vice
President -- Finance and Administration of The Dexter Corporation, where he also
served as a director from 1983 to April 1995. Mr. McGill also serves as a
director of Connecticut Surety Corporation and Chemfab Corporation.
The Company's Board of Directors is currently composed of five directors,
one of whom is an employee of the Company. Directors serve until the next annual
stockholders' meeting or until their successors have been duly elected and
qualified. During 1995, the Board of Directors had six meetings. The Company
intends to add an additional independent director with life sciences industry
experience.
COMMITTEES OF THE BOARD OF DIRECTORS
Compensation Committee. The Company has a Compensation Committee consisting
of Messrs. Bryant and Landy. The Compensation Committee provides recommendations
concerning salaries and incentive compensation for the Company's officers and
administers the Company's benefit plans, other than the Stock Option Plan.
Audit Committee. The Company has an Audit Committee consisting of Messrs.
Lewis and McGill. The Audit Committee recommends to the Board of Directors the
engagement of the Company's independent public accountants and reviews the scope
and results of their audits and other services. The Audit Committee meets with
management and with the independent public accountants to review matters
relating to the quality of the Company's financial reporting and internal
accounting controls, including the nature, extent and results of the audits,
proposed changes to the Company's accounting principles and otherwise maintains
communications between the independent public accountants and the Board of
Directors.
Stock Option Committee. The Company has a Stock Option Committee consisting
of Messrs. Bryant and Landy. The Stock Option Committee determines grants under
and otherwise administers the Company's Stock Option Plan.
COMPENSATION OF DIRECTORS
Directors, other than Warburg's nominees, are reimbursed for expenses
incurred in attending meetings of the Board of Directors. In addition, Mr.
McGill, who is not an employee and not otherwise affiliated with a principal
stockholder of the Company, is paid $500 for each Board of Directors meeting
attended. At the time that Mr. McGill joined the Board of Directors, he was
granted options to purchase 11,829 shares of Common Stock at an exercise price
of $3.38 per share. Additionally, under an agreement with the Company, Mr.
McGill
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<PAGE> 43
from time to time provides certain consulting services for which he is
compensated at the rate of $1,000 per day. During 1995, the Company paid Mr.
McGill a consulting fee of $1,000.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation of the
Company's Chief Executive Officer and the five other most highly compensated
executive officers including the Company's former President (collectively, the
"Named Executive Officers") for the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------------------------- --------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Stelios B. Papadopoulos (1)
Chief Executive Officer and President...... $ 204,327 $ 162,640 -- $ 2,112
Richard B. Slansky (2)
President.................................. 63,600 93,015 -- 147,190
Douglas J. Greenwold (3)
Vice President, Sales and Marketing........ 115,000 -- -- 3,352
John T. Snow (4)
Vice President, New Business Development... 110,021 -- -- 3,804
James G. Stewart (5)
Vice President, Administration, Chief
Financial Officer and Secretary............ 80,865 21,518(6) 47,317 45,471
Ben Matzilevich (7)
Vice President, Market Development -- Niche
Applications............................... 87,692 -- 23,659 --
</TABLE>
- ---------------
(1) Other annual compensation represents forgiveness of principal and interest
related to a note receivable from Mr. Papadopoulos in connection with his
purchase of capital stock of the Company pursuant to his employment
agreement. Other compensation includes $1,098 in premiums for personal
beneficiary life insurance in excess of non-taxable group limits, and $1,014
of Company matching 401(k) contributions.
(2) Resigned from the Company in June 1995. Other annual compensation represents
severance pay. Other compensation includes $144,460 of compensation from
exercise of non-qualified stock options and $2,730 of Company matching
401(k) contributions.
(3) Other compensation includes $580 in premiums for personal beneficiary life
insurance in excess of non-taxable group limits and $2,772 of Company
matching 401(k) contributions.
(4) Other compensation includes $1,035 in premiums for personal beneficiary life
insurance in excess of non-taxable group limits and $2,769 of Company
matching 401(k) contributions.
(5) Joined the Company in June 1995. Other compensation includes $39,231
relocation expense reimbursement, $4,680 of premiums for personal
beneficiary life insurance in excess of non-taxable group limits and $1,560
of Company matching 401(k) contributions.
(6) Represents tax reimbursement payments related to relocation.
(7) Joined the Company in April 1995.
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<PAGE> 44
The following table summarizes the number of shares and the terms of stock
options granted to the Named Executive Officers in 1995:
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION
UNDERLYING GRANTED TO TERM($)(2)(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE 5% 10%
- ---------------------------------- ---------- ------------ -------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
James G. Stewart.................. 47,317 46.5% $.42 6/12/00 $ 5,526 $ 12,210
Ben Matzilevich................... 23,659 23.3 .42 7/03/00 2,763 6,105
</TABLE>
- ---------------
(1) The exercise price of options is equal to 100% of the fair market value of
the Common Stock as determined by the Company's Board of Directors on the
date of grant.
(2) The options have a five-year term, subject to earlier termination under
certain circumstances.
(3) The potential realizable value is calculated based on the term of the option
at its time of grant and is calculated by assuming that the stock price on
the date of grant as determined by the Board of Directors appreciates at the
indicated annual rate compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for
the appreciated price. The 5% and 10% assumed rates of appreciation are
derived from the rules of the Securities and Exchange Commission (the
"Commission") and do not represent the Company's estimate or projection of
the future market price of the Common Stock.
The following table summarizes options exercised in 1995 by the Named
Executive Officers, the number of unexercised options held by the Named
Executive Officers at the end of 1995, and their value at that date if they were
in-the-money.
AGGREGATED 1995 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1995(#) DECEMBER 31, 1995($)(1)
ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- -------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stelios B. Papadopoulos.... -- -- 55,124 55,124 $ 167,061 $ 167,061
Richard B. Slansky......... 47,696 $ 144,460 -- -- -- --
Douglas J. Greenwold....... -- -- 18,927 28,390 57,360 86,040
John T. Snow............... -- -- -- 6,624 -- 20,076
James G. Stewart........... -- -- -- 47,317 -- 143,400
Ben Matzilevich............ -- -- -- 23,659 -- 71,700
</TABLE>
- ---------------
(1) Based on a value of $3.45 per share, the fair market value on December 31,
1995 as determined by the Board of Directors.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Papadopoulos and
Matzilevich currently providing for their employment at annual base salaries of
$225,000 and $124,000, respectively. Mr. Papadopoulos' employment agreement
provides that the Board of Directors will review his compensation at least once
each year and award such bonuses and effect such increases in base salary as the
Board of Directors, in its sole discretion, determines are merited, based upon
his performance and consistent with the Company's compensation policies. Mr.
Matzilevich's employment agreement provides that in addition to any annual
adjustment made to his salary, he is eligible for a bonus up to 35% of base
salary, based on the achievement of certain agreed-upon objectives. In addition,
both of these executives may participate in such fringe benefits as are
generally provided to the Company's executives.
Unless terminated earlier in accordance with their respective terms, Mr.
Papadopoulos' employment agreement terminates on January 4, 1998, and Mr.
Matzilevich's employment agreement terminates on April 3, 1998. In addition,
each of these agreements provides that the Company and the executive will, not
later than
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<PAGE> 45
90 days prior to the termination thereof, begin to negotiate in good faith the
terms of any extension of the employment agreement.
If Mr. Papadopoulos' employment is terminated without cause, if there is a
material change in his duties, or if the Company does not offer to continue his
employment with the Company after the agreement's expiration at a base salary at
least equal to his then most recent salary, Mr. Papadopoulos will be entitled to
receive salary continuation pay for the 12-month period from the date of such
termination equal to his base salary under the terms of his employment
agreement. In addition, Mr. Papadopoulos' employment agreement provides that
upon such a termination, any options to purchase Common Stock then held by him
will become exercisable to the full extent that they would otherwise have become
exercisable on January 4, 1998, without regard to certain restrictions or
deferrals of the right to exercise such options. In the event that Mr.
Matzilevich is terminated without cause, he will be entitled to continue to
receive compensation under his employment agreement for the remainder of its
term.
The Company maintains $1.0 million of key man life insurance on the lives
of Messrs. Papadopoulos and Matzilevich and Dr. Snow, naming the Company as
beneficiary.
Although not parties to employment agreements with the Company, Messrs.
Stewart and Greenwold and Dr. Snow are eligible for incentive bonuses up to
approximately 35% of their base salaries, based on the achievement of certain
agreed-upon objectives, and are eligible for severance payments up to six months
of their base salary in the event they are terminated without cause.
STOCK OPTION PLAN
The Stock Option Plan, including all amendments, has been adopted by the
Board of Directors and approved by the Company's stockholders. The Stock Option
Plan authorizes the grant of both incentive stock options ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and nonqualified stock options ("NQSOs") to key employees, officers,
directors and consultants of the Company and its subsidiaries. ISOs, however,
may only be granted to participants who are employees of the Company or its
subsidiaries. Options to purchase an aggregate of 835,000 shares of Common Stock
are authorized under the Stock Option Plan. As of July 17, 1996, 78,073 ISOs and
315,841 NQSOs were outstanding under the Stock Option Plan, and 359,559 shares
were available for future awards.
The Stock Option Plan is presently administered by a committee (the "Stock
Option Committee") appointed by the Board of Directors. The Stock Option
Committee has the discretion to determine the key employees, officers, directors
and consultants to whom options are granted and the terms of such options,
including the exercise price, vesting provisions and expiration date. The
minimum exercise price for ISOs, however, must be the fair market value of the
Common Stock on the date of grant, as determined by the Company's Board of
Directors. No options may be granted with a term longer than ten years.
All options granted under the Stock Option Plan are evidenced by a written
option agreement between the option holder and the Company. Option holders have
no voting, dividend or other rights of stockholders with respect to shares of
Common Stock covered by their options prior to exercising such options and
becoming the holders of record of shares of Common Stock.
The Board of Directors may at any time terminate the Stock Option Plan or
from time to time make such modifications or amendments to the Stock Option Plan
as it may deem advisable; provided that the Board of Directors may not, without
the approval of the Company's stockholders, increase the maximum number of
shares of Common Stock for which options may be granted under the Stock Option
Plan.
Federal Tax Consequences. Set forth below is a brief description of the
federal income tax consequences applicable to ISOs and NQSOs granted under the
Stock Option Plan.
ISOs. No taxable income is realized by the option holder upon the grant or
exercise of an ISO. If Common Stock is issued to an option holder pursuant to
the exercise of an ISO, and if no disqualifying disposition of such shares is
made by such option holder within the earlier of two years after the date of
grant or within one year after the exercise of such options, then (i) upon the
sale of such shares of Common Stock, any amount realized in excess of the option
price will be taxed to such option holder as a long-term capital gain and any
loss sustained will be taxed to such option holder as a long-term capital loss,
and (ii) no deduction will be allowed to the Company for federal income tax
purposes.
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<PAGE> 46
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, then generally
(i) the option holder will realize ordinary income in the year of disposition in
an amount equal to the excess, if any, of the fair market value of such shares
at the time of exercise (or, if less, the amount realized on the disposition of
such shares) over the option price paid for such shares, and (ii) the Company
will be entitled to deduct the same amount as compensation expense for federal
income tax purposes. Any further gain (or loss) realized by the option holder
will be taxed as short-term or long-term capital gain (or loss), as the case may
be, and will not result in any deduction by the Company.
NQSOs. With respect to NQSOs, (i) no income is realized by the option
holder at the time the option is granted, (ii) generally, upon exercise,
ordinary income is realized by the option holder in an amount equal to the
difference between the option price paid for the shares and the fair market
value of the shares, if unrestricted, on the date of exercise, and the Company
is generally entitled to a federal income tax deduction in the same amount as
compensation expense, subject to applicable withholding requirements and (iii)
at sale, appreciation (or depreciation) after the date of exercise is treated as
either short-term or long-term capital gain (or loss), depending on how long the
shares have been held.
The foregoing summary with respect to federal income taxation does not
purport to be complete and reference is made to the applicable provisions of the
Code.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No officer or employee of the Company currently serves as a member of the
Compensation Committee. Messrs. Landy and Bryant, the current members of the
Compensation Committee, have in the past served as officers of the Company,
including, in the case of Mr. Landy, during fiscal 1995. Messrs. Landy and
Bryant may be deemed to have an indirect pecuniary interest (within the meaning
of Rule 16a-1 under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), in an indeterminate portion of the securities of the Company
beneficially owned by Warburg and ABS, respectively. See "Principal
Stockholders" and "Certain Transactions -- Acquisition of the Company."
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
The Certificate of Incorporation provides that, to the fullest extent
permitted by Delaware law, the Company's directors shall not be personally
liable to the Company and its stockholders for monetary damages for breach of
their fiduciary duties as directors, except for liability for (i) breach of the
directors' and officers' duty of loyalty, (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law,
(iii) the unlawful payment of a dividend or unlawful stock purchase or
redemption and (iv) any transaction from which the director derives an improper
personal benefit. Delaware law does not permit a corporation to eliminate a
director's duty of care, and this provision of the Company's Certificate of
Incorporation has no effect on the availability of equitable remedies, such as
injunction or rescission, based upon a director's breach of the duty of care.
In addition, the Company's Certificate of Incorporation and By-Laws provide
that the Company shall indemnify its directors and officers to the fullest
extent permitted by Delaware law. The Company has entered into indemnification
agreements with certain of its directors and officers pursuant to which the
Company provides indemnification and contribution against expenses and losses
incurred for claims brought against them by reason of their being a director or
officer of the Company. Members of the Stock Option Committee are also
indemnified by the Company in connection with their administration of the Stock
Option Plan.
The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors and
officers.
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<PAGE> 47
CERTAIN TRANSACTIONS
The following is a summary of certain transactions among the Company and
its directors, executive officers and principal stockholders:
CONVERSION OF SERIES A CONVERTIBLE PREFERRED STOCK AND EXCHANGE OF SERIES B
PREFERRED STOCK
The Company has agreed with Warburg that upon consummation of the offering
of Common Stock, Warburg will convert its 4,001 shares of Series A Convertible
Preferred Stock into 788,814 shares of Class A Common Stock. Promptly after such
conversion, Warburg will, in turn, make the requisite certification required
under the Certificate of Incorporation regarding its share ownership to the
Company and will convert such shares of Class A Common Stock into Common Stock.
See "Description of Capital Stock."
The Company has agreed with the holders of the Series B Preferred Stock
that upon consummation of this offering, each share of Series B Preferred Stock
will be exchanged for that number of shares of Common Stock as will be equal to
the liquidation preference of a share of Series B Preferred Stock ($100) divided
by the initial public offering price of the Common Stock set forth on the cover
page of this Prospectus. As as a result, at an assumed public offering price of
$13.00 per share of Common Stock, all of the shares of Series B Preferred Stock
will be converted into an aggregate of 1,380,215 shares. Warburg, ABS, Mr.
Papadopoulos and Dr. Snow are the holders of the Series B Preferred Stock,
holding 124,023 shares, 50,356 shares, 4,377 shares and 672 shares, respectively
and will, accordingly, be issued 954,023, 387,354, 33,669 and 5,169 shares of
Common Stock, respectively, upon such exchange.
ACQUISITION OF THE COMPANY
In March 1992, the Company acquired all of the issued and outstanding
capital stock, together with certain bank and intercompany indebtedness, of the
Company's subsidiaries from Biodor Holding AG, Ixora Holding AG and Biodor US
Holding Corporation. Warburg, ABS and certain current and former employees of
the Company provided the principal equity financing for these acquisitions by
purchasing from the Company 1,012,984 shares of Common Stock at $.42 per share,
4,001 shares of Series A Convertible Preferred Stock at $100 per share and
178,166 shares of Series B Preferred Stock at $100 per share, representing a
total investment of approximately $18.6 million. In addition, these investors
received certain registration rights. See "Description of Capital
Stock -- Registration Rights."
TRANSACTIONS WITH OFFICERS
On January 4, 1993, Mr. Papadopoulos, the Company's Chairman of the Board,
Chief Executive Officer and President, purchased 44,100 shares of Common Stock
at $.42 per share and 4,377 shares of Series B Preferred Stock at $100 per
share, in exchange for $4,000 and a $452,000 promissory note. The Company has
granted Mr. Papadopoulos certain registration rights for such shares of Common
Stock. See "Description of Capital Stock -- Registration Rights." This unsecured
note bore interest at the rate of 8% per annum and matured on January 4, 1996.
In accordance with the terms of the note, as a result of Mr. Papadopoulos'
continued employment with the Company, one-third of the principal amount,
together with accrued interest, was forgiven on each of the first three
anniversaries of the note.
Effective June 9, 1995, Richard B. Slansky, the former President and Chief
Operating Officer of the Company, resigned to pursue other business
opportunities. In connection therewith, the Company and Mr. Slansky entered into
an agreement which provided for the payment to Mr. Slansky of six months
severance pay and also provided for the sale by Mr. Slansky to the Company of
59,726 shares of Common Stock at a price of approximately $3.45 per share and
1,199 shares of Series B Preferred Stock at a price of $100 per share.
On January 31, 1996, Mr. Matzilevich, the Company's Vice President, Market
Development-Niche Applications, purchased 28,390 shares of Common Stock at $3.38
per share from the Company in exchange for a $96,000 promissory note. The note
bears interest at the rate of 5.65% per annum, matures on January 31, 1998, and
is secured by such shares of Common Stock. The Company has granted Mr.
Matzilevich certain registration rights for such shares of Common Stock. See
"Description of Capital Stock -- Registration Rights."
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<PAGE> 48
PRINCIPAL STOCKHOLDERS
The following table presents certain information regarding beneficial
ownership of the Company's Common Stock as of June 30, 1996, by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each Named Executive Officer and (iv) all directors and executive officers as a
group. Unless otherwise indicated, each person in the table has sole voting and
investment power as to the shares shown.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK SHARES OF COMMON STOCK
BENEFICIALLY OWNED PRIOR BENEFICIALLY OWNED
TO OFFERING(1) AFTER OFFERING(2)
------------------------------------- ------------------------------------
NAME NUMBER PERCENT NUMBER PERCENT
- --------------------------------------------------- ---------------------- ------------ --------------------- ------------
<S> <C> <C> <C> <C>
Warburg, Pincus Investors, L.P. (3)................ 618,901 49.9% 2,210,324 45.5%
466 Lexington Avenue
New York, New York 10017
ABS MB (C-N) Limited Partnership II (4)............ 507,342 46.6 894,696 18.4
135 East Baltimore Street
Baltimore, Maryland 21202
Stelios B. Papadopoulos (5)
10394 Pacific Center Court
San Diego, California 92121...................... 126,786 10.8 160,455 3.2
James G. Stewart (6)............................... 9,463 * 9,463 *
John T. Snow (7)................................... 33,221 3.0 38,390 *
Ben Matzilevich (8)................................ 33,122 3.0 33,122 *
Douglas J. Greenwold (6)........................... 18,927 1.7 18,927 *
Frederick L. Bryant (9)............................ 507,342 46.6 894,696 18.4
Joseph P. Landy (10)............................... 618,901 49.9 2,210,324 45.5
S. Joshua Lewis.................................... -- -- -- --
Robert E. McGill, III.............................. -- -- -- --
Richard B. Slansky................................. -- -- -- --
Directors and Executive Officers as a group (10
persons) (11).................................... 1,347,762 99.0 3,365,377 67.6
</TABLE>
- ---------------
* Less than 1%.
(1) Prior to giving effect to the conversion of the outstanding shares of
Series A Convertible Preferred Stock into shares of Class A Common Stock
and the exchange of the outstanding shares of Series B Preferred Stock for
shares of Common Stock.
(2) Gives effect to the conversion of all outstanding shares of Series A
Convertible Preferred Stock into an aggregate of 788,814 shares of Class A
Common Stock and the subsequent conversion into an equal number of shares
of Common Stock, and the exchange of all outstanding shares of Series B
Preferred Stock, based upon an assumed initial public offering price of
$13.00 per share, for an aggregate of 1,380,215 shares of Common Stock.
(3) The sole general partner of Warburg is Warburg, Pincus & Co., a New York
general partnership ("WP"). Lionel I. Pincus is the managing partner of WP
and may be deemed to control it. E.M. Warburg, Pincus & Company, a New York
general partnership that has the same partners as WP ("E.M. Warburg"),
manages Warburg. WP has a 20% interest in the profits of Warburg and,
through its wholly owned subsidiary, E.M. Warburg, Pincus & Co., Inc.
("EMW"), owns 1.13% of the limited partnership interests in Warburg. Mr.
Landy, a director of the Company, is a Managing Director of EMW and a
general partner of WP and E.M. Warburg. As such, Mr. Landy may be deemed to
have an indirect pecuniary interest (within the meaning of Rule 16a-1 under
the Exchange Act) in an indeterminate portion of the shares of Common Stock
beneficially owned by Warburg, EMW and WP. See Note (10) below. Shares
beneficially owned prior to the offering includes 151,414 shares of Common
Stock which may be acquired upon the conversion of shares of Series A
Convertible Preferred Stock into Class A Common Stock and the subsequent
conversion into Common Stock.
(4) The general partner of ABS is ABS MB Ltd. ("ABS Ltd."). Mr. Bryant, a
director of the Company, is a Vice President and a director of ABS Ltd. As
such, Mr. Bryant may be deemed to share voting and investment power over
the shares of Common Stock owned by ABS. Additionally, Mr. Bryant is a
direct and indirect limited partner of ABS, and as such, may be deemed to
have an indirect pecuniary interest (within the meaning of Rule 16a-1 under
the Exchange Act) in an indeterminate portion of the shares of Common Stock
beneficially owned by ABS and ABS Ltd. See Note (9) below.
(5) Includes 82,686 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of June 30, 1996.
(6) Represents shares of Common Stock which may be acquired pursuant to stock
options exercisable within 60 days of June 30, 1996.
(7) Includes 6,624 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of June 30, 1996.
(8) Includes 4,732 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of June 30, 1996.
(9) All of the shares of Common Stock indicated as owned by Mr. Bryant are
owned directly by ABS and are included because of Mr. Bryant's affiliation
with ABS and ABS Ltd. Mr. Bryant disclaims "beneficial ownership" of these
shares within the meaning of Rule 13d-3 under the Exchange Act, except to
the extent of his indirect pecuniary interest. See Note (4).
(10) All of the shares of Common Stock indicated as owned by Mr. Landy are owned
directly by Warburg and are included because of Mr. Landy's affiliation
with Warburg, WP and E.M. Warburg. Mr. Landy disclaims "beneficial
ownership" of these shares within the meaning of Rule 13d-3 under the
Exchange Act, except to the extent of his indirect pecuniary interest. See
Note (3).
(11) Includes shares of Common Stock which may be acquired within 60 days of
June 30, 1996. See Notes (3), (5), (6), (7) and (8).
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<PAGE> 49
DESCRIPTION OF CAPITAL STOCK
The following summary does not purport to be complete and is subject to,
and qualified in its entirety by, the Certificate of Incorporation and the
By-Laws, which are included as exhibits to the registration statement of which
this Prospectus forms a part, and by the provisions of applicable law. The
Company intends to file an amended and restated certificate of incorporation
immediately following the consummation of the offering to eliminate the Series A
Convertible Preferred Stock and Series B Preferred Stock. Upon the consummation
of this offering and following such amendment and restatement, the authorized
capital stock of the Company will consist of 30,000,000 shares of Common Stock,
par value $.01 per share, 800,000 shares of Class A Common Stock, par value $.01
per share, and 5,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock").
COMMON STOCK
As of June 30, 1996, there were 1,087,875 shares of Common Stock
outstanding held of record by 19 persons. Upon the consummation of the offering
of shares of Common Stock offered hereby, there will be 4,856,905 shares of
Common Stock outstanding (5,096,905 shares if the Underwriters' over-allotment
option is exercised in full), including 1,380,215 shares of Common Stock
issuable upon the exchange of the outstanding shares of Series B Preferred
Stock, and 788,814 shares of Common Stock issuable upon conversion of the shares
of Class A Common Stock. An aggregate of 393,914 shares of Common Stock are
issuable upon the exercise of outstanding stock options and 359,559 shares of
Common Stock are reserved for future issuance under the Company's Stock Option
Plan.
Holders of Common Stock are entitled to one vote per share in all matters
to be voted on by the stockholders of the Company and do not have cumulative
voting rights. Subject to preferences that may be applicable to any Preferred
Stock outstanding at the time, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of the Company's liabilities and the liquidation
preference, if any, of any outstanding Preferred Stock. Holders of shares of
Common Stock have no preemptive, subscription, redemption or conversion rights.
There are no redemption or sinking fund provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the shares offered
by the Company in this offering will be, when issued and paid for, fully paid
and non-assessable. The rights, preferences and privileges of holders of Common
Stock are, subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
CLASS A COMMON STOCK
Following the conversion of all outstanding shares of Series A Convertible
Preferred Stock upon the consummation of this offering, there will be 788,814
shares of Class A Common Stock outstanding, all shares of which will be held by
Warburg. Except as otherwise provided by law, the holders of the Class A Common
Stock are not entitled to notice of, or to vote at, any meeting of the
stockholders of the Company nor to vote upon any matter relating to the business
or affairs of the Company. The dividend, liquidation and other rights of the
Class A Common Stock are identical to those of the Common Stock. Each share of
Class A Common Stock is convertible into one share of Common Stock at any time
provided that either (i) the holder thereof is not Warburg or any affiliate, or
(ii) upon such conversion and after giving effect thereto, such holder and all
affiliates will collectively own beneficially and of record no more than 50% of
the then outstanding shares of Common Stock. Warburg is expected to be able to
certify to the Company that it meets the latter requirement and, accordingly,
will convert all of its shares of Class A Common Stock into an equal number of
shares of Common Stock. The Company does not presently intend to issue any
additional shares of its Class A Common Stock following such conversion.
PREFERRED STOCK
As of the date of this Prospectus, there were no outstanding shares of
Preferred Stock, other than the 4,001 shares of Series A Convertible Preferred
Stock and the 179,428 shares of Series B Preferred Stock, all of the
47
<PAGE> 50
shares of which will be converted or exchanged for Class A Common Stock or
Common Stock upon the consummation of the offering. Following the conversion of
all outstanding shares of Series A Convertible Preferred Stock and the exchange
of all outstanding shares of Series B Preferred Stock, in each case upon the
consummation of this offering, there will be no shares of Series A Convertible
Preferred Stock or Series B Preferred Stock outstanding. See "Certain
Transactions -- Conversion of Series A Convertible Preferred Stock and Exchange
of Series B Preferred Stock."
The Board of Directors will have the authority, without any further vote or
action by the stockholders, to provide for the issuance of up to 5,000,000
shares of Preferred Stock from time to time in one or more series with such
designations, rights, preferences and limitations as the Board of Directors may
determine, including the consideration received therefor. The Board also will
have the authority to determine the number of shares comprising each series,
dividend rates, redemption provisions, liquidation preferences, sinking fund
provisions, conversion rights and voting rights without approval by the holders
of the Common Stock. Although it is not possible to state the effect that any
issuance of Preferred Stock might have on the rights of holders of Common Stock,
the issuance of Preferred Stock may have one or more of the following effects:
(i) restriction of Common Stock dividends if Preferred Stock dividends have not
been paid, (ii) dilution of the voting power and equity interest of holders of
Common Stock to the extent that any series of Preferred Stock has voting rights
or is convertible into Common Stock or (iii) prevention of current holders of
Common Stock from participating in the Company's assets upon liquidation until
any liquidation preferences granted to holders of Preferred Stock are satisfied.
In addition, the issuance of Preferred Stock may, under certain circumstances,
have the effect of discouraging a change in control of the Company by, for
example, granting voting rights to holders of Preferred Stock that require
approval by the separate vote of the holders of Preferred Stock for any
amendment to the Certificate of Incorporation or for any reorganization,
consolidation, merger or other similar transaction involving the Company. As a
result, the issuance of such Preferred Stock may discourage bids for the Common
Stock at a premium over the market price therefor, and could have a materially
adverse effect on the market value of the Common Stock. See "Risk
Factors -- Anti-Takeover Effects of Certificate of Incorporation and Delaware
Law."
WARRANT
As of the date of this Prospectus, there was an outstanding warrant to
purchase 3,028 shares of Common Stock (subject to adjustment upon certain
dilutive events) at an exercise price of $1.06 per share (the "Warrant"). The
Warrant is currently exercisable in whole or in part, and expires on July 28,
2000. The holder or holders of the shares of Common Stock issuable upon exercise
of the Warrant are entitled to certain registration rights. See
" -- Registration Rights."
REGISTRATION RIGHTS
Holders of 3,211,179 shares of Common Stock (the "Registrable Securities")
are entitled to certain rights with respect to the registration of such shares
under the Securities Act. In the event that the Company proposes to register any
of its securities under the Securities Act for its own account or otherwise on a
form which permits the registration of such Registrable Securities (other than
Form S-4 or Form S-8 or their successor forms), such holders are entitled to
include their Registrable Securities in such registrations, subject to certain
conditions and limitations. These limitations include the right of the managing
underwriter of any such offering to exclude some of the Registrable Securities
from such registration if it determines that marketing forces require a
limitation on the number of shares to be underwritten. All holders of
registration rights have waived their rights to register shares in connection
with this offering.
The holder or holders of in excess of 50% of the Registrable Securities
then outstanding are also entitled to request that the Company register at least
20% (or a lesser percent under certain circumstances) of the Registrable
Securities then outstanding ("Demand Registrations"), subject to certain
limitations. The Company is not obligated to effect more that three Demand
Registrations, and generally will bear all expenses incurred in connection with
the registration of Registrable Securities, other than underwriting discounts
and commissions. In addition, the holder or holders of shares of the 3,028
shares of Common Stock issuable upon exercise of the Warrant may include their
shares in Company-initiated registrations or Demand Registrations by other
holders of Registrable Securities.
48
<PAGE> 51
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock is publicly traded or
held of record by more than 2,000 stockholders and an "interested stockholder"
are prohibited for a three-year period following the date that such stockholder
became an interested stockholder, unless (i) the corporation has elected in its
original certificate of incorporation not to be governed by Section 203 (the
Company did not make such an election), (ii) the business combination was
approved by the Board of Directors of the corporation before the other party to
the business combination became an interested stockholder, (iii) upon
consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan) or (iv) the business combination was approved by the Board of
Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of certain extraordinary
transactions involving the corporation and a person who was not an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of the majority of the corporation's directors.
The term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an "interested stockholder,"
transactions with an "interested stockholder" involving the assets or stock of
the corporation or its majority-owned subsidiaries and transactions which
increase an "interested stockholder's" percentage ownership of stock. The term
"interested stockholder" is defined generally as a stockholder who, together
with its affiliates and associates, owns (or, within three years prior, did own)
15% or more of a Delaware corporation's voting stock. Section 203 could prohibit
or delay a merger, takeover or other change in control of the Company and
therefore could discourage attempts to acquire the Company.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Chase Mellon
Shareholder Services.
49
<PAGE> 52
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
4,856,905 shares of Common Stock (assuming no exercise of the Underwriters
over-allotment option). Of these shares, 1,600,000 shares sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act unless purchased by "affiliates" of the Company as that term is
defined under Rule 144 promulgated under the Securities Act ("Rule 144"). The
remaining 3,256,905 shares outstanding upon completion of this offering will be
"restricted securities" as that term is defined under Rule 144 (the "Restricted
Shares"). The Company's directors, executive officers and principal
stockholders, who in the aggregate hold approximately 3,242,945 shares of Common
Stock, have agreed not to sell or otherwise dispose of any shares of Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of UBS Securities LLC. See "Underwriting." The number of
shares of Common Stock available for sale in the public market is further
limited by restrictions under the Securities Act.
Upon completion of this offering, in addition to the 1,600,000 shares
offered hereby, approximately 8,043 shares of Common Stock held by current
stockholders will be eligible for immediate sale. Upon expiration of the 180-day
Lock-up Period, and subject to the limitations imposed by Rule 144, 3,130,162
shares of Common Stock held by the Company's directors, executive officers and
principal stockholders will be eligible for immediate sale. Promptly after the
completion of the offering, the Company intends to file a registration statement
on Form S-8 under the Securities Act covering approximately 393,914 shares of
Common Stock reserved for issuance pursuant to stock options outstanding as of
June 30, 1996, and 359,559 shares of Common Stock reserved for future issuance
under the Stock Option Plan. See "Management -- Stock Option Plan." Such
registration statement will automatically become effective upon filing.
Accordingly, shares registered thereunder will, subject to Rule 144 volume
limitations applicable to affiliates, be available for sale in the open market,
except to the extent that such shares are subject to vesting restrictions or
certain contractual restrictions on sale or transfer. Holders of options to
purchase 246,995 shares have agreed not to sell or otherwise transfer shares
obtained upon exercise of such options during the Lock-Up Period, 161,824 of
which will be exercisable upon the expiration of such Lock-Up Period.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years, including persons who may be deemed affiliates of the Company,
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of 1% of the number of shares of Common Stock then
outstanding or the average weekly trading volume of the Common Stock as reported
by the Nasdaq National Market during the four calendar weeks preceding the
filing of a Form 144 with respect to such sale. Sales under Rule 144 are also
subject to certain manner-of-sale provisions and notice requirements and to the
availability of current public information about the Company. In addition, a
person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned for at least
three years the shares proposed to be sold, would be entitled to sell such
shares under Rule 144(k) without regard to the requirements described above.
The Commission has proposed certain amendments to Rule 144 that would
reduce by one year the holding periods required for shares subject to Rule 144
to become eligible for resale in the public market. This proposal, if adopted,
would accelerate by one year the dates on which shares of Common Stock will
become eligible for resale described above. No assurance can be given concerning
whether or when the proposal will be adopted by the Commission.
After this offering, subject to the lock-up agreements described above,
holders of 3,211,179 shares of Common Stock, or their transferees, and the
holder or holders of the 3,028 shares of Common Stock issuable upon exercise of
the Warrant, are entitled to certain rights with respect to the registration of
such shares under the Securities Act. Registration of such shares under the
Securities Act would result in such shares becoming freely tradable without
restriction under the Securities Act (except for shares purchased by affiliates)
immediately upon the effectiveness of such registration. See "Description of
Capital Stock -- Registration Rights."
50
<PAGE> 53
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom UBS Securities LLC and
Dain Bosworth Incorporated are acting as representatives (the
"Representatives"), have agreed to purchase from the Company the following
respective number of shares of Common Stock:
<TABLE>
<CAPTION>
UNDERWRITERS SHARES
------------------------------------------------------------------ ----------
<S> <C>
UBS Securities LLC................................................
Dain Bosworth Incorporated........................................
-------
Total........................................................... 1,600,000
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company and its counsel. The
nature of the Underwriters' obligation is such that they are committed to
purchase all shares of Common Stock offered hereby if any such shares are
purchased. The Underwriting Agreement contains certain provisions whereby if any
underwriter defaults in its obligation to purchase shares, and the aggregate
obligations of the Underwriters so defaulting do not exceed 10% of the shares
offered hereby, the remaining Underwriters, or some of them, must assume such
obligations.
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock directly to the public at the offering price
set forth on the cover page of this Prospectus, and to certain dealers at such
price less a concession not in excess of $ per share. The Underwriters
may allow and such dealers may reallow a concession not in excess of $
per share to certain other dealers. After the public offering of the shares of
Common Stock, the offering price and other selling terms may be changed by the
Underwriters.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 240,000
additional shares of Common Stock to cover over-allotments, if any, at the
public offering price set forth on the cover page of this Prospectus, less the
underwriting discounts and commissions. To the extent that the Underwriters
exercise this option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the number of shares of
Common Stock to be purchased by it shown in the table above bears to the total
number of shares of Common Stock offered hereby. The Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The executive officers, directors, and principal stockholders of the
Company who beneficially own an aggregate of 3,365,466 shares of Common Stock
outstanding immediately prior to this offering have agreed that they will not,
without the prior written consent of UBS Securities LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock owned by them for a period of 180 days after the date of this
Prospectus. The Company has agreed that it will not, without the prior written
consent of
51
<PAGE> 54
UBS Securities LLC, offer, sell or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock for a period of 180
days after the date of this Prospectus, except that the Company may grant
additional options under the Stock Option Plan, or issue shares upon the
exercise of stock options.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
At the request of the Company, the Underwriters have reserved up to 80,000
shares of Common Stock for sale at the public offering price, less underwriting
discounts and commissions, to certain officers, directors, employees and other
persons designated by the Company. The number of shares of Common Stock
available for sale to the general public will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters to the general public on the same basis as the
other shares offered hereby.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price was determined through negotiations
among the Company and the Representatives. Among the factors considered in
determining the initial public offering price, in addition to prevailing market
and economic conditions, were certain financial information of the Company, the
history of, and the prospects for, the Company and the industry in which it
competes, an assessment of the Company's management, its past and present
operations, the prospects, and timing of, future revenues of the Company, the
present stage of the Company's development and the above factors in relation to
market values and various valuation measures of other companies engaged in
activities similar to the Company. The initial public offering price set forth
on the cover page of this Prospectus should not, however, be considered an
indication of the actual value of the Common Stock. Such price is subject to
change as a result of market conditions and other factors. There can be no
assurance that an active trading market will develop for the Common Stock or
that the Common Stock will trade in the public market subsequent to this
offering at or above the initial offering price.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York. Certain legal matters
relating to this offering will be passed upon for the Underwriters by Cooley
Godward Castro Huddleson & Tatum, San Diego, California.
EXPERTS
The financial statements of CN Biosciences, Inc. at December 31, 1994 and
1995, and for each of the three years in the period ended December 31, 1995
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The Company acquired the Oncogene Research Products business effective
August 1, 1995, in a business combination which has been accounted for as a
purchase. The financial statements of the Oncogene Research Products business
for each of the two years ended September 30, 1993 and 1994 and the ten-month
period ended July 31, 1995 appearing in this Prospectus and Registration
Statement have been audited by KPMG Peat Marwick LLP, independent auditors, as
set forth in their report thereon appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
52
<PAGE> 55
CHANGE IN ACCOUNTANTS
At a meeting held on November 10, 1995, the Audit Committee recommended,
and the Board of Directors approved, the engagement of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31, 1995.
Prior to the engagement of Ernst & Young LLP, Coopers & Lybrand L.L.P. served as
independent auditors of the Company.
The reports of Coopers & Lybrand L.L.P. on the Company's financial
statements for the years ended December 31, 1993 and 1994 did not contain
adverse opinions or disclaimers of opinions and were not qualified or modified
as to uncertainty, audit scope, or accounting principles.
In connection with the audit of the Company's financial statements for the
fiscal years ended December 31, 1993 and 1994, there were no disagreements with
Coopers & Lybrand L.L.P. on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to the satisfaction Coopers & Lybrand L.L.P., would have caused Coopers
& Lybrand L.L.P. to make a reference to the matter in their report.
ADDITIONAL INFORMATION
The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-1 with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement in accordance with the rules and regulations of the
Commission. For further information pertaining to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement, including
the exhibits thereto and the financial statements, notes and schedules filed as
a part thereof. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices located in New York at Seven World Trade Center, New York, New York
10007 and in Chicago at Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60611. Copies of such material can be obtained from the public
reference section of the Commission at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of the Registration Statement may also be inspected at the offices
of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
53
<PAGE> 56
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CN BIOSCIENCES, INC.
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996
(Unaudited)........................................................................ F-3
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 1995 and the six months ended June 30, 1995 and 1996 (Unaudited)...... F-4
Consolidated Statements of Stockholders' Equity for each of the three years in the
period ended December 31, 1995 and the six months ended June 30, 1996
(Unaudited)........................................................................ F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 1995 and the six months ended June 30, 1995 and 1996 (Unaudited)...... F-6
Notes to Consolidated Financial Statements........................................... F-7
ONCOGENE SCIENCE, INC. RESEARCH PRODUCTS BUSINESS (A BUSINESS SECTOR OF ONCOGENE
SCIENCE, INC.)
Report of Independent Auditors....................................................... F-20
Statements of Operations for the years ended September 30, 1993 and 1994 and the ten
months ended July 31, 1995......................................................... F-21
Notes to Financial Statements........................................................ F-22
CN BIOSCIENCES, INC. PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT (UNAUDITED).... F-24
</TABLE>
F-1
<PAGE> 57
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
CN Biosciences, Inc.
We have audited the accompanying consolidated balance sheets of CN
Biosciences, Inc. as of December 31, 1994 and 1995 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
CN Biosciences, Inc. at December 31, 1994 and 1995 and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
--------------------------------------
ERNST & YOUNG LLP
San Diego, California
July 16, 1996
F-2
<PAGE> 58
CN BIOSCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, JUNE 30, JUNE 30,
------------------------- ----------- -------------
1994 1995 1996 1996
----------- ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................. $ 935,000 $ 1,203,000 $ 1,118,000
Accounts receivable, trade, net of
allowance for doubtful accounts of
$589,000 in 1994, $472,000 in 1995 and
$428,000 in 1996 (unaudited)........... 3,264,000 4,099,000 4,761,000
Inventories............................... 12,292,000 14,443,000 14,372,000
Other current assets...................... 489,000 476,000 903,000
----------- ----------- -----------
Total current assets........................ 16,980,000 20,221,000 21,154,000
Property and equipment, net................. 3,655,000 4,030,000 3,838,000
Intangible assets, net...................... 2,096,000 6,067,000 5,874,000
Other assets................................ 764,000 879,000 1,362,000
----------- ----------- -----------
Total assets................................ $23,495,000 $31,197,000 $32,228,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under lines of credit.......... $ 569,000 $ -- $ --
Accounts payable, trade................... 1,114,000 1,491,000 1,550,000
Accrued expenses.......................... 665,000 1,556,000 1,596,000
Other current liabilities................. 1,115,000 583,000 1,305,000
Current portion of long-term debt......... 500,000 1,167,000 1,417,000
----------- ----------- -----------
Total current liabilities................... 3,963,000 4,797,000 5,868,000
Long-term debt, net of current portion...... 1,667,000 7,000,000 6,750,000
Other liabilities........................... 1,599,000 1,601,000 1,451,000
----------- ----------- -----------
Total liabilities........................... 7,229,000 13,398,000 14,069,000
----------- ----------- -----------
Commitments
Stockholders' equity:
Preferred stock, various par values;
5,205,000 shares authorized, 184,628
shares in 1994 and 183,429 in 1995 and
1996 issued and outstanding............ 18,463,000 18,343,000 18,343,000 $ --
Common stock, $.01 par value; 30,000,000
shares authorized, 1,060,869 shares in
1994, 1,058,065 in 1995 and 1,087,876
shares in 1996 issued and outstanding
(3,256,905 shares unaudited pro
forma)................................. 11,000 11,000 11,000 33,000
Additional paid-in capital................ 437,000 255,000 351,000 18,672,000
Accumulated deficit....................... (3,081,000) (2,064,000) (1,207,000) (1,207,000)
Foreign currency translation adjustment... 586,000 1,254,000 757,000 757,000
Notes receivable from stockholder......... (150,000) -- (96,000) (96,000)
----------- ----------- ----------- -----------
Total stockholders' equity.................. 16,266,000 17,799,000 18,159,000 $ 18,159,000
===========
----------- ----------- -----------
Total liabilities and stockholders'
equity.................................... $23,495,000 $31,197,000 $32,228,000
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 59
CN BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales.......................... $22,771,000 $24,188,000 $26,966,000 $13,075,000 $16,565,000
Cost of sales.................. 14,195,000 13,183,000 13,185,000 6,691,000 7,602,000
----------- ----------- ----------- ----------- -----------
Gross profit................... 8,576,000 11,005,000 13,781,000 6,384,000 8,963,000
Operating expenses:
Selling, general and
administrative............ 10,292,000 10,343,000 10,608,000 4,802,000 6,185,000
Research and development..... 462,000 736,000 1,338,000 488,000 1,065,000
----------- ----------- ----------- ----------- -----------
Total operating expenses....... 10,754,000 11,079,000 11,946,000 5,290,000 7,250,000
----------- ----------- ----------- ----------- -----------
Income (loss) from
operations................... (2,178,000) (74,000) 1,835,000 1,094,000 1,713,000
Interest expense, net.......... 170,000 326,000 527,000 159,000 394,000
----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes........................ (2,348,000) (400,000) 1,308,000 935,000 1,319,000
Provision (benefit) for income
taxes........................ (195,000) 62,000 291,000 208,000 462,000
----------- ----------- ----------- ----------- -----------
Net income (loss)......... $(2,153,000) $ (462,000) $ 1,017,000 $ 727,000 $ 857,000
=========== =========== =========== =========== ===========
Pro forma net income per
share........................ $ .30 $ .25
=========== ===========
Pro forma shares used in per
share computations........... 3,367,000 3,477,000
=========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 60
CN BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE SIX MONTHS ENDED JUNE 30,
1996 (UNAUDITED)
<TABLE>
<CAPTION>
NOTE
RECEIVABLE NOTE FOREIGN
PREFERRED STOCK FROM COMMON STOCK ADDITIONAL RECEIVABLE CURRENCY
-------------------- PREFERRED ------------------ PAID-IN FROM COMMON ACCUMULATED TRANSLATION
SHARES AMOUNT STOCKHOLDER SHARES AMOUNT CAPITAL STOCKHOLDER DEFICIT ADJUSTMENT TOTAL
------- ----------- ----------- --------- ------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1,
1993...... 182,599 $18,260,000 $ (235,000) 1,017,244 $10,000 $ 420,000 $ (10,000) $ (466,000) $ 22,000 $18,001,000
Issuance of
note
receivable
for common
stock and
preferred
stock..... 4,377 438,000 (433,000) 44,100 1,000 18,000 (19,000) -- -- 5,000
Forgiveness
of
stockholder
note
receivable... -- -- 145,000 -- -- -- 7,000 -- -- 152,000
Cancellation
of note
receivable
from
stockholder... (2,348) (235,000) 235,000 (23,659) -- (10,000) 10,000 -- -- --
Exercise of
stock
options... -- -- -- 6,624 -- 2,000 -- -- -- 2,000
Net loss.... -- -- -- -- -- -- -- (2,153,000) -- (2,153,000)
Translation
adjustment... -- -- -- -- -- -- -- -- (123,000) (123,000)
------- ----------- --------- ------- ------ -------- -------- ----------- --------- -----------
Balance at
December
31,
1993...... 184,628 18,463,000 (288,000) 1,044,309 11,000 430,000 (12,000) (2,619,000) (101,000) 15,884,000
Forgiveness
of
stockholder
note
receivable... -- -- 144,000 -- -- -- 6,000 -- -- 150,000
Exercise of
stock
options... -- -- -- 16,561 -- 7,000 -- -- -- 7,000
Net loss.... -- -- -- -- -- -- -- (462,000) -- (462,000)
Translation
adjustment... -- -- -- -- -- -- -- -- 687,000 687,000
------- ----------- --------- ------- ------ -------- -------- ----------- --------- -----------
Balance at
December
31,
1994...... 184,628 18,463,000 (144,000) 1,060,870 11,000 437,000 (6,000) (3,081,000) 586,000 16,266,000
Forgiveness
of
stockholder
note
receivable... -- -- 144,000 -- -- -- 6,000 -- -- 150,000
Repurchase
of
stock..... (1,199) (120,000) -- (59,726) -- (206,000) -- -- -- (326,000)
Exercise of
stock
options... -- -- -- 56,922 -- 24,000 -- -- -- 24,000
Net
income.... -- -- -- -- -- -- -- 1,017,000 -- 1,017,000
Translation
adjustment... -- -- -- -- -- -- -- -- 668,000 668,000
------- ----------- --------- ------- ------ -------- -------- ----------- --------- -----------
Balance at
December
31,
1995...... 183,429 18,343,000 1,058,066 11,000 255,000 (2,064,000) 1,254,000 17,799,000
Exercise of
stock
options
(unaudited)... -- -- -- 1,420 -- -- -- -- -- --
Issuance of
note
receivable
for common
stock
(unaudited)... -- -- -- 28,390 -- 96,000 (96,000) -- -- --
Net income
(unaudited)... -- -- -- -- -- -- -- 857,000 -- 857,000
Translation
adjustment
(unaudited)... -- -- -- -- -- -- -- -- (497,000) (497,000)
------- ----------- --------- ------- ------ -------- -------- ----------- --------- -----------
Balance at
June 30,
1996
(unaudited)... 183,429 $18,343,000 -- 1,087,876 $11,000 $ 351,000 $ (96,000) $(1,207,000) $ 757,000 $18,159,000
======= =========== ========= ======= ====== ======== ======== =========== ========= ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 61
CN BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)...................... $(2,153,000) $ (462,000) $ 1,017,000 $ 727,000 $ 857,000
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operations:
Depreciation and amortization........ 1,368,000 1,448,000 1,856,000 807,000 892,000
Additions to inventory reserve....... 1,744,000 192,000 62,000 58,000 880,000
Additions to allowance for doubtful
accounts.......................... 4,000 217,000 129,000 48,000 7,000
Loss on disposal of property and
equipment......................... 268,000 2,000 10,000 8,000 5,000
Forgiveness of note receivable from
stockholder....................... 152,000 150,000 150,000 -- --
Changes in assets and liabilities:
Accounts receivable, trade........ 574,000 (327,000) (667,000) (480,000) (868,000)
Inventories....................... (1,956,000) 709,000 (115,000) 226,000 (1,225,000)
Other current assets.............. (405,000) (12,000) 329,000 (23,000) (447,000)
Deferred income taxes............. (70,000) 42,000 26,000 -- --
Other assets...................... (112,000) (475,000) (1,153,000) (376,000) (753,000)
Accounts payable, trade........... 258,000 (784,000) 148,000 (174,000) 181,000
Accrued expenses.................. (281,000) (436,000) 781,000 235,000 44,000
Other current liabilities......... (62,000) (655,000) (590,000) (146,000) 294,000
Other liabilities................. 432,000 362,000 9,000 (184,000) 230,000
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
operating activities................. (239,000) (29,000) 1,992,000 726,000 97,000
INVESTING ACTIVITIES
Purchases of property and equipment.... (994,000) (1,436,000) (805,000) (187,000) (164,000)
Proceeds from sale of property and
equipment............................ -- 51,000 22,000 -- 6,000
Purchase of business................... -- -- (6,213,000) -- --
Other.................................. -- 154,000 150,000 -- --
----------- ----------- ----------- ----------- ----------
Net cash used in investing
activities........................... (994,000) (1,231,000) (6,846,000) (187,000) (158,000)
----------- ----------- ----------- ----------- ----------
FINANCING ACTIVITIES
Proceeds from lines of credit.......... -- 258,000 809,000 484,000 700,000
Payments on lines of credit............ (216,000) (33,000) (1,404,000) (474,000) (200,000)
Proceeds from long-term debt........... 2,500,000 2,500,000 8,500,000 -- --
Payments on long-term debt............. (333,000) (2,500,000) (2,500,000) (250,000) (498,000)
Proceeds from sale of common stock..... 2,000 7,000 24,000 -- --
Proceeds from sale of redeemable
preferred stock...................... 4,000 -- -- -- --
Payments for repurchase of stock....... -- -- (326,000) -- --
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
financing activities................. 1,957,000 232,000 5,103,000 (240,000) 2,000
----------- ----------- ----------- ----------- ----------
Effect of exchange rate changes on
cash................................. (123,000) 124,000 19,000 55,000 (26,000)
----------- ----------- ----------- ----------- ----------
Net increase (decrease) in cash and
cash equivalents..................... 601,000 (904,000) 268,000 354,000 (85,000)
Balance at beginning of period......... 1,238,000 1,839,000 935,000 935,000 1,203,000
----------- ----------- ----------- ----------- ----------
Balance at end of period............... $ 1,839,000 $ 935,000 $ 1,203,000 $1,289,000 $ 1,118,000
=========== =========== =========== =========== ==========
Supplemental cash flow information:
Interest paid during the period...... $ 530,000 $ 316,000 $ 548,000 $ 160,000 $ 420,000
=========== =========== =========== =========== ==========
Income taxes paid during the
period............................ $ 52,000 $ 86,000 $ 313,000 $ 52,000 $ 12,000
=========== =========== =========== =========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 62
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
CN Biosciences, Inc. (formerly known as Calbiochem-Novabiochem
International, Inc.) is engaged in the development, production, marketing and
distribution of a broad array of products used worldwide in disease-related life
sciences research at pharmaceutical and biotechnology companies, academic
institutions and government laboratories. The Company's products include
biochemical and biological reagents, antibodies, assays and research kits which
it sells principally through its general and specialty catalogs under its well
established brand names, such as Calibochem and Novabiochem. With over 7,000
products, the Company offers scientists the convenience of obtaining from a
single source both innovative and fundamental research products, many of which
are instrumental to research in areas such as cancer, cardiovascular disease,
Alzheimer's and AIDS.
Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Interim Financial Information (Unaudited)
The accompanying financial statements at June 30, 1996 and for the six
months ended June 30, 1995 and 1996 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which, in the opinion of
management, are necessary for a fair statement of the financial position and the
operating results and cash flows for the interim date and periods presented.
Results for the interim periods are not necessarily indicative of results for
the entire year or future periods.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash Equivalents
For purposes of financial statement preparation, the Company considers all
demand deposits with banks or other financial institutions and investments with
initial maturities of three months or less at the date of purchase as cash
equivalents.
Concentration of Credit Risk and Revenue Recognition
The Company deposits its cash in financial institutions. At times, such
deposits may be in excess of insured limits. To date, the Company has not
experienced any losses on its cash investments.
The Company records revenue upon shipment. Accounts receivable are derived
from sales which are generally for small amounts and denominated in various
currencies. The Company grants credit to its customers based on an evaluation of
the customer's financial condition and collateral is generally not required.
Management believes the allowance for doubtful accounts is sufficient to provide
for any future losses. Credit losses have traditionally been minimal and within
management's expectations.
F-7
<PAGE> 63
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Inventories
Inventories are maintained to support customer deliveries worldwide, often
on a next-day or second-day basis, of many sizes and quantities of each brand of
catalog items. Based upon economic production runs for certain products, the
Company from time to time manufactures quantities of product in excess of a
one-year supply. Inventories are valued at the lower of cost (first-in,
first-out basis) or market, with costs including material, labor and
manufacturing overhead.
Property and Equipment
Property and equipment is stated at cost. Depreciation is provided under
the straight-line method over 3 to 5 years for equipment and office fixtures and
over the shorter of the remaining lease life or 15 years for leasehold
improvements.
Intangible Assets
Intangible assets represent the excess of the purchase price over the fair
market value of assets acquired. Intangibles are being amortized over 15 to 25
years.
The Company assesses the carrying value of the intangibles on a periodic
basis and if the facts indicate that the intangible assets are not recoverable,
as determined based on the undiscounted cash flows of the business over the
remaining amortization period, the carrying value is reduced to its estimated
fair value.
Deferred Charges
Costs relating to the preparation, printing and distribution of the
Company's product catalogs are deferred and amortized over the expected useful
life of the catalog (up to two years).
Foreign Currency Translation
The financial statements of foreign subsidiaries are translated to U.S.
dollars. All assets and liabilities are translated at year end exchange rates,
and stockholders' equity are translated at historical exchange rates. The
resulting translation adjustment is recorded as a separate component of
stockholders' equity. Sales and expense transactions are translated at average
exchange rates. Foreign currency gains and losses were not material during any
of the three years in the periods ended December 31, 1995.
Income Taxes
The Company provides for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes
("SFAS 109"). SFAS 109 requires a company to recognize deferred tax liabilities
and assets for the expected future tax consequences of events that have been
recognized in a company's financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax basis of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized. Income tax expense represents the tax payable for the period and the
change during the period in the deferred tax assets and liabilities.
F-8
<PAGE> 64
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Net Income (Loss) Per Share
Historical net income (loss) per share is computed using the weighted
average number of shares of common stock and common stock equivalents
outstanding during the periods presented. Common share equivalents result from
outstanding options and warrants to purchase common stock. For loss periods,
common share equivalents were not included in computing net loss per share since
the effect would have been antidilutive. The Securities and Exchange Commission
requires stock issued during the twelve months immediately preceding the initial
public offering, plus the number of equivalent shares of common stock granted or
issued during the same period, be included in the calculation of shares used in
computing net income (loss) per share as if these shares were outstanding for
all periods presented (using the treasury stock method and the assumed initial
public offering price).
Historical net income (loss) per share information is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- ---------------
1993 1994 1995 1995 1996
------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net income (loss) per share....................... $(1.97) $ (.42) $ .51 $ .41 $ .41
====== ====== ===== ===== =====
Shares used in computing net income (loss) per
share (in thousands)............................ 1,094 1,104 1,987 1,763 2,097
====== ====== ===== ===== =====
</TABLE>
Pro Forma Net Income Per Share and Unaudited Pro Forma Stockholders' Equity
Pro forma net income per share has been computed as described above and
also gives effect to the conversion and exchange of the shares of preferred
stock upon completion of the Company's initial public offering using the
if-converted method from the original date of issuance.
As discussed in Note 5, the Company has 4,001 shares of Series A preferred
stock which is convertible into a total of 788,814 shares of common stock.
Additionally, the Company has 179,428 shares of Series B preferred stock
outstanding with a liquidation preference of $17,943,000. Upon the consummation
of the offering contemplated by this Prospectus, all of the Series A preferred
stock will be converted into Class A common stock and each outstanding share of
Series B preferred stock will be exchanged for a number of shares of common
stock based upon the initial public offering price for the common stock.
Unaudited pro forma stockholders' equity as of June 30, 1996 is adjusted for the
conversion and exchange of the preferred stock into common stock.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, Accounting for Stock-Based Compensation ("SFAS No. 123"), effective for
fiscal years beginning after December 15, 1995. SFAS 123 establishes the fair
value-based method of accounting for stock-based compensation arrangements,
under which compensation is determined using the fair value of the stock option
at the grant date and the number of options vested, and is recognized over the
periods in which the related services are rendered. The Company has made the
decision to continue with the current intrinsic value-based method, as allowed
by
F-9
<PAGE> 65
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
SFAS 123, and will be required to disclose the pro forma effect of adopting the
fair value-based method in future fiscal years beginning with the fiscal year
ending December 31, 1996.
Accounting Standard on Impairment of Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of " ("SFAS 121") regarding the
impairment of the long-lived assets, identifiable intangibles and goodwill
related to those assets. SFAS 121 is effective for financial statements for
fiscal years beginning after December 15, 1995. The Company adopted this
standard effective January 1, 1996 and such adoption did not have a material
effect on the Company's financial position or results of operations.
2. ACQUISITION
On August 1, 1995, the Company acquired certain assets and assumed certain
liabilities of the Oncogene Research Products Business ("ORP") of Oncogene
Science, Inc., a biopharmaceutical company, in exchange for $5,932,000 in cash
plus acquisition costs of $281,000. The acquisition has been accounted for as a
purchase and, accordingly, the purchase price has been allocated to the assets
acquired and liabilities assumed based on the estimated fair values at the date
of acquisition. This allocation resulted in $4,335,000 of costs in excess of net
assets acquired which is being amortized over 15 years. ORP's results of
operations have been included in the consolidated results of the Company from
August 1, 1995.
The ORP purchase price allocation is summarized as follows:
<TABLE>
<S> <C>
Inventories...................................................... $1,507,000
Property and equipment........................................... 350,000
Other current assets............................................. 121,000
Costs in excess of net assets acquired........................... 4,335,000
----------
Total assets..................................................... 6,313,000
Liabilities assumed.............................................. (100,000)
----------
Net assets acquired.............................................. $6,213,000
==========
</TABLE>
The following unaudited pro forma information presents the combined results
of operations of the Company and ORP for the years ended December 31, 1994 and
1995 as though the acquisition had occurred January 1, 1994. The unaudited pro
forma information is included for comparative purposes only and is not
necessarily indicative of the results of operations that would have occurred had
the acquisition been made on the date indicated or of future results of the
combined companies.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1995
----------- -----------
<S> <C> <C>
Net sales................................................. $28,908,000 $29,937,000
Net income (loss)......................................... (332,000) 979,000
Historical net income (loss) per share.................... $ (.30) $ .49
</TABLE>
F-10
<PAGE> 66
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
3. FINANCIAL STATEMENT DETAILS
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Finished products............................... $12,728,000 $13,987,000 $13,898,000
Semi-finished products, raw materials and
supplies...................................... 3,131,000 3,958,000 4,614,000
Work-in-progress................................ 256,000 415,000 500,000
----------- ----------- -----------
16,115,000 18,360,000 19,012,000
Reserves for excess materials................... (3,823,000) (3,917,000) (4,640,000)
----------- ----------- -----------
$12,292,000 $14,443,000 $14,372,000
=========== =========== ===========
</TABLE>
Other current assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Other........................................... $ 380,000 $ 394,000 $ 821,000
Deferred income taxes........................... 109,000 82,000 82,000
-------- -------- --------
$ 489,000 $ 476,000 $ 903,000
======== ======== ========
</TABLE>
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Equipment and office fixtures................... $ 5,133,000 $ 6,365,000 $ 7,160,000
Leasehold improvements.......................... 912,000 1,131,000 1,274,000
----------- ----------- -----------
6,045,000 7,496,000 8,434,000
Accumulated depreciation........................ (2,390,000) (3,466,000) (4,596,000)
----------- ----------- -----------
$ 3,655,000 $ 4,030,000 $ 3,838,000
========== ========== ==========
</TABLE>
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Intangible assets............................... $ 2,376,000 $ 6,561,000 $ 6,561,000
Accumulated depreciation........................ (280,000) (494,000) (687,000)
----------- ----------- -----------
$ 2,096,000 $ 6,067,000 $ 5,874,000
========== ========== ==========
</TABLE>
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Deferred charges................................ $ 547,000 $ 171,000 $ 658,000
Other........................................... 217,000 708,000 704,000
----------- ----------- -----------
$ 764,000 $ 879,000 $ 1,362,000
========== ========== ==========
</TABLE>
F-11
<PAGE> 67
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
4. BANK DEBT
The Company's U.S. subsidiary's credit agreement with a commercial bank
provides for borrowings under a revolving line of credit up to a maximum of
$2,000,000 based upon percentages of eligible accounts receivable (as defined)
and inventory. The facility provides that the Company can elect that borrowings
bear interest at the bank's prime rate or LIBOR plus 2.85% (8.50% at December
31, 1995). There were no borrowings outstanding under this facility at December
31, 1995.
Additionally, the credit agreement provides for $8,500,000 in term loans
which bear interest at the bank's prime rate plus .375% or LIBOR plus 3.22%,
with interest and principal payable monthly through July 2000. Borrowings
outstanding under the term loans at December 31, 1995 were $8,167,000 bearing
interest at 8.875%.
In June 1996, the Company's U.S. subsidiary's credit agreement was amended,
modifying the interest rates and extending the expiration date of the revolving
line of credit to June 1998. Upon consummation of the initial public offering
contemplated by this Prospectus of at least $20 million, the bank credit
facility will convert to an unsecured $5 million line of credit.
Borrowings under the credit agreement are collateralized by all the assets
of the Company's U.S. subsidiary, guaranteed by the Company and the Company's
Swiss subsidiary and are also secured by pledges of the stock of the Company's
subsidiaries. The agreement provides that the Company comply with minimum
financial and operating covenants and not, without prior consent, incur
significant additional debt. In addition to scheduled monthly payments, the
Company may be required to pay annually an amount equal to 25% of excess cash
flows (as defined). At December 31, 1995 the Company was in compliance with all
restrictive covenants.
As of December 31, 1995, future annual minimum payments under the term loan
are as follows:
<TABLE>
<S> <C>
1996........................................................... $1,167,000
1997........................................................... 1,667,000
1998........................................................... 2,000,000
1999........................................................... 2,000,000
2000........................................................... 1,333,000
----------
$8,167,000
=========
</TABLE>
Interest expense charged against operations was $211,000 in 1993, $349,000
in 1994, $574,000 in 1995 and $179,000 and $412,000 for the six months ended
June 30, 1995 and 1996, respectively.
5. STOCKHOLDERS' EQUITY
In March 1992, the Company and certain of its current stockholders entered
into a Subscription and Shareholder Agreement (the "Shareholder Agreement") for
purposes of issuing preferred stock and common stock for a total investment of
approximately $18.6 million.
Common Stock
In connection with the Shareholder Agreement, the Company issued 1,017,244
shares of common stock, $.01 par value, in exchange for $420,000 and a note for
$10,000. During 1993, the note was canceled (see Note 6). The Shareholder
Agreement contains certain restrictions on the sale of securities by
stockholders.
F-12
<PAGE> 68
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
In January 1995, the Company authorized 500,000 shares, $.01 par value, of
nonvoting Class A common stock. Each share of Class A common stock is
convertible into one fully paid and nonassessable share of voting common stock
at any time at the election of the holder subject to certain terms and
conditions. Currently, no Class A common stock has been issued.
Redeemable Preferred Stock
The Series A redeemable preferred stock and Series B redeemable preferred
stock are referred to collectively as the "preferred stock" and the number of
authorized shares, number of issued and outstanding shares and the liquidation
preference by series is as follows:
<TABLE>
<CAPTION>
ISSUED AND
AUTHORIZED OUTSTANDING LIQUIDATION
SHARES SHARES PREFERENCE
---------- ----------- -----------
<S> <C> <C> <C>
Series A............................................ 5,000 4,001 $ 400,100
Series B............................................ 200,000 179,428 17,943,000
</TABLE>
The Series A preferred stock has a $100 per share, plus declared and unpaid
dividends, preference over common shares in liquidation and is entitled to
preferential non-cumulative dividends at the rate of $8 per share per annum,
when and if declared by the Board of Directors. The Series A preferred stock is
convertible at a rate of one share of Series A preferred stock for 197.1541
shares of Class A common stock, subject to adjustment for certain anti-dilution
provisions. The Series A preferred stock is convertible at any time at the
option of the holder into shares of Class A common stock (provided that such
holder has the consent of the holders of at least 50% of the then outstanding
shares of Series A preferred stock) or upon vote by a majority of the holders of
shares of Series A preferred stock. In addition, at any time, the Company has
the right to redeem at its option, with the consent of a majority of the holders
of the Series A preferred stock, any or all of the outstanding Series A
preferred stock provided that no redemption of the Series A preferred stock
shall be effected until all of the Series B preferred stock is first redeemed.
The Series B preferred stock is entitled to preferential non-cumulative
dividends at the rate of $10 per share per annum when and if declared by the
Board of Directors. In the event of liquidation, the Series B preferred stock is
entitled to receive $100 per share, plus declared and unpaid dividends, in
preference to any distribution to the Series A preferred stock. In addition, at
any time, the Company has the right to redeem at its option, with the consent of
a majority of the holders of the Series B preferred stock, any or all of the
outstanding Series B preferred stock.
The preferred stock is subject to mandatory redemption at a price of $100
per share, plus all accrued and unpaid dividends in the year of redemption, 25%
annually beginning December 31, 1999 through December 31, 2002.
The Company has agreed with the holders of the preferred stock, that upon
consummation of the offering contemplated by this Prospectus, the holders of the
preferred stock will convert the 4,001 shares of the Series A preferred stock
into 788,814 shares of Class A common stock and exchange the Series B preferred
stock for shares of common stock based upon the initial public offering price
for the common stock.
F-13
<PAGE> 69
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Stock Options
The Company has reserved 835,000 shares of common stock for grant or sale
to employees, officers, directors and consultants under the 1992 stock option
plan (the "Plan"). The following table summarizes stock option transactions for
each of the three years and the six months in the period ended June 30, 1996:
<TABLE>
<CAPTION>
EXERCISE
SHARES PRICE
------- ----------
<S> <C> <C>
Balance at January 1, 1993..................................... 192,817 $ .42
Granted...................................................... 242,736 .42
Exercised.................................................... (6,624) .42
Canceled..................................................... (45,945) .42
------- -----------
Outstanding at December 31, 1993............................... 382,984 .42
Granted...................................................... 23,659 .42
Exercised.................................................... (16,561) .42
Canceled..................................................... (10,410) .42
------- -----------
Outstanding at December 31, 1994............................... 379,672 .42
Granted...................................................... 101,732 .42-$3.38
Exercised.................................................... (56,922) .42
Canceled..................................................... (29,148) .42
------- -----------
Outstanding at December 31, 1995............................... 395,334 .42-$3.38
Exercised.................................................... (1,420) $.42
------- -----------
Outstanding at June 30, 1996................................... 393,914 $.42-$3.38
======= ===========
</TABLE>
The options vest over four or five years from the date of grant. All
outstanding options expire five years after the date of grant. As of June 30,
1996, options to acquire 182,289 shares of common stock were exercisable and
359,559 were available for future grant, after giving effect to the authorized
increase in reserved shares as described below.
Warrants
During 1995, the Company issued a warrant to purchase 3,028 shares of the
Company's common stock at $1.06 per share. The value of the warrant on the date
of issuance was not considered significant. The warrant is currently exercisable
and expires in July 2000.
Stock Split and Increase in Shares Authorized
On July 16, 1996, the Board of Directors authorized a 2.36585 for 1 stock
split of all outstanding common stock. All share and per share amounts and stock
option data have been restated to retroactively reflect the stock split.
Additionally, on July 16, 1996, the Board of Directors modified the Company's
capital structure to authorize: 30,000,000 shares of common stock ($.01 par
value), 800,000 shares of Class A common stock ($1.00 par value), 5,000 shares
of Series A preferred stock ($1.00 par value), 200,000 shares of Series B
preferred stock ($1.00 par value) and 5,000,000 shares of preferred stock ($.01
par value). The shares reserved for issuance under the 1992 Stock Option Plan
were increased to 835,000.
6. TRANSACTIONS WITH EMPLOYEE/STOCKHOLDERS
In 1993, the Company entered into an employment agreement with the Chairman
and Chief Executive Officer of the Company. As part of this agreement, the
Company granted an option to purchase 110,249
F-14
<PAGE> 70
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
shares of common stock at $.42 per share. The options vest over four years and
expire in January 1998. In addition, the Company issued 44,100 shares of common
stock at $.42 per share and 4,377 shares of Series B preferred stock at $100 per
share in exchange for $4,000 in cash and a note for $452,000. The note bears
interest at 8% per annum, payable annually. Amounts forgiven in 1993, 1994 and
1995 related to this note, charged to current operations were $152,000, $150,000
and $150,000, respectively.
In 1993, an employee/stockholder resigned from the Company. As part of the
termination agreement, 23,659 shares of common stock and 2,348 shares of Series
B preferred stock were returned to the Company in exchange for the cancellation
of the related notes receivable from the employee/stockholder of $245,000. In
addition, options to purchase 42,396 shares of common stock were canceled.
Effective June 9, 1995, an officer/stockholder of the Company resigned and,
in connection therewith, the Company entered into an agreement to reacquire
59,726 shares of common stock at a price of $3.4515 per share and 1,199 shares
of Series B preferred stock at a price of $100 per share.
In January 1996, the Company sold 28,390 shares of common stock to an
officer of the Company in exchange for a note receivable of $96,000 bearing
interest at 5.65%.
7. INCOME TAXES
The significant components of the provision (benefit) for income taxes are
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
--------- ------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $(148,000) $17,000 $ 52,000
State............................................ 13,000 2,000 17,000
--------- ------- --------
(135,000) 19,000 69,000
Deferred:
Federal.......................................... (36,000) 43,000 139,000
State............................................ (34,000) -- 36,000
--------- ------- --------
(70,000) 43,000 175,000
--------- ------- --------
(205,000) 62,000 244,000
Foreign............................................ 10,000 -- 47,000
--------- ------- --------
$(195,000) $62,000 $291,000
========= ======= ========
</TABLE>
F-15
<PAGE> 71
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Temporary differences and carryforwards which give rise to a significant
portion of the net deferred tax asset included in the accompanying consolidated
balance sheets at December 31, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Inventory reserves...................................... $ 693,000 $ 548,000
Accounts receivable reserves............................ 84,000 65,000
Net operating losses.................................... 3,137,000 2,397,000
Deferred rent........................................... 114,000 102,000
Other................................................... 309,000 283,000
----------- -----------
Total deferred tax assets................................. 4,337,000 3,395,000
Valuation allowances...................................... (4,064,000) (3,296,000)
----------- -----------
273,000 99,000
Deferred tax liability:
Depreciation............................................ (164,000) (15,000)
----------- -----------
Net deferred tax assets................................... $ 109,000 $ 84,000
=========== ===========
</TABLE>
Income tax expense (benefit) differs from the amount obtained by applying
the statutory federal income tax rate to earnings before tax as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Provision at federal statutory rate.............. $(798,000) $(136,000) $ 445,000
State income taxes, net of federal benefit....... (14,000) 1,000 56,000
Nondeductible expenses, including amortization of
costs in excess of net assets acquired......... 60,000 63,000 71,000
Change in valuation allowance, net of write-offs
and adjustments................................ 557,000 134,000 (298,000)
Other, net....................................... -- -- 17,000
--------- --------- ---------
Total income tax expense (benefit)............... $(195,000) $ 62,000 $ 291,000
========= ========= =========
</TABLE>
At December 31, 1995, the Company has state net operating loss
carryforwards of approximately $1,500,000 which begin to expire in 1998 unless
previously utilized. The Company also has approximately $1,318,000 and $568,000
of foreign net operating losses in Germany and the United Kingdom, respectively,
which are available indefinitely. Additionally, the Company has approximately
$6,185,000 and $4,965,000 of net operating losses for Swiss Federal and Cantonal
purposes, respectively. These loss carryforwards will begin to expire in 1997
and 1996, respectively, unless previously utilized.
For the six months ended June 30, 1995 and 1996, income taxes have been
provided based on the estimated annual effective tax rate applied to pretax
income for the interim period.
8. COMMITMENTS AND CONTINGENCIES
The Company leases certain facilities and equipment under various operating
leases. Lease expense on the facilities and equipment for the years ended
December 31, 1993, 1994 and 1995 was $1,369,000, $1,157,000 and $1,126,000,
respectively. Lease expense for the six months ended June 30, 1995 and 1996 was
$708,000 and $563,000, respectively.
F-16
<PAGE> 72
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
The Company is party to a fifteen year lease agreement for premises which
were first occupied during 1993. The Company has two options to extend the term
of the lease for five years each.
In addition, the Company leases certain equipment under capital leases.
Cost and accumulated amortization of equipment under capital leases at December
31, 1994 were approximately $1,173,000 and $415,000, respectively, and at
December 31, 1995 were $1,514,000 and $587,000, respectively. Amortization of
assets held under capital leases is included with depreciation expenses.
Future annual minimum payments under the operating and capital leases as of
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
----------- ---------
<S> <C> <C>
1996........................................................ $ 1,529,000 $ 367,000
1997........................................................ 1,483,000 307,000
1998........................................................ 1,329,000 112,000
1999........................................................ 1,157,000 67,000
2000........................................................ 1,098,000 24,000
Thereafter.................................................. 7,618,000 2,000
----------- ---------
$14,214,000 879,000
===========
---------
Less amounts representing interest.......................... (119,000)
---------
Present value of future minimum lease payments.............. 760,000
---------
Less current portion (included in other current
liabilities).............................................. (307,000)
---------
Capital lease obligation, net of current portion (included
in other liabilities)..................................... $ 453,000
=========
</TABLE>
9. CUSTOMER AND GEOGRAPHIC INFORMATION
The Company operates in one business segment, the development, production,
marketing and distribution of a broad array of products used in disease-related
life sciences research at pharmaceutical and biotechnology companies, academic
institutions and government laboratories. No single customer accounted for more
than 10% of total revenue during any of the three years in the period ended
December 31, 1995 or either of six month periods ended June 30, 1995 and 1996.
United States export sales, principally to Europe and Asia, aggregated
$1,857,000, $2,524,000 and $4,429,000, for the years ended December 31, 1993,
1994 and 1995, respectively, and $1,773,000 and $3,402,000 for the six months
ended June 30, 1995 and 1996, respectively.
Information with respect to the Company's operations by significant
geographic area is set forth below. Transfers between geographic areas have been
shown at the agreed upon transfer price, computed by applying discount
percentages to local currency list prices. All transactions denominated in
foreign currency have been translated at the average exchange rate during the
period.
F-17
<PAGE> 73
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
--------------------------------------------------------------
(IN THOUSANDS)
CONSOLIDATED
UNITED STATES EUROPE OTHER ELIMINATIONS TOTAL
------------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers............ $11,557 $ 9,242 $1,972 $ -- $ 22,771
Transfers between geographic areas......... 2,842 3,144 280 (6,266) --
------- ------- ------ ------- -------
Total revenue.............................. $14,399 $12,386 $2,252 $ (6,266) $ 22,771
======= ======= ====== ======= =======
Income (loss) before income taxes.......... $ 144 $(2,403) $ (15) $ (75) $ (2,349)
======= ======= ====== ======= =======
Identifiable assets........................ $15,220 $ 9,188 $ 412 $ (774) $ 24,046
======= ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------
(IN THOUSANDS)
CONSOLIDATED
UNITED STATES EUROPE OTHER ELIMINATIONS TOTAL
------------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers............ $12,554 $ 9,329 $2,305 $ -- $ 24,188
Transfers between geographic areas......... 2,996 3,581 701 (7,278) --
------- ------- ------ ------- -------
Total revenue.............................. $15,550 $12,910 $3,006 $ (7,278) $ 24,188
======= ======= ====== ======= =======
Income (loss) before income taxes.......... $ (251) $ (126) $ 67 $ (90) $ (400)
======= ======= ====== ======= =======
Identifiable assets........................ $15,624 $ 8,315 $ 395 $ (839) $ 23,495
======= ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------
(IN THOUSANDS)
CONSOLIDATED
UNITED STATES EUROPE OTHER ELIMINATIONS TOTAL
------------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers............ $13,202 $11,353 $2,411 $ -- $ 26,966
Transfers between geographic areas......... 3,735 4,435 339 (8,509) --
------- ------- ------ ------- -------
Total revenue.............................. $16,937 $15,788 $2,750 $ (8,509) $ 26,966
======= ======= ====== ======= =======
Income before taxes........................ $ 211 $ 1,058 $ 36 $ 3 $ 1,308
======= ======= ====== ======= =======
Identifiable assets........................ $22,557 $ 8,978 $ 482 $ (820) $ 31,197
======= ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
--------------------------------------------------------------
(IN THOUSANDS)
CONSOLIDATED
UNITED STATES EUROPE OTHER ELIMINATIONS TOTAL
------------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers............ $ 8,402 $ 6,364 $1,799 $ -- $ 16,565
Transfers between geographic areas......... 2,527 2,325 192 (5,044) --
------- ------- ------ ------- -------
Total revenue.............................. $10,929 $ 8,689 $1,991 $ (5,044) $ 16,565
======= ======= ====== ======= =======
Income (loss) before taxes................. $ 666 $ 631 $ 22 -- $ 1,319
======= ======= ====== ======= =======
Identifiable assets........................ $24,202 $ 8,352 $ 547 $ (873) $ 32,228
======= ======= ====== ======= =======
</TABLE>
F-18
<PAGE> 74
CN BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1995 AND PERTAINING TO JUNE 30, 1996
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
10. EMPLOYEE BENEFIT PLAN
The Company sponsors a Defined Contribution Plan (the "Plan") which covers
substantially all domestic employees who meet certain age requirements.
Employees may contribute up to 15% of their compensation per year (subject to a
maximum limit imposed by federal tax law). The Company is obligated to make
matching contributions equal to a maximum of 30% of each participant's
contribution per year. The contributions charged to operations totaled $38,000,
$31,000 and $67,000 for the three years ended December 31, 1993, 1994 and 1995
and $24,000 and $51,000 for the six month periods ended June 30, 1995 and 1996,
respectively.
F-19
<PAGE> 75
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Oncogene Science, Inc.
We have audited the accompanying statements of operations of Oncogene
Science, Inc. Research Products Business (a business sector of Oncogene Science,
Inc.) (the Business) for each of the years in the two-year period ended
September 30, 1994 and for the ten-month period ended July 31, 1995. These
financial statements are the responsibility of the Business' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the statements of operations referred to above present
fairly, in all material respects, the results of operations of Oncogene Science,
Inc. Research Products Business for each of the years in the two-year period
ended September 30, 1994 and for the ten-month period ended July 31, 1995 in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
--------------------------------------
KPMG PEAT MARWICK LLP
Jericho, New York
September 22, 1995
F-20
<PAGE> 76
ONCOGENE SCIENCE, INC.
RESEARCH PRODUCTS BUSINESS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED TEN MONTHS
SEPTEMBER 30, ENDED
------------------------- JULY 31,
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.............................................. $4,743,740 $4,719,942 $4,108,910
Cost of goods sold..................................... 1,777,851 1,804,099 1,415,399
---------- ---------- ----------
Gross profit........................................... 2,965,889 2,915,843 2,693,511
Grant revenue.......................................... 133,360 45,539 --
3,099,249 2,961,382 2,693,511
---------- ---------- ----------
Operating expenses:
Selling, general and administrative.................. 2,460,117 2,520,767 2,076,922
Research and development............................. 658,508 310,949 255,737
---------- ---------- ----------
3,118,625 2,831,716 2,332,659
---------- ---------- ----------
Net income (loss)...................................... $ (19,376) $ 129,666 $ 360,852
========= ========= =========
</TABLE>
See accompanying notes to statements of operations.
F-21
<PAGE> 77
ONCOGENE SCIENCE, INC.
RESEARCH PRODUCTS BUSINESS
NOTES TO STATEMENTS OF OPERATIONS
JULY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The financial statements of Oncogene Science, Inc. Research Products
Business (the Business) include the accounts of the research products operations
at Oncogene Science, Inc. ("Oncogene"). The Business has not operated as a
stand-alone company, thus certain allocations have been made to present the
financial statements of the Business as a separate entity. In general, salaries
and the related personnel costs of researchers and laboratory supplies are
allocated based on direct responsibilities and direct usage, respectively;
facility costs are allocated based on a percentage of square footage occupied;
and general and administrative expenses are allocated based on project salaries.
Management believes that the allocation methods used are reasonable.
The Business is engaged in the development and marketing of products for
the basic research and clinical research markets. The Business' research
products catalogue includes over 800 research reagent products, including
monoclonal and polyclonal antibodies, as well as a variety of
immunohistochemistry kits, DNA probes, quantitative immunoassays and accessory
reagents. The acquisition of the cancer business of Applied bioTechnology by
Oncogene in 1991 resulted in the expansion of the Business' research reagent
products lines. The financial statements for the ten months ended July 31, 1995,
and the fiscal years ended September 30, 1994 and 1993 include only the accounts
specifically related to the Research Products Business and allocations of such
business.
On June 26, 1995, Oncogene entered into an agreement to sell certain assets
of its Research Products business to CN Biosciences, Inc. (formerly
Calbiochem-Novabiochem International, Inc.), consisting primarily of
inventories, laboratory equipment, office furniture and office equipment, for
approximately $5.9 million in cash. The closing of the purchase agreement
occurred on August 2, 1995.
Revenue Recognition
Revenue from the sale of research reagent products is recognized at time of
shipment.
Research and Development Costs
Research and development costs are charged to operations as incurred and
include direct costs of research scientists and equipment and an allocation of
laboratory facility and administrative costs.
Grant Revenue
Grant revenues relate to National Cancer Institute funds awarded to the
Business of approximately $133,000 and $46,000 for the years ended September 30,
1993 and 1994, respectively.
Depreciation and Amortization
Depreciation of equipment is provided over the estimated useful lives of
the respective asset groups on a straight-line basis. Leasehold improvements are
amortized on a straight-line basis over the lesser of the estimated useful lives
or the remaining term of the lease.
Income Taxes
Effective October 1, 1993, Oncogene adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). SFAS 109 requires that Oncogene recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under SFAS 109, deferred
tax liabilities and assets are determined on the basis of the difference between
the tax basis of assets and liabilities and their respective financial reporting
amounts (temporary differences) at enacted tax rates in effect for the years in
which the differences are expected to reverse.
F-22
<PAGE> 78
ONCOGENE SCIENCE, INC.
RESEARCH PRODUCTS BUSINESS
NOTES TO STATEMENTS OF OPERATIONS
JULY 31, 1995
The adoption of SFAS 109 did not have any impact on the financial position
of operations of Oncogene or the Business. Oncogene, in years prior to fiscal
1994, accounted for taxes in accordance with Accounting Principles Board Opinion
No. 11, "Accounting for Income Taxes". No provision for income taxes has been
provided by the Business since Oncogene has incurred operation losses since
inception and has established a valuation allowance equal to the total deferred
tax asset.
2. RELATED PARTY TRANSACTIONS
Oncogene's wholly-owned subsidiary, Oncogene Science S.A. (OSSA), was
established in France to distribute products to the French market. Sales by the
Business to OSSA were approximately $111,000, $237,000 and $140,000, for the
fiscal years ended September 30, 1993 and 1994 and the ten months ended July 31,
1995, respectively, with related costs of sales of approximately $33,000,
$69,000 and $51,000, respectively.
The Business also recognized expenses payable to OSSA in 1995 and 1994 in
connection with any marketing efforts performed by OSSA on behalf of the
Business. Expenses were $96,000 and $24,000, for the fiscal year ended September
30, 1994 and the ten months ended July 31, 1995, respectively.
The Business also had sales to Becton Dickinson, a party with whom Oncogene
has existing collaborative agreements, and CN Biosciences, the party purchasing
the Business from Oncogene (Note 1), during the ten months ended July 31, 1995
of approximately $152,000 and $21,000, respectively.
3. COMMITMENT
The Company leases office, operating and laboratory space under various
lease agreements.
Rent expense related to the Business' facility was $49,844, $98,000 and
$81,720 for the fiscal years ended September 30, 1993 and 1994 and for the ten
months ended July 31, 1995, respectively.
The following is a schedule by fiscal years of future minimum rental
payments relating to the Business' facilities required as of July 31, 1995,
assuming expiration of all lease agreements by December 31, 2003 for the
Business.
<TABLE>
<S> <C>
Two months ended September 30, 1995............................... $ 30,184
1996.............................................................. 90,950
1997.............................................................. 91,888
1998.............................................................. 95,781
1999.............................................................. 97,500
2000 and thereafter............................................... 421,781
--------
$828,084
========
</TABLE>
4. EMPLOYEE SAVINGS AND INVESTMENT PLAN
On September 16, 1987, the Company's Board of Directors adopted a Savings
and Investment Plan under Section 401(k) of the Internal Revenue Code effective
September 1, 1987. This plan allows employees to defer from 2% to 10% of their
income on a pre-tax basis through contributions into designated investment
funds. For each dollar the employee invests up to 6% of his or her earnings, the
Company will contribute an additional 50 cents into the funds. For the fiscal
years ended September 30, 1993 and 1994 and the ten months ended July 31, 1995,
the Business' expenses related to the plan were approximately $32,000, $35,000
and $31,000, respectively.
F-23
<PAGE> 79
CN BIOSCIENCES, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENT
The following unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 gives effect to the acquisition
of Oncogene Science, Inc. Research Products Business as if it was acquired on
January 1, 1995.
The pro forma condensed consolidated financial statement is based on
historical financial statements of CN Biosciences, Inc. and Oncogene Science,
Inc. Research Products Business, giving effect to the acquisition applying the
purchase method of accounting and the assumptions and adjustments as discussed
in the accompanying notes to the pro forma condensed consolidated financial
statement. This pro forma condensed consolidated financial statement has been
prepared by the management of CN Biosciences, Inc. based upon the audited
consolidated financial statements of CN Biosciences, Inc., as of December 31,
1995 and for the year then ended, and the unaudited condensed statement of
operations of Oncogene Science, Inc. Research Products Business for the seven
months ended July 31, 1995. The unaudited pro forma condensed consolidated
financial statement should be read in conjunction with the historical financial
statements and notes thereto and narrative sections included elsewhere herein.
The pro forma condensed consolidated financial statement is not necessarily
indicative of what actual results of operations would have been for the periods
had the transactions occurred on the date indicated and do not purport to
indicate the results of future operations.
F-24
<PAGE> 80
CN BIOSCIENCES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
ONCOGENE PRO FORMA PRO FORMA
CN BIOSCIENCES, SCIENCE, ADJUSTMENTS REFLECTING
INC. INC. (NOTE 2) ACQUISITION
--------------- -------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales.................................... $26,966 $2,971 $ -- $29,937
Operating expenses....................... 25,131 2,710 --(a) 27,841
------- ------ ------ -------
Operating income......................... 1,835 261 -- 2,096
Interest expense, net.................... 527 -- 322(b) 849
------- ------ ------ -------
Income before income taxes............... 1,308 261 (322) 1,247
Provision for income taxes............... 291 -- (23)(c) 268
------- ------ ------ -------
Net income............................... $ 1,017 $ 261 $ 299 $ 979
======= ====== ====== =======
Net income per share..................... $ .49
=======
Shares used in computing net income per
share.................................. 1,987
=======
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statement of
Operations.
F-25
<PAGE> 81
CN BIOSCIENCES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED)
DECEMBER 31, 1995
1. On August 1, 1995, CN Biosciences, Inc. (the "Company") acquired certain
assets and assumed certain liabilities of Oncogene Science, Inc. Research
Products Business ("Oncogene"). The purchase price was $6,213,000, including
acquisition costs of $281,000. The transaction was accounted for as a
purchase.
The purchase price has been allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values on the
date of acquisition as follows:
<TABLE>
<S> <C>
Inventories...................................................... $1,507,000
Property and equipment........................................... 350,000
Other current assets............................................. 121,000
Cost in excess of net assets acquired............................ 4,335,000
----------
Total assets................................................... 6,313,000
Liabilities assumed.............................................. (100,000)
----------
Net assets acquired............................................ $6,213,000
==========
</TABLE>
2. The accompanying unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 gives effect to the
acquisition of Oncogene as if it had occurred as of January 1, 1995.
The pro forma adjustments are summarized as follows:
(a) The increase in amortization expense of intangibles for the
goodwill related to the acquisition of Oncogene was entirely
offset by the elimination of the amortization of goodwill on the
books of Oncogene at the time of the acquisition by the Company.
(b) Increase interest expense for the debt incurred to complete the
acquisition.
(c) Adjust the provision for income taxes based on the consolidated
operations for all of 1995.
F-26
<PAGE> 82
INSIDE BACK COVER PAGE
[COLOR PICTURE OF TWO SCIENTISTS WORKING IN LABORATORY WITH CAPTION WHICH
READS "THE COMPANY'S SCIENTIFIC STAFF, INCLUDING OVER 40 PH.D.S, DEVELOPS AND
MANUFACTURES A LARGE ARRAY OF BIOCHEMICAL AND BIOLOGICAL REAGENTS, ANTIBODIES,
PEPTIDES, ASSAYS AND RESEARCH KITS."]
[COLOR PHOTO OF EMPLOYEE HOLDING BOTTLE OF BIOCHEMICAL PRODUCT WITH CAPTION
WHICH READS "CUSTOMER ORDERS ARE FULFILLED, GENERALLY WITH NEXT-DAY OR
SECOND-DAY SHIPMENTS, FROM THE SAN DIEGO, CA AND NOTTINGHAM, U.K. DISTRIBUTION
CENTERS"]
[COLOR PHOTO OF WORLD MAP INDICATING LOCATIONS OF COMPANY FACILITIES WITH
DOTS IN COUNTRIES WHERE PRODUCTS ARE SOLD WITH CAPTION WHICH READS "CUSTOMERS IN
46 COUNTRIES ARE SERVED BY THE COMPANY FROM ITS SEVEN WORLDWIDE LOCATIONS."]
[COLOR PHOTO SHOWING AN ARRAY OF COMPANY PUBLICATIONS WITH CAPTION WHICH
READS "THE COMPANY INTRODUCES NEW PRODUCTS, PROVIDES TECHNICAL INFORMATION AND
REGULARLY COMMUNICATES WITH ITS CUSTOMERS THROUGH A BROAD ARRAY OF SUPPLEMENTAL
PUBLICATIONS."]
<PAGE> 83
No dealer, salesperson or any other person has been authorized to give any
information or make any representation not contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or the Underwriters. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities offered
hereby to anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date of this
Prospectus.
---------------------------
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 23
Management............................ 39
Certain Transactions.................. 45
Principal Stockholders................ 46
Description of Capital Stock.......... 47
Shares Eligible for Future Sale....... 50
Underwriting.......................... 51
Legal Matters......................... 52
Experts............................... 52
Change in Accountants................. 53
Additional Information................ 53
Index to Financial Statements......... F-1
</TABLE>
---------------------------
Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
1,600,000 SHARES
LOGO
COMMON STOCK
---------------------------------
PROSPECTUS
,1996
---------------------------------
UBS SECURITIES
DAIN BOSWORTH
Incorporated
<PAGE> 84
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, all of which will be
paid solely by the Company. All the amounts shown are estimates, except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market listing
fee:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
SEC registration fee............................................... $ 8,566
NASD filing fee.................................................... 2,984
Nasdaq National Market listing fee................................. *
Transfer agent and registrar fees and expenses..................... *
Printing and engraving expenses.................................... *
Legal fees and expenses............................................ *
Accounting fees and expenses....................................... *
Directors' and officers' liability insurance....................... *
Blue sky fees and expenses......................................... 15,000
Miscellaneous expenses............................................. *
------
Total............................................................ $ *
======
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and By-Laws provide that the
Company shall indemnify each person who is or was a director or officer of the
Company to the fullest extent permitted under Section 145 of the Delaware
General Corporation Law. Section 145 of the Delaware General Corporation Law
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may, in advance of the final disposition of any
civil, criminal, administrative or investigative action, suit or proceeding, pay
the expenses (including attorneys' fees) incurred by any officer or director in
defending such action, provided that the director or officer undertakes to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
A Delaware corporation may also indemnify officers and directors in an
action by or in the right of the corporation to procure a judgment in its favor
under the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses (including attorneys' fees) which he actually
and reasonably incurred in connection therewith. The indemnification provided is
not deemed to be exclusive of any other rights to which an officer or director
may be entitled under any corporation's by-laws, agreements, vote or otherwise.
II-1
<PAGE> 85
The Certificate of Incorporation provides that a director of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, which concerns unlawful payments of dividends,
stock purchases or redemptions or (iv) for any transaction from which the
director derived an improper personal benefit.
While the Certificate of Incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Certificate of Incorporation will have no
effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of his or her duty of care. The
provisions of the Certificate of Incorporation described in the preceding
paragraph apply to an officer of the Company only if he or she is a director of
the Company and is acting in his or her capacity as director, and do not apply
to officers of the Company who are not directors.
Reference is made to the Underwriting Agreement (Exhibit 1) which provides
for indemnification of the Company, its directors, officers and controlling
persons.
The Company has entered into indemnification agreements with certain of its
directors and officers pursuant to which the Company provides indemnification
and contribution against expenses and losses incurred for claims brought against
them by reason of their being a director or officer of the Company. Members of
the Stock Option Committee are also indemnified by the Company in connection
with their administration of the Stock Option Plan. Additionally, the Company
intends to purchase directors' and officers' liability insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information is furnished with regard to all securities sold
by the Company within the past three years which were not registered under the
Securities Act. Amounts have been restated to reflect a 2.36585- for-one stock
split effected by the Registrant in July 1996. These transactions were private
transactions not involving a public offering and were exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) thereof.
All transactions did not involve an underwriter and certificates for shares of
Common Stock issued bear a restrictive legend permitting the transfer thereof
only upon registration or an exemption therefrom under the Securities Act. All
issuances of stock options were pursuant to the Registrant's 1992 Stock Option
Plan.
From July 1, 1993 to December 31, 1993, the Registrant issued stock options
to purchase 21,293 shares of Common Stock at $0.42 per share to an employee.
On October 20, 1993, the Registrant issued stock options to purchase 59,146
shares of Common Stock at $0.42 per share to members of its Technology Council.
On December 31, 1993, the Registrant issued stock options to purchase
47,317 shares of Common Stock at $0.42 per share to an executive officer.
From January 1, 1994 to December 31, 1994, the Registrant issued stock
options to purchase 23,658 shares of Common Stock at $0.42 per share to
employees.
From January 1, 1995 to December 31, 1995, the Registrant issued stock
options to purchase 70,976 shares of Common Stock at $0.42 per share to
executive officers.
On July 28, 1995, the Registrant issued a warrant to purchase 3,028 shares
of Common Stock at $1.06 per share to Silicon Valley Bank in connection with the
Registrant's bank credit facility.
On August 15, 1995, the Registrant issued stock options to purchase 18,927
shares of Common Stock at $1.06 per share to employees.
On November 10, 1995, the Registrant issued stock options to purchase
11,829 shares of Common Stock at $3.38 per share to a director.
II-2
<PAGE> 86
On January 31, 1996, the Registrant sold 28,390 shares of Common Stock for
$3.38 per share to an executive officer.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------------------------
<S> <C>
1* Form of Underwriting Agreement.
2(a) Asset Purchase Agreement, dated as of June 26, 1995, by and among Oncogene
Science, Inc., Calbiochem-Novabiochem Corporation and Calbiochem-Novabiochem
International, Inc.
3(a) Amended and Restated Certificate of Incorporation of the Registrant.
3(b) By-Laws of the Registrant.
4* Specimen of Registrant's Common Stock certificate.
5* Opinion of Willkie Farr & Gallagher as to the legality of Common Stock.
10(a)* Agreement, dated as of March 1996, by and between Calbiochem-Novabiochem
International, Inc. and Amersham International plc.
10(b)* Series B Preferred Stock Exchange Agreement, dated as of ,
1996, by and among CN Biosciences, Inc. and the holders of its Series B
Preferred Stock.
10(c)(i)* Commercial Lease, dated as of February 1, 1992, between LMP Properties, Ltd.
and Calbiochem Corporation.
10(c)(ii)* First Amendment, dated as of April 1, 1992, to Commercial Lease, dated as of
February 1, 1992, between LMP Properties, Ltd. and Calbiochem Corporation.
10(c)(iii)* Second Amendment, dated as of September 14, 1992, to Commercial Lease, dated
as of February 1, 1992, between LMP Properties, Ltd. and Calbiochem
Corporation.
10(c)(iv)* Third Amendment, dated as of March 30, 1993, to Commercial Lease, dated as of
February 1, 1992, between LMP Properties, Ltd. and Calbiochem Corporation.
10(d)* Sublease Agreement, dated as of August 2, 1995, by and between Oncogene
Science, Inc. and Calbiochem-Novabiochem Corporation.
10(e) Sublease Agreement, dated as of July 1996, by and between
Calbiochem-Novabiochem Corporation and DataWorks Corporation.
10(f )(i) Registration Rights Agreement, dated as of March 13, 1992, by and among
Calbiochem-Novabiochem International, Inc. and each of the signatories
thereto.
10(f )(ii) Amendment Agreement, dated as of January 4, 1993, among Warburg, Pincus
Investors, L.P., ABS MB (C-N) Limited Partnership, Richard Slansky, John T.
Snow, Georges Chappuis, Calbiochem-Novabiochem International, Inc. and
Stelios B. Papadopoulos.
10(g)(i) Shared Services Agreement, dated as of August 2, 1995, by and between
Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation.
10(g)(ii) Trademark License Agreement, dated as of August 2, 1995, by and between
Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation.
10(g)(iii) Sublicense Agreement, dated as of August 2, 1995, by and between Oncogene
Science, Inc. and Calbiochem-Novabiochem Corporation.
10(g)(iv) Shared Intellectual Property License Agreement, dated as of August 2, 1995,
by and between Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation.
10(h) Letter Agreement, dated June 9, 1995, by and between Calbiochem-Novabiochem
International, Inc. and Richard B. Slansky.
</TABLE>
II-3
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------------------------
<S> <C>
10(i) Form of Director Indemnification Agreement.
10(j) Form of Officer Indemnification Agreement.
10(k) Calbiochem-Novabiochem International, Inc. 1992 Stock Option Plan, as
amended, including Form of Incentive Stock Option Agreement and Form of
Non-Qualified Stock Option Agreement.
10(l) Employment Agreement, dated as of January 1, 1996, between
Calbiochem-Novabiochem International, Inc. and Stelios B. Papadopoulos.
10(m)(i) Employment Agreement, dated as of February 23, 1996, between Calbiochem-
Novabiochem International, Inc. and Ben Matzilevich.
10(m)(ii) Secured Recourse Promissory Note, dated January 31, 1996, issued to
Calbiochem-Novabiochem International, Inc. by Ben Matzilevich.
10(m)(iii) Restricted Stock Purchase Agreement, dated as of January 31, 1996, between
Calbiochem-Novabiochem International, Inc. and Ben Matzilevich.
10(m)(iv) Loan and Pledge Agreement, dated as of January 31, 1996, by and between
Calbiochem-Novabiochem International, Inc. and Ben Matzilevich.
10(n)(i) Loan and Security Agreement, dated July 28, 1995 (including schedule), by and
between Calbiochem-Novabiochem Corporation and Silicon Valley Bank.
10(n)(ii) Pledge Agreement, dated July 28, 1995, by and between Calbiochem-Novabiochem
Corporation and Silicon Valley Bank.
10(n)(iii) Collateral Assignment, Patent Mortgage and Security Agreement, dated July 28,
1995, by and between Calbiochem-Novabiochem Corporation and Silicon Valley
Bank.
10(n)(iv) Security Agreement, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank.
10(n)(v) Pledge Agreement, dated July 28, 1995, by and between Calbiochem-Novabiochem
International, Inc. and Silicon Valley Bank.
10(n)(vi) Cross-Corporate Continuing Guaranty, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank.
10(n)(vii) Pledge Agreement, dated July 27, 1995, by and between Calbiochem-Novabiochem
AG and Silicon Valley Bank.
10(n)(viii) Cross-Corporate Continuing Guaranty, dated July 28, 1995, by and between
Calbiochem-Novabiochem AG and Silicon Valley Bank.
10(n)(ix) Subordination Agreement, dated July 28, 1995, by and among
Calbiochem-Novabiochem Corporation, Calbiochem-Novabiochem International,
Inc. and Silicon Valley Bank.
10(n)(x) Antidilution Agreement, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank.
10(n)(xi) Warrant to Purchase Stock, dated July 28, 1995, by and between Calbiochem-
Novabiochem International, Inc. and Silicon Valley Bank.
10(n)(xii) Amendment to Loan Agreement, dated November 22, 1995, by and between Silicon
Valley Bank and Calbiochem-Novabiochem Corporation.
10(n)(xiii) Amendment to Loan Agreement, dated January 24, 1996, by and between Silicon
Valley Bank and Calbiochem-Novabiochem Corporation.
10(n)(xiv) Amendment to Loan Agreement, dated June 27, 1996, by and between Silicon
Valley Bank and Calbiochem-Novabiochem Corporation.
10(n)(xv) Schedule to Loan and Security Agreement, dated June 27, 1996, by and between
Silicon Valley Bank and Calbiochem-Novabiochem Corporation.
11 Computation of Earnings per Share.
</TABLE>
II-4
<PAGE> 88
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------------------------
<S> <C>
16 Letter re Change in Certifying Accountant.
21 Subsidiaries of the Registrant.
23(a)* Consent of Willkie Farr & Gallagher (included as part of Exhibit 5).
23(b) Consent of Ernst & Young LLP.
23(c) Consent of KPMG Peat Marwick LLP.
24 Power of Attorney (included on the signature page to the Registration
Statement).
27 Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES.
Not applicable.
ITEM 17. UNDERTAKINGS.
(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(2) The undersigned Registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of San Diego, State of
California, on July 18, 1996.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
--------------------------------
Name: Stelios B. Papadopoulos
Title: Chairman of the Board of Directors,
Chief Executive Officer
and President
POWER OF ATTORNEY
Each of the undersigned officers and directors of CN Biosciences, Inc.
hereby severally constitutes and appoints Stelios B. Papadopoulos and James G.
Stewart, and each of them as the attorneys-in-fact for the undersigned, in any
and all capacities, with full power of substitution, to sign any and all pre- or
post-effective amendments to this Registration Statement, any subsequent
Registration Statement for the same offering which may be filed pursuant to Rule
462(b) under the Securities Act of 1933 and any and all pre- or post-effective
amendments thereto, and to file the same with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that each said
attorney-in-fact, or either of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------- --------------
<C> <S> <C>
/s/ Stelios B. Papadopoulos Chairman of the Board of July 18, 1996
- --------------------------------------------- Directors, Chief Executive
Stelios B. Papadopoulos Officer and President (Principal
executive officer)
/s/ James G. Steward Vice President, Chief Financial July 18, 1996
- --------------------------------------------- Officer and Secretary
James G. Stewart (Principal financial and
accounting officer)
/s/ Frederick L. Bryant Director July 18, 1996
- ---------------------------------------------
Frederick L. Bryant
/s/ Joseph P. Landy Director July 18, 1996
- ---------------------------------------------
Joseph P. Landy
/s/ S. Joshua Lewis Director July 18, 1996
- ---------------------------------------------
S. Joshua Lewis
/s/ Robert E. McGill, III Director July 18, 1996
- ---------------------------------------------
Robert E. McGill, III
</TABLE>
<PAGE> 90
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
------------ ------------------------------------------------------------------------ ----
<S> <C> <C>
1* Form of Underwriting Agreement..........................................
2(a) Asset Purchase Agreement, dated as of June 26, 1995, by and among
Oncogene Science, Inc., Calbiochem-Novabiochem Corporation and
Calbiochem-Novabiochem International, Inc...............................
3(a) Amended and Restated Certificate of Incorporation of the Registrant.....
3(b) By-Laws of the Registrant...............................................
4* Specimen of Registrant's Common Stock certificate.......................
5* Opinion of Willkie Farr & Gallagher as to the legality of Common
Stock...................................................................
10(a)* Agreement, dated as of March 1996, by and between Calbiochem-Novabiochem
International, Inc. and Amersham International plc......................
10(b)* Series B Preferred Stock Exchange Agreement, dated as of ,
1996, by and among CN Biosciences, Inc. and the holders of its Series B
Preferred Stock.........................................................
10(c)(i)* Commercial Lease, dated as of February 1, 1992, between LMP Properties,
Ltd. and Calbiochem Corporation.........................................
10(c)(ii)* First Amendment, dated as of April 1, 1992, to Commercial Lease, dated
as of February 1, 1992, between LMP Properties, Ltd. and Calbiochem
Corporation.............................................................
10(c)(iii)* Second Amendment, dated as of September 14, 1992, to Commercial Lease,
dated as of February 1, 1992, between LMP Properties, Ltd. and
Calbiochem Corporation..................................................
10(c)(iv)* Third Amendment, dated as of March 30, 1993, to Commercial Lease, dated
as of February 1, 1992, between LMP Properties, Ltd. and Calbiochem
Corporation.............................................................
10(d)* Sublease Agreement, dated as of August 2, 1995, by and between Oncogene
Science, Inc. and Calbiochem-Novabiochem Corporation....................
10(e) Sublease Agreement, dated as of July 1996, by and between Calbiochem-
Novabiochem Corporation and DataWorks Corporation.......................
10(f )(i) Registration Rights Agreement, dated as of March 13, 1992, by and among
Calbiochem-Novabiochem International, Inc. and each of the signatories
thereto.................................................................
10(f )(ii) Amendment Agreement, dated as of January 4, 1993, among Warburg, Pincus
Investors, L.P., ABS MB (C-N) Limited Partnership, Richard Slansky, John
T. Snow, Georges Chappuis, Calbiochem-Novabiochem International, Inc.
and Stelios B. Papadopoulos.............................................
10(g)(i) Shared Services Agreement, dated as of August 2, 1995, by and between
Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation...........
10(g)(ii) Trademark License Agreement, dated as of August 2, 1995, by and between
Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation...........
10(g)(iii) Sublicense Agreement, dated as of August 2, 1995, by and between
Oncogene Science, Inc. and Calbiochem-Novabiochem Corporation...........
10(g)(iv) Shared Intellectual Property License Agreement, dated as of August 2,
1995, by and between Oncogene Science, Inc. and Calbiochem-Novabiochem
Corporation.............................................................
10(h) Letter Agreement, dated June 9, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Richard B. Slansky.......
10(i) Form of Director Indemnification Agreement..............................
10(j) Form of Officer Indemnification Agreement...............................
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
------------ ------------------------------------------------------------------------ ----
<S> <C> <C>
10(k) Calbiochem-Novabiochem International, Inc. 1992 Stock Option Plan, as
amended, including Form of Incentive Stock Option Agreement and Form of
Non-Qualified Stock Option Agreement....................................
10(l) Employment Agreement, dated as of January 1, 1996, between Calbiochem-
Novabiochem International, Inc. and Stelios B. Papadopoulos.............
10(m)(i) Employment Agreement, dated as of February 23, 1996, between Calbiochem-
Novabiochem International, Inc. and Ben Matzilevich.....................
10(m)(ii) Secured Recourse Promissory Note, dated January 31, 1996, issued to
Calbiochem-Novabiochem International, Inc. by Ben Matzilevich...........
10(m)(iii) Restricted Stock Purchase Agreement, dated as of January 31, 1996,
between Calbiochem-Novabiochem International, Inc. and Ben
Matzilevich.............................................................
10(m)(iv) Loan and Pledge Agreement, dated as of January 31, 1996, by and between
Calbiochem-Novabiochem International, Inc. and Ben Matzilevich..........
10(n)(i) Loan and Security Agreement, dated July 28, 1995 (including schedule),
by and between Calbiochem-Novabiochem Corporation and Silicon Valley
Bank....................................................................
10(n)(ii) Pledge Agreement, dated July 28, 1995, by and between
Calbiochem-Novabiochem Corporation and Silicon Valley Bank..............
10(n)(iii) Collateral Assignment, Patent Mortgage and Security Agreement, dated
July 28, 1995, by and between Calbiochem-Novabiochem Corporation and
Silicon Valley Bank.....................................................
10(n)(iv) Security Agreement, dated July 28, 1995, by and between Calbiochem-
Novabiochem International, Inc. and Silicon Valley Bank.................
10(n)(v) Pledge Agreement, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank......
10(n)(vi) Cross-Corporate Continuing Guaranty, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank......
10(n)(vii) Pledge Agreement, dated July 27, 1995, by and between Calbiochem-
Novabiochem AG and Silicon Valley Bank..................................
10(n)(viii) Cross-Corporate Continuing Guaranty, dated July 28, 1995, by and between
Calbiochem-Novabiochem AG and Silicon Valley Bank.......................
10(n)(ix) Subordination Agreement, dated July 28, 1995, by and among Calbiochem-
Novabiochem Corporation, Calbiochem-Novabiochem International, Inc. and
Silicon Valley Bank.....................................................
10(n)(x) Antidilution Agreement, dated July 28, 1995, by and between Calbiochem-
Novabiochem International, Inc. and Silicon Valley Bank.................
10(n)(xi) Warrant to Purchase Stock, dated July 28, 1995, by and between
Calbiochem-Novabiochem International, Inc. and Silicon Valley Bank......
10(n)(xii) Amendment to Loan Agreement, dated November 22, 1995, by and between
Silicon Valley Bank and Calbiochem-Novabiochem Corporation..............
10(n)(xiii) Amendment to Loan Agreement, dated January 24, 1996, by and between
Silicon Valley Bank and Calbiochem-Novabiochem Corporation..............
10(n)(xiv) Amendment to Loan Agreement, dated June 27, 1996, by and between Silicon
Valley Bank and Calbiochem-Novabiochem Corporation......................
10(n)(xv) Schedule to Loan and Security Agreement, dated June 27, 1996, by and
between Silicon Valley Bank and Calbiochem-Novabiochem Corporation......
11 Computation of Earnings per Share.......................................
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
------------ ------------------------------------------------------------------------ ----
<S> <C> <C>
16 Letter re Change in Certifying Accountant...............................
21 Subsidiaries of the Registrant..........................................
23(a)* Consent of Willkie Farr & Gallagher (included as part of Exhibit 5).....
23(b) Consent of Ernst & Young LLP............................................
23(c) Consent of KPMG Peat Marwick LLP........................................
24 Power of Attorney (included on the signature page to the Registration
Statement)..............................................................
27 Financial Data Schedule.................................................
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 2(a)
CALBIOCHEM-NOVABIOCHEM CORPORATION
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC..
AND
ONCOGENE SCIENCE, INC.
------------------------
ASSET PURCHASE AGREEMENT
------------------------
---------------------------
Dated as of June 26, 1995
---------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1. DEFINITIONS...........................................................................................1
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY...........................................................8
SECTION 2.1. Transfer of Assets.........................................................................8
SECTION 2.2. Sale at Closing Date.......................................................................8
SECTION 2.3. Subsequent Documentation...................................................................8
SECTION 2.4. Assumption of Assumed Contracts;
Exclusion of Excluded Liabilities............................................8
SECTION 3. PURCHASE PRICE........................................................................................9
SECTION 3.1. Purchase Price.............................................................................9
SECTION 3.2. Payment of Purchase Price..................................................................9
SECTION 3.3. Post-Closing Adjustment to Purchase Price.................................................10
SECTION 3.4 Allocation of Purchase Price..............................................................10
SECTION 4. CLOSING..............................................................................................11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
SELLER..................................................................................................11
SECTION 5.1. Corporate Organization....................................................................11
SECTION 5.2. Qualification to Do Business..............................................................12
SECTION 5.3. Authorization and Validity o fAgreement...................................................12
SECTION 5.4. No Conflict or Violation..................................................................12
SECTION 5.5. Consents and Approvals....................................................................12
SECTION 5.6. Good Title; Necessary Assets and Rights...................................................13
SECTION 5.7. Financial Information.....................................................................13
SECTION 5.8. Absence of Certain Changes or Events......................................................13
SECTION 5.9. Tax Matters...............................................................................15
SECTION 5.10. Warranties................................................................................15
SECTION 5.11. Cambridge Lease...........................................................................15
SECTION 5.12. Equipment and Machinery...................................................................16
SECTION 5.13. Intellectual Property; Intangible Assets..................................................16
SECTION 5.14. Licenses and Permits......................................................................17
SECTION 5.15. Compliance with Law.......................................................................18
SECTION 5.16. Litigation................................................................................18
SECTION 5.17. Assumed Contracts.........................................................................19
SECTION 5.18. Prepaid Expenses..........................................................................19
SECTION 5.19. Inventories...............................................................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 5.20. Cell Lines; Biological Materials..........................................................20
SECTION 5.21. Employee Plans............................................................................20
SECTION 5.22 Compensation..............................................................................21
SECTION 5.23. Customers, Suppliers and Distributors.....................................................21
SECTION 5.24. Insurance.................................................................................22
SECTION 5.25. Labor Matters; Employment Agreements......................................................22
SECTION 5.26. Products Liability........................................................................22
SECTION 5.27. Environmental Matters.....................................................................23
SECTION 5.28. Accuracy of Information...................................................................24
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................................................25
SECTION 6.1. Corporate Organization....................................................................25
SECTION 6.2. Qualification to Do Business..............................................................25
SECTION 6.3. Authorization and Validity of Agreement...................................................25
SECTION 6.4. No Conflict or Violation..................................................................25
SECTION 6.5. Consents and Approvals....................................................................26
SECTION 7. COVENANTS OF THE SELLER..............................................................................26
SECTION 7.1. Conduct of Business Before the
Closing Date.........................................................................26
SECTION 7.2. Consents and Approvals....................................................................28
SECTION 7.3. Notice of Breach..........................................................................28
SECTION 7.4. Access to Properties and Records..........................................................28
SECTION 7.5. Negotiations..............................................................................29
SECTION 7.6. Best Efforts..............................................................................29
SECTION 7.7. Covenant Not To Compete...................................................................29
SECTION 7.8. Non-Solicitation of Employees.............................................................30
Section 7.9 Cooperation Regarding Receivables.........................................................30
Section 7.10. Diagnostic Business Inventory Build.......................................................30
Section 7.11. Preparation of Financial Statements.......................................................31
Section 7.12. Accounts Payable..........................................................................31
SECTION 8. COVENANTS OF THE PARENT AND BUYER....................................................................31
SECTION 8.1. Actions Before Closing Date...............................................................31
SECTION 8.2. Consents and Approvals....................................................................31
SECTION 8.3. Best Efforts..............................................................................31
Section 8.4 Non-Solicitation of Employees.............................................................32
Section 8.5 Cooperation Regarding Receivables.........................................................32
Section 8.6 Guarantee of Obligations of The Buyer.....................................................32
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS.........................................................................32
SECTION 9.1. Offer of Employment.......................................................................32
SECTION 9.2 Seller Savings Plan.......................................................................33
SECTION 9.3 Flexible Spending Accounts................................................................33
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 10. BULK SALES LAW......................................................................................33
SECTION 11. INDEMNIFICATION......................................................................................33
SECTION 11.1. Indemnification by the Seller............................................................33
SECTION 11.2. Indemnification by the Buyer.............................................................34
SECTION 11.3. Procedures for Indemnification by the
Buyer..................................................................................35
SECTION 11.4 Limitations...............................................................................36
SECTION 11.5 Environmental Liability After Closing.....................................................36
SECTION 12. CONDITIONS PRECEDENT TO PERFORMANCE BY THE
SELLER..........................................................................................37
SECTION 12.1. Representations and Warranties of
the Buyer..............................................................................37
SECTION 12.2. Performance of the Obligations of
the Buyer..............................................................................37
SECTION 12.3. Consents and Approvals...................................................................37
SECTION 12.4. No Violation of Orders...................................................................37
SECTION 12.5. Delivery of Ancillary Agreements.........................................................38
SECTION 12.6. Opinion of Buyer's Counsel...............................................................38
SECTION 12.7. Other Closing Documents..................................................................39
SECTION 12.8. Legal Matters............................................................................39
SECTION 13. CONDITIONS PRECEDENT TO PERFORMANCE BY THE
BUYER...........................................................................................39
SECTION 13.1. Representations and Warranties of
the Seller.............................................................................39
SECTION 13.2. Performance of the Obligations of
the Seller.............................................................................40
SECTION 13.3. Consents and Approvals...................................................................40
SECTION 13.4. No Violation of Orders...................................................................40
SECTION 13.5. Delivery of Ancillary Agreements.........................................................40
SECTION 13.6. No Material Adverse Change...............................................................40
SECTION 13.7. Opinion of Counsel.......................................................................40
SECTION 13.8. Other Closing Documents..................................................................42
SECTION 13.9. Legal Matters............................................................................42
SECTION 14. TERMINATION.........................................................................................43
SECTION 14.1. Conditions of Termination................................................................43
SECTION 14.2. Effect of Termination....................................................................43
SECTION 15. MISCELLANEOUS.......................................................................................43
SECTION 15.1. Successors and Assigns...................................................................43
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 15.2. Governing Law, Jurisdiction..............................................................43
SECTION 15.3. Expenses.................................................................................44
SECTION 15.4. Broker's and Finder's Fees...............................................................44
SECTION 15.5 Access to Records........................................................................44
SECTION 15.6. Force Majeure............................................................................45
SECTION 15.7 Survival.................................................................................45
SECTION 15.8. Severability.............................................................................45
SECTION 15.9. Notices..................................................................................45
SECTION 15.10. Amendments; Waivers......................................................................46
SECTION 15.11. Public Announcements.....................................................................47
SECTION 15.12. Entire Agreement.........................................................................47
SECTION 15.13. Parties in Interest......................................................................47
SECTION 15.14. Section and Paragraph Headings...........................................................47
SECTION 15.15. Counterparts.............................................................................47
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
INDEX OF EXHIBITS
<S> <C>
A Cambridge Sublease
B New Products License Agreement
C Oncogene Science Tradename License Agreement
D Shared Services Agreement
E Shared Intellectual Property License
F Transition Services Agreement
INDEX TO SCHEDULES
1.0 Research Products under Development
5.5 Consents, Waivers, Authorizations and Approvals
5.7 Financial Data
5.8 Material Changes or Events
5.10 Warranties on Products
5.11 Cambridge Lease Exceptions
5.12 Equipment and Machinery
5.13 Intellectual Property
5.14 Licenses and Permits
5.16 Litigation
5.17 Principal Assumed Contracts
5.18 Prepaid Expense
5.19 Inventory
5.21 Seller Plans
5.23 Principal Customers, Suppliers, Distributors and
Sales Agents
5.27 Environmental Matters
7.10 Diagnostic Inventory Production Quantities
9.1 Prospective Transferred Employees
</TABLE>
v
<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of June 26, 1995 by
and among ONCOGENE SCIENCE, INC., a Delaware corporation (the "Seller"),
CALBIOCHEM-NOVABIOCHEM CORPORATION, a California corporation (the "Buyer") and
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC., a Delaware corporation (the
"Parent").
W I T N E S S E T H:
WHEREAS, the Seller is a biopharmaceutical company which is
engaged in its Cambridge, Massachusetts facility in both a diagnostics business
and a research products business;
WHEREAS, the research products business markets research
reagents, kits and other research tools to the academic research market,
clinical research market and industrial research market;
WHEREAS, the Seller has decided to sell its research products
business, while retaining the right in connection with its diagnostics business
to manufacture and sell research products to the clinical research market;
WHEREAS, the Buyer desires to purchase the research products
business and to conduct such business in the academic research market, clinical
research market and industrial research market, recognizing that the Seller will
continue to have the right to manufacture and sell products to the clinical
research market and diagnostic products to the diagnostic market; and
WHEREAS, the Buyer desires to purchase certain assets of such
research products business from the Seller, and the Seller desires to sell such
assets to the Buyer, in each case upon the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements hereinafter contained, the parties hereby
agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 8
"Affiliate" shall mean, with respect to any Person, any
Person which directly or indirectly through stock ownership or through other
arrangements, either controls, is controlled by or is under common control with
such Person;
"Allocation Statement" -- See Section 3.4;
"Ancillary Agreements" shall refer collectively to the
Cambridge Sublease, the New Products License Agreement, the Oncogene Science
Tradename License Agreement, the Shared Services Agreement, the Shared
Intellectual Property License and the Transition Services Agreement.
"Assumed Contracts" shall mean, collectively, the
Distributorship Agreements, Equipment Leases, License Agreements, Purchase
Orders, Sales Orders, and such other contracts to which the Seller is a party
relating to the Business as are described in Section 5.17 hereto;
"Business" shall mean the research, development, manufacture,
worldwide distribution and sale of research reagent products, for sale into the
academic, clinical and industrial research markets, including without limitation
such products as monoclonal and polyclonal antibodies, DNA probes, transcription
factors, growth factors, growth factor receptors, and lymphoid cell surface
markers, as such business is currently being conducted by Seller;
"Business Day" shall mean days other than Saturdays, Sundays
and days on which banks in New York are authorized or obligated by law to be
closed;
"Buyer's FSAs" shall mean the flexible spending accounts
relating to the Health Care Reimbursement Accounts and Dependent Care
Reimbursement Accounts maintained by the Buyer under the Calbiochem-Novabiochem
Corporation Flexible Benefit Plan.
"Cambridge Lease" -- See Section 5.11;
"Cambridge Sublease" shall mean the sublease to be entered
into by the Buyer and the Seller relating to a portion of the Seller's facility
at 80-84 Rogers Street, Cambridge, Massachusetts, the principal terms of which
are set forth on Exhibit A;
"Cell Lines" shall mean all cell lines, sibling cell lines,
strains, cultures and other biological or biochemical source stocks used by the
Seller in the Business;
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<PAGE> 9
"Closing" -- See Section 4;
"Closing Date" -- See Section 4;
"COBRA" shall mean the provisions of the Code, ERISA and the
Public Health Service Act enacted by Sections 10001 through 10003 of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L.99-272), including
any subsequent amendments to such provisions.
"Code" shall mean the Internal Revenue Code of 1986, as
amended;
"Diagnostic Business" shall mean Seller's ongoing business,
including but not limited to its collaboration with Becton, Dickinson and
Company, to develop, manufacture and sell certain research products to the
clinical research market and to develop, make, use and sell clinical products
for the clinical diagnostic and therapeutic markets, which includes furnishing
certain research reagents to clinical researchers.
"Distributorship Agreements" shall mean the distributorship
agreements of the Seller relating to the sale and distribution of the Products
(other than the agreement with its distributor in Belgium, France, and Israel);
"Environmental Laws" -- See Section 5.27;
"Equipment and Machinery" shall mean (i) all the equipment,
machinery, furniture, tooling, spare parts, and supplies that are (x) owned by
the Seller, (y) located at the Premises and (z) utilized by Seller in connection
with the manufacturing, administrative, sales and marketing functions of the
Business; (ii) all the replacements for any of the foregoing owned by the
Seller, (iii) any rights of the Seller to the warranties (to the extent
assignable) and licenses received from manufacturers and sellers of the
aforesaid items and (iv) any related claims, credits, rights of recovery and
set-off with respect thereto;
"Equipment Leases" shall mean those lease agreements to which
the Seller is a party relating to the Leased Equipment and Machinery.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
"Excluded Liabilities" -- See Section 2.4;
3
<PAGE> 10
"Files and Records" shall mean all files and records, whether
in hard copy or magnetic format, of the Seller relating to the Business or the
Purchased Property, including, without limitation, the following types of files
and records relating to the Business: customer and supplier lists; customer
correspondence, including complaint files and customer specifications; copies of
financial schedules, records, spread sheets, purchase orders, check registers
and similar financial records pertaining to the Business; correspondence with
licensors and other members of the academic, clinical and scientific community
relating to research products; product manufacturing data, including batch
manufacturing records and quality control records; product catalogue data bases;
equipment maintenance records, equipment warranty information, laboratory plans,
specifications and drawings, and equipment drawings; all files relating to those
employees of the Business to be employed by the Buyer following the Closing;
correspondence with national, state and local governmental agencies relating to
the operation of the Business and related files and records of the Seller;
"Financial Data" -- See Section 5.7;
"Hazardous Substance" -- See Section 5.27;
"Independent Accounting Firm" -- See Section 3.4;
"Intangible Assets" shall mean all intangible personal
property rights (other than the Intellectual Property) owned or held by the
Seller and relating exclusively to the Business, including, without limitation,
all goodwill of the Seller relating to the Business, all software, software
systems, databases and all other information systems (including Market Force)
used in the Business, the current toll free "800" telephone numbers utilized by
the Seller in connection with the Business, and all rights on the part of the
Seller to proceeds of any insurance policies and all claims on the part of the
Seller for recoupment, reimbursement and coverage under any insurance policies,
in each case in connection with the Business;
"Intellectual Property" shall mean (i) those letters patent
and patent applications, owned by Seller and utilized exclusively in the
Business, and (ii) the trademarks, service marks, trade names, (in each case
other than the mark or name "Oncogene Science" or a derivative thereof),
copyrights, know-how relating to the manufacture or development of Products,
trade secrets and licenses and rights with respect to the foregoing that the
Seller owns or possesses the rights to use relating to the Purchased Property or
the operations of the Business, including, without limitation, the copyrights to
all product
4
<PAGE> 11
catalogues of the Business, new product guides and other supplements published
in connection with the Business, the "Oncogene Science Guide to Literature
Citations", advertising copy used in connection with the Business, art-work
related to the Business (including the Oncogene Science Wall Chart), the
trademarks "Discovery Tools," and "Transcript" and those other items listed in
Schedule 5.13;
"Inventory" shall mean (i) all the finished goods, raw
materials, work in progress and inventoriable supplies owned by the Seller on
the Closing Date and held for use in the operations of the Business and (ii) any
and all rights of the Seller to the warranties received from its suppliers with
respect to such inventory (to the extent assignable) and related claims,
credits, rights of recovery and set-off with respect thereto;
"Inventory Value" -- See Section 3.3;
"knowledge of Seller" as used in this Agreement shall mean the
conscious knowledge of executive officers of Seller and general management
personnel of the Business;
"Leased Equipment and Machinery" all equipment, machinery and
furniture utilized by Seller in the Business that are held by Seller under one
or more equipment leases and that, if owned, would constitute Equipment and
Machinery as defined above.
"License Agreements" shall mean those license agreements to
which the Seller is a party which provide the Seller with rights to technology
or products used or useful in the conduct of the business, including without
limitation, software licenses and those license agreements relating to the
manufacture, use and sale of any of the Products.
"Licenses and Permits" -- See Section 5.14;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement.
"New Products License Agreement" shall mean the agreement to
be entered into by the Buyer and the Seller relating to the license by the
Seller of the research reagents and products that are derived from the Seller's
cancer diagnostic development program, the principal terms of which are set
forth on Exhibit B;
5
<PAGE> 12
"Oncogene Science Tradename License Agreement" shall mean
the agreement to be entered into by the Buyer and the Seller relating to the
granting of the right to use the Oncogene Science name in connection with the
sale of Products to the research market, the principal terms of which are set
forth on Exhibit C;
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government;
"Plans" -- See Section 5.21(a);
"Premises" shall mean the premises occupied by Seller at 80-84
Rogers Street, Cambridge, Massachusetts, all as more particularly described in
the lease agreement, as amended between Seller, as successor by assignment from
Applied bioTechnology Inc. and Trustees of The Cambridge East Trust, dated
November 1991, a copy of which has previously been furnished by Seller to Buyer;
"Products" shall mean (i) the products manufactured and sold
(including, but not limited to, the Seller's complete line of research products
contained in the Seller's 1995 product catalogue, but excluding TransProbe-1(R)
and TransProbe Light(TM)) in connection with the Business as of the Closing Date
(including, but not limited to, any product necessary and useful for the
performance of any Assumed Contract) and (ii) those products which are in the
process of development for manufacturing by the Seller listed on Schedule 1.0
hereto;
"Purchase Orders" shall mean all the Seller's outstanding
purchase orders, contracts or other commitments to suppliers of goods and
services for materials, supplies or other items used in the Business;
"Purchase Price" -- See Section 3.1;
"Purchased Property" shall mean the Assumed Contracts, Cell
Lines, Equipment and Machinery, Files and Records, Intangible Assets,
Intellectual Property, Inventory, any prepaid expenses and other assets relating
exclusively to the operations of the Business on the Closing Date;
"Sales Orders" shall mean all the Seller's sales orders,
contracts or other commitments to purchasers of goods and services of the
Business;
"Seller Plans" -- See Section 5.21;
6
<PAGE> 13
"Seller Savings Plan" shall mean the Oncogene Science, Inc.
Savings and Investment Plan;
"Seller's FSAs" shall mean the flexible spending accounts
relating to the Health Care Reimbursement Accounts and Dependent Care
Reimbursement Accounts maintained by the Seller under the Oncogene Science
Flexible Spending Plan.
"Shared Services Agreement" shall mean the agreement to be
entered into by the Buyer and the Seller relating to the sharing of facilities
and services at the Premises, the principal terms of which are set forth on
Exhibit D;
"Shared Intellectual Property License" shall mean the license
agreement to be entered into by the Buyer and the Seller relating to the license
to Buyer of rights under patents of Seller and technology disclosed in patent
applications of Seller, that are used and useful in the manufacture, use and
sale of the Products, but which have other uses in Seller's other businesses,
the principal terms of which are set forth on Exhibit E;
"Taxes" shall mean for all purposes of this Agreement all
taxes however denominated, including any interest, penalties or additions to tax
that may become payable in respect thereof, imposed by any governmental body,
which taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, workmen's compensation taxes and other obligations of the same
or a similar nature, whether arising before, on or after the Closing; and "Tax"
shall mean any one of them;
"Tax Returns" shall mean any return, report, information
return or other document (including any related or supporting information) filed
or required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes;
"Transferred Employees" -- See Section 9.1;
"Transition Services Agreement" shall mean the agreement to be
entered into by the Buyer and the Seller relating to the provision by the Seller
to the Buyer of certain services, including without limitation, administrative
and management information systems and financial reporting services, the
principal terms of which are set forth on Exhibit F;
7
<PAGE> 14
"W.A.R.N." shall mean the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C, SectionSection 2101-2109, and the
regulations promulgated thereunder.
SECTION 2. PURCHASE AND SALE OF THE PURCHASED
PROPERTY.
SECTION 2.1. Transfer of Assets. Subject to the terms and upon
the conditions herein set forth, the Seller shall sell, convey, transfer, assign
and deliver to the Buyer, and the Buyer shall purchase and accept from the
Seller, on the Closing Date, all right, title and interest of the Seller in and
to the Purchased Property, free and clear of any Lien.
SECTION 2.2. Sale at Closing Date. The sale, transfer,
assignment and delivery by the Seller of the Purchased Property to the Buyer, as
herein provided, shall be effected on the Closing Date by bills of sale,
endorsements, assignments and other instruments of transfer and conveyance
reasonably satisfactory in form and substance to counsel for the Buyer.
SECTION 2.3. Subsequent Documentation. The Seller shall, at
any time and from time to time after the Closing Date, upon the request of the
Buyer, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all such further assignments, transfers and
conveyances as may be required for the better assigning, transferring, granting,
conveying and confirming to the Buyer or its successors and assigns, or for
aiding and assisting in collecting and reducing to possession, any or all of the
Purchased Property.
SECTION 2.4. Assumption of Assumed Contracts; Exclusion of
Excluded Liabilities. On the Closing, the Buyer shall assume and agree to pay,
perform and discharge when due all of the obligations, debts and liabilities of
Seller under the Assumed Contracts. Such assumption shall be pursuant to an
assignment and assumption agreement in form and substance reasonably
satisfactory to counsel for the Buyer and the Seller. The Buyer shall not assume
or pay, perform or discharge, nor shall the Buyer be responsible, directly or
indirectly, for any other debts, obligations, contracts, or liabilities of the
Seller, including without limitation any liabilities for accounts payable, long
or short term indebtedness, Taxes or product liability actions arising from the
sale of any Products prior to the Closing Date, all such liabilities and
obligations of the Seller being herein referred to as the "Excluded
Liabilities."
8
<PAGE> 15
To the extent that the assignment of any Assumed Contract
shall require the consent of the other party thereto, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. The Seller will use its best efforts to obtain the
consent of the other parties to such contracts for the assignment thereof to the
Buyer. If such consent is not obtained in respect of any such Assumed Contract,
the Seller will cooperate with the Buyer in any reasonable arrangement requested
by the Buyer, including subcontracting or subleasing, to provide for the Buyer
the benefits under any such Assumed Contract, including enforcement at the cost
of and for the benefit of the Buyer, of any and all rights of the Seller against
the other party thereto with respect to such Assumed Contract.
SECTION 3. PURCHASE PRICE.
SECTION 3.1. Purchase Price. The purchase price for the sale
and transfer of the Purchased Property shall be $6,000,000 in cash (the
"Purchase Price"), which price shall be payable and deliverable in accordance
with Section 3.2 and shall be subject to adjustment as provided in Section 3.3.
SECTION 3.2. Payment of Purchase Price. In payment for the
Purchased Property, the Buyer will pay to the Seller (i) on the Closing Date,
$3,000,000, and (ii) on each of the first, second and third anniversaries of the
Closing Date, $1,000,000 plus accrued and unpaid interest (at a rate per annum
equal to the rate publicly announced by Chemical Bank in New York, New York, as
its prime rate in effect from time to time) (the "Deferred Payments"), in each
case by wire transfer of immediately available funds to the account of the
Seller at European American Bank, Account No. 064075799 or such other account as
the Seller shall notify the Buyer in writing at least two Business Days before
such payment is due. On the Closing Date, the Buyer shall, in addition, deliver
to the Seller an irrevocable letter of credit issued by a bank reasonably
acceptable to the Seller in an amount equal to the Deferred Payments (the "LC")
to secure the payment of the Deferred Payments. The Seller shall have the right
to draw upon such LC by delivering a sight draft and a certificate of an
executive officer of the Seller to the effect that a Deferred Payment has not
been paid when due. The amount of the LC shall be decreased by an appropriate
amount upon the payment of the initial Deferred Payment and shall be further
reduced upon the payment of the second Deferred Payment. The LC shall be
transferable and shall expire 60 days after the third anniversary of the Closing
Date. The Buyer shall have the right to deliver $6,000,000 to the
9
<PAGE> 16
Seller on the Closing Date in lieu of the payments of $3,000,000 plus the
Deferred Payments and the delivery of the LC.
SECTION 3.3. Post-Closing Adjustment to Purchase Price. The
Purchase Price shall be subject to adjustment after the Closing as follows:
Inventory. Commencing on the Closing Date representatives of
the Buyer and the Seller shall take a physical count of the Inventory as of the
Closing Date. Upon completion of each portion of such physical count, such
representatives shall immediately consult and seek in good faith to reach
agreement on the count of the number of merchantable (as to finished goods) and
useable (as to raw material and supply) units of each type of Inventory. In
connection with the preparation of the balance sheet as of the Closing Date
called for under Section 7.11, KPMG Peat Marwick L.L.P. ("Peat") shall observe
such physical count, and shall conduct such tests of the viability and quality
of the inventory as Peat shall deem appropriate and as shall be consistent with
its past practices, and the standard costing methodology previously used by the
Seller in connection with the preparation of its annual audited financial
statements. If the balance sheet presented shows Inventory valued at less than
$1,575,000, then within 10 Business Days of the delivery of such balance sheet,
the Seller shall pay to the Buyer in cash the amount by which $1,575,000 exceeds
the Inventory value.
SECTION 3.4 Allocation of Purchase Price. The Buyer shall, as
promptly as practicable after the Closing Date, submit to the Seller a statement
of the Buyer's allocation of the Purchase Price to the different items of
Purchased Property (the "Allocation Statement"). The Allocation Statement shall
be, subject to further adjustment on the basis of the Purchase Price adjustment
pursuant to Section 3.3, binding and conclusive upon the parties hereto, unless
the Seller objects in writing to any item or items shown on the Allocation
Statement within ten Business Days after delivery thereof to the Seller. If the
Buyer and the Seller shall be unable to resolve any dispute with regard to the
Allocation Statement within ten Business Days after delivery of the Seller's
written objections, the matter or matters in dispute shall be submitted to an
independent certified public accountant that does not render services to either
the Buyer or the Seller (the "Independent Accounting Firm") who shall be
authorized by the parties to select either the purchase price allocation
proposed by the Buyer or that proposed by the Seller, whichever the Independent
Accounting Firm deems to be most reasonable. The expenses of the Independent
Accounting Firm shall be borne by the party whose allocation is not so chosen.
10
<PAGE> 17
The decision of the Independent Accounting Firm shall be conclusive and binding
upon the Buyer and the Seller.
Promptly after the Closing Date (but not before a resolution
of all disputes, if any, with regard to the Allocation Statement), the Buyer's
firm of independent certified public accountants shall prepare, in consultation
with the Seller or the Independent Accounting Firm, those statements or forms
required by Section 1060 of the Code and the regulations promulgated thereunder
with respect to the allocation of the Purchase Price. Such statements or forms
shall be prepared consistently with the allocation of the Purchase Price. Such
statements or forms shall be filed by the parties on their respective federal
income tax returns as required by Section 1060 of the Code and the regulations
promulgated thereunder and each party shall provide the other party with a copy
of such statement or form as filed.
SECTION 4. CLOSING.
The closing hereunder (the "Closing") shall take place at the
offices of Willkie Farr & Gallagher at One Citicorp Center, 153 East 53rd
Street, New York, New York 10022 at 10:00 a.m. on the third Business Day after
the Minimum Threshhold Conditions shall have been met or at such other place and
time as may be mutually agreed to by the parties hereto (the "Closing Date").
For the purposes of this Section, the "Minimum Threshhold Conditions" shall mean
the closing conditions set forth in Sections 12 and 13 of this Agreement,
qualified as to the receipt of consents, approvals, licenses and permits as
follows: (a) the Buyer shall have obtained licenses and permits comparable to
the Licenses and Permits as to all subject matters material to Buyer's ability
to legally commence operations at the Premises as owner of the Business; (b) the
Seller shall have obtained the consent of the landlord under the Cambridge Lease
to the Cambridge Sublease; and (c) Seller shall have obtained the consent to the
assignment to the Buyer of those product license agreements referred to in
Schedule 5.13 covering products that, in the aggregate, represented not less
than 80% of the sales of licensed products during the eight months ended May 31,
1995.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Buyer as
follows:
SECTION 5.1. Corporate Organization. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite
11
<PAGE> 18
corporate power and authority to own its properties and assets and to conduct
its businesses as now conducted. Copies of the Certificate of Incorporation and
By-laws of the Seller, with all amendments thereto to the date hereof, have been
furnished to the Buyer or its representatives, and such copies are accurate and
complete as of the date hereof.
SECTION 5.2. Qualification to Do Business. The Seller is duly
qualified to do business as a foreign corporation and is in good standing in the
Commonwealth of Massachusetts and the State of New York and in every other
jurisdiction where the character of the properties owned or leased by it or the
nature of the business conducted by it makes such qualification necessary and in
which the absence of such qualification could have a material adverse effect on
the business of the Seller.
SECTION 5.3. Authorization and Validity of Agreement. The
Seller has all requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance of the Seller's obligations hereunder have
been duly authorized by all necessary corporate action by the Board of Directors
of the Seller, and no other corporate proceedings on the part of the Seller are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by the Seller and constitutes its valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 5.4. No Conflict or Violation. The execution, delivery
and performance by the Seller of this Agreement do not and will not violate or
conflict with any provision of the Certificate of Incorporation or By-laws of
the Seller and do not and will not violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory authority,
nor violate nor will result in a breach of or constitute (with due notice or
lapse of time or both) a default under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument
to which the Seller is a party or by which it is bound or to which any of its
properties or assets is subject, nor will result in the creation or imposition
of any Lien upon any of the Purchased Property, nor will result in the
cancellation, modification, revocation or suspension of any of the Licenses and
Permits.
SECTION 5.5. Consents and Approvals. Schedule 5.5 sets forth
a true and complete list of each consent, waiver, authorization or approval of
any governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, and each declaration to or filing or registration
12
<PAGE> 19
with any such governmental or regulatory authority, that is required in
connection with the execution and delivery of this Agreement by the Seller or
the performance by the Seller of its obligations hereunder.
SECTION 5.6 Good Title; Necessary Assets and Rights. The
Seller has, and on the Closing Date will have, good title in and to the
Purchased Property free and clear of any Liens. The Purchased Property, together
with the premises covered by the Cambridge Sublease and the intellectual
property covered by the Shared Intellectual Property License, constitute
substantially all the assets, properties and rights, including without
limitation contract rights, necessary and used to conduct the Business as
currently conducted.
SECTION 5.7. Financial Information. The Seller has heretofore
furnished to the Buyer a Pro-Forma Statement of Operations of the Business for
each of the four years in the period ended September 30, 1994 and for the eight
months ended May 31, 1995 (the "Financial Data"), copies of which are set forth
in Schedule 5.7. The Financial Data (i) have been prepared from the books and
records of the Seller, which books and records are used to prepare financial
statements which are in accordance with U.S. generally accepted accounting
principles ("GAAP"), (ii) have been prepared on a consistent basis over the four
years and eight months shown, (iii) reflect the adjustments set forth on
Schedule 5.7, (iv) fairly present revenues and direct expenses of the Business,
which revenues and expenses, after giving effect to such adjustments, can be
legitimately reconciled with the financial statements and the financial records
maintained and the accounting methods applied by the Seller for its financial
reporting purposes and (iv) contain allocation estimates for all allocated items
not individually accounted for in connection with the Business as described in
Schedule 5.7 which estimates the Seller believes to be reasonable.
SECTION 5.8. Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 5.8, since September 30,
1994, there has not been:
(i) any material adverse change in the business, operations,
properties, assets or condition (financial or other) of the Business,
or any event that has had a material adverse effect on the foregoing,
and, to the best knowledge of Seller, no factor or condition exists and
no event has occurred that would be likely to result in any such
change;
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<PAGE> 20
(ii) any material loss, damage, destruction or other casualty
to the Purchased Property;
(iii) any change in any method of accounting or accounting
practice of the Business or the Seller relating to the Business; or
(iv) any loss of the employment, services or benefits of any
key employee of the Business.
(b) Since September 30, 1994, the Seller has operated the
Business in the ordinary course of its business consistent with past practice
and, except as set forth in Schedule 5.8 hereto, has not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) relating to the operations
of the Business except in the ordinary course of business consistent
with past practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy
any obligation or liability (whether absolute, accrued, contingent or
otherwise) arising from the operation of the Business, other than
liabilities being contested in good faith and for which adequate
reserves have been provided;
(iii) mortgaged, pledged or subjected to any Lien any of the
Purchased Property;
(iv) sold or transferred any of the assets of the Business
material to the Business or canceled any debts or claims or waived any
rights material to the Business relating to the operations of the
Business, except in the ordinary course of business consistent with
past practice;
(v) disposed of any patents, trademarks or copyrights or any
patent, trademark, or copyright applications used in the operations of
the Business;
(vi) defaulted on any material obligation relating to the
operations of the Business;
(vii) entered into any transaction material to the Business or
relating to the Business, except in the ordinary course of business
consistent with past practice;
(viii) written down the value of any inventory or written off
as uncollectible any accounts receivable specifically
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<PAGE> 21
relating to the Business or any portion thereof other than in the
ordinary course of business consistent with past practice;
(ix) granted any increase in the compensation or benefits of
employees of the Business other than increases in accordance with past
practice not exceeding 10% or entered into any employment or severance
agreement or arrangement with any of them;
(x) made any capital expenditure in excess of $10,000, or
additions to property, plant and equipment used in the operations of
the Business other than ordinary repairs and maintenance;
(xi) discontinued the manufacture or sale of any Products
except in the ordinary course of business; or
(xii) entered into any agreement or made any commitment to do
any of the foregoing.
SECTION 5.9. Tax Matters. All Tax Returns required to be filed
before the Closing Date in respect of the Seller have been (or will have been by
the Closing Date) filed, and the Seller has (or will have by the Closing Date)
paid, accrued or otherwise adequately reserved for the payment of all Taxes
required to be paid in respect of the periods covered by such returns and has
(or will have by the Closing Date) adequately reserved for the payment of all
Taxes with respect to periods ended on or before the Closing Date for which tax
returns have not yet been filed.
SECTION 5.10. Warranties. Schedule 5.10 sets forth the
warranties given by the Seller in connection with the sale of Products.
SECTION 5.11. Cambridge Lease.
(a) The Seller has previously delivered to the Buyer a true
and correct copy of the lease of the Premises, including all amendments thereto
through the date hereof (the "Cambridge Lease").
(b) Except as set forth in Schedule 5.11, the landlord under
the Cambridge Lease has not given the Seller written notice of or made a claim
with respect to any breach or default the consequences of which, individually or
in the aggregate, would have a material adverse effect on the business,
operations,
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properties, assets or condition (financial or other) of the Business.
(c) Except as set forth in Schedule 5.11, the Cambridge Lease
is not subject to any sublease, license or other agreement granting to any
person or entity any right to the use, occupancy or enjoyment of such property
or any portion thereof.
(d) The plumbing, electrical, heating, water, air
conditioning, ventilating and all other mechanical or structural systems of the
Premises are in good working order and condition, and the roof, basement and
foundation walls of the Premise are in good condition and free of leaks and
other material defects.
SECTION 5.12. Equipment and Machinery. Schedule 5.12 sets
forth a complete and correct list and brief description of each item of
Equipment and Machinery or of Leased Equipment and Machinery having an original
purchase cost or aggregate lease cost exceeding $2,000. Except as set forth in
Schedule 5.12, as of the date hereof, the Seller has good title, free and clear
of all title defects and objections, Liens (other than the Lien of current
property taxes and assessments not in default, if any) to the Equipment and
Machinery owned by it. None of the title defects, objections or Liens (if any)
listed in Schedule 5.12 adversely affects the value of any of the items of
Equipment and Machinery or interferes with their use in the conduct of the
Business. Except as set forth in Schedule 5.12, the Seller holds good and
transferable leaseholds in all of the Leased Equipment and Machinery, in each
case under valid and enforceable leases. The Seller is not in default with
respect to any item of Leased Equipment and Machinery, and no event has occurred
that constitutes or with due notice or lapse of time or both may constitute a
default under any lease thereof. The Equipment and Machinery and the Leased
Equipment and Machinery are sufficient and adequate to carry on the Business as
presently conducted by the Seller, and all items thereof are in good operating
condition and repair, ordinary wear and tear excepted.
SECTION 5.13. Intellectual Property; Intangible Assets.
(a) Schedule 5.13 sets forth a complete and correct listing of
the Intellectual Property. Except as described in Schedule 5.13, all
Intellectual Property listed therein is owned by the Seller, free and clear of
all Liens and is not known to be the subject of any challenge. As of the date
hereof, except as described in Schedule 5.13, there are no unresolved claims
made and there has not been communicated to the Seller the threat of any claim
that the holder of such Intellectual Property is in
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violation or infringement of any service mark, patent, trademark, trade name,
trademark or trade name registration, copyright or copyright registration of any
other Person. The Seller is the owner of, or has a valid license to use, the
patents, patent licenses, trade names, trademarks, service marks, brand marks,
brand names, copyrights, know-how, formula and other proprietary and trade
rights necessary for the conduct of the Business as now conducted, without any
known conflict with the rights of others, and the Seller has not knowingly
forfeited or otherwise relinquished any such patent, patent license, trade name,
trademark, service mark, brand mark, brand name, copyright, know-how, formula or
other proprietary right necessary for the conduct of the Business as conducted
on the date hereof. Except as set forth in Schedule 5.13, the Seller is not
under any obligation to pay any royalties or similar payments in connection with
any license to any of its Affiliates.
(b) Schedule 5.13 sets forth a true and complete list of all
of the Intangible Assets and a summary description of each such item. There is
no restriction affecting the use of any of the Intangible Assets, and no license
has been granted with respect thereto. None of the Intangible Assets is
currently being challenged, is involved in any pending or threatened
administrative or judicial proceeding, or, to the knowledge of Seller conflicts
with any rights of any other person, firm or corporation. The Seller owns or has
the right to use all computer software, software systems and databases and all
other information systems included in the Purchased Property. The Seller's
rights in and to the Intangible Assets and Intellectual Property are sufficient
and adequate in all material respects to permit the conduct of the Business as
now conducted, and, to the knowledge of Seller, none of the Products or
operations of the Business involves any infringement of any proprietary right of
any other Person.
SECTION 5.14. Licenses and Permits. Schedule 5.14 sets forth a
true and complete list of all licenses, permits, franchises, authorizations and
approvals issued or granted to the Seller with respect to the Business by the
federal government, any state or local government, any foreign national or local
government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "Licenses and Permits"), and all
pending applications therefor. Such list contains a summary description of each
such item and, where applicable, specifies the date issued, granted or applied
for, the expiration date and the current status thereof. Each License and Permit
has been duly obtained, is valid and in full force and effect, and is not
subject to any pending or threatened administrative or judicial proceeding to
revoke, cancel, suspend
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or declare such License and Permit invalid in any respect. To the knowledge of
Seller, the Licenses and Permits are sufficient and adequate in all material
respects to permit the continued lawful conduct of the Business in the manner
now conducted by the Seller, and none of the operations of the Business are
being conducted in a manner that violates in any material respect any of the
terms or conditions under which any License and Permit was granted. Except as
set forth in Schedule 5.14, no such License and Permit will in any way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.
SECTION 5.15. Compliance with Law. The operations of the
Business have been conducted in all material respects in accordance with all
applicable laws, regulations, orders and other requirements of all courts and
other governmental or regulatory authorities having jurisdiction over the Seller
and its assets, properties and operations. The Seller has not received notice of
any violation of any such law, regulation, order or other legal requirement, and
is not in default with respect to any order, writ, judgment, award, injunction
or decree of any national, state or local court or governmental or regulatory
authority or arbitrator, domestic or foreign, applicable to the Business or any
of the assets, properties or operations with respect thereto. The Seller does
not have knowledge of any proposed change in any such laws, rules or regulations
(other than laws of general applicability and evolving regulations of the Food
and Drug Administration of products for the clinical research market) that would
materially and adversely affect the transactions contemplated by this Agreement
or all or a material part of the Business or the Purchased Property.
SECTION 5.16. Litigation. Except as set forth in Schedule
5.16, there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the knowledge of the Seller, threatened, before
any national, state or local court or governmental or regulatory authority,
domestic or foreign, or before any arbitrator of any nature, brought by or
against the Seller or any of its officers, directors, employees, agents or
Affiliates involving, affecting or relating to the Business, the Purchased
Property or the transactions contemplated by this Agreement, nor is any basis
known to the Seller or any of its directors or officers for any such action,
suit, proceeding or investigation. Neither the Business nor the Purchased
Property is subject to any order, writ, judgment, award, injunction or decree of
any national, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, that affects or might affect the Business or
the Purchased Property,
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or that would or might interfere with the transactions contemplated by this
Agreement.
SECTION 5.17. Assumed Contracts.
(a) Schedule 5.17 sets forth a complete and correct list and a
summary description of all Assumed Contracts (as in effect on the date hereof)
other than individual Purchase Orders or Sales Orders for amounts less than
$5,000.
(b) Each Assumed Contract is valid, binding and enforceable
against the parties thereto in accordance with its terms, and is in full force
and effect on the date hereof. The Seller has performed in all material respects
the obligations required to be performed by it to date under, and is not in
default or delinquent in the performance (claimed or actual) in connection with,
any Assumed Contract, and no event has occurred which, with due notice or lapse
of time or both, would constitute such a default. To the knowledge of the
Seller, no other party to any Assumed Contract is in default in respect thereof,
and no event has occurred which, with due notice or lapse of time or both, would
constitute such a default. The Seller has delivered to the Buyer or its
representatives true and complete copies of the Assumed Contracts listed on
Schedule 5.17.
(c) Except as set forth on Schedule 5.17, the Seller is not a
party to any partnership or joint venture agreements, license agreements,
service contracts, commission and consulting agreements, suretyship contracts,
reimbursement agreements, sales agency agreements or distribution agreements, in
each such case relating to the Business or the Purchased Property, or any
contracts or commitments limiting or restraining the Seller with respect to the
Business from engaging or competing in any lines of business or with any Person,
or any documents granting the power of attorney with respect to the conduct of
the Business, or any options to purchase any assets or property rights of the
Business.
SECTION 5.18. Prepaid Expenses. Schedule 5.18 sets forth a
true and complete listing of the prepaid expenses of the Business as of May 31,
1995.
SECTION 5.19. Inventories. Schedule 5.19 sets forth a true and
complete inventory listing and valuation as of May 31, 1995 (the "May 31
Inventory Schedule"). The inventories of the Business are carried at not more
than the lower of standard cost (approximating average costs) or net realizable
value, and such inventories as are reflected on the May 31 Inventory Schedule
are of a type, quantity and quality useable and saleable in the
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ordinary course of the conduct of the Business. The reserve for excess bulk
inventory reflected on the May 31 Inventory Schedule has been calculated on a
basis consistent with that used in the Seller's financial statements from which
the Financial Data are derived.
SECTION 5.20 Cell Lines; Biological Materials. The Cell Lines,
taken as a whole, are biologically active and provide the source material
necessary to generate the biological materials included in the Products. Such
Cell Lines have been properly maintained by Seller so as to retain their
viability, minimize deterioration and avoid contamination, and Seller has
established and maintained duplicate back-up stocks of the most significant of
such Cell Lines (from the point of view of volume of sales of the Products they
generate) to enable the Business to continue in the event of the expiration or
contamination of the primary stocks of such Cell Lines. Seller has (i)
manufactured or prepared the other biological materials included in the
Inventory in accordance with what, to the knowledge of Seller constitute good
standards generally utilized by its competitors in the research reagent
industry, (ii) maintained accurate quality control records by production lot of
all such biological materials and (iii) has maintained such materials in a
manner reasonably designed to preserve their viability and to avoid
contamination and deterioration.
SECTION 5.21. Employee Plans.
(a) Except as set forth on Schedule 5.21, neither the Seller
nor any Affiliate of Seller maintains, contributes to, or is a party to, any
"employee benefit plan," as defined in Section 3(3) of ERISA, or any other
written, unwritten, formal or informal plan or agreement involving direct or
indirect compensation other than workers' compensation, unemployment
compensation and other government programs, under which the Seller or any
affiliate thereof has any present or future obligation or liability with respect
to the current employees of the Business ("Seller Plans").
(b) Each Seller Plan has been maintained in substantial
compliance with its terms and the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to it. The Seller
Savings Plan is qualified and tax-exempt under Sections 401(a) and 501(a) of the
Code, respectively, and meets the requirements of a "qualified cash or deferred
arrangement" under Section 401(k) of the Code.
(c) The Seller has or has caused to be provided, or will have
caused to be provided, to current and former employees
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of the Business entitled thereto all required notices within the applicable time
period and coverage pursuant to COBRA with respect to any "qualifying event" (as
defined in COBRA) occurring prior to and including the Closing Date.
(d) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Seller Plans have been made by the due date thereof (including any
valid extension), and all contributions for any period ending on or before the
Closing Date which are not yet due will have been paid or accrued on or prior to
the Closing Date.
(e) True, correct and complete copies of the Seller Plans, and
related trust documents and summary plan descriptions, have been delivered to
the Buyer by the Seller, to the extent requested by the Buyer. Additionally, the
Seller has delivered to the Buyer descriptions of each of the Seller Plans in a
form and with a level of detail reasonably satisfactory to the Buyer.
(f) There are no pending actions, claims or lawsuits which
have been asserted or instituted against any party regarding the Seller Plans
or, to the knowledge of the Seller, against any fiduciary of such plans with
respect to their operation (other than routine benefit claims), and there are no
other circumstances regarding any of the Seller Plans, which could result in any
liability to the Buyer, or any lien on the Purchased Property, on or after the
Closing Date.
(g) The Seller has taken all actions, and given all notices,
required under W.A.R.N. prior to and including the Closing Date with respect to
the employees of the Business. There has been no "mass layoff" or "plant
closing," as defined in W.A.R.N., with respect to the employees of the Business.
SECTION 5.22 Compensation. The Seller has previously delivered
to the Buyer a schedule setting forth the current base salary of each of the
employees of the Business listed on Schedule 9.1 as well as the aggregate bonus
paid to each such employee in respect of the most recently completed bonus
measuring period for such employee. Except for the Seller Plans, the Seller has
not, by reason of past practices with respect to such employees, established any
rights on the part of such employees to additional compensation with respect to
any period after the Closing Date.
SECTION 5.23. Customers, Suppliers and Distributors. Schedule
5.23 sets forth a complete and correct list of (a) all customers whose purchases
exceeded 5% of the aggregate net sales
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of the Business during the eight months ended May 31, 1995, setting forth with
respect to each such customer the aggregate volume of purchases made during such
period; (b) all suppliers from whom the Business purchased in excess of 5% of
its raw materials and supplies during the eight months ended May 31, 1995,
setting forth with respect to each such supplier the aggregate dollar volume of
purchases (broken down by principal categories) by the Business from such
supplier for such period; (c) all distributors of any Products; and (d) all
sales agents or representatives of the Business or of the Seller with respect to
the Business. Except as set forth in Schedule 5.23, none of such customers,
suppliers, distributors or representatives has or, to the knowledge of the
Seller, intends to terminate or change significantly its relationship with the
Business.
SECTION 5.24. Insurance. The Business, the Premises and the
Purchased Property are covered by the Seller's comprehensive blanket insurance
policies. The Seller will continue in full force and effect through the Closing
Date all of such policies of insurance. To the knowledge of Seller, the Seller
has not been refused any insurance by any insurance carrier to which it has
applied for insurance with respect to the Premises, the Purchased Property or
the Business at any time since January 1, 1993.
SECTION 5.25. Labor Matters; Employment Agreements. The Seller
is not a party to any union or collective bargaining agreements covering any of
the employees of the Business, nor does the Seller know of any activities or
proceedings of any labor union to organize any such employees, nor does the
Seller have any employment agreements with any of such employees which are not
terminable at will at the election of the Seller. The Seller is in compliance in
all material respects with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment in
each case relating to the Business, and there are no charges with respect to or
relating to the Business pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the prevention
of unlawful employment practices.
SECTION 5.26. Products Liability. There is no notice, demand,
claim, action, suit, inquiry, hearing, proceeding, notice of violation or
investigation of a civil, criminal or administrative nature before any court or
governmental or other regulatory or administrative agency, commission or
authority, domestic or foreign, against or involving any Product or any product
distributed by or on behalf of the Business, or class of claims or lawsuits
involving the same or similar Product or any
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product distributed by or on behalf of the Business which is pending or
threatened, resulting from an alleged defect in design, manufacture, materials
or workmanship of any Product or any product distributed or sold by or on behalf
of the Business, or any alleged failure to warn, or from any breach of implied
warranties or representations (collectively, "Product Liability Lawsuits"); and
(ii) there has not been any Occurrence. For purposes of this Section 5.26, the
term "Occurrence" shall mean any accident, happening or event which takes place
at any time which is caused or allegedly caused by any alleged hazard or alleged
defect in manufacture, design, materials or workmanship including, without
limitation, any alleged failure to warn or any breach of express or implied
warranties or representations with respect to, or any such accident, happening
or event otherwise involving any Product or any product distributed by or on
behalf of the Business, that is likely to result in a claim or loss.
SECTION 5.27. Environmental Matters.
(a) Except as set forth in Schedule 5.27, (i) the Seller and
the Business are in material compliance with all Environmental Laws (as defined
below); (ii) the Seller and the Business have obtained all applicable
Environmental Permits (as defined below); (iii) all such permits are in full
force and effect; (iv) the Seller and the Business are in material compliance
with all Environmental Permits. As used herein, "Environmental Laws" shall mean
all applicable federal, state, and local laws, ordinances, rules, regulations,
judgments, orders, or decrees relating to the protection or regulation of human
health, safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA") (42 U.S.C. SectionSection 9601 et seq.), the Resource
Conservation and Recovery Act ("RCRA") (42 U.S.C. SectionSection 6901 et seq.),
the Clean Water Act (33 U.S.C. SectionSection 1251 et seq.), the Atomic Energy
Act (42 U.S.C. Section 2201 et seq.), and similar state and local laws.
"Environmental Permits" shall mean all applicable licenses and permits or other
approvals required under applicable Environmental Law in connection with the
ownership, operation, and/or use of the Business.
(b) To the knowledge of Seller, the Seller and the Business
have not violated, done or suffered any act which could reasonably be expected
to give rise to liability that would materially affect the operations of the
Business under any Environmental Law.
(c) Except as set forth in Schedule 5.27, (i) there is no
pending or threatened claim, litigation, or administrative
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proceeding, or known prior claim, litigation or administrative proceeding
arising under any Environmental Law involving the Business or any property
formerly owned, leased, operated or occupied by the Business; (ii) there are no
ongoing negotiations with or agreements with any governmental authority relating
to any Remedial Action (as defined in CERCLA Section 101(24), 42 U.S.C. Section
9601(24)) or other environmentally-related claim involving the Business; and
(iii) neither the Seller nor the Business have received any request for
information from any governmental or private entity with respect to any
liability or alleged liability under any Environmental Law related to the
Business.
(d) To the Seller's knowledge, the Premises (i) have never
been used for the treatment or disposal of hazardous materials, hazardous
substances or hazardous waste (as those terms are defined under any
Environmental Law) nor as a landfill or other waste disposal site; (ii) is not
now nor ever has been subject to investigation by any governmental authority
evaluating the need to undertake any environmental remedial action.
(e) Except as set forth on Schedule 5.27, (i) there are and
never have been any underground storage tanks present on the Premises; (ii)
there is no asbestos present on the Premises; and (iii) there are no PCBs
present on the Premises.
(f) To the Seller's knowledge, neither the Seller nor the
Business has disposed of any hazardous wastes (as defined under any
Environmental Law) at any location which is currently identified or proposed for
inclusion on (A) the National Priorities List, 40 CFR Part 300 Appendix B, (B)
the Comprehensive Environmental Response, Compensation and Liability Inventory
List, or (C) any analogous state list.
(g) Seller and the Business have provided to Buyer copies of
all environmental reports or investigations regarding the Premises in the
control or possession of Seller or the Business.
SECTION 5.28. Accuracy of Information. None of the Seller's
representations, warranties or statements contained in this Agreement, or in the
schedules or exhibits hereto, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make any of such
representations, warranties or statements in light of the circumstances under
which they were made not misleading.
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer and Parent hereby jointly and severally represent
and warrant to the Seller as follows:
SECTION 6.1. Corporate Organization. The Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, the Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and each
of the Parent and Buyer has all requisite corporate power and authority to own
its properties and assets and to conduct its businesses as now conducted.
SECTION 6.2. Qualification to Do Business. The Buyer is duly
qualified to do business as a foreign corporation in and is in good standing in
every jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary and in which the absence of such qualification could have a material
adverse effect on the business of the Buyer. On or prior to the Closing Date,
the Buyer will be qualified to do business in the Commonwealth of Massachusetts.
SECTION 6.3. Authorization and Validity of Agreement. Each of
the Parent and the Buyer has all requisite corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance of the Buyer's
obligations hereunder have been duly authorized by all necessary corporate
action by their respective Boards of Directors, and no other corporate
proceedings on the part of the either the Buyer or the Parent are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by each of the Parent and the Buyer and constitutes its valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 6.4. No Conflict or Violation. The execution, delivery
and performance by the Parent and the Buyer of this Agreement do not and will
not violate or conflict with any provision of their respective Certificates of
Incorporation or By-laws and do not and will not violate any provision of law,
or any order, judgment or decree of any court or other governmental or
regulatory authority, nor violate nor will result in a breach
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of or constitute (with due notice or lapse of time or both) a default under any
contract, lease, loan agreement, mortgage, security agreement, trust indenture
or other agreement or instrument to which the Parent or the Buyer is a party or
by which either is bound or to which any of their properties or assets is
subject.
SECTION 6.5. Consents and Approvals. The execution, delivery
and performance of this Agreement on behalf of the Parent and the Buyer does not
require the consent or approval of, or filing with, any government, governmental
body or agency or other entity or person except: (i) as may be required to
transfer any Licenses and Permits; (ii) as may be required in connection with
the assignment and assumption of the Assumed Contracts and (iii) such consents,
approvals and filings, of which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Buyer to consummate the transactions contemplated hereby.
SECTION 7. COVENANTS OF THE SELLER.
SECTION 7.1. Conduct of Business Before the Closing Date. (a)
Without the prior written consent of the Buyer, between the date hereof and the
Closing Date, the Seller shall not, except as required or expressly permitted
pursuant to the terms hereof:
(i) make any material change in the conduct of the Business or
enter into any transaction other than in the ordinary course of
business consistent with past practices;
(ii) make any sale, assignment, transfer, abandonment or other
conveyance of the Purchased Property or any part thereof, except
transactions pursuant to the existing Assumed Contracts hereto and
dispositions of Inventory or of worn-out or obsolete equipment for fair
or reasonable value in the ordinary course of business consistent with
past practice;
(iii) subject any of the Purchased Property, or any part
thereof, to any Lien or suffer such to exist other than such Liens as
may arise in the ordinary course of business consistent with past
practice by operation of law and that will not, individually or in the
aggregate, have a material adverse effect on the Business;
(iv) acquire any assets, raw materials or properties related
to the Business, or enter into any other transaction
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related to the Business, other than in the ordinary course of business
consistent with past practice;
(v) enter into any new (or amend any existing) employee
benefit plan, program or arrangement affecting the employees of the
Business or any new (or amend any existing) employment, severance or
consulting agreement relating to any employee of the Business, grant
any general increase in the compensation of any such employees
(including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or grant any increase in
the compensation payable or to become payable to any such employee,
except in accordance with pre-existing contractual provisions or
consistent with past practice;
(vi) commit to make any capital expenditure related to the
Business in excess of $10,000;
(vii) sell, transfer or lease any properties or assets related
to the Business to any of its Affiliates;
(viii) fail to keep in full force and effect insurance
comparable in amount and scope to coverage maintained in respect of the
Business;
(ix) take any other action that would cause any of the
representations and warranties made by the Seller in this Agreement not
to remain true and correct;
(x) settle, release or forgive any claim or litigation or
waive any right thereto;
(xi) make, enter into, modify, amend in any material respect
or terminate any contract related to the Business, where such contract
is for (A) a contract entailing payments in excess of $5,000 or (B) a
contract having a term in excess of twelve months; or
(xii) commit to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date,
the Seller shall:
(i) continue to maintain, in all material respects, the
Purchased Property in accordance with present practice in a condition
suitable for its current use;
(ii) file, when due or required, national, state, foreign and
other tax returns and other reports required to
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be filed and pay when due all taxes, assessments, fees and other
charges lawfully levied or assessed against it, unless the validity
thereof is contested in good faith and by appropriate proceedings
diligently conducted;
(iii) continue to conduct the Business in the ordinary course
consistent with past practice;
(iv) keep its books of account, Files and Records in the ordinary
course and in accordance with existing practice; and
(v) continue to maintain existing business relationships with
suppliers and customers other than relationships not economically
beneficial to the Business.
SECTION 7.2. Consents and Approvals. The Seller (a) shall use
its best efforts to obtain all necessary consents, waivers, authorizations and
approvals of all governmental and regulatory authorities, domestic and foreign,
and of all other persons, firms or corporations required in connection with the
execution, delivery and performance by it of this Agreement, and (b) shall
diligently assist and cooperate with the Buyer in preparing and filing all
documents required to be submitted by the Buyer to any governmental or
regulatory authority, domestic or foreign, in connection with such transactions
and in obtaining any governmental consents, waivers, authorizations or approvals
(including without limitation licenses and permits for the Buyer comparable to
the Licenses and Permits) which may be required to be obtained by the Buyer in
connection with such transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Buyer all information
concerning the Seller that counsel to the Buyer determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval).
SECTION 7.3. Notice of Breach. Through the Closing Date, the
Seller shall promptly give the Buyer written notice with particularity upon
having knowledge of any matter that may constitute a breach of any
representation, warranty, agreement or covenant contained in this Agreement.
SECTION 7.4. Access to Properties and Records. The Seller
shall afford to the Buyer, and to the accountants, counsel and representatives
of the Buyer, reasonable access during normal business hours throughout the
period prior to the Closing Date (or the earlier termination of this Agreement
pursuant to Section 14) to all properties, books, contracts, commitments and
Files
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and Records of the Seller relating to the Business and, during such period,
shall furnish promptly to the Buyer all other information concerning the
Business, properties and personnel as the Buyer may reasonably request, provided
that no investigation or receipt of information pursuant to this Section 7.4
shall qualify any representation or warranty of the Seller or the conditions to
the obligations of the Buyer. The Seller shall also afford the Buyer reasonable
access to the Business, all operations of the Business and to all Purchased
Property throughout the period prior to the Closing Date.
SECTION 7.5. Negotiations. From and after the date hereof,
neither the Seller, nor its officers or directors nor anyone acting on behalf of
the Seller or such persons shall, directly or indirectly, encourage, solicit,
engage in discussions or negotiations with, or provide any information to, any
person, firm, or other entity or group (other than the Buyer or its
representatives) concerning the sale of all or a substantial portion of the
assets of the Business or similar transaction involving the Seller or the
Business or any other transaction inconsistent with the transactions
contemplated hereby.
SECTION 7.6. Best Efforts. Upon the terms and subject to the
conditions of this Agreement, the Seller will use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby. Seller will negotiate in good faith the preparation of
definitive forms of those Ancillary Agreements the principal terms of which are
set forth in the Exhibits hereto.
SECTION 7.7. Covenant Not To Compete.
(a) For a period of three years after the Closing Date, Seller
shall not engage or participate, directly or indirectly, in the Business in any
geographical area where such Business is being conducted as of the Closing Date,
except that the Seller shall continue to have the right to sell research
products into the clinical research market in connection with its Diagnostic
Business.
(b) The Seller agrees that a monetary remedy for a breach of
the agreement set forth in Section 7.7(a) hereof will be inadequate and
impracticable and further agrees that such a breach would cause the Buyer
irreparable harm, and that the Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages. In
the event of such a breach, the Seller agrees that the Buyer shall be entitled
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to such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions as a court of competent jurisdiction shall
determine.
(c) If any provision of this Section 7.7 is invalid in part,
it shall be curtailed, both as to time and location, to the minimum extent
required for its validity under the laws of any State within the United States
and shall be binding and enforceable with respect to the Seller as so curtailed.
SECTION 7.8. Non-Solicitation of Employees. For the two-year
period commencing on the Closing Date, the Seller shall not make, offer, solicit
or induce to enter into, any written or oral arrangement, agreement or
understanding regarding employment or retention as a consultant with any person
identified on Schedule 9.1, in each case without the written consent of the
Buyer.
Section 7.9 Cooperation Regarding Receivables. For a
reasonable period of time after the Closing Date, the Seller shall cooperate
with and assist the Buyer in the collection of accounts receivable arising from
sales of Products after the Closing Date ("Buyer Receivables"). After the
Closing Date, the Buyer shall have the right and authority to collect, for its
own account, all Buyer Receivables and to endorse with the name of the Seller
any checks received by Buyer on account of any such Buyer Receivables. The
Seller shall promptly transfer or deliver to the Buyer any cash or other
property received by the Seller after the Closing in respect of any Buyer
Receivables. In the event that the Seller receives payments from a debtor which,
by invoice number or otherwise, specifies that such payment is to be applied to
a Buyer Receivable (even if such debtor owes money in respect of Seller
Receivables), the Seller shall pay over to the Buyer the amount of such Buyer
Receivable and the Seller shall retain only the balance, if any, in respect of
the Seller Receivable.
Section 7.10. Diagnostic Business Inventory Build. Between the
date hereof and the Closing Date, Seller intends to manufacture certain Products
in the quantities set forth on Schedule 7.10. Such production will yield
Products that can be used both for the Business and the Seller's Diagnostic
Business. Seller shall have the right to retain the quantities for each such
Product in the amounts specified in such Schedule, and such quantities shall not
be included in the Inventory. To the extent that such production has not been
completed by the Closing Date, the Buyer shall continue to produce Products in
accordance with such plan and shall transfer to the Seller those quantities of
products designated on such schedule as being for the Diagnostic
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Business. Such transfers shall be made at no cost to the Seller other than such
incremental material costs, which shall be fully reimbursed, and incremental
labor costs which shall be reimbursed in accordance with the Transition Services
Agreement. Seller shall not, in connection with the sale of Products for the
Diagnostic Business prior to the Closing Date or the build up of its inventory
for the Diagnostic Business in accordance with such production, deplete either
the quantities or product mix of Products to be included in the Inventory in
such a way as to adversely affect the Business prior to or after the Closing
Date.
Section 7.11 Preparation of Financial Statements. The Seller
shall engage Peat to audit and certify a balance sheet of the Business as of the
Closing Date and results of operations of the Business, and related statements
of cash flows, for the year ended September 30, 1994 and the period from October
1, 1994 through the Closing Date. The Buyer shall reimburse the Seller for
amounts charged by Peat in connection with the certification of these financial
statements to the extent that such fees are in excess of the amount normally
charged by Peat in connection with its engagement as the auditors for the
Seller.
Section 7.12 Accounts Payable. The Seller shall promptly pay
and discharge in accordance with their respective due dates all accounts payable
of the Seller arising from the acquisition of products or services used by the
Seller in the conduct of the Business prior to the Closing Date.
SECTION 8. COVENANTS OF THE PARENT AND BUYER.
SECTION 8.1. Actions Before Closing Date. The Buyer shall not
take any action which shall cause it to be in breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
SECTION 8.2. Consents and Approvals. The Buyer shall use its
best efforts to obtain all consents and approvals of third parties, if any,
required to be obtained by the Buyer to effect the transactions contemplated by
this Agreement.
SECTION 8.3. Best Efforts. Upon the terms and subject to the
conditions of this Agreement, the Buyer will use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby. Buyer will negotiate in good faith the preparation of
definitive forms of those Ancillary Agreements the principal terms of which are
set forth in the Exhibits hereto.
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Section 8.4 Non-Solicitation of Employees. For the two-year
period commencing on the Closing Date, the Buyer shall not make, offer, solicit
or induce to enter into, any written or oral arrangement, agreement or
understanding regarding employment or retention as a consultant with any
employee of the Seller (other than those identified on Schedule 9.1), in each
case without the prior written consent of the Seller.
Section 8.5 Cooperation Regarding Receivables. For a
reasonable period of time after the Closing Date, the Buyer shall cooperate with
and assist the Seller in the collection of accounts receivable arising from
sales of Products prior to the Closing Date ("Seller Receivables"). Promptly
after the Closing Date, the Seller shall deliver to the Buyer a schedule of the
Seller Receivables and shall provide a monthly update thereafter until such time
at the Seller Receivables have been collected or written off. The Buyer shall
promptly transfer or deliver to the Seller any cash or other property received
by the Buyer after the Closing in respect of any Seller Receivables. In the
event that the Buyer receives payment from a debtor which does not specify, by
invoice number or otherwise, whether such payment is to be applied to a Seller
Receivable or a Buyer Receivable (and such debtor owes money in respect of both
Buyer Receivables and Seller Receivables), the Buyer shall pay over to the
Seller the amount of the Seller Receivable and the Buyer shall retain only the
balance, if any, in respect of the Buyer Receivable.
Section 8.6 Guarantee of Obligations of the Buyer. Parent
hereby guaranties the full and faithful performance of the obligations, duties
and liabilities of the Buyer under this Agreement.
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS.
SECTION 9.1. Offer of Employment. The Buyer shall offer
employment to those employees of the Business as are listed on Schedule 9.1,
effective as of the Closing at their respective current base salary levels.
Those employees who accept such offers of employment are referred to herein as
"Transferred Employees." Transferred Employees shall be employed under terms and
conditions determined in the sole discretion of the Buyer, and the Buyer shall
not be obligated to provide any particular type or level of compensation or
benefits to such persons other than as required hereunder. The Buyer shall not
be responsible for any compensation, benefits or other liabilities attributable
to (i) Transferred Employees, to the extent arising under any Seller Plan or
otherwise prior to or as of the Closing, or (ii) any other employee of the
Business, irrespective of when or under what circumstances arising.
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SECTION 9.2 Seller Savings Plan. The Seller shall cause each
Transferred Employee's "Matching Contribution Account" under the Seller Savings
Plan to become fully vested and nonforfeitable as of the Closing Date. The
Seller shall take any actions necessary to allow lump sum distributions to be
made to Transferred Employees from the Seller Savings Plan in accordance with
Section 401(k)(10) of the Code on account of the purchase of the Business by the
Buyer. Transferred Employees shall be allowed to elect such distributions during
the period beginning no later than the close of the calendar quarter which
follows, or begins on, the Closing Date, and ending on the latest date allowed
under Section 401(k)(10) of the Code.
SECTION 9.3 Flexible Spending Accounts. As soon as practicable
following the Closing, the unused balances of Transferred Employees in Seller's
FSAs shall be transferred to Buyer's FSAs by way of bookkeeping entries. Any
elections made by Transferred Employees under Seller's FSAs for 1995 shall be
continued under Buyer's FSAs, to the extent allowable under Buyer's FSAs. If
such elections are not so allowable, they may be adjusted by the Buyer in a
manner which is both allowable under Buyer's FSAs and consistent to the extent
possible with such elections. The Seller shall transfer to the Buyer any claims
under Seller's FSAs pending as of the Closing Date, and such claims shall be
paid to the extent allowable under Buyer's FSAs. If the aggregate claims paid to
Transferred Employees during 1995 prior to the Closing Date under Seller's FSAs
exceed the aggregate amount of payroll withholding relating to Seller's FSA's
for such period for such persons, the Buyer shall transfer to the Seller, in
cash, such excess as soon as practicable following the Closing. If the aggregate
claims paid to Transferred Employees during 1995 prior to the Closing Date under
Seller's FSAs is less than the aggregate amount of payroll withholding relating
to Seller's FSA's for such period for such persons, the Seller shall transfer to
the Buyer, in cash, such difference as soon as practicable following the
Closing.
SECTION 10. BULK SALES LAW.
Buyer hereby waives compliance by Seller with the Bulk
Transfer provisions of the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts.
SECTION 11. INDEMNIFICATION.
SECTION 11.1. Indemnification by the Seller. The Seller shall
indemnify and fully defend, save and hold the Buyer, any Affiliate of the Buyer
and their respective directors, officers and employees (the "Buyer
Indemnitees"), harmless from
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and against any damage, liability, loss, judgment, cost, expense (including all
reasonable attorneys' fees), deficiency, interest, penalty, impositions,
assessments or fines (collectively, "Losses") arising out of or resulting from:
(a) the breach of any representation or warranty made by
Seller in this Agreement or in any of the Ancillary Agreements;
(b) any failure of the Seller duly to perform or observe any
term, provision, covenant, agreement or condition on the part of the Seller to
be performed or observed hereunder or under the Ancillary Agreements;
(c) any failure of the Seller to pay and discharge when due
any Excluded Liabilities, or any claim or cause of action by any party against
any Buyer Indemnitee, with respect to the Excluded Liabilities;
(d) the failure of the Seller to comply with any applicable
provisions of the Bulk Transfer provisions of the Uniform Commercial Code of the
Commonwealth of Massachusetts, notwithstanding Buyer's waiver of compliance with
such provisions; or
(e) any liability under any Environmental Law or under common
law for the Release (as defined in CERCLA Section 101(22), 42 U.S.C. Section
9601(22)) or threat of Release or for exposure or potential exposure to
hazardous or toxic substances, arising from events occurring prior to the
Closing Date.
SECTION 11.2. Indemnification by the Buyer. The Buyer shall
indemnify and agree to fully defend, save and hold the Seller, any Affiliate of
the Seller, and their respective directors, officers and employees (the "Seller
Indemnitees"), harmless from and against any Losses arising out of or resulting
from:
(a) the breach of any representation or warranty made
by Buyer in this Agreement or in any of the Ancillary Agreements;
(b) any failure of the Buyer duly to perform or observe any
term, provision, covenant, agreement or condition on the part of the Buyer to be
performed or observed hereunder or under the Ancillary Agreements;
(c) any failure of the Buyer to pay and discharge when due any
of its obligations or liabilities under the Assumed Contracts.
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SECTION 11.3. Procedures for Indemnification by the Buyer.
(a) Promptly after the receipt by any party hereto of notice
under this Section 11 of (A) any claim or (B) the commencement of any action or
proceeding, such party (the "Aggrieved Party") will, if a claim with respect
thereto is to be made against any party obligated to provide indemnification
(the "Indemnifying Party") pursuant to this Section 11, give such Indemnifying
Party (or parties) written notice of such claim or the commencement of such
action or proceeding and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting from such claim, and, upon
such assumption, shall cooperate fully with the Indemnifying Party in the
conduct of such defense. Failure by the Indemnifying Party to notify the
Aggrieved Party of its election to defend any such action within a reasonable
time, but in no event more than fifteen days after notice thereof shall have
been given to the Indemnifying Party, shall be deemed a waiver by the
Indemnifying Party of its right to defend such action. If the Indemnifying Party
assumes the defense of any such claim or litigation resulting therefrom, the
obligations of the Indemnifying Party as to such claim shall be limited to
taking all steps necessary in the defense or settlement of such claim or
litigation resulting therefrom and to holding the Aggrieved Party harmless from
and against any and all losses, damages and liabilities caused by or arising out
of any settlement approved by the Indemnifying Party or any judgment in
connection with such claim or litigation resulting therefrom. The Aggrieved
Party may participate, at its expense, in the defense of such claim or
litigation provided that the Indemnifying Party shall direct and control the
defense of such claim or litigation. The Indemnifying Party shall not, in the
defense of such claim or any litigation resulting therefrom, consent to entry of
any judgment, except with the written consent of the Aggrieved Party, or enter
into any settlement, except with the written consent of the Aggrieved Party,
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Aggrieved Party of a release from all liability
in respect of such claim or litigation. All awards and costs payable by a third
party to the Indemnified Party or the Indemnifying Party shall belong to the
Indemnifying Party.
(B) If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom, the Aggrieved Party may defend
against such claim or litigation in such manner as it may deem appropriate and,
unless the Indemnifying Party shall deposit with the Aggrieved Party a sum
equivalent to the total amount demanded in such claim or
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litigation, or shall deliver to the Aggrieved Party a surety bond in form and
substance reasonably satisfactory to the Aggrieved Party, the Aggrieved Party
may settle such claim or litigation on such terms as it may deem appropriate,
and the Indemnifying Party shall promptly reimburse the Aggrieved Party for the
amount of all expenses, legal or otherwise, incurred by the Aggrieved Party in
connection with the defense against or settlement of such claims or litigation.
If no settlement of such claim or litigation is made, the Indemnifying Party
shall promptly reimburse the Aggrieved Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
legal or otherwise, incurred by the Aggrieved Party in the defense against such
claim or litigation.
SECTION 11.4 Limitations. An Aggrieved Party shall not be
entitled to recover any Losses in respect of a breach of a representation or
warranty of the other party until the aggregate amount of Losses suffered by the
Aggrieved Party shall exceed $75,000 (the "Minimum Loss"), at which time the
indemnification provided under this Section 11 shall apply to all Losses in
excess of such Minimum Loss.
SECTION 11.5 Environmental Liability After Closing. As to any
liability under any Environmental Law or common law for the Release (as defined
in CERCLA Section 101(22), 42 U.S.C. Section9601(22)) or threat of Release or
for exposure or potential exposure to hazardous substances, hazardous materials,
or hazardous wastes (as defined in any Environmental Law) arising from events
occurring after the Closing Date, the parties agree as follows:
(a) The party whose act or omission caused, or which
controlled the instrumentality giving rise to such liability shall defend,
indemnify, and hold harmless the other party for such liability.
(b) In the event the parties do not agree which party is
liable pursuant to subsection (a), the parties shall submit the dispute to a
neutral third party arbitrator, mutually agreeable to both parties, for binding
arbitration. Either party may initiate such arbitration by giving written notice
to the other party 10 days prior to initiation of arbitration proceedings. Such
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association ("AAA"). If the parties do not agree on an arbitrator,
one shall be selected in accordance with the rules of the AAA. The arbitrator
may determine that one or the other party is solely responsible for the
liability, or may apportion liability between the parties.
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(c) In the event the arbitrator is unable to make a liability
determination, the parties agree to share equally any such liability.
(d) In the event a Response Action (as defined in CERCLA
Section 101(25), 42 U.S.C. Section 9601(25)) is necessary as a result of such
liability, the Response Action selected shall be the most cost-effective
response action which complies with applicable laws, regulations, or orders, and
which interferes with the use of the Premises to the least extent practicable.
If the parties do not agree on the appropriate Response Action, then the parties
shall resolve the dispute in accordance with subsection (b).
SECTION 12. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.
The obligations of the Seller to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Seller in its sole discretion:
SECTION 12.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects (and in all respects in the case of each
representation and warranty that is qualified as to materiality) on and as of
the Closing Date as if again made by the Buyer on and as of such date, and the
Seller shall have received a certificate dated the Closing Date and signed by
the President or any Vice President of the Buyer to that effect.
SECTION 12.2. Performance of the Obligations of the Buyer. The
Buyer shall have performed in all material respects all obligations required
under this Agreement to be performed by the Buyer on or before the Closing Date,
and the Seller shall have received a certificate dated the Closing Date and
signed by the President or any Vice President of the Buyer to that effect.
SECTION 12.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of this Agreement, shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
SECTION 12.4. No Violation of Orders. No preliminary
or permanent injunction or other order issued by any court or
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other governmental or regulatory authority, domestic or foreign, nor any
statute, rule, regulation, decree or executive order promulgated or enacted by
any government or governmental or regulatory authority, domestic or foreign,
that declares this Agreement invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby shall be in
effect.
SECTION 12.5. Delivery of Ancillary Agreements. The
Buyer shall have executed and delivered to the Seller each of the
Ancillary Agreements.
SECTION 12.6 Opinion of Buyer's Counsel The Seller shall have
received an opinion, dated the Closing Date, from counsel to the Buyer, in form
and substance reasonably satisfactory to the Seller and its counsel, that:
(a) The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
the Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and each of the
Parent and the Buyer has all requisite corporate power and authority to
own its properties and assets and to conduct its business as now
conducted.
(b) Each of the Parent and the Buyer has the corporate power
to enter into this Agreement and the Ancillary Agreements and to carry
out its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Ancillary Agreements and the
performance of the obligations of the Parent and the Buyer hereunder
and thereunder have been duly authorized by their respective Boards of
Directors, and no other corporate proceedings on the part of the Parent
or the Buyer are necessary to authorize such execution, delivery and
performance. This Agreement and the Ancillary Agreements have been duly
executed by the Parent and the Buyer and constitute the legal, valid
and binding obligation of the Parent and the Buyer, respectively,
enforceable against the Parent and the Buyer in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the
enforceability of creditors' rights generally and except that the
remedy of specific performance or similar equitable relief may be
subject to equitable defenses and to the discretion of the court before
which enforcement is sought.
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(c) The execution, delivery or performance by the Parent and
the Buyer of this Agreement and the Ancillary Agreements do not and
will not violate or conflict with any provision of their respective
Certificates of Incorporation or By-laws and do not and will not
violate any provision of law, or any order, judgment or decree of any
court or other governmental or regulatory authority, nor violate nor
will result in a breach of or constitute (with due notice or lapse of
time or both) a default under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or
instrument known to such counsel (after inquiry of appropriate officers
of the Parent and the Buyer) to which the Parent or the Buyer is a
party or by which it is bound or to which its properties or assets is
subject.
Seller acknowledges that the Buyer's counsel is not admitted
to practice law in California. Accordingly, as to the laws of California, such
counsel may rely on an opinion of California counsel or may otherwise qualify
its opinion in a manner reasonably acceptable to counsel for the Seller.
SECTION 12.7. Other Closing Documents. The Seller shall have
received such other certificates, instruments and documents in confirmation of
the representations and warranties of the Buyer or in furtherance of the
transactions contemplated by this Agreement as the Seller or its counsel may
reasonably request.
SECTION 12.8. Legal Matters. All certificates, instruments,
opinions and other documents required to be executed or delivered by or on
behalf of the Buyer under the provisions of this Agreement, and all other
actions and proceedings required to be taken by or on behalf of the Buyer in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for the Seller.
SECTION 13. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER.
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Buyer in its sole discretion:
SECTION 13.1. Representations and Warranties of the Seller.
All representations and warranties made by the Seller in this Agreement shall be
true and correct in all material respects
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(and in all respects in the case of each representation and warranty that is
qualified as to materiality) on and as of the Closing Date as if again made by
the Seller on and as of such date, and the Buyer shall have received a
certificate dated the Closing Date and signed by the President or any Vice
President of the Seller to that effect.
SECTION 13.2. Performance of the Obligations of the Seller.
The Seller shall have performed in all material respects all obligations
required under this Agreement to be performed by the Seller on or before the
Closing Date, and the Buyer shall have received a certificate dated the Closing
Date and signed by the President or any Vice President of the Seller to that
effect.
SECTION 13.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, including licenses and permits comparable to the Licenses
and Permits, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of this Agreement shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
SECTION 13.4. No Violation of Orders. No preliminary or
permanent injunction or other order issued by any court or governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, which declares this Agreement invalid in
any respect or prevents the consummation of the transactions contemplated
hereby, or which materially and adversely affects the assets, properties,
operations, prospects, net income or financial condition of the Business shall
be in effect.
SECTION 13.5. Delivery of Ancillary Agreements. The Seller
shall have executed and delivered to the Buyer each of the Ancillary Agreements.
SECTION 13.6. No Material Adverse Change. During the period
from May 31, 1995 to the Closing Date, there shall not have been any material
adverse change in the assets, properties, business, operations, prospects of the
Business.
SECTION 13.7. Opinion of Counsel. The Buyer shall have
received an opinion, dated the Closing Date, from counsel to the Seller, in form
and substance reasonably satisfactory to the Buyer and its counsel, that:
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(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and the Seller has all requisite corporate power and authority to own
its properties and assets and to conduct its business as now conducted.
The Seller is duly qualified to do business as a foreign corporation
and is in good standing in the Commonwealth of Massachusetts, the State
of New York and in every jurisdiction where the character of the
properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary and in which the
absence of such qualification could have a material adverse effect on
the business of the Seller.
(b) The Seller has the corporate power to enter into this
Agreement and the Ancillary Agreements and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement,
the Ancillary Agreements and the instruments of conveyance executed by
the Seller in connection with the sale of the Purchased Property and
the performance of the obligations of the Seller hereunder and
thereunder have been duly authorized by the Board of Directors of the
Seller, and no other corporate proceedings on the part of the Seller
are necessary to authorize such execution, delivery and performance.
This Agreement, the Ancillary Agreements and the instruments of
conveyance executed by the Seller in connection with the sale of the
Purchased Property have been duly executed by the Seller and constitute
the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforceability of creditors' rights
generally and except that the remedy of specific performance or similar
equitable relief may be subject to equitable defenses and to the
discretion of the court before which enforcement is sought.
(c) The execution, delivery or performance by the Seller of
this Agreement, the Ancillary Agreements and the instruments of
conveyance executed by the Seller in connection with the sale of the
Purchased Property do not and will not violate or conflict with any
provision of the Certificate of Incorporation or By-laws of the Seller
and do not and will not violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory
authority, nor violate nor will result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
contract, lease, loan agreement,
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mortgage, security agreement, trust indenture or other agreement or
instrument known to such counsel (after inquiry of appropriate officers
of the Seller) to which the Seller is a party or by which it is bound
or to which its properties or assets is subject, nor will result in the
creation or imposition of any Lien upon any of the properties or assets
of the Seller, nor will result in the cancellation, modification,
revocation or suspension of any of the licenses, franchises, permits,
authorizations or approvals referred to in Section 5.14.
(d) To the best of such counsel's knowledge after inquiry of
appropriate officers of the Seller, except as set forth in Schedule
5.16, there are no claims, actions, suits, proceedings, labor disputes
or investigations of any nature pending or threatened before any
national, state or local court or governmental or regulatory authority,
domestic or foreign, or before any arbitrator, brought by or against
the Seller, any of its officers, directors, employees, agents or
Affiliates involving, affecting or relating to the Purchased Property,
the Business or the transactions contemplated by this Agreement. To the
best of such counsel's knowledge after inquiry of appropriate officers
of the Seller, neither the Seller, nor any of its assets or properties
is subject to any order, writ, judgment, award, injunction or decree of
any national, state or local court or governmental or regulatory
authority or arbitrator, that could have a material adverse effect on
the Purchased Property, the Business or that would or might interfere
with the transactions contemplated by this Agreement.
SECTION 13.8. Other Closing Documents. The Buyer shall have
received such other certificates, instruments and documents in confirmation of
the representations and warranties of the Seller or in furtherance of the
transactions contemplated by this Agreement as the Buyer or its counsel may
reasonably request.
SECTION 13.9. Legal Matters. All certificates, instruments,
opinions and other documents required to be executed or delivered by or on
behalf of the Seller under the provisions of this Agreement, and all other
actions and proceedings required to be taken by or on behalf of the Seller in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for the Buyer.
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SECTION 14. TERMINATION.
SECTION 14.1. Conditions of Termination. Notwithstanding
anything to the contrary contained herein, this Agreement may be terminated at
any time before the Closing:
(a) By mutual consent of the Seller and the Buyer;
(b) By the Seller if, as of September 1, 1995, any of
the conditions set forth in Section 12 shall not have been met;
or
(c) By the Buyer if, as of September 1, 1995, any of the
conditions set forth in Section 13 shall not have been met.
SECTION 14.2. Effect of Termination. In the event of
termination pursuant to Section 14.1, this Agreement shall become null and void
and have no effect, with no liability on the part of the Seller, the Buyer or
the Parent, or their directors, officers, agents or stockholders, with respect
to this Agreement, except for the (i) liability of a party for expenses pursuant
to Section 15.3 and (ii) liability for breach of this Agreement.
SECTION 15. MISCELLANEOUS.
SECTION 15.1. Successors and Assigns. Except as otherwise
provided in this Agreement, no party hereto shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect, provided, that the Buyer may
assign its rights hereunder to an Affiliate and to any party providing financing
in connection with the transactions contemplated hereby, provided further, that
no such assignment shall reduce or otherwise vitiate any of the obligations of
the Buyer hereunder. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
SECTION 15.2. Governing Law, Jurisdiction. This Agreement
shall be construed, performed and enforced in accordance with, and governed by,
the laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof. The parties hereto irrevocably elect as the sole
judicial forum for the adjudication of any matters arising under or in
connection with this Agreement, and consent to the jurisdiction of, the courts
of the County of New York, State of New York or the United States of America for
the Southern District of New York.
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<PAGE> 50
SECTION 15.3. Expenses. Except as otherwise provided herein,
each of the parties hereto shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. The Seller shall pay all state and local
sales, transfer, excise, value-added or other similar taxes, and all recording
and filing fees that may be imposed by reason of the sale, transfer, assignment
and delivery of the Purchased Property.
SECTION 15.4. Broker's and Finder's Fees. Each of the parties
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement other than Cowen &
Company, whose fees and expenses shall, as between the parties hereto, be the
responsibility of the Seller, and, insofar as it knows, no other broker or other
person is entitled to any commission or finder's fee in connection with any of
these transactions.
SECTION 15.5 Access to Records. (a) For a period of six years
after the date hereof (or the earlier termination of this Agreement), Seller
shall have reasonable access to all of the books and records of the Business
with respect to periods prior to the Closing Date that are held by the Buyer to
the extent that such access may reasonably be required by the Seller in
connection with matters relating to or affected by the operations of the
Business prior to the Closing Date. The Buyer shall afford such access upon
receipt of reasonable advance notice and during normal business hours, the
Seller shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 15.5. If the Buyer shall desire to dispose of any of
such books and records prior to the expiration of such six-year period, the
Buyer shall, prior to such disposition, give the Seller a reasonable
opportunity, at the Seller's expense, to segregate and remove such books and
records as the Seller may elect.
(b) For a period of six years after the date hereof, the
Buyer shall have reasonable access to all of the books and records relating to
the Business which the Seller may retain after the Closing Date. Such access
shall be afforded by the Seller upon receipt of reasonable advance notice and
during normal business hours. The Buyer shall be solely responsible for any
costs and expenses incurred by it pursuant to this Section 15.5. If the Seller
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, the Seller shall, prior to such disposition, give the
Buyer a
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<PAGE> 51
reasonable opportunity, at the Buyer's expense, to segregate and remove such
books and records as the Buyer may elect.
SECTION 15.6. Force Majeure. Neither party shall be liable for
any failure of or delay in the performance of this Agreement for the period that
such failure or delay is due to acts of God, public enemy, civil war, strikes or
labor disputes, or any other cause beyond the parties' reasonable control. Each
party agrees to notify the other party promptly of the occurrence of any such
cause and to carry out this Agreement as promptly as practicable after such
cause is terminated.
SECTION 15.7 Survival. All statements contained in any
certificate or other instrument executed and delivered by the Seller or the
Buyer pursuant to this Agreement or in connection with the transactions
contemplated hereby shall be deemed representations and warranties by the Seller
or the Buyer, respectively, hereunder. All representations and warranties and
agreements made by the parties hereto in this Agreement or pursuant hereto shall
survive the Closing hereunder and any investigation at any time made by or on
behalf of the Buyer or Seller, provided, however, that the Buyer shall not
commence any action against the Seller in respect of any provision of this
Agreement at any time more than 24 months after the Closing Date except with
respect to a breach of the warranty contained in Section 5.27, with respect to
Seller's indemnification obligations for Excluded Liabilities under Section
11.1(c) or with respect to Seller's indemnification obligations for
environmental liabilities under Section 11.1(e), as to which the only
limitations shall be those provided by applicable statutes of limitation.
SECTION 15.8. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect.
SECTION 15.9. Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of service if served personally
on the party to whom notice is to be given; (ii) on the day of transmission if
sent via facsimile transmission to the facsimile number given below, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission; (iii) on the day after delivery to Federal Express or similar
overnight courier or the Express Mail service maintained by the United States
Postal Service; or (iv) on the
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<PAGE> 52
fifth day after mailing, if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid and properly
addressed, to the party as follows:
If to the Seller:
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, New York 11553
Attention: Steven M. Peltzman
Facsimile: (516) 222-0114
Copy to:
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, Pennsylvania 19102
Attention: Spencer W. Franck, Jr. Esq.
Facsimile: (215) 972-7725
If to the Parent or the Buyer:
Calbiochem-Novabiochem
International, Inc.
10394 Pacific Center Court
San Diego, California 92121
Attention: Stelios B. Papadopoulos
Facsimile: (619) 450-5522
Copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Peter H. Jakes, Esq.
Facsimile: (212) 821-8111
Any party may change its address for the purpose of this
Section by giving the other party written notice of its new address in the
manner set forth above.
SECTION 15.10. Amendments; Waivers. This Agreement
may be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived,
only by a written instrument executed by the parties hereto, or
in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any
46
<PAGE> 53
provision, term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall not be deemed to be nor construed
as further or continuing waiver of any such condition, or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
SECTION 15.11. Public Announcements. The parties agree that
after the signing of this Agreement, neither party shall make any press release
or public announcement concerning this transaction without the prior written
approval of the other party unless a press release or public announcement is
required by law. If any such announcement or other disclosure is required by
law, the disclosing party agrees to give the nondisclosing party prior notice
and an opportunity to comment on the proposed disclosure.
SECTION 15.12. Entire Agreement. This Agreement and the
Ancillary Agreements contain the entire understanding between the parties hereto
with respect to the transactions contemplated hereby and supersedes and replaces
all prior and contemporaneous agreements and understandings, oral or written,
with regard to such transactions. All schedules hereto and any documents and
instruments delivered pursuant to any provision hereof are expressly made a part
of this Agreement as fully as though completely set forth herein.
SECTION 15.13. Parties in Interest. Nothing in this Agreement
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Seller, and the Buyer and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the obligations or liability of any third
persons to the Seller or the Buyer. No provision of this Agreement shall give
any third persons any right of subrogation or action over or against the Seller
or the Buyer.
SECTION 15.14. Section and Paragraph Headings. The section
and paragraph headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 15.15. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an
original, but both of which shall constitute the same instrument.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
ONCOGENE SCIENCE, INC.
By: /s/ Steven M. Peltzman
---------------------------------
Name: Steven M. Peltzman
Title: President and Chief
Operating Officer
CALBIOCHEM-NOVABIOCHEM CORPORATION
By: /s/ Stelios B. Papadopoulos
---------------------------------
Name: Stelios B. Papadopoulos
Title: Chairman and Chief
Executive Officer
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos
---------------------------------
Name: Stelios B. Papadopoulos
Title: Chairman and Chief
Executive Officer
48
<PAGE> 55
Exhibit "A"
Cambridge Sublease - Certain Terms
Sublease See floor plan attached hereto as
Premises: Schedule I
Prime Lease: The sublease is made under and subject to all of
the terms and conditions of the prime lease between
Seller and the Trustees of The Cambridge East Trust. The
terms and conditions of the sublease shall be identical
to those in the prime lease, except as set forth herein
or as otherwise required to accommodate the intentions
of Buyer and Seller. Except as set forth herein, Buyer
shall be responsible for the performance of all of the
obligations of the tenant under the prime lease with
respect to the sublease premises. Buyer shall look
solely to the overlandlord for the performance of
services to be provided by the overlandlord with respect
to the sublease premises, and Seller shall not be liable
or otherwise responsible for the overlandlord's failure
to provide the same.
Term: 3 years
Renewal Terms: Buyer may renew the sublease on an annual basis on 9
months, prior notice to Seller, provided that no such
renewal shall extend the term of the sublease beyond the
date on which the prime lease expires.
Rights of Seller and, subject to the rights of
First Refusal: Therion (if any), Buyer shall have a right of first
refusal if the other party desires (a) to assign its
interest in the prime lease and/or the sublease or (b)
to sublet all or any portion of the premises demised
thereby.
Base Rent: Buyer shall reimburse Seller for 50k of the Annual Fixed
Rent payable by Seller to the overlandlord pursuant to
terms of the prime lease.
Additional Rent: Buyer shall reimburse Seller for 5O% of Real Estate
Taxes and Operating Expenses
<PAGE> 56
payable by Seller to the overlandlord
pursuant to terms of the prime lease.
Utilities and Each of Buyer and Seller shall pay 50% of
Other Shared the expenses incurred with respect to the
Expenses: line items included in the 1994/95 budget
attached hereto as Schedule II; provided
that with respect to each line item
described in the budget, such 50t
allocation shall be subject to periodic
review and equitable adjustment based on
the then current utilization of such item
by each of the parties. (Amounts described
in this paragraph shall not be duplicative
of those described elsewhere in this
Exhibit "A".) Each party shall have the
right to install, at its own expense, one
or more meters to segregate the measurement
of that party's utilities usage and remove
the cost thereof from the pool of shared
expenses.
Insurance Buyer shall maintain (a) liability
Requirements: insurance in accordance with the terms of
the prime lease and (b) casualty insurance
with respect only to the contents of the
sublease premises. Seller shall maintain
all other insurance required by the prime
lease, except that Seller shall not be
responsible for insuring Buyer's
personalty. Buyer and Seller shall name
each other as additional insureds under
insurance policies maintained pursuant to
the terms of the sublease.
Non-Disturbance Seller shall use reasonable efforts to
Agreement: obtain for the benefit of Buyer a non-
disturbance agreement from the
overlandlord.
Improvements by Seller shall use its best efforts to
Buyer: obtain the overlandlord's consent to any
alterations, installations and improvements
proposed by Buyer with respect to the
sublease premises.
Parking: Buyer shall have the right to use a
mutually agreed upon number of the parking
spaces that are currently available to
Seller.
Therion Therion shall have no rights whatsoever
2
<PAGE> 57
Biologics: with respect to any portion of 84 Rogers
Street that is subleased to Buyer.
Overlandlord The overlandlord's unconditional written
Consent: consent to the sublease shall have been
obtained prior to the execution and
delivery of the sublease.
3
<PAGE> 58
EXHIBIT B
Terms of New Product License Agreement
1. Buyer shall have a right of first refusal to purchase a
license to make, use and sell all research Products developed by Seller's cancer
diagnostics business where the Seller has the right to do so. Such licenses
shall be exclusive in the academic and industrial research markets and
co-exclusive in the clinical research market.
2. Seller shall notify Buyer on a monthly basis of all such
Products developed, and Buyer shall have a period of 30 days after notification
to purchase a license. In each case, Buyer shall pay a one time license fee of
$5,000 plus an additional 5% royalty on sales for the greater of the life of the
intellectual property or ten years.
3. The rights described in Paragraph 1 above shall expire five
years after the Closing Date (or sooner if Seller shall no longer be engaged in
a cancer diagnostics business).
4. If Seller produces an initial batch of a Product with
respect to which Buyer has purchased a license ("Licensed Product"), Buyer shall
have the right to purchase such Licensed Product from the initial batch at a
price equal to $175 per mg, but not greater than $2,500 for one-half of the
batch, with such amounts being subject to adjustment for inflation.
5. In the event Buyer produces the initial batch of the
Licensed Product pursuant to the license, Buyer would also grant Seller a
similar right to purchase such Licensed Product from the initial batch at a
price equal to $175 per mg, but not greater than $2,500 for one-half of the
batch, with such amounts being subject to adjustment for inflation.
1
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EXHIBIT C
Terms of Oncogene Science Trademark License Agreement
1. For a period of up to three years following the Closing
Date, the Buyer will have the right to use the "Oncogene Science" name and
related trademark in connection with the sale of the Products. Buyer shall use
such name at all times together with its own corporate name, with the manner of
such combination of names to be reasonably acceptable to the Seller. During the
three year term, the Buyer shall slowly transition its catalogues, product
labeling and promotional materials so as to de-emphasize the Oncogene Science
name and emphasize its own corporate name and identification program.
2. The license shall be royalty free and exclusive to the
Buyer.
3. During the period of the license, the Buyer will undertake
to continue to operate the Business to the same high standards as it had been
operated by the Seller so as to preserve the value of the Oncogene Science name.
2
<PAGE> 60
EXHIBIT D
Terms of Shared Services Agreement
During a term coincident with the Sublease of the Cambridge
Premises, the Seller shall provide the following facilities and services to the
Buyer:
1. Seller's water purification system
2. Seller's dark room
3. Seller's animal facility (which the Buyer shall enlarge
pursuant to an agreed upon design within six months after
the Closing Date)
4. Seller's glassware cleaning and sterilization facility
5. Supervisory and operating services relating to the
operation of the animal facility and the glassware
cleaning and sterilization facility
Such facilities and services are referred to as the "Core
Services".
In addition, for a period not to exceed twelve months
following the Closing Date, the Seller will provide the Buyer with access to and
use of the Seller's research and development laboratory in 80 Rogers Street
("R&D Access").
Seller currently shares its animal facility and its glassware
cleaning and sterilization facility with Therion Biologics Corporation.
Accordingly, the Buyer will be entitled to share on an equal basis, the Seller's
portion of such facilities and services.
The Seller will annually develop its estimate for the costs to
operate the Core Services and deliver such estimate to the Buyer. The Buyer and
the Seller will then meet to negotiate an appropriate sharing of such costs,
based upon the experience of the parties as to Buyer's usage during the past
year and Buyer and Seller's best estimate of the relative usage of such Core
Services in the forthcoming year; provided, that with respect to the first
twelve months of the agreement, the Buyer shall pay the Seller at the annual
rate of $130,000 in equal monthly installments.
The Buyer will reimburse the Seller for R&D Access at the rate
of $40,000 per year, payable in equal monthly installments; provided, that Buyer
shall have the right to terminate its rights to R&D Access on 30 days notice.
From and
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<PAGE> 61
after such termination, the Buyer shall have no further liability for R&D Access
charges.
4
<PAGE> 62
EXHIBIT E
Terms of Shared Intellectual Property License
1. Seller shall grant Buyer a license to make, use and
sell Products.
2. The license shall be royalty free, but shall bear
existing royalties to third parties.
3. The license shall be exclusive in the academic and
industrial research markets and co-exclusive in the clinical
research markets.
4. The term of the license shall be co-extensive with
the life of the underlying patents.
5. Buyer shall notify Seller promptly of any activity which
constitutes infringement by a third party. Seller shall have the right, but not
the obligation, at its expense, to commence action against the alleged
infringer. If Seller does not determine to proceed within 120 days of such
notification, Buyer shall have the right to commence such action. To the extent
royalties are received pursuant to a settlement with an infringing party related
to Products sold to the clinical research market, such royalties shall be shared
equally by the Buyer and the Seller. The Buyer shall be entitled to all
royalties related to Products sold to the academic or industrial research
markets.
5
<PAGE> 63
EXHIBIT F
Terms of Transition Services Agreement
For a period of three months following the Closing Date, the Seller
and the Buyer will provide certain services to one another to facilitate the
separation of their two businesses.
The services to be provided will include:
In the case of the Seller: general administrative
services, receptionist and
secretarial support; assistance
with the preparation of
financial reports; management
information systems ("MIS")
support; and similar services.
In the case of the Buyer: manufacturing in connection
with the inventory build for
Seller's Diagnostics Business
and such other support as may
be required for Seller's
Diagnostic Business.
Each of the Seller and the Buyer will agree to provide up to one
man month per month of services to the other party at no cost. If the services
requested by either party of the other exceed this basic level of support, then
the party requesting the services will pay the party providing the services at
the rate of $500.00 per day. In addition, each party will reimburse the other
for out-of-pocket expenses incurred in the course of rendering services under
this agreement.
During the Transition Services Agreement, the Buyer will take the
necessary steps to put in place by the end of the three month term the
following:
- Buyer's own telephone system and receptionist
- Buyer's own MIS system
- A security system for Buyer's portion of the Cambridge Premises
- Signage on the 84 Rogers Street entrance to the Cambridge Premises
reflecting the Buyer's name (together with an Oncogene Science Division
designation).
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<PAGE> 64
During the three months following the Closing Date, the Seller will take
the necessary steps to put in place a security system for its R&D laboratory
area within the Cambridge Premises (with the Buyer to share in the cost of such
security system, and Buyer's R&D personnel to be granted access codes).
7
<PAGE> 65
All schedules to the Asset Purchase Agreement have been omitted, but
will be furnished supplementally to the Securities and Exchange Commission upon
request.
8
<PAGE> 1
EXHIBIT 3(a)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC., a corporation
organized and existing under, and by virtue of, the General Corporation Law of
the State of Delaware, was incorporated by the filing of an original Certificate
of Incorporation with the Office of the Secretary of State of Delaware on March
11, 1992, which certificate was amended and restated by the filing of an Amended
and Restated Certificate of Incorporation on February 22, 1995 (collectively,
the "Amended Certificate of Incorporation").
This Amended and Restated Certificate of Incorporation
restates, integrates and amends the Amended Certificate of Incorporation and was
duly adopted pursuant to Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware.
ARTICLE I
The name of the corporation (the "Corporation") is:
CN BIOSCIENCES, INC.
ARTICLE II
The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The nature of the business and purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
<PAGE> 2
ARTICLE IV
The total authorized capital stock of the Corporation shall be
36,005,000 shares consisting of 30,000,000 shares of Common Stock, par value
$.01 per share ("Voting Common Stock"), 800,000 shares of Class A Common Stock,
par value $.01 per share ("Class A Common Stock"), 5,000,000 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock"), 5,000 shares of Series A
Convertible Preferred Stock, par value $1.00 per share ("Series A Preferred
Stock"), and 200,000 shares of Series B Preferred Stock, par value $1.00 per
share ("Series B Preferred Stock").
The relative powers, preferences and rights of, and the
qualifications, limitations and restrictions granted to and imposed upon, the
Voting Common Stock and the Class A Common Stock (collectively, the "Common
Stock"), the Preferred Stock, the Series A Preferred Stock and the Series B
Preferred Stock are as follows:
SECTION A: SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
(I) General Provisions.
The following provisions shall be applicable to all shares of
Series A Preferred Stock and Series B Preferred Stock regardless of series
designation:
(a) Preference. So long as any shares of Series A Preferred
Stock or Series B Preferred Stock remain outstanding, in no event shall any
dividend whatsoever, whether in cash or other property (other than shares of
Common Stock), be paid or declared or any distribution be made on the Common
Stock, nor shall any shares of the Common Stock be purchased, retired or
otherwise acquired for a consideration by the Corporation (except shares of
Class A Common Stock converted into shares of Voting Common Stock and shares of
Common Stock repurchased through the operation of vesting provisions of employee
incentive programs or agreements adopted by the Board of Directors) (i) unless
the full dividends of the Series A Preferred Stock and Series B Preferred Stock
for the then current fiscal year shall have been paid or declared and a sum set
apart sufficient for the payment thereof; and (ii) unless, if at any time the
Corporation is obligated to retire or redeem shares of the Series A Preferred
Stock or Series B Preferred Stock, all arrears, if any, in respect of the
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<PAGE> 3
retirement of the Series A Preferred Stock or Series B Preferred Stock shall
have been made good. Subject to the foregoing provisions and not otherwise, such
dividends (payable in cash, stock or otherwise), as may be determined by the
Board of Directors, may be declared and paid on the Common Stock from time to
time out of the remaining funds of the Corporation legally available therefor,
and the Series A Preferred Stock and the Series B Preferred Stock shall not be
entitled to participate in any such dividend, whether payable in cash, stock or
otherwise.
(b) Redemption Procedure. In case of redemption of only part
of the shares of the Series A Preferred Stock or the Series B Preferred Stock at
any time outstanding, the Corporation shall redeem the shares pro rata among all
of the holders of such series (as closely pro rata as reasonably practical
without the creation of fractional share interests).
Notice of every redemption provided for in this Section A of
Article IV shall be given by mailing the same to every holder of record, any of
whose shares are then to be redeemed, not less than 15 nor more than 30 days
prior to the date fixed as the date of the redemption thereof, at the respective
addresses of such holders as the same shall appear on the stock transfer books
of the Corporation. The notice shall state that the shares specified in such
notice will be redeemed by the Corporation at the redemption price and on the
date specified in such notice upon the surrender for cancellation, at the places
designated in such notice, of the certificates representing the shares so to be
redeemed, properly endorsed in blank for transfer, or accompanied by proper
instruments of assignment and transfer in blank, bearing any necessary transfer
tax stamps thereto affixed and cancelled, or accompanied by cash or a certified
check in the amount of any stock transfer tax applicable to such transaction. On
and after the date specified in the notice described above, each holder of
shares called for redemption, upon presentation and surrender in accordance with
such notice of the certificates for shares held by such holder and called for
redemption, shall be entitled to receive therefor the applicable redemption
price. If the Corporation shall give notice of redemption as aforesaid (and
unless the Corporation shall fail to pay the redemption price of shares
presented for redemption in accordance with such notice), all shares called for
redemption shall be deemed to have been redeemed on the date specified in such
notice whether or not the certificates for such shares be surrendered for
redemption and cancellation, and such shares so called for redemption shall
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<PAGE> 4
from and after such date cease to represent any interest whatever in the
Corporation or its property, and the holders thereof shall have no rights other
than the right to receive such redemption price but without any interest thereon
from or after such date.
(c) Cancellation of Redeemed Shares. All shares of the Series
A Preferred Stock or the Series B Preferred Stock purchased or redeemed by the
Corporation shall be forthwith retired and cancelled and shall not be reissued,
nor shall any other stock be issued in place thereof, but the Corporation may,
nevertheless, from time to time thereafter increase its capital stock in the
manner and to the extent permitted by law and by the Certificate of
Incorporation of the Corporation.
(d) Rights on Liquidation. (i) In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of shares of Series A Preferred Stock and Series B
Preferred Stock then outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Corporation to the
holders of the Common Stock by reason of their ownership thereof, full payment
of any dividends declared and unpaid for the then current fiscal year on such
series and an amount equal to $100.00 per share for each of the shares of such
Series A Preferred Stock or Series B Preferred Stock. If upon the occurrence of
such event the assets thus distributed among the holders of the Preferred Stock
shall be insufficient to permit the payment to such holders of the full
preferential amount, the entire assets of this Corporation legally available for
distribution shall be distributed among the holders of the Series A Preferred
Stock and Series B Preferred Stock in such priority as hereinafter described.
After the payment or distribution to the holders of the Series A Preferred Stock
and Series B Preferred Stock of the full preferential amounts aforesaid, the
holders of the Common Stock then outstanding shall be entitled to receive
ratably all remaining assets of the Corporation to be distributed.
(ii) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to
receive, prior and in preference to any distribution of any of the assets of the
Corporation to the holders of the Series A Preferred Stock by reason of their
ownership thereof, full payment of any dividends declared and unpaid for the
then current fiscal year on the
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Series B Preferred Stock, and an amount equal to $100.00 per share for each of
the shares of Series B Preferred Stock. If upon the occurrence of such event the
assets thus distributed among the holders of the Series B Preferred Stock shall
be insufficient to permit the payment to such holders of the full preferential
amount, the assets of this Corporation legally available for distribution shall
first be distributed ratably among the holders of the Series B Preferred Stock.
After the payment or distribution to the holders of the Series B Preferred Stock
of the full preferential amounts aforesaid, the holders of the Series A
Preferred Stock then outstanding shall be entitled to receive ratably all
remaining assets of the Corporation to be distributed up to the amount of the
liquidation preference of the Series A Preferred Stock.
(e) Consents. Except as otherwise provided below, so long as
any shares of Series A Preferred Stock or Series B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of record of a majority of the shares of each series of
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a class:
(i) alter or change any of the provisions of the
Certificate of Incorporation of the Corporation;
(ii) authorize any other class or series of capital
stock ranking prior to or on a parity with the Series A Preferred Stock or the
Series B Preferred Stock as to dividends or redemption or upon liquidation,
dissolution or winding up;
(iii) increase the authorized number of shares of
Series A Preferred Stock or the Series B Preferred Stock or authorize the
reissuance thereof after repurchase or redemption;
(iv) authorize any liquidation, dissolution, winding
up of the affairs of the Corporation, consolidation or merger of the Corporation
into or with another corporation or corporations, sale of all or substantially
all of the Corporation's assets or distribution of the Corporation's assets by
way of return of capital;
(v) authorize any public offering of any securities
of the Corporation;
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(vi) authorize the repurchase of any security issued
by the Corporation (other than through the operation of vesting provisions of
employee incentive programs or agreements adopted by the Board of Directors);
(vii) authorize any capital expenditures in the
aggregate in any fiscal year in excess of $100,000.00;
(viii) authorize the incurrence of any indebtedness
for borrowed money in an amount in excess of $250,000.00;
(ix) authorize the appointment or replacement of the
Corporation's chief executive or chief operating officer; or
(x) authorize any business acquisition through
purchase of assets, purchase of stock, licensing arrangement or otherwise.
(f) Events of Default. (1) The following shall
constitute an Event of Default:
(i) Failure by the Corporation to redeem any of the
Series A Preferred Stock or Series B Preferred Stock on the dates specified
herein, to convert any shares of Series A Preferred Stock in accordance with the
provisions hereof or to convert shares of Class A Common Stock in accordance
with the provisions hereof;
(ii) Default by the Corporation in the performance or
observance of any of the Corporation's obligations under the Subscription and
Shareholder Agreement between the Corporation and certain investors dated March
13, 1992;
(iii) Failure by the Corporation to obtain consents
of the holders of any series of the Series A Preferred Stock or Series B
Preferred Stock as required by the provisions hereof;
(iv) Default by the Corporation (1) in any payment of
principal of or interest on any obligation for borrowed money or for the
deferred purchase price of property beyond any period of grace provided with
respect thereto or (2) in the observance or performance of any other agreement,
term or condition contained in any such obligation or in any agreement
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<PAGE> 7
relating thereto beyond any period of grace provided with respect thereto, if
the effect of such default is to cause, or to permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) then to
cause, such obligation to become due prior to its stated maturity; or
(v) Dissolution or liquidation of the Corporation; or
the failure by the Corporation within sixty (60) days to lift any execution,
garnishment or attachment of such consequence as may impair its ability to carry
on its operations, or the failure by the Corporation generally to pay its debts
as they become due or the assignment by the Corporation of all or substantially
all of its assets for the benefit of creditors, or the commencement by the
Corporation (as the debtor) of a case under the Bankruptcy Code of 1986, as
amended (the "Bankruptcy Code") or any proceeding under any other insolvency
law; or the commencement of a case under the Bankruptcy Code or any proceeding
under any other insolvency law against the Corporation (as the debtor) and the
entry by a court having jurisdiction in the premises of a decree or order for
relief against the Corporation as the debtor in such case or proceeding, or the
consent by the Corporation to such case or proceeding, or the failure by the
Corporation to cause such case or proceeding to be dismissed within ninety (90)
days, or the consent by the Corporation to or the admission by the Corporation
of the material allegations against it in any such case or proceeding; or the
appointment or authorization of a trustee, receiver or agent of all or
substantially all of the property of the Corporation for the purpose of
enforcing a lien against such property or for the purpose of general
administration of such property for the benefit of creditors.
(2) If an Event of Default shall have occurred, the holders of
the Series A Preferred Stock and Series B Preferred Stock, shall have the right,
voting together as a single class, to elect a majority of the entire board of
directors (the "Special Voting Rights"). The Special Voting Rights of the
holders of the Preferred Stock shall continue until all Events of Default are no
longer continuing, whereupon all Special Voting Rights of the holders of the
Preferred Stock shall cease, subject to being again revived from time to time
upon the occurrence of an Event of Default. Failure by the holders of the Series
A Preferred Stock and the Series B Preferred Stock to exercise their Special
Voting Rights promptly upon the occurrence of an Event of Default shall not be
deemed to be a waiver of such
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<PAGE> 8
rights, such rights being exercisable at any time that such Event of Default
shall have occurred or be continuing.
(3) Immediately upon the accrual of the Special Voting Rights
of the holders of Series A Preferred Stock and the Series B Preferred Stock, the
number of directors of the Corporation shall, ipso facto, be increased to the
extent necessary to enable the holders of the Series A Preferred Stock and the
Series B Preferred Stock to appoint a majority of the Board of Directors and the
directors of the Corporation shall thereupon be divided into two classes. One of
such classes shall consist of the directors appointed pursuant to the Special
Voting Rights who shall be known as the Preferred Directors and the other class
shall consist of the remaining Directors. The Preferred Directors shall be
elected only by vote of the holders of Series A Preferred Stock and the Series B
Preferred Stock, voting as a single class. Whenever the number of directors of
the Corporation shall have been so increased, the number as so increased may
thereafter be further increased or decreased in such manner as may be permitted
by the By-Laws, provided that no such action shall impair the right of the
holders of the Preferred Stock to elect the Preferred Directors. The holders of
the Series A Preferred Stock and the Series B Preferred Stock may at their
option at any time exercise the Special Voting Rights by written consent without
a meeting in accordance with the General Corporation Law of Delaware.
(4) The Preferred Directors shall serve for terms of one year
and until their successors are elected and qualified, or until the earlier
termination of the Special Voting Rights of the holders of the Series A
Preferred Stock and the Series B Preferred Stock. Upon the election of the
Preferred Directors, then so long as the holders of the Series A Preferred Stock
and the Series B Preferred Stock are entitled to the Special Voting Rights, the
presence of a majority of Preferred Directors shall be required for there to be
a quorum at all meetings of the Board of Directors of the Corporation, and of
the Executive Committee of the Corporation if there be such a committee, and the
affirmative vote of the Preferred Directors shall be required for any action to
be taken by the Board of Directors of the Corporation or the Executive
Committee. So long as the holders of the Series A Preferred Stock and the Series
B Preferred Stock are entitled to the Special Voting Rights, any vacancies in
the position of Preferred Directors may be filled only by the holders of the
Series A Preferred Stock and the Series B Preferred Stock.
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<PAGE> 9
The Preferred Directors may, during their term of office, be removed at any
time, with or without cause, by and only by the affirmative votes, at a special
meeting of holders of the Series A Preferred Stock and the Series B Preferred
Stock called for such purpose, or the written consent, of the holders of record
of a majority of the outstanding shares of the Series A Preferred Stock and the
Series B Preferred Stock. Any vacancy created by such removal may also be filled
at such meeting or by such consent. Upon the termination of the Special Voting
Rights of the holders of the Series A Preferred Stock and the Series B Preferred
Stock, the term of office of the Preferred Directors shall forthwith terminate
and the number of directors of the Corporation shall thereupon be appropriately
decreased.
(II) Series A Convertible Preferred Stock.
The relative powers, preferences and rights of, and the
qualifications, limitations and restrictions granted to and imposed upon, the
Series A Preferred Stock are as follows:
(a) Designation. The series shall consist of 5,000 shares and
shall be known as the Series A Convertible Preferred Stock.
(b) Dividends. The holder of each share of the Series A
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of any funds legally available therefor, preferential
non-cumulative dividends in cash at the rate of $8.00 per annum per share, and
not more, payable quarterly on the last day of March, June, September and
December, commencing June 30, 1992.
Such dividends upon the Series A Preferred Stock which are
designated as "non-cumulative" shall be non-cumulative, whether or not in any
fiscal year there shall be net income or surplus available for the payment of
such dividends in such fiscal year, so that, if in any fiscal year or years,
such dividends in whole or in part are not paid upon the Series A Preferred
Stock, unpaid dividends shall not accumulate as against the holders of Common
Stock, so that no sums in any later years shall be paid to the holders of the
Series A Preferred Stock with respect to such dividends payable in any prior
year or years when such dividends were not paid.
(c) Mandatory Redemption. The Corporation shall redeem (to the
extent that such redemption shall not violate any
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<PAGE> 10
applicable provisions of the laws of the State of Delaware) at a price of One
Hundred Dollars ($100) per share, plus an amount equal to any and all dividends
accrued and unpaid for the then current fiscal year, but without interest (the
"Series A Redemption Price"), on the 31st day of December (the "Series A
Redemption Date") of each of the years of 1999 through 2002 an amount of shares
equal to 25% of the shares of Series A Preferred Stock outstanding on the first
such Series A Redemption Date (or such lesser number as shall then be
outstanding). If the Corporation is unable on any Series A Redemption Date to
redeem any shares of Series A Preferred Stock then to be redeemed because such
redemption would violate the applicable laws of the State of Delaware, then the
Corporation shall redeem such shares as soon thereafter as redemption would not
violate such laws.
(d) Optional Redemption. The Corporation shall have the right
at its option, and with the affirmative vote or written consent of the holders
of record of a majority of the Series A Preferred Stock then outstanding to
redeem as a whole, or from time to time in part, shares of Series A Preferred
Stock at the Series A Redemption Price, provided, however, that no such
redemption shall be effected until all of the Series B Preferred Stock shall
first have been redeemed. The Corporation may credit against any mandatory
redemption specified in the preceding paragraph any shares of Series A Preferred
Stock redeemed pursuant to this paragraph or otherwise acquired by the
Corporation including shares of Series A Preferred Stock purchased by the
Corporation from former directors, officers or employees of the Corporation. Any
such credit shall be applied against mandatory redemptions in the inverse order
of the above-stated redemption requirements.
(e) Voting Rights. Except as provided in Section A(I)(f) above
and except as otherwise provided by law, the holders of Series A Preferred Stock
shall not be entitled to notice of, or to vote at, any meeting of the
stockholders of the Corporation nor to vote on any matter relating to the
business or affairs of the Corporation.
(f) Conversion. The holders of Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(1) Optional Conversion. Each share of Series A Preferred
Stock may be converted at any time, at the option of
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<PAGE> 11
the holder thereof but only with the consent of the holders of in excess of 50%
of the then outstanding shares of Series A Preferred Stock, in the manner
hereinafter provided, into fully paid and nonassessable shares of Class A Common
Stock at its then effective Conversion Price (as defined below), provided,
however, that on any redemption of any Series A Preferred Stock or any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day preceding the date fixed for such
redemption or for the payment of any amounts distributable on liquidation to the
holders of Series A Preferred Stock. Conversion of a share of Series A Preferred
Stock shall constitute a waiver by the holder thereof of any accrued and unpaid
dividends for the then current fiscal year on such share of Series A Preferred
Stock.
(2) Mandatory Conversion. Each share of Series A Preferred
Stock shall automatically be converted into shares of Class A Common Stock at
its then effective Conversion Price upon the vote to so convert of the holders
of a majority of the shares of Series A Preferred Stock then outstanding. All
holders of record of shares of Series A Preferred Stock will be given at least
10 days' prior written notice of the date fixed and the place designated for
mandatory conversion of all of such shares of Series A Preferred Stock. On the
date fixed for conversion, all rights with respect to the Series A Preferred
Stock so converted will terminate (including without limitation the right to
receive accrued and unpaid dividends thereon for the then current fiscal year),
except only the rights of the holders thereof, upon surrender of their
certificate or certificates therefore, to receive certificates for the number of
shares of Class A Common Stock into which such Series A Preferred Stock has been
converted. Such notice will be sent by mail, first class, postage prepaid, to
each holder of record of shares of Series A Preferred Stock at such holder's
address appearing on the stock register. On or before the date fixed for
conversion each holder of shares of Series A Preferred Stock shall surrender his
or its certificate or certificates for all such shares to the Corporation at the
place designated in such notice, and shall thereafter receive certificates for
the number of shares of Class A Common Stock to which such holder is entitled
pursuant to this Section A(II)(f).
(3) Conversion Price. (i) The initial conversion rate for the
Series A Preferred Stock shall be 83.3333 shares of Class A Common Stock for
each one share of Series A Preferred
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Stock surrendered for conversion, representing an initial Conversion Price of
$1.20 per share of the Corporation's Class A Common Stock. The applicable
conversion rate and Conversion Price from time to time in effect is subject to
adjustment as provided in Section A(II)(g) hereof.
(ii) Whenever the conversion rate and Conversion
Price shall be adjusted as provided in Section A(II)(g) hereof, the Corporation
shall forthwith file at each office designated for the conversion of Series A
Preferred Stock, a statement, signed by the President and any Vice President or
Treasurer of the Corporation, showing in reasonable detail the facts requiring
such adjustment and the conversion rate that will be effective after such
adjustment. The Corporation shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to each holder of
record of Series A Preferred Stock at his or its address appearing on the stock
register.
(iii) Upon any conversion, no adjustment to the
conversion rate shall be made for any accrued and unpaid dividends on the Series
A Preferred Stock surrendered for conversion or on the Class A Common Stock
delivered.
(4) Conversion Mechanics. (i) In order to exercise the
conversion privilege, the holder of any Series A Preferred Stock to be converted
shall surrender his or its certificate or certificates therefore to the
principal office of the transfer agent for the Series A Preferred Stock (or if
no transfer agent is at the time appointed, then the Corporation at its
principal office), shall give written notice to the Corporation at such office
that the holder elects to convert the Series A Preferred Stock represented by
such certificates, or any number thereof and shall furnish to the Corporation
the written consent to such conversion by the holders of in excess of 50% of the
then outstanding shares of Series A Preferred Stock. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares of Class A Common Stock which shall be issuable on such conversion
shall be issued, subject to any restriction on transfer relating to shares of
the Series A Preferred Stock or shares of Class A Common Stock upon conversion
thereof. If so required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by written instrument or instruments
of transfer, in form satisfactory to the Corporation, duly authorized in
writing.
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In respect of all optional conversions, the date of receipt by the transfer
agent (or by the Corporation if the Corporation serves as its own transfer
agent) of the certificates and notice shall be the conversion date. As soon as
practicable after receipt of such notice and the surrender of the certificate or
certificates for Series A Preferred Stock as aforesaid, the Corporation shall
cause to be issued and delivered at such office to such holder, or on his or its
written order, a certificate or certificates for the number of full shares of
Class A Common Stock issuable on such conversion in accordance with the
provisions hereof and cash as provided in paragraph (ii) of this section in
respect of any fraction of a share of Class A Common Stock otherwise issuable
upon such conversion.
(ii) Unless otherwise determined by the Corporation,
it shall not issue fractional shares of Class A Common Stock upon conversion of
Series A Preferred Stock or scrip in lieu thereof. If any fraction of a share of
Class A Common Stock would, except for the provisions of this paragraph (ii), be
issuable upon conversion of any Series A Preferred Stock, the Corporation shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction as determined by the Board of Directors.
(iii) The Corporation shall at all times when the
Series A Preferred Stock shall be outstanding reserve and keep available out of
its authorized but unissued stock, for the purposes of effecting the conversion
of the Series A Preferred Stock, such number of its duly authorized shares of
Class A Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Series A Preferred Stock. Before taking any action
which would cause an adjustment reducing the conversion price below the then par
value of the shares of Class A Common Stock issuable upon conversion of the
Series A Preferred Stock, the Corporation will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and nonassessable shares of such Class
A Common Stock at such adjusted conversion price.
(iv) All shares of Series A Preferred Stock which
shall have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall forthwith cease and
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terminate except only the right of the holder thereof to receive shares of Class
A Common Stock in exchange therefor.
(g) Anti-dilution Provisions. (1) In order to prevent dilution
of the rights granted hereunder, the Conversion Price shall be subject to
adjustment from time to time in accordance with this paragraph (g)(1). At any
given time the Conversion Price, whether as the initial Conversion Price ($1.20
per share) or as last adjusted, shall be that dollar (or part of a dollar)
amount the payment of which shall be sufficient at the given time to acquire one
share of the Corporation's Class A Common Stock upon conversion of shares of
Series A Preferred Stock. Upon each adjustment of the Conversion Price, the
holder of record of shares of Series A Preferred Stock shall thereafter be
entitled to acquire upon exercise, at the Conversion Price resulting from such
adjustment, the number of shares of the Corporation's Class A Common Stock
obtainable by multiplying the Conversion Price in effect immediately prior to
such adjustment by the number of shares of the Corporation's Class A Common
Stock acquirable immediately prior to such adjustment and dividing the product
thereof by the Conversion Price resulting from such adjustment.
(2) Except as provided in paragraph (g)(3) or (g)(6) below, if
and whenever on or after the date of initial issuance of the Series A Preferred
Stock (the "Initial Issuance Date"), the Corporation shall issue or sell, or
shall in accordance with subparagraphs (g)(2)(i) to (ix), inclusive, be deemed
to have issued or sold any shares of its Common Stock for a consideration per
share less than the Conversion Price in effect immediately prior to the time of
such issue or sale, then forthwith upon such issue or sale (the "Triggering
Transaction"), the Conversion Price shall, subject to subparagraphs (i) to (ix)
of this section, be reduced to the Conversion Price (calculated to the nearest
tenth of a cent) determined by dividing:
(A) an amount equal to the sum of (x) the product
derived by multiplying the Number of Shares Deemed Outstanding immediately prior
to such Triggering Transaction by the Conversion Price then in effect, plus (y)
the consideration, if any, received by the Corporation upon consummation of such
Triggering Transaction, by
(B) an amount equal to the sum of (x) the Number of
Common Shares Deemed Outstanding immediately prior to such
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Triggering Transaction plus (y) the number of shares of Common Stock issued (or
deemed to be issued in accordance with subparagraphs (g)(2)(i) to (ix)) in
connection with the Triggering Transaction.
For purposes of this Section (g), the term "Number of Common
Shares Deemed Outstanding" at any given time shall mean the sum of (x) the
number of shares of the Corporation's Class A Common Stock outstanding at such
time, (y) the number of shares of the Corporation's Class A Common Stock
issuable assuming conversion at such time of the Corporation's Series A
Preferred Stock and (z) the number of shares of the Corporation's Common Stock
deemed to be outstanding under subparagraphs (g)(2)(i) to (ix), inclusive, at
such time.
For purposes of determining the adjusted Conversion Price
under this paragraph (g)(2), the following subsections (i) to (ix), inclusive,
shall be applicable:
(i) In case the Corporation at any time shall in any
manner grant (whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or other securities convertible into or exchangeable
for Common Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Options or the right to convert or exchange
any such Convertible Securities are immediately exercisable and the price per
share for which the Common Stock is issuable upon exercise, conversion or
exchange (determined by dividing (x) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (y) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or the conversion or exchange of such Convertible Securities) shall
be less than the Conversion Price in effect immediately prior to the time of the
granting of such Option, then the total maximum amount of Common Stock issuable
upon the exercise of such Options or in the case of Options for Convertible
Securities, upon the
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conversion or exchange of such Convertible Securities shall (as of the date of
granting of such Options) be deemed to be outstanding and to have been issued
and sold by the Corporation for such price per share. No adjustment of the
Conversion Price shall be made upon the actual issue of such shares of Common
Stock or such Convertible Securities upon the exercise of such Options, except
as otherwise provided in subparagraph (iii) below.
(ii) In case the Corporation at any time shall in any
manner issue (whether directly or by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (x) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (y) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued and
sold by the Corporation for such price per share. No adjustment of the
Conversion Price shall be made upon the actual issue of such Common Stock upon
exercise of the rights to exchange or convert under such Convertible Securities,
except as otherwise provided in subparagraph (iii) below.
(iii) If the purchase price provided for in any
Options referred to in subparagraph (i), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in subparagraphs (i) or (ii), or the rate at which any Convertible Securities
referred to in subparagraph (i) or (ii) are convertible into or exchangeable for
Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution of the type set forth in
paragraphs (g)(2) or (g)(4)), the Conversion Price in effect at the time of such
change shall forthwith be readjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities
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still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold. If the purchase price provided for in any Option
referred to in subparagraph (i) or the rate at which any Convertible Securities
referred to in subparagraphs (i) or (ii) are convertible into or exchangeable
for Common Stock, shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such Option or upon conversion
or exchange of any such Convertible Security, the Conversion Price then in
effect hereunder shall forthwith be adjusted to such respective amount as would
have been obtained had such Option or Convertible Security never been issued as
to such Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder is hereby reduced.
(iv) On the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(v) In case any Options shall be issued in connection
with the issue or sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration.
(vi) In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Corporation shall be the fair value of such consideration. In case any shares of
Common Stock, Options or Convertible Securities shall be issued in connection
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with any merger in which the Corporation is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as shall
be attributable to such Common Stock, Options or Convertible Securities as the
case may be.
(vii) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock for the purpose of
this paragraph (g)(2).
(viii) In case the Corporation shall declare a
dividend or make any other distribution upon the stock of the Corporation
payable in Common Stock, Options, or Convertible Securities, such issuance shall
be covered by paragraph (g)(4) below.
(ix) For purposes of this paragraph (g)(2), in case
the Corporation shall take a record of the holders of its Common Stock for the
purpose of entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right or subscription or purchase, as the case may be.
(3) In the event the Corporation shall declare a dividend upon
the Common Stock (other than a dividend payable in Common Stock covered by
subparagraph (g)(2)(viii)) payable otherwise than out of earnings or earned
surplus, determined in accordance with generally accepted accounting principles,
including the making of appropriate deductions for minority interests, if any,
in subsidiaries (herein referred to as "Liquidating Dividends"), then as soon as
possible after the conversion of any Series A Preferred Stock, the Corporation
shall pay to the person converting such Series A Preferred Stock an amount equal
to the aggregate value at the time of such exercise of all Liquidating Dividends
(including but not limited to the Common Stock which would have been issued at
the time of such
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earlier exercise and all other securities which would have been issued with
respect to such Common Stock by reason of stock splits, stock dividends, mergers
or reorganizations, or for any other reason). For the purposes of this paragraph
(g)(3), a dividend other than in cash shall be considered payable out of
earnings or earned surplus only to the extent that such earnings or earned
surplus are charged an amount equal to the fair value of such dividend as
determined in good faith by the Board of Directors of the Corporation.
(4) In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, or declare a
dividend or make any other distribution upon the stock of the Corporation
payable in Common Stock, Options or Convertible Securities, the Conversion Price
in effect immediately prior to such subdivision or dividend shall be
appropriately reduced, and, conversely, in case the outstanding shares of Common
Stock of the Corporation shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(5) If any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of the Corporation
with another corporation, or the sale of all or substantially all of its assets
to another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash or other property
with respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series A Preferred
Stock shall have the right to acquire and receive upon conversion of the Series
A Preferred Stock, which right shall be prior to the rights of the holders of
Class A Common Stock (but after and subject to the rights of holders of
Preferred Stock senior to the Series A Preferred Stock, if any), such shares of
stock, securities, cash or other property issuable or payable (as part of the
reorganization, reclassification, consolidation, merger or sale) with respect to
or in exchange for such number of outstanding shares of the Corporation's Common
Stock as would have been received upon conversion of the Series A Preferred
Stock at the Conversion Price then in effect. The Corporation will not effect
any such consolidation, merger or sale, unless prior to the consummation thereof
the successor corporation (if
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<PAGE> 20
other than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument mailed or
delivered to the holders of the Series A Preferred Stock at the last address of
each such holder appearing on the books of the Corporation, the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase. If a purchase, tender or exchange offer is made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock of the
Corporation, the Corporation shall not effect any consolidation, merger or sale
with the person having made such offer or with any Affiliate of such person,
unless prior to the consummation of such consolidation, merger or sale the
holders of the Series A Preferred Stock shall have been given a reasonable
opportunity to then elect to receive upon the conversion of the Series A
Preferred Stock either the stock, securities or assets then issuable with
respect to the Common Stock of the Corporation or the stock, securities or
assets, or the equivalent, issued to previous holders of the Common Stock in
accordance with such offer. For purposes hereof the term "Affiliate" with
respect to any given person shall mean any person controlling, controlled by or
under common control with the given person.
(6) The provisions of this Section (g) shall not apply to any
Common Stock issued, issuable or deemed outstanding under subparagraphs
(g)(2)(i) to (ix) inclusive: (i) to any person pursuant to any stock option,
stock purchase or similar plan or arrangement for the benefit of employees,
consultants or directors of the Corporation or its subsidiaries in effect on the
Initial Issuance Date or thereafter adopted by the Board of Directors of the
Corporation, (ii) pursuant to options and warrants in existence on the Initial
Issuance Date, (iii) as a dividend on the Series A Preferred Stock, (iv) on
conversion of the Series A Preferred Stock, or (v) to any then current
shareholder of the Corporation or its affiliates in any round of financing for
the Corporation in which a purchaser or purchasers other than the then current
shareholders (or their affiliates) do not purchase at least ten percent (10%) of
such financing.
(7) In the event that:
(i) the Corporation shall declare any cash
dividend upon its Common Stock, or
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(ii) the Corporation shall declare any dividend upon
its Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
(iii) the Corporation shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of stock of
any class or other rights, or
(iv) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, including any
subdivision or combination of its outstanding shares of Common Stock, or
consolidation or merger of the Corporation with, or sale of all or substantially
all of its assets to, another corporation, or
(v) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the holders
of the Series A Preferred Stock:
(a) at least 20 days prior written notice of the date on
which the books of the Corporation shall close or a
record shall be taken for such dividend, distribution
or subscription rights or for determining rights to
vote in respect of any such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up; and
(b) in the case of any such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least 20
days prior written notice of the date when the same
shall take place. Such notice in accordance with the
foregoing clause (i) shall also specify, in the case
of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock
shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also
specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation,
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<PAGE> 22
merger, sale, dissolution, liquidation or winding up,
as the case may be. Each such written notice shall be
given by first class mail, postage prepaid, addressed
to the holders of the Series A Preferred Stock at the
address of each such holder as shown on the books of
the Corporation.
(8) If at any time or from time to time on or after the
Initial Issuance Date, the Corporation shall grant, issue or sell any Options,
Convertible Securities or rights to purchase property (the "Purchase Rights")
pro rata to the holders of record of any class of Common Stock of the
Corporation and such grants, issuances or sales do not result in an adjustment
of the Conversion Price under paragraph (g)(2) hereof, then each holder of
Series A Preferred Stock shall be entitled to acquire (within 30 days after the
later to occur of the initial exercise date of such Purchase Rights or receipt
by such holder of the notice concerning Purchase Rights to which such holder
shall be entitled under paragraph (g)(8)) and upon the terms applicable to such
Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could
have acquired if it had held the number of shares of
Class A Common Stock acquirable upon conversion of
the Series A Preferred Stock immediately before the
grant, issuance or sale of such Purchase Rights;
provided that if any Purchase Rights were distributed
to holders of Class A Common Stock without the
payment of additional consideration by such holders,
corresponding Purchase Rights shall be distributed to
the exercising holders of the Series A Preferred
Stock as soon as possible after such exercise and it
shall not be necessary for the exercising holder of
the Series A Preferred Stock specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said
30-day period, the number of shares of Common Stock
or the amount of property which such holder could
have acquired upon such exercise at the time or times
at which the Corporation granted, issued or sold such
expired Purchase Rights.
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<PAGE> 23
(9) If any event occurs as to which, in the opinion of the
Board of Directors of the Corporation, the provisions of this Section (g) are
not strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Series A Preferred Stock in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of increasing
the Conversion Price as otherwise determined pursuant to any of the provisions
of this Section (g) except in the case of a combination of shares of a type
contemplated in paragraph (g)(4) and then in no event to an amount larger than
the Conversion Price as adjusted pursuant to paragraph (g)(4).
(III) Series B Preferred Stock.
The relative powers, preferences and rights of, and the
qualifications, limitations and restrictions granted to and imposed upon, the
Series B Preferred Stock are as follows:
(a) Designation. The series shall consist of 200,000 shares
and shall be known as the Series B Preferred Stock.
(b) Dividends. The holder of each share of the Series B
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of any funds legally available therefor, preferential
non-cumulative dividends in cash at the rate of $10.00 per annum per share, and
not more, payable quarterly on the last day of March, June, September and
December, commencing June 30, 1992.
Such dividends upon the Series B Preferred Stock which are
designated as "non-cumulative" shall be non-cumulative, whether or not in any
fiscal year there shall be net income or surplus available for the payment of
such dividends in such fiscal year, so that, if in any fiscal year or years,
such dividends in whole or in part are not paid upon the Series B Preferred
Stock, unpaid dividends shall not accumulate as against the holders of Common
Stock, so that no sums in any later years shall be paid to the holders of the
Series B Preferred Stock with respect to such dividends payable in any prior
year or years when such dividends were not paid.
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<PAGE> 24
(c) Mandatory Redemption. The Corporation shall redeem (to the
extent that such redemption shall not violate any applicable provisions of the
laws of the State of Delaware) at a price of One Hundred Dollars ($100) per
share, plus an amount equal to any and all dividends accrued and unpaid for the
then current fiscal year, but without interest (the "Series B Redemption
Price"), on the 31st day of December (a "Series B Redemption Date") of each of
the years of 1999 through 2002 an amount of shares equal to 25% of the shares of
Series B Preferred Stock outstanding on the first such Series B Redemption Date
(or such lesser number as shall then be outstanding). If the Corporation is
unable on any Series B Redemption Date to redeem any shares of Series B
Preferred Stock then to be redeemed because such redemption would violate the
applicable laws of the State of Delaware then the Corporation shall redeem such
shares as soon thereafter as the restrictions precluding such redemption shall
no longer be applicable.
(d) Optional Redemption. At any time, the Corporation shall
have the right at its option, and with the affirmative vote or written consent
of the holders of record of a majority of the shares of Series B Preferred Stock
then outstanding, to redeem as a whole, or from time to time in part, shares of
Series B Preferred Stock at the Series B Redemption Price. The Corporation may
credit against any mandatory redemption specified in the preceding paragraph any
shares of Series B Preferred Stock redeemed pursuant to this paragraph or
otherwise acquired by the Corporation including shares of Series B Preferred
Stock purchased by the Corporation from former directors, officers or employees
of the Corporation. Any such credit shall be applied against mandatory
redemptions in the inverse order of the above-stated redemption requirements.
(e) Voting Rights. Except as provided in Section A(I)(f) above
and except as otherwise provided by law, the holders of Series B Preferred Stock
shall not be entitled to notice of, or to vote at, any meeting of the
stockholders of the Corporation nor to vote on any matter relating to the
business or affairs of the Corporation.
SECTION B: PREFERRED STOCK
The Preferred Stock may be issued from time to time as herein
provided in one or more series. The designations, relative
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<PAGE> 25
rights, preferences and limitations of the Preferred Stock, and particularly of
the shares of each series thereof, may, to the extent permitted by law, be
similar to or differ from those of any other series. The Board of Directors of
the Corporation is hereby expressly granted authority, subject to the provisions
of this Article IV, to fix from time to time before issuance thereof the number
of shares in each series and all designations, relative rights, preferences and
limitations of the shares in each such series, including, but without limiting
the generality of the foregoing, the following:
(a) the designation of the series and the number of shares to
constitute each series;
(b) the dividend rate on the shares of each series, any
conditions on which and times at which dividends are payable, whether dividends
shall be cumulative, and the preference or relation (if any) with respect to
such dividends (including possible preferences over dividends on the Common
Stock or any other class or classes);
(c) whether the series will be redeemable (at the option of
the Corporation or the holders of such shares or both, or upon the happening of
a specified event) and, if so, the redemption prices and the conditions and
times upon which redemption may take place and whether for cash, property or
rights, including securities of the Corporation or another corporation;
(d) the terms and amount of any sinking, retirement or
purchase fund;
(e) the conversion or exchange rights (at the option of the
Corporation or the holders of such shares or both, or upon the happening of a
specified event), if any, including the conversion or exchange price and other
terms of conversion or exchange;
(f) the voting rights, if any (other than any voting rights
that the Preferred Stock may have as a matter of law);
(g) any restrictions on the issue or reissue or sale of
additional Preferred Stock;
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<PAGE> 26
(h) the rights of the holders upon voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation
(including preferences over the Common Stock or other class or classes or series
of stock);
(i) the preemptive rights, if any, to subscribe to additional
issues of stock or securities of the Corporation; and
(j) such other special rights and privileges, if any, for the
benefit of the holders of the Preferred Stock, as shall not be inconsistent with
provisions of this Amended and Restated Certificate of Incorporation.
All shares of Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series issued at
different times may differ as to dates, if any, from which dividends thereon may
accumulate. All shares of Preferred Stock of all series shall be of equal rank
and shall be identical in all respects except that any series may differ from
any other series with respect to any one or more of the designations, relative
rights, preferences and limitations described or referred to in subparagraphs
2(a) to 2(j) inclusive above.
SECTION C: COMMON STOCK
(a) Dividends. Subject to the preferences and other rights of
the Preferred Stock as set out above, the holders of Common Stock shall be
entitled to receive dividends when and as declared by the Board of Directors out
of funds legally available therefor.
(b) Liquidation. In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, voluntary or involuntary, after
payment or provision for payment to the holders of Preferred Stock of the
amounts to which they may be entitled as set out above, the remaining assets of
the Corporation available to stockholders shall be distributed equally per share
to the holders of Common Stock.
(c) Voting Rights. The holders of Voting Common Stock shall be
entitled to one vote in respect of each share held on all matters submitted to a
vote of shareholders. Except as otherwise provided by law, the holders of Class
A Common Stock
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<PAGE> 27
shall not be entitled to notice of, or to vote at, any meeting of the
stockholders of the Corporation nor to vote upon any matter relating to the
business or affairs of the Corporation.
(d) No Pre-emptive Rights. No holder of Common Stock of the
Corporation shall, by virtue of this Amended and Restated Certificate of
Incorporation or Delaware law generally, have any pre-emptive right to subscribe
to any additional issue of stock of the Corporation of any or all classes or
series thereof or to any security convertible into such stock.
(e) Conversion of Class A Common Stock. (1) Each share of
Class A Common Stock shall be convertible into one fully paid and nonassessable
share of Voting Common Stock at any time at the election of the holder thereof
subject to the condition that the holder thereof delivers to the Corporation,
together with the notice of election so to convert and the applicable stock
certificates (as described below), a certificate of such holder (a "Conversion
Eligibility Certificate") to the effect that (i) such holder is a person other
than Warburg, Pincus Investors, L.P. ("Warburg") or any affiliate (as defined in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934 and any
successor rule) of Warburg, or (ii) upon such conversion and after giving effect
thereto, such holder and all affiliates of such holder will collectively own
beneficially and of record no more than 50% of the then outstanding shares of
Voting Common Stock. The Corporation or its transfer agent shall rely on any
such certificate as accurately setting forth the facts therein stated, unless
the Corporation has actual knowledge of the falseness of any such statements of
fact.
(2) In order to exercise the foregoing conversion privilege, a
holder of Class A Common Stock shall surrender to the Corporation at its
principal offices, or to any transfer agent for the Corporation, a certificate
or certificates for Class A Common Stock to be converted together with (i) a
Conversion Eligibility Certificate and (ii) a written notice to the Corporation
that such holder has elected to convert such shares, or, if less than all shares
represented by such certificate are to be converted, the portion of the shares
represented thereby to be converted. Such notice shall also state the name or
names (with addresses) in which the certificates for shares of Voting Common
Stock issuable upon such conversion shall be issued. Class A Common Stock shall
be deemed converted for all purposes including without limitation the
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<PAGE> 28
taking of a record date for a meeting of the stockholders of the Corporation,
upon receipt by the Corporation or its transfer agent of such certificates
evidencing such shares accompanied by a Conversion Eligibility Certificate and
such notice of election to convert.
(3) Upon conversion of any certificate evidencing Class A
Common Stock which is converted in part only, the Corporation shall cause to be
executed and delivered to the holder thereof, at the expense of the Corporation,
a new certificate evidencing the balance of the Class A Common Stock which was
not so converted.
(4) The Corporation shall not be required to issue or deliver
any certificate unless and until the holder of the shares so surrendered has
paid to the Corporation the amount of any tax which may be payable in respect of
any transfer involved in such issuance or shall establish to the satisfaction of
the Corporation that such tax has been paid.
(5) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Voting Common Stock the full number
of shares of such stock into which all shares of Class A Common Stock from time
to time outstanding are convertible.
(6) Shares of Class A Common Stock which are converted into
shares of Voting Common Stock as provided herein shall not be reissued.
(7) In the event of any stock split, combination or other
reclassification of shares of Voting Common Stock and Class A Common Stock, each
share of Common Stock and Class A Common Stock shall be treated equally;
provided, however, that in any such transaction, only holders of Voting Common
Stock shall receive shares of Voting Common Stock and only holders of Class A
Common Stock shall receive shares of Class A Common Stock.
ARTICLE V
The Corporation is to have perpetual existence.
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<PAGE> 29
ARTICLE VI
In furtherance and not in limitation of the powers conferred
by statute, the By-Laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by the Board of Directors.
ARTICLE VII
The Corporation shall indemnify each person who is or was a
director or officer of the Corporation (including the heirs, executors,
administrators or estate of such person) or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise to the fullest extent permitted under
and in accordance with the Delaware General Corporation Law or any successor
statute.
The indemnification provided by this Article VII shall not be
deemed exclusive of any other rights to which any of those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VIII
Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation.
ARTICLE IX
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to
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<PAGE> 30
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper personal benefit. If
the Delaware General Corporation Law is amended after the date of incorporation
of the Corporation to authorize corporate action further eliminating or limiting
the personal liability of Directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE X
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code, or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, said
compromise or arrangement and said reorganization, if sanctioned by the court to
which the said application has been made, shall be binding on all the creditors
or class of creditors, and/or on all the stockholders or class of stockholders,
of this Corporation, as the case may be, and also on this Corporation.
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ARTICLE XI
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in any manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE> 32
IN WITNESS WHEREOF, CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
has caused this Amended and Restated Certificate of Incorporation to be signed
by Stelios B. Papadopoulos, its Chief Executive Officer, and attested by James
G. Stewart, its Secretary, this 17th day of July 1995.
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos
---------------------------------
Stelios B. Papadopoulos
Chief Executive Officer
Attest:
By: /s/ James G. Stewart
----------------------------
James G. Stewart
Secretary
<PAGE> 1
EXHIBIT 3(b)
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
Incorporated Under the Laws of the
State of Delaware
BY-LAWS
ARTICLE I
OFFICES.
Calbiochem-Novabiochem International, Inc. (the "Corporation") shall
maintain a registered office in the State of Delaware. The Corporation may also
have other offices at such other places, either within or without the State of
Delaware, as the Board of Directors may from time to time designate or the
business of the Corporation may require.
ARTICLE II
STOCKHOLDERS.
Section 1. Annual Meeting: The annual meeting of Stockholders for the
election of Directors and the transaction of any other business as may properly
come before such meeting shall be held on the first Monday in June of each year,
or as soon after such date as may be practicable, in such City and State and at
such time and place as may be designated by the Board of Directors, and set
forth in the notice of such meeting. If said day be a legal holiday, said
meeting shall be held on the next succeeding business day. At the annual meeting
any business may be transacted and any corporate action may be taken, whether
stated in the notice of meeting or not, except as otherwise expressly provided
by statute or the Certificate of Incorporation.
Section 2. Special Meetings: Special meetings of the Stockholders for
any purpose may be called at any time by the Board of Directors, the Chairman of
the Board, the Chief Executive Officer or, in the absence of the Chairman of the
Board or Chief Executive Officer, by the President, and shall be called by the
Chairman of the Board, the Chief Executive Officer or, in the absence of the
Chairman of the Board, or Chief Executive Officer, by the President, at the
request of the holders of a majority of the outstanding shares of capital stock
entitled to vote. Special meetings shall be held at such place or places within
or without the State of Delaware as shall from time to time be designated by the
Board of Directors and stated in the notice of such meeting. At a special
meeting no business shall
<PAGE> 2
be transacted and no corporate action shall be taken other than that stated in
the notice of the meeting.
Section 3. Notice of Meetings: Written notice of the date, time and
place of any Stockholders' meeting, whether annual or special, shall be given to
each Stockholder entitled to vote thereat, by mailing the same to him at his
address as the same appears upon the records of the Corporation not less than
ten (10) nor more than sixty (60) days prior to the date of such meeting. Notice
of any adjourned meeting need not be given other than by announcement at the
meeting so adjourned, unless otherwise ordered in connection with such
adjournment. Such further notice, if any, shall be given as may be required by
law.
Section 4. Waiver of Notice: Notice of meeting need not be given to any
Stockholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting. The attendance of any Stockholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 5. Quorum: Any number of Stockholders, together holding at
least a majority of the capital stock of the Corporation issued and outstanding
and entitled to vote, who shall be present in person or by proxy at any meeting
duly called, shall constitute a quorum for all purposes except as may otherwise
be provided by law.
Section 6. Adjournment of Meetings: If less than a quorum shall attend
at the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority vote of the Stockholders present or by
proxy and entitled to vote thereat, without notice other than by announcement at
the meeting until a quorum shall attend. Any meeting at which a quorum is
present may also be adjourned in like manner and for such time or upon such call
as may be determined by a majority vote of the Stockholders present in person or
by proxy and entitled to vote thereat. At any adjourned meeting at which a
quorum shall be present, any business may be transacted and any corporate action
may be taken which might have been transacted at the meeting as originally
called.
Section 7. Voting: Each Stockholder entitled to vote at any meeting may
vote either in person or by proxy, duly appointed by instrument in writing
subscribed by such Stockholder and bearing a date not more than eleven months
prior to said meeting, unless said proxy provides for a longer period. The
holders of Common Stock shall be entitled to one vote in respect of each share
held on all matters submitted to a vote of shareholders. At all meetings of
Stockholders all matters, except as otherwise provided by law, the Certificate
of
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<PAGE> 3
Incorporation, or these By-laws shall be determined by a majority vote of the
Stockholders present in person or by proxy and entitled to vote thereat.
Section 8. Action by Stockholders Without a Meeting: Whenever under the
General Corporation Law of Delaware Stockholders are required or permitted to
take any action by vote, such action may be taken without a meeting upon written
consent, setting forth the action so taken, signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
ARTICLE III
DIRECTORS.
Section 1. Number and Qualifications: The Board of Directors shall
consist initially of two (2) Directors, and thereafter shall consist of such
number as may be fixed from time to time by resolution of the Board of
Directors. The Directors need not be Stockholders.
Section 2. Responsibilities: The general management of the affairs of
the Corporation shall be vested in the Board of Directors, which may delegate to
Officers, employees and to committees of three (3) or more Directors such powers
and duties as it may from time to time see fit, subject to the limitations
hereinafter set forth, and except as may otherwise be provided by law.
Section 3. Election and Term of Office: The Directors shall be elected
by the Stockholders at the annual meeting of Stockholders. If the election of
Directors shall not be held on the day designated by the By-laws, the Directors
shall cause the same to be held as soon thereafter as may be convenient. The
Directors chosen at any annual meeting shall hold office except as hereinafter
provided, until the next annual election and until the election and
qualification of their successors. Except as otherwise provided by law, the
holders of Preferred Stock shall not be entitled to notice of, or to vote at,
any meeting of the stockholders of the Corporation nor to vote upon any matter
relating to the business or affairs of the Corporation; provided, however, that
in the event that an Event of Default (as defined in the Certificate of
Incorporation) shall have occurred, the holders of the Preferred Stock shall as
a class become entitled to Special Voting Rights. The Special Voting Rights of
the
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holders of the Preferred Stock shall continue until all Events of Default are no
longer continuing, whereupon all Special Voting Rights of the holders of the
Preferred Stock shall cease, subject to being again revived from time to time
upon the occurrence of an Event of Default. Failure by the holders of the
Preferred Stock to exercise their Special Voting Rights promptly upon the
occurrence of an Event of Default shall not be deemed to be a waiver of such
rights, such rights being exercisable at any time that such Event of Default
shall have occurred or be continuing.
The term "Special Voting Rights" shall mean the right of the holders of
the Preferred Stock, voting together as a single class, to elect a majority of
the entire board of directors.
Immediately upon the accrual of the Special Voting Rights of the
holders of Preferred Stock, the number of directors of the Corporation shall,
ipso facto, be increased to the extent necessary to enable the holders of the
Preferred Stock to appoint a majority of the Board of Directors and the
directors of the Corporation shall thereupon be divided into two classes. One of
such classes shall consist of the directors appointed pursuant to the Special
Voting Rights who shall be known as the Preferred Directors and the other class
shall consist of the remaining Directors. The Preferred Directors shall be
elected only by vote of the holders of Preferred Stock, voting as a class.
Whenever the number of directors of the Corporation shall have been so
increased, the number as so increased may thereafter be further increased or
decreased in such manner as may be permitted by the By-Laws and without the vote
of the holders of the Preferred Stock, provided that no such action shall impair
the right of the holders of the Preferred Stock to elect the Preferred
Directors. The holders of the Preferred Stock may at their option at any time
exercise the Special Voting Rights by written consent without a meeting in
accordance with the General Corporation Law of Delaware.
The Preferred Directors shall serve for a term of one year and until
their successors are elected and qualified, or until the earlier termination of
the Special Voting Rights of the holders of the Preferred Stock. Upon the
election of the Preferred Directors, then so long as the holders of the
Preferred Stock are entitled to the Special Voting Rights, the presence of a
majority of Preferred Directors shall be required for there to be a quorum at
all meetings of the Board of Directors of the Corporation, and of the Executive
Committee of the Corporation if there be such a committee, and the affirmative
vote of the Preferred Directors shall be required for any action to be taken by
the Board of Directors of the Corporation or the Executive Committee. So long as
the holders of the Preferred Stock are entitled to the Special Voting Rights,
any vacancies in the position of the Preferred Directors may be filled only by
the holders of the Preferred Stock. The Preferred Directors may,
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during their term of office, be removed at any time, with or without cause, by
and only by the affirmative votes, at a special meeting of holders of the
Preferred Stock called for such purpose, or the written consent, of the holders
of record of a majority of the outstanding shares of the Preferred Stock. Any
vacancy created by such removal may also be filled at such meeting or by such
consent. Upon the termination of the Special Voting Rights of the holders of the
Preferred Stock, the term of office of the Preferred Directors shall forthwith
terminate and the number of directors of the Corporation shall thereupon be
appropriately decreased.
Section 4. Removal and Resignation of Directors: Any Director may be
removed from the Board of Directors, with or without cause, by the holders of a
majority of the shares of outstanding stock entitled to vote at any special
meeting of the Stockholders called for that purpose, and the office of such
Director shall forthwith become vacant. Any Director may resign at any time.
Such resignation shall take effect at the time specified therein, and if no time
be specified, at the time of its receipt by the Chairman of the Board or by the
Chief Executive Officer or, in the absence of the Chairman of the Board or Chief
Executive Officer, by the President or by the Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless so specified
therein.
Section 5. Filling of Vacancies: Any vacancy among the Directors,
occurring from any cause whatsoever, may be filled by a majority of the
remaining Directors, though less than a quorum, provided, however, that the
Stockholders removing any Director may at the same meeting fill the vacancy
caused by such removal, and provided further, that if the Directors fail to fill
any such vacancy, the Stockholders may at any special meeting called for that
purpose fill such vacancy. In case of any increase in the number of Directors,
the additional Directors may be elected by the Directors in office prior to such
increase. Any person elected to fill a vacancy shall hold office, subject to the
right of removal as hereinbefore provided, until the next annual election and
until the election and qualification of his successor.
Section 6. Regular Meetings: The Board of Directors shall hold an
annual meeting for the purpose of organization and the transaction of any
business immediately after the annual meeting of the Stockholders, provided a
quorum is present. Other regular meetings may be held at such times as may be
determined from time to time by resolution of the Board of Directors.
Section 7. Special Meetings: Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or by the Chief Executive
Officer or, in the absence of the Chairman of the Board or Chief Executive
Officer, by the President.
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Section 8. Notice and Place of Meetings: Regular meetings of the Board
of Directors may be held without notice at such time and place as shall be
designated by resolution of the Board of Directors. Notice shall be required,
however, for special meetings. Notice of any special meeting shall be
sufficiently given if mailed to each Director at his residence or usual place of
business at least two (2) days before the day on which the meeting is to be
held, or if sent to him at such place by telegraph or cable, or delivered
personally or by telephone not later than 24 hours prior to the time at which
the meeting is to be held. No notice of the annual meeting shall be required if
held immediately after the annual meeting of the Stockholders and if a quorum is
present. Notice of a meeting need not be given to any Director who submits a
signed waiver of notice before or after the meeting, nor to any Director who
attends the meeting without protesting the lack of notice prior thereto or at
its commencement.
Section 9. Business Transacted at Meetings: Any business may be
transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum shall be present, whether
such business or proposed action be stated in the notice of such meeting or not,
unless special notice of such business or proposed action shall be required by
law.
Section 10. Quorum: A majority of the entire Board of Directors shall
be necessary to constitute a quorum for the transaction of business, and the
acts of a majority of the Directors present at a meeting at which a quorum is
present shall be the acts of the Board of Directors, unless otherwise provided
by law, the Certificate of Incorporation or these By-laws. If a quorum is not
present at a meeting of the Board of Directors, a majority of the Directors
present may adjourn the meeting to such time and place as they may determine
without notice other than announcement at the meeting until enough Directors to
constitute a quorum shall attend. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any Directors.
Section 11. Action Without A Meeting: Any action required or permitted
to be taken by the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or the committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the Board or committee shall
be filed with the minutes of the proceedings of the Board or committee.
Section 12. Participation By Telephone: Any one or more members of the
Board or any committee thereof may participate in a meeting of the Board or such
committee by means
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of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Section 13. Compensation: The Board of Directors may establish by
resolution reasonable compensation of all Directors for services to the
Corporation as Directors, including a fixed fee, if any, incurred in attending
each meeting. Nothing herein contained shall preclude any Director from serving
the Corporation in any other capacity, as an Officer, agent or otherwise, and
receiving compensation therefor.
ARTICLE IV
COMMITTEES.
Section 1. Executive Committee: The Board of Directors, by resolution
passed by a majority of the entire Board, may designate three (3) or more
Directors to constitute an Executive Committee to hold office at the pleasure of
the Board, which Committee shall, during the intervals between meetings of the
Board of Directors, have and exercise all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
subject only to such restrictions or limitations as the Board of Directors may
from time to time specify, or as limited by the Delaware General Corporation
Law, and shall have power to authorize the seal of the Corporation to be affixed
to all instruments which may require it. Any member of the Executive Committee
may be removed at any time, with or without cause, by a resolution of a majority
of the entire Board of Directors. Any person ceasing to be a Director shall ipso
facto cease to be a member of the Executive Committee. Any vacancy in the
Executive Committee occurring from any cause whatsoever may be filled from among
the Directors by a resolution of a majority of the entire Board of Directors.
Section 2. Other Committees: Other committees, whose members are to be
Directors, may be appointed by the Board of Directors, which committees shall
hold office for such time and have such powers and perform such duties as may
from time to time be assigned to them by the Board of Directors or the committee
appointing them. Any member of such a committee may be removed at any time, with
or without cause, by the Board of Directors or the committee appointing such
committee. Any vacancy in a committee occurring from any cause whatsoever may be
filled by the Board of Directors or the committee appointing such committee.
Section 3. Resignation: Any member of a committee may resign at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein, or, if no
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time be specified, at the time of its receipt by the Chairman of the Board, the
President and Chief Executive Officer or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective unless so specified
therein.
Section 4. Quorum: A majority of the members of a committee shall
constitute a quorum. The act of a majority of the members of a committee present
at any meeting at which a quorum is present shall be the act of such committee.
The members of a committee shall act only as a committee, and the individual
members thereof shall have no powers as such.
Section 5. Record of Proceedings: Each committee shall keep a record of
its acts and proceedings, and shall report the same to the Board of Directors
when and as required by the Board of Directors.
Section 6. Organization, Meetings, Notices: A committee may hold its
meetings at the principal office of the Corporation, or at any other place upon
which a majority of the committee may at any time agree. Each committee may make
such rules as it may deem expedient for the regulation and carrying on of its
meetings and proceedings. Unless otherwise ordered by the Executive Committee,
any notice of a meeting of such Committee may be given by the Secretary or by
the chairman of the Committee and shall be sufficiently given if mailed to each
member at his residence or usual place of business at least five (5) days before
the day on which the meeting is to be held, or if sent to him at such place by
telegraph or cable, or delivered personally or by telephone not later than 24
hours prior to the time at which the meeting is to be held.
Section 7. Compensation: The members of any committee shall be entitled
to such compensation as may be established by resolution of the Board of
Directors.
ARTICLE V
OFFICERS.
Section 1. Number: The Officers of the Corporation shall be a Chairman
of the Board, a Chief Executive Officer, a President, a Chief Operating Officer,
a Secretary and a Treasurer, and such Vice Presidents and other Officers as may
be appointed in accordance with the provisions of Section 3 of this Article V.
Section 2. Election, Term of Office and Qualifications: The Officers,
except as provided in Section 3 of this Article V, shall be chosen annually by
the Board of Directors. Each such Officer shall, except as herein otherwise
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provided, hold office until the selection and qualification of his successor.
Any two or more offices may be held by the same person, except the offices of
President and Chief Executive Officer and Secretary.
Section 3. Other Officers: Other Officers, including, without
limitation, one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers, may from time to time be appointed by the Board of Directors, which
other Officers shall have such powers and perform such duties as may be assigned
to them by the Board of Directors or the Officer or committee appointing them.
All such Officers shall be corporate officers of the Corporation with the power
to bind the Corporation by acts within the scope of their authority.
Section 4. Removal of Officers: Any Officer of the Corporation may be
removed from office, with or without cause, by a vote of a majority of the Board
of Directors.
Section 5. Resignation: Any Officer of the Corporation may resign at
any time. Such resignation shall be in writing and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board or by the Chief Executive Officer or, in the absence
of the Chairman of the Board or Chief Executive Officer, by the President or the
Secretary. The acceptance of a resignation shall not be necessary in order to
make it effective, unless so specified therein.
Section 6. Filling of Vacancies: A vacancy in any office shall be
filled by the Board of Directors.
Section 7. Compensation: The compensation of the Officers shall be
fixed by the Board of Directors, or by any committee upon whom such power may be
conferred by the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and of the Board of Directors. He shall,
at each annual meeting and from time to time, report to the stockholders and to
the Board of Directors all matters under his jurisdiction of which he has
knowledge, which the interest of the Corporation may require be brought to their
notice. In general, he shall perform all duties incident to the office of
Chairman of the Board and such of the duties as may be assigned him by the Board
of Directors or Executive Committee or as are prescribed by these By-laws. In
the absence or incapacity of the Chairman of the Board, his duties as Chairman
shall be performed, in the absence of the Chief Executive Officer, by the
President.
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Section 9. Chief Executive Officer. The Chief Executive Officer shall
have the responsibility for carrying out the policies of the Board of Directors
and, subject to the control of the Board, shall provide general leadership in
matters of policy and planning and have general and active charge, control and
supervision of the property, business and affairs of the Corporation. The Chief
Executive Officer shall be either the Chairman of the Board or the President,
unless the Board of Diectors shall, by resolution, otherwise determine.
Section 10. President. The President shall perform such duties as may
from time to time be assigned to him by the Board of Directors or the Executive
Committee. He shall at each annual meeting and from time to time report to the
stockholders and to the Board of Directors all matters under his jurisdiction of
which he has knowledge which the interest of the Corporation may require to be
brought to their notice. He shall, in the absence of the Chairman of the Board
or Chief Executive Officer, preside at all meetings of the stockholders and of
the Board of Directors.
Section 11. Chief Operating Officer. The Chief Operating Officer shall
assist the Chief Executive Officer in the control and supervision of the
property, business and affairs of the Corporation. The Chief Operating Officer
shall be either the President or a Vice-President unless the Board of Directors,
shall, by resolution, otherwise determine.
Section 12. Secretary: The Secretary shall attend all meetings of the
Board of Directors and of the Stockholders and record all votes and the minutes
of all proceedings in a book to be kept for that purpose, and shall perform like
duties for any committee appointed by the Board. He shall give or cause to be
given notice of all meetings of Stockholders and special meetings of the Board
of Directors and shall perform such other duties as may be prescribed by the
Board of Directors. He shall keep in safe custody the seal of the Corporation
and affix it to any instrument when so authorized by the Board of Directors.
Section 13. Treasurer: The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositaries as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the Chairman of the Board, the Chief Executive Officer, the President and
Directors at the regular meetings of the Board, or whenever they may require it,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation. He may be required to give bond for the faithful discharge
of his duties.
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ARTICLE VI
CAPITAL STOCK.
Section 1. Issue of Certificates of Stock: Certificates of capital
stock shall be in such form as shall be approved by the Board of Directors. They
shall be numbered in the order of their issue, and shall be signed by the
Chairman of the Board of Directors, the Chief Executive Officer, the President
or any Vice President, and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary, and the seal of the Corporation or a
facsimile thereof shall be impressed, affixed or reproduced thereon. In case any
Officer or Officers who shall have signed any such certificate or certificates
shall cease to be such Officer or Officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such certificate or certificates
may nevertheless be adopted by the Corporation and be issued and delivered as
though the person or persons who signed such certificate or certificates have
not ceased to be such Officer or Officers of the Corporation.
Section 2. Registration and Transfer of Shares: The name of each person
owning a share of the capital stock of the Corporation shall be entered on the
books of the Corporation together with the number of shares held by him, the
numbers of the certificates covering such shares and the dates of issue of such
certificates. The shares of stock of the Corporation shall be transferable on
the books of the Corporation by the holders thereof in person, or by their duly
authorized attorneys or legal representatives, on surrender and cancellation of
certificates for a like number of shares, accompanied by an assignment of power
of transfer endorsed thereon or attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require. A record shall be made of each transfer. The Board of
Directors may make other and further rules and regulations concerning the
transfer and registration of certificates for stock.
Section 3. Lost, Destroyed and Mutilated Certificates: The holder of
any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of the certificates therefor. The
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it and alleged to have been lost, stolen or destroyed. The
Board of Directors may, in its discretion, require the owner of the lost, stolen
or destroyed certificate, or his legal representatives, to give the Corporation
a bond, in such sum not exceeding double the value of the stock and with
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such surety or sureties as they may require, to indemnify it against any claim
that may be made against it by reason of the issue of such new certificate and
against all other liability in the premises, or may remit such owner to such
remedy or remedies as he may have under the laws of the State of Delaware.
ARTICLE VII
DIVIDENDS AND SURPLUS.
Section 1. General Discretion of Directors: The Board of Directors
shall have power to fix and vary the amount to be set aside or reserved as
working capital of the Corporation, or as reserves, or for other proper purposes
of the Corporation, and, subject to the requirements of the Certificate of
Incorporation, to determine whether any part of the surplus or net profits of
the Corporation shall be declared in dividends and paid to the Stockholders, and
to fix the date or dates for the payment of dividends.
ARTICLE VIII
MISCELLANEOUS PROVISIONS.
Section 1. Fiscal Year: The fiscal year of the Corporation shall
commence on the first day of January and end on the last day of December.
Section 2. Corporate Seal: The corporate seal shall be in such form as
approved by the Board of Directors and may be altered at its pleasure. The
corporate seal may be used by causing it or a facsimile thereof to be impressed,
affixed or reproduced by the Secretary or Assistant Secretary of the
Corporation.
Section 3. Notices: Except as otherwise expressly provided, any notice
required by these By-laws to be given shall be sufficient if given by depositing
the same in a post office or letter box in a sealed wrapper with first class
postage prepaid thereon and addressed to the person entitled thereto at his
address, as the same appears upon the books of the Corporation, or by
telegraphing or cabling the same to such person at such address; and such notice
shall be deemed to be given at the time it is mailed, telegraphed or cabled.
Section 4. Waiver of Notice: Any Stockholder or Director may at any
time, by writing or by telegraph or by cable, waive any notice required to be
given under these By-laws, and if any Stockholder or Director shall be present
at any meeting his presence shall constitute a waiver of such notice.
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Section 5. Contracts, Checks, Drafts: The Board of Directors, except as
may otherwise be required by law, may authorize any Officer or Officers, agent
or agents, in the name of and on behalf of the Corporation to enter into any
contract or execute or deliver any instrument. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such Officer or Officers,
agent or agents of the Corporation, and in such manner, as shall be designated
from time to time by resolution of the Board of Directors.
Section 6. Deposits: All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such bank or banks, trust
companies or other depositaries as the Board of Directors may select, and, for
the purpose of such deposit, checks, drafts, warrants and other orders for the
payment of money which are payable to the order of the Corporation, may be
endorsed for deposit, assigned and delivered by any Officer of the Corporation,
or by such agents of the Corporation as the Board of Directors, the Chairman of
the Board, the Chief Executive Officer or the President may authorize for that
purpose.
Section 7. Voting Stock of Other Corporations: Except as otherwise
ordered by the Board of Directors or the Executive Committee, the Chairman of
the Board, or the Chief Executive Officer shall have full power and authority on
behalf of the Corporation to attend and to act and to vote at any meeting of the
stockholders of any corporation of which the Corporation is a stockholder and to
execute a proxy to any other person to represent the Corporation at any such
meeting, and at any such meeting the Chairman of the Board, or the Chief
Executive Officer or the holder of any such proxy, as the case may be, shall
possess and may exercise any and all rights and powers incident to ownership of
such stock and which, as owner thereof, the Corporation might have possessed and
exercised if present. The Board of Directors or the Executive Committee may from
time to time confer like powers upon any other person or persons.
Section 8. Indemnification of Officers and Directors: The Corporation
shall indemnify any and all of its Directors or Officers, who shall serve as an
Officer or Director of this Corporation or of any other corporation at the
request of this Corporation, to the fullest extent permitted under and in
accordance with the laws of the State of Delaware.
ARTICLE IX
AMENDMENTS.
These By-laws may be amended or repealed, or new By-laws may be
adopted, at any annual or special meeting of the
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Stockholders, by vote of the Stockholders entitled to vote in the election of
Directors; provided, however, that the notice of such meetings shall have been
given as provided in these By-laws, which notice shall mention that amendment or
repeal of these By-laws, or the adoption of new By-laws, is one of the purposes
of such a meeting; and provided, further, that By-laws adopted by the
Stockholders shall not be rescinded, altered, amended or repealed by the Board
of Directors if such By-laws adopted by the Stockholders so express. These
By-laws may also be amended or repealed, or new By-laws may be adopted, by the
Board of Directors at any meeting thereof; provided, however, that notice of
such meeting shall have been given as provided in these By-laws, which notice
shall mention that amendment or repeal of the By-laws, or the adoption of new
By-laws, is one of the purposes of such meeting; and provided, further, that
By-laws adopted by the Board of Directors may be amended or repealed by the
Stockholders as hereinabove provided.
Dated: March 11, 1992
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EXHIBIT 10(e)
SUBLEASE
1. PARTIES
This Sublease is entered into by and between Calbiochem/Novabiochem Corporation
("Sublessor") and DataWorks Corporation ("Sublessee") as a Sublease under the
Master Lease dated February 1,1992, entered into by LMP Properties, Ltd. as
lessor, and Sublessor as lessee, as amended by Amendment to Commercial Lease,
dated as of April 1, 1992, Second Amendment to Lease, dated September 14, 1992,
and Third Amendment to Lease, dated March 30, 1993 (as amended, the "Master
Lease"); a copy of the Master Lease is attached hereto as Exhibit A.
2. PROVISIONS CONSTITUTING SUBLEASE
(a) This Sublease is subject to all of the terms and conditions of the Master
Lease in Exhibit A, and to all of the matters to which the Master Lease
is subject and subordinate, and Sublessee shall assume and perform the
obligations of Sublessor and Lessee in said Master Lease, to the extent
said terms and conditions are applicable to the Subleased Premises.
Sublessee shall not commit or permit to be committed on the Premises
(including, but not limited to, the Subleased Premises) any act or
omission which shall violate any term or condition of the Master Lease.
In the event of the termination of Sublessor's interest as lessee under
the Master Lease, for any reason, then this Sublease shall terminate
coincidentally therewith without any liability of Sublessor to Sublessee.
(b) All of the terms and conditions contained in the copy of the Master Lease
attached hereto as Exhibit A are incorporated herein, except for Sections
listed in the Addendum or crossed out on, or redacted from, such copy of
the Master Lease, as terms and conditions of this Sublease (with each
reference therein to "Lessor" and "Lessee" to be deemed to refer to
Sublessor and Sublessee, respectively, and each reference therein to the
"Premises" to be deemed to refer to the Subleased Premises) and, along
with all of the following Sections set out in this Sublease and the
Addendum attached hereto, shall be the complete terms and conditions of
this Sublease.
3. PREMISES
Sublessor leases to Sublessee and Sublessee hires from Sublessor the following
described premises (the "Subleased Premises"), situated in the City of San
Diego, County of San Diego, State of California: The Subleased Premises shall
consist of approximately 9,630 square feet which constitutes the entire
mezzanine level of the subject building at 10394 Pacific Center Court. The
Subleased Premises are depicted on Exhibit B.
4. RENTAL
Sublessee shall pay to Sublessor as rent for the Subleased Premises in advance
on the first day of each calendar month of the term of this Sublease without
deduction, offset, prior notice or demand, in lawful money of the United States,
the sum as listed in the attached Addendum. If the commencement date is not the
first day of the month, or if the Sublease termination date is not the last day
of the month, a prorated monthly installment shall be paid at the then current
rate for the fractional month during which the Sublease commences and/or
terminates.
Receipt of $10,881.90 is hereby acknowledged for rental for the first month, and
an additional amount of $10,881.90 (the "Security Deposit") as security for the
performance of Sublessee's obligations under this Sublease. In the event
Sublessee has performed all of the terms and conditions of this Sublease
throughout the term, upon Sublessee vacating the Subleased Premises, the amount
paid as the Security Deposit shall be returned to Sublessee after first
deducting any sums owing to Sublessor.
5. TERM
(a) The term of this Sublease shall be for a period of twenty-four months
commencing on July 15, 1996, and ending on July 15, 1998. In addition the
Sublessee will have the option to extend for two periods of one year each.
(b) In the event Sublessor is unable to deliver possession of the Subleased
Premises at the commencement of the term, Sublessor shall not be liable
for any damage caused thereby, nor shall this Sublease be void or voidable
but Sublessee shall not be liable for rent until such time as Sublessor
offers to deliver possession of the Subleased Premises to Sublessee, but
the term hereof shall not be extended by such delay. If Sublessee, with
Sublessor's consent, takes possession prior to the commencement of the
term, Sublessee shall do so subject to all of the covenants and conditions
hereof and shall pay rent for the period ending with the commencement of
the term at the same rental as that prescribed for the first month of the
term, prorated at the rate of 1/30th thereof per day.
<PAGE> 2
6. USE
Sublessee shall use the Subleased Premises for research, development, office
and/or any other lawful purpose which is permitted under the Master Lease and is
consistent with applicable zoning and other governmental regulations, and for no
other purpose without the prior written consent of Sublessor.
Sublessee's business shall be established and conducted throughout the term
hereof in a first class manner. Sublessee shall not use the Subleased Premises
for, or carry on, or permit to be carried on, any offensive, noisy or dangerous
trade, business, manufacture or occupation nor permit any auction sale to be
held or conducted on or about the Subleased Premises. Sublessee shall not do or
suffer anything to be done upon the Subleased Premises which will cause
structural injury to the Subleased Premises or the building of which the
Subleased Premises form a part. The Subleased Premises shall not be overloaded
and no machinery, apparatus or other appliance shall be used or operated in or
upon the Subleased Premises which will in any manner injure, vibrate or shake
the Subleased Premises or the building of which it is a part. No use shall be
made of the Subleased Premises which will in any way impair the efficient
operation of the sprinkler system (if any) or any other building system within
the building containing the Subleased Premises. Sublessee shall not leave the
Subleased Premises unoccupied or vacant during the term. No musical instrument
of any sort, or any noise making device will be operated or allowed upon the
Subleased Premises for the purpose of attracting trade or otherwise. Sublessee
shall not use or permit the use of the Subleased Premises or any part thereof
for any purpose which will increase the existing rate of insurance upon the
building in which the Subleased Premises are located, or cause a cancellation of
any insurance policy covering the building or any part thereof. If any action on
the part of Sublessee or use of the Subleased Premises by Sublessee shall cause,
directly or indirectly, any increase of Sublessor's insurance expense, said
additional expense shall be paid by Sublessee to Sublessor upon demand. No such
payment by Sublessee shall limit Sublessor in the exercise of any other rights
or remedies, or constitute a waiver of Sublessor's right to require Sublessee to
discontinue such act or use.
7. NOTICES
All notices or demands of any kind required or desired to be given by Sublessor
or Sublessee hereunder shall be in writing and shall be deemed delivered
forty-eight (48) hours after depositing the notice or demand in the United
States mail, certified or registered, postage prepaid, addressed to the
Sublessor or Sublessee respectively at the addresses set forth after their
signatures at the end of this Sublease. All rent and other payments due under
this Sublease or the Master Lease shall be made by Sublessee to Sublessor at the
same address.
8. GENERAL
(a) Subject to Consent by Lessor. This Sublease is subject to and conditioned
upon the consent and approval of Lessor under the Master Lease.
(b) Insurance. Any policies of insurance required to be maintained by the
Sublessee shall name Lessor and Sublessor as insured parties thereunder.
(c) Lessor's Consent to Tenant Improvements. If the Master Lease requires the
consent of Lessor to any alterations, additions or other improvements
("Improvements") to the Premises (as defined in the Master Lease), the
same shall not be commenced by Sublessee until Lessor's consent has been
obtained. Sublessor agrees to cooperate with Sublessee to obtain Lessor's
consent with respect to any such Improvements.
(d) Filing of Plans and Specifications. Sublessee agrees to file, as required
by law, any plans and/or specifications submitted in connection with any
Improvements, and to comply with all applicable laws and regulations in
connection with such Improvements.
(e) Condition of Subleased Premises. Sublessee understands and agrees that
Sublessor shall neither make, nor be required or obligated to make any
repairs, alterations or improvements for Sublessee in connection with the
Subleased Premises, including, without limitation, painting, finishing,
plastering or decorating, except in connection with any gross negligence
by Sublessor or its agents or representatives. Sublessee is fully familiar
with the condition of the Leased Premises and shall accept them "as is" in
the condition thereof on the date on which possession of the Subleased
Premises is delivered to Sublessee. Sublessee acknowledges that neither
Sublessor nor anyone acting for or on behalf of Sublessor has made any
covenant, warranty or representation to Sublessee about the Subleased
Premises or their suitability either for the use to which Sublessee
intends to put them or for any Improvements which Sublessee may make
pursuant to Article 6 (Use) of this Sublease.
(f) Sublessee will not use or suffer or permit the use of the Subleased
Premises, or any part thereof, in any manner which would violate the
provisions of the Master Lease.
(g) Services. Sublessee shall be entitled to the services and repairs which
Lessor is and may be obligated to furnish or make to or in the Subleased
Premises pursuant to the terms of the Master Lease. Sublessor shall in no
event be liable to Sublessee nor, except as hereinafter provided, shall
the obligations of Sublessee hereunder be impaired or the performance
thereof excused because of any failure or delay on Lessor's part in
furnishing such services or in making such repairs unless such failure or
delay results from Sublessor's being in default under the Master Lease or
from Sublessor's willful misconduct. If Lessor shall default in any of its
obligations to Sublessor with respect to the Subleased Premises, Sublessee
shall be entitled to participate with Sublessor in the enforcement of
Sublessor's rights against Lessor, but Sublessor shall not be obligated to
bring any action or proceeding or to take any steps to enforce Sublessor's
rights against Lessor except that Sublessor agrees, upon notice from
Sublessee, to make demand upon Lessor to perform its obligations under the
Master Lease with respect to the Subleased Premises.
<PAGE> 3
(h) Payments for Additional Services. If Lessor shall be entitled to any
payment or remuneration by reason of additional services provided at the
request of Sublessee or for the other reasons specified in the Master
Lease resulting from acts or omissions of Sublessee, Sublessee shall pay
the same promptly upon demand as additional rent hereunder.
(i) Cure Period for Defaults. In the event of any default on the part of
Sublessee under any of the terms, provisions, covenants or agreements of
the Master Lease, or of this Sublease, Sublessee shall have the same grace
periods after notice (less three (3) days) for the curing thereof which
are provided for in the Master Lease. In the event of any such default
which is not cured in the applicable grace period after notice thereof is
given, Sublessor shall have the same rights and remedies against Sublessee
under this Sublease as are available to Lessor against Sublessor under the
provisions of the Master Lease.
(j) Successor and Assigns. The covenants, agreements, terms, provisions and
conditions of this Sublease shall bind and inure to the benefit of
Sublessor and its successors and assigns and Sublessee and its permitted
successors and assigns with the same effect as if mentioned in each
instance where a party hereto is named or referred to, except that no
violation of the restrictions on assignment, subletting and other
transfers of Sublessee's interest in the Subleased Premises contained in
this Sublease or in the Master Lease shall operate to vest any rights in
any successor, assignee of legal representative of Sublessee.
(k) Broker. Sublessor and Sublessee each warrant and represent to the other
that it had no dealings in connection with this transaction with any
broker and each agrees to indemnify and hold the other harmless from any
loss, claim or damage which the other party may incur arising out of a
breach by such party of the foregoing warranty and representation.
<TABLE>
<S> <C>
Dated July 13, 1996 Dated July 12, 1996
Sublessor CALBIOCHEM/NOVABIOCHEM Sublessee DATAWORKS CORPORATION
A CALIFORNIA CORPORATION A CALIFORNIA CORPORATION
By /s/ James G. Stewart By /s/ Norm Farquhar
---------------------------------- -----------------------------------
By James G. Stewart, CFO By Norm Farquhar, CFO
Address: 10394 Pacific Center Court Address: 5910 Pacific Center Boulevard Suite 300
San Diego, California 92121 San Diego, California 92121
</TABLE>
<PAGE> 4
ADDENDUM
This Addendum to that certain Sublease by and between the Calbiochem/Novabiochem
Corporation ("Sublessor") and DataWorks Corporation ("Sublessee") dated July
___, 1996 (the "Sublease") is made and entered into as of the date of the
Sublease and the terms and conditions set forth herein shall be considered a
part of the Sublease.
1. COMPLIANCE WITH ORIGINAL LEASE
The Sublessee hereby acknowledges that the Sublessor is obligated pursuant to
the terms of the Master Lease, a copy of which is attached hereto and
incorporated herein by reference as Exhibit A as fully as if the terms and
provisions thereof were set forth herein, and the Sublessee agrees to assume and
be bound by the same responsibilities, rights, privileges, and duties that the
Sublessor has from and to the Landlord in the Master Lease, except as modified
herein or as crossed out on, or redacted from, such copy of the Master Lease.
Sublessor agrees to assume and be bound by the same responsibilities, rights,
privileges, and duties that Lessor has from and to Sublessor in the Master
Lease, except as modified herein or as crossed out on, or redacted from, such
copy of the Master Lease. Sublessee shall fully indemnify the Sublessor against
any responsibility or liability caused by the Sublessee that the Sublessor may
incur with respect to the occupancy by the Sublessee of the Subleased Premises
or the nonperformance or non-observance by the Sublessee of any term or
condition of the Master Lease.
2. EXCLUSIONS FROM SUBLEASE
The provisions that have been crossed out on, or redacted from, the copy of that
certain Master Lease by and between LPM Properties Ltd. and the Sublessor dated
February 1, 1992, as amended on April 1, 1992, September 14, 1992, and March 30,
1993 (the "Master Lease") attached hereto shall not apply to the Sublease and
are excluded under Section 2(b) of the Sublease. If there is a conflict between
the terms of the Master Lease and the terms expressly set forth in the Sublease,
as amended hereby, the terms of the Sublease and this Amendment shall control
over the Master Lease provided, however, that Sublessee will not do, or permit
to be done in or about the Subleased Premises, any act, manner or thing which
will be, result in, or constitute a violation or breach of or a default under
the Master Lease or any other covenant or agreement to which Sublessor is now or
hereafter subject with respect to the Premises (as defined in the Master Lease)
or the Subleased Premises, and such violation, breach or default to constitute a
breach by Sublessee of a material obligation under this Sublease.
3. RENTAL RATE
(a) Rent shall be payable on the first day of each and every calendar month
during the Lease Term.
Months 1-24 $1.13 per month per square foot full service gross
Months 25-36 $1.13 per month per square foot full service gross (if
option is exercised)
Months 37-48 $1.33 per month per square foot full service gross (if
option is exercised)
The above rental rates include five (5) days per week janitorial service
throughout the entire Subleased Premises.
(b) Sublessee covenants and agrees to pay to Sublessor a late fee equal to
five percent (5%) of the Monthly Rent if any such payment is not received
by Sublessor within ten (10) days of its due date. In addition, any such
delinquent payments shall bear interest at the rate of prime + 3% per
annum, provided, however, that nothing herein contained shall be
construed or implemented in such a manner as to allow Sublessor to charge
or receive interest in excess of the maximum rate then allowed by law.
All such late fees and interest charges shall be deemed additional rent
due hereunder and shall be payable on demand.
(c) Full Service Gross rent shall include all expenses that are required to
operate and maintain the building in a manner deemed reasonable and
appropriate, including but not limited to supplies, materials,
janitorial, maintenance, repairs, utilities, service agreements,
insurance, taxes and management fees. Those costs associated with
Sublessee's operations, including, but not limited to telephone, data
services, furniture and office supplies, will be at Sublessee's expense.
4. TENANT IMPROVEMENTS
Sublessee shall not make any alterations, additions, or improvements on or to
the Subleased Premises without first obtaining the written consent of the
Sublessor, such consent not be unreasonably withheld or delayed. All
alterations, additions, and improvements that shall be made, shall be at the
sole expense of the Sublessee unless otherwise expressly stated herein and
shall, at the election of the Sublessor made not less than sixty (60) days
before the end of the term of this Sublease, become the property of the
Sublessor and shall remain on and be surrendered with the Subleased Premises as
a part thereof at the termination
<PAGE> 5
of this Sublease without disturbance, molestation or injury. Sublessor may at
its election within thirty (30) days after the termination of the Sublease
require Sublessee, at the expense of Sublessee, to remove any and all such
alterations, additions, and improvements at the expiration of the Sublease and
repair the Subleased Premises to their pre-existing condition if, and only if,
Sublessor provides Sublessee written notice of such requirement at the time of
Sublessor's consent to such alterations, additions and improvements. All
modifications shall be constructed in a manner similar to the current standards
of the existing improvements. Sublessee may select the contractor for any
modifications, provided that said contractor is adequately bonded and insured,
and acceptable to Sublessor.
5. FIRST RIGHT OF REFUSAL
Commencing upon Sublease commencement, on the first month of the Sublease and
continuing thereafter through Sublease expiration, provided that Sublessee is
not in default hereunder, Sublessee will have a first right of refusal to lease
additional space in the building that is leased to Sublessor which might come
available in the building at the same terms and conditions of the Sublease. This
first right of refusal shall be on a non-expiring basis for the duration of the
Sublease. This right will terminate at the end of the Sublease.
Sublessee shall have five (5) business days to respond in writing to said first
right of refusal. If no written response is delivered to Sublessor, after said
five (5) business days, then the first right of refusal shall be deemed rejected
by Sublessee.
6. SECURITY AND ACCESS TO THE BUILDING
Sublessee shall be granted access to the south entrance on the first floor and
all of the mezzanine level (the Subleased Premises) 24 hours per day, seven (7)
days per week for the term of the Sublease.
Sublessee shall be entitled to purchase such number of access cards for access
to the building and Subleased Premises as Sublessee shall require at the time of
occupancy and from time to time at a per card cost equal to the actual cost of
the access cards, that the Sublessor pays. The cost of the security cards are
currently $8.00 each. Sublessor does not warrant that in the future, the cost
for the security cards will remain at current prices.
Sublessee shall be allowed to install a security system within their Subleased
Premises, at Sublessee's sole expense, provided that Sublessor and the building
property management have access to the access codes, for emergency purposes,
only.
7. NON DISTURBANCE
Sublessor shall use commercially reasonable efforts to obtain a non disturbance
agreement from the existing lender if any, with respect to this Sublease, in a
form reasonably satisfactory to Sublessee.
8. RECORDATION
Subject to the right of Lessor to consent thereto, Sublessee shall be allowed to
record a memorandum of said Sublease with the County Recorder's office.
9. PARKING
Sublessor will provide adequate unassigned parking spaces adjacent to the south
end of the building.
<PAGE> 6
EXHIBIT A
MASTER LEASE
Incorporated by reference to Commercial Lease, dated as of February 1, 1992, as
amended, between LMP Properties, Ltd. and Calbiochem Corporation, filed as an
exhibit to this Registration Statement.
<PAGE> 7
EXHIBIT B
[FLOOR PLAN]
<PAGE> 1
EXHIBIT 10(f)(i)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 13, 1992, by and
among Calbiochem-Novabiochem International, Inc., a Delaware corporation (the
"Company") and each of the signatories hereto.
WHEREAS, each of the signatories hereto has subscribed for the purchase
of equity securities of the Company, consisting either of its Common Stock, par
value $0.01 per share, or securities convertible into its Common Stock; and
WHEREAS, the obligations of each of the signatories hereto to purchase
the Company's securities are conditioned upon, among other things, the execution
and delivery of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. REGISTRATION RIGHTS
1.1 Definitions
As used in this Section 1:
(a) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "1933 Act") (and any
post-effective amendments filed or required to be filed) and the declaration or
ordering of effectiveness of such registration statement;
(b) the term "Registrable Securities" means (A) any shares of Common
Stock issued on or prior to the date hereof, (B) the shares of Common Stock
issuable on conversion of the Series A Convertible Preferred Stock, (C) any
shares of Common Stock which any of the purchasers of the Series A Convertible
Preferred Stock may hereafter acquire and (D) any capital stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares of Common Stock referred
to in clauses (A)-(C) above, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which such person's rights under
this Agreement are not assigned;
(c) the term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof;
(d) the number of shares of "Registrable Securities then outstanding"
shall be determined by adding the number of shares of Common Stock outstanding
which are, and the number of shares of
<PAGE> 2
Common Stock issuable pursuant to then exercisable or convertible securities
which upon issuance would be, Registrable Securities; and
(e) the term "Affiliate" means a Person (other than a subsidiary) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
(f) the term "Form S-3" means such form under the 1933 Act as in effect
on the date hereof or any registration form under the 1933 Act subsequently
adopted by the Securities and Exchange Commission (the "SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
1.2 Requested Registration
(a) Request for Registration. If the Company shall receive at any time
a written request from the Holder or Holders of in excess of 50% of the
Registrable Securities then outstanding and entitled to registration rights
under this Section 1 (the "Initiating Holders") that the Company file a
registration statement under the 1933 Act with the SEC with respect to at least
20% of the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $5,000,000), the Company will, within ten days of the
receipt thereof, give written notice of such request to all Holders and shall
within seventy-five (75) days of its receipt of such written request, file a
registration statement on a form deemed appropriate by the Company's counsel
with the SEC covering all the Registrable Securities which the Holders shall in
writing request (given within 20 days of receipt of the notice given by the
Company pursuant to this Section 1.2(a)) to be included in such registration and
the Company shall use its diligent best efforts to cause such registration
statement to become effective no later than 120-days after the receipt of such
request.
The Company shall also, as soon as practicable, use its diligent best
efforts to effect all such other registration, qualification and compliance
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under the applicable blue
sky or other state securities laws, and appropriate compliance with exemptive
regulations issued under the 1933 Act) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of the
Registrable Securities of such Holders as are specified in such request. No
request under this Section 1.2(a) may be made, however, during the 120 day
period immediately following the date on which the Company has given the Holders
notice pursuant to Section 1.3 of any registration statement with respect to
which the Holders can cause Registrable Securities to be included therein.
-2-
<PAGE> 3
The Company shall not be obligated to effect such registration,
qualification or compliance pursuant to Section 1.2(a) hereof (A) after the
Company already has effected three (3) such registrations pursuant to this
Section 1.2(a) and such registrations have been declared or ordered effective or
(B) in any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the 1933 Act or applicable
rules or regulations thereunder.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Sections 1.2(b) and 1.14
below, include other securities of the Company which are held by officers or
directors of the Company, or which are held by persons who, by virtue of
agreements with the Company, are entitled to include their securities in any
such registration (the "Other Shareholders"), but the Company shall have no
absolute right to include any of its securities in any such registration.
The registration rights set forth in this Section 1.2 shall be
assignable (but only with all related obligations) at the option of each of the
Holders, in whole or in part, to any transferee of Registrable Securities or of
the convertible securities or warrants the conversion or exercise of which
result in the issuance of Registrable Securities; provided, that the Company is
given written notice by such Holder at the time or within a reasonable time
after said transfer, stating the name and address of such transferee or assignee
and identifying the securities with respect to which such registration rights
are assigned; and provided, further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act.
Notwithstanding anything else in Section 1.2, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2 a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 60 days after receipt of the request of the
initiating Holders'; provided, however, that the Company may not utilize this
right more than once in any twelve month period.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by such request by means of an underwriting, they
shall so advise the Company as a part of such request made pursuant to Section
1.2(a). The Initiating Holders shall choose a nationally recognized investment
banking firm as underwriter of such requested registration, which underwriter
-3-
<PAGE> 4
shall be subject to the approval of the Company, whose approval shall not be
unreasonably withheld. The right of any Holder to registration pursuant to
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein.
If officers or directors of the Company holding other securities of the
Company shall request inclusion in any registration pursuant to this Section
1.2, or if Other Shareholders request such inclusion, the Holders shall offer to
include the securities of such officers, directors and Other Shareholders in the
underwriting and may condition such offer upon their participation in the
underwriting and on their acceptance of the further applicable provisions of
this Section 1.
The Company shall (together with all Holders, officers, directors and
Other Shareholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by the Initiating Holders as provided above, but the Company shall not be
required to pay any commission to the underwriter in respect of the sale of
Registrable Securities. Notwithstanding any other provision of this Section 1.2,
if the representative of the underwriter or underwriters advises the Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the securities of the Company held by officers or directors of
the Company and the securities held by Other Shareholders shall be excluded from
the underwriting by reason of the underwriter's marketing limitation to the
extent so required by such limitation. If a further limitation is required, the
Company shall so advise all Holders requesting inclusion in such offering, and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders requesting
inclusion in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held (or entitled to be held upon conversion) by each
such Holder at the time of filing the registration statement. No Registrable
Securities or any other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder, officer, director or Other Shareholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders. The securities so
withdrawn shall also be withdrawn from registration; provided, however, that, if
by the withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up to a
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities in the same
proportion used
-4-
<PAGE> 5
in determining the underwriter limitation in this Paragraph 1.2.(b). If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
1.3 Company Registration
(a) Inclusion in Registration. If the Company shall determine to
register any of its securities on a form (other than Form S-8 or Form S-4 or
their successor forms) which would permit the registration of any Registrable
Securities, or the Company shall be requested to register any of its securities
by any holder of any securities entitled to registration upon such request
(other than the Holders or their nominees or assignees), the Company will:
(i) promptly give to the Holders written notice thereof (which
shall include a list of the jurisdictions, if any, in which the Company
intends to qualify such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein which must be a firm commitment
underwriting, all the Registrable Securities specified in a written
request or requests made by each of the Holders, within 20 days after
receipt of the written notice from the Company described in clause (i)
above; provided, however, that if the offering is underwritten and
relates (x) only to securities to be sold by the Company and the
Holders are advised in writing by the managing underwriter that the
sale of Registrable Securities by the Holders within 120 days of the
effective date of such registration statement, due to market
conditions, will materially adversely affect such underwriting, or (y)
to the initial public offering of the Company, the Holders shall not
sell any of their Registrable Securities for 120 days after the
effective date of such registration statement (or such shorter time as
the managing underwriter may request).
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
1.3(a). In such event the right of the Holders to registration pursuant to this
Section 1.3 shall be conditioned upon the Holders' participation in such
underwriting and acceptance of the terms of the underwriting as agreed between
the Company and the underwriters selected by it and the inclusion of the
Holders' Registrable Securities in the
-5-
<PAGE> 6
underwriting to the extent provided herein. The Holders shall (together with the
Company and the Other Shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for underwriting by the Company and shall
use their best efforts to arrange for all documents and opinions required to be
delivered thereunder in respect of their participation as selling shareholders
to be delivered. Notwithstanding any other provision of this Section 1.3, if the
underwriter advises the Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, then the Company shall
include in the underwriting only that number of such securities, including
Registrable Securities, which the managing underwriter believes will not
jeopardize the success of the offering (the securities so included to be
apportioned as follows: first all securities which stockholders other than the
Holders seek to include in the offering shall be excluded from the offering to
the extent limitation on the number of shares included in the underwriting is
required; then the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders requesting inclusion in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held (or entitled to be held upon
conversion) by each such Holder at the time of filing of the registration
statement, or in such other apportions as shall be mutually agreed to by such
selling Holders) but in no event shall the amount of securities of the selling
Holders included in the offering be reduced below 25% of the total amount of
securities included in such offering without the prior consent of the Holders,
unless such offering is the initial public offering of the Company's securities
in which case the selling Holders may be excluded if the managing underwriter
makes the determination described above and no securities other than those of
the Company are included. If any of the Holders or any officer, director or
Other Shareholder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) Number and Transferability. The Holders shall be entitled to have
their shares included in an unlimited number of registrations pursuant to this
Section 1.3. The registration rights granted pursuant to this Section shall be
assignable at the option of each of the Holders, in whole or in part, to any
transferee of Registrable Securities or of the convertible securities or
warrants the conversion or exercise of which result in the issuance of
Registrable Securities (i) so long as such transferee owns at least 2% of the
Common Stock (computed on a fully diluted basis) of the Company or (ii) the
transferee is an Affiliate of a Holder; provided, that the Company is given
written notice by such Holder at the time or within a reasonable time after said
transfer, stating the name and address of such transferee or assignee and
identifying the securities with respect to which such registration rights are
assigned.
-6-
<PAGE> 7
1.4 Form S-3
The Company shall use its best efforts to qualify for registration on
Form S-3 for secondary sales. After the Company has qualified for the use of
Form S-3, Holders of Registrable Securities shall have the right to request an
unlimited number of registrations on Form S-3 (such requests shall be in writing
and shall state the number of shares of Registrable Securities to be disposed of
and the intended method of disposition of shares by such holders), subject only
to the following:
(A) The Company shall not be required to effect a registration
pursuant to this Paragraph 1.4 unless the Holder or Holders of
Registrable Securities requesting registration propose to dispose of
shares of Registrable Securities having an aggregate price to the
public (before deduction of underwriting discounts and expenses of
sale) of more than $1,000,000.
(B) The Company shall not be required to effect a registration
pursuant to this Paragraph 1.4 within 180 days after the effective date
of the most recent registration pursuant to this Section 1 in which
securities held by the requesting Holder could have been included for
sale or distribution.
(C) The Company shall not be required to effect a
registration pursuant to this Paragraph 1.4 if the Company shall
furnish to the Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of
Directors of the Company it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be
effected at such time, in which event the Company shall have the right
to defer the filing of the Form S-3 registration statement for a period
of not more than 60 days after receipt of the request of the Holder or
Holders under this Section 1.4; provided, however, that the Company
shall not utilize this right more than once in any twelve month period;
(D) The Company shall not be required to effect a
registration pursuant to this Paragraph 1.4 if the Company has, within
the twelve (12) month period preceding the date of such request,
already effected two registrations on Form S-3 for the Holders pursuant
to this Section 1.4.
(E) The Company shall not be required to effect a
registration pursuant to this Paragraph 1.4 in any particular
jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
The Company shall give written notice to all Holders of
Registrable Securities of the receipt of a request for registration
pursuant to this Paragraph 1.4 and shall provide a reasonable
opportunity for other Holders of Registrable Securities to participate
in the registration, provided that if the registration is
-7-
<PAGE> 8
for an underwritten offering, the terms of Paragraph 1.2(b) shall apply to all
participants in such offering. Subject to the foregoing, the Company will use
its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 to the extent requested by the Holder or
Holders thereof for purposes of disposition.
1.5 Expenses of Registration
All expenses incurred in connection with the registration,
qualification or compliance pursuant to this Section 1 including, without
limitation, all registration, filing and qualification fees, accounting fees and
printing expenses, fees and disbursements of counsel for the Company and the
reasonable fees and expenses of one counsel for the selling Holders and expenses
incidental to or required by such registration shall be borne by the Company;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
Participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business or prospects of the Company from that known to
the Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any such expenses
and shall retain their rights pursuant to Section 1.2. Underwriting discounts
and commissions shall be borne and paid ratably by the Holders of the
Registrable Securities included in any such registration.
1.6 Other Obligations of the Company
In connection with the Company's obligations to the Holders with
respect to the sale of Registrable Securities pursuant to a public offering
thereof as provided in this Section 1, the Company shall use its best efforts to
register Registrable Securities as required, or permitted if any Holder so
requests, by Section 12 of the Securities and Exchange Act of 1934 (the
"Exchange Act") and, if the Registrable Securities to be sold meet the criteria
for listing on any exchange on which the Common Stock is then listed, apply for
listing of such Registrable Securities on such exchange.
1.7 Registration Procedures
In the case of each registration, qualification or compliance effected
by the Company pursuant to this Section 1, the Company shall:
(i) Notify each Holder as to the filing of the Registration
Statement and of all amendments or supplements
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<PAGE> 9
thereto filed prior to the effective date of said Registration
Statement;
(ii) Notify each Holder, promptly after it shall receive
notice thereof, of the time when said Registration Statement becomes
effective or when any amendment or supplement to any prospectus forming
a part of said Registration Statement has been filed;
(iii) Notify each Holder promptly of any request by the SEC
for the amending or supplementing of such Registration Statement or
prospectus or for additional information;
(iv) Prepare and promptly file with the SEC and promptly
notify each Holder of the filing of any amendments or supplements to
such Registration Statement or prospectus as may be necessary to
correct any statements or omissions if, at any time when a prospectus
relating to the Registrable Securities is required to be delivered
under the 1933 Act, any event with respect to the Company shall have
occurred as a result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements made, in the light of the circumstances under which
they were made, not misleading; and, in addition, prepare and file with
the SEC, promptly upon the written request of any Holder, any
amendments or supplements to such Registration Statement or prospectus
which may be reasonably necessary or advisable in connection with the
distribution of the Registrable Securities;
(v) Advise each Holder promptly after the Company shall
receive notice or obtain knowledge of the issuance of any stop order by
the SEC suspending the effectiveness of any such Registration Statement
or amendment thereto or of the initiation or threatening of any
proceeding for that purpose, and promptly use its best efforts to
prevent the issuance of any stop order or obtain its withdrawal
promptly if such stop order should be issued;
(vi) Use its best efforts to qualify as soon as practicable
the Registrable Securities included in the Registration Statement for
sale under the securities or blue-sky laws of such states and
jurisdictions within the United States as shall be reasonably requested
by any Holder; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business, to become subject to taxation or to file a consent to service
of process generally in any of the aforesaid states or jurisdictions;
-9-
<PAGE> 10
(vii) Furnish each Holder, as soon as available, copies of any
Registration Statement and each preliminary or final prospectus, or
supplement or amendment required to be prepared pursuant hereto, all in
such quantities as any Holder may from time to time reasonably request;
(viii) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to
this Agreement, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are being
sold through underwriters or, if such securities are not being sold
through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given by
company counsel to the underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter, dated such
date, from the independent certified public accountant of the Company,
in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities; and
(ix) make available for inspection by each Holder, any
underwriter participating in any disposition pursuant to such
registration, and any attorney, accountant or other agent retained by
any Holder or any such underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such
Inspector in connection with such registration, provided that (i)
records and information obtained hereunder shall be used by such
persons only to exercise their due diligence responsibility and (ii)
records or information which the Company determines, in good faith, to
be confidential shall not be disclosed by the Inspectors unless (x) the
disclosure of such Records or information is necessary to avoid or
correct a misstatement or omission in the Registration Statement or (y)
the release of such Records or information is ordered pursuant to a
subpoena or other order from a court or governmental authority of
competent jurisdiction. Each Holder shall use reasonable efforts, prior
to any such disclosure, to inform the Company that such disclosure is
necessary to avoid or correct a misstatement or omission in the
Registration
-10-
<PAGE> 11
Statement. Each Holder further agrees that it will, upon learning that
disclosure of such Records or information is sought by a court or
governmental authority, give notice to the Company and allow the
Company, at the expense of the Company, to undertake appropriate action
to prevent disclosure of the Records or information deemed
confidential.
At its expense, the Company shall keep such registration effective for
a period of one hundred twenty (120) days or until each Holder has completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the 1933 Act, permits an offering on a continuous or delayed basis, and
provided, further, that applicable rules under the 1933 Act governing the
obligation to file a post-effective amendment which reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement permit the incorporation by reference of information
required to be included above to be contained in periodic reports filed pursuant
to Section 13 or 15(d) of the Exchange Act in the registration statement.
1.8 Delay of Registration
No Holder shall have any right to take any action to restrain, enjoin
or otherwise delay any registration as a result of any controversy that may
arise with respect to the interpretation or implementation of this Agreement.
1.9 Indemnification
(a) The Company shall indemnify each Holder, each of its officers,
directors and general and limited partners, and its Affiliates, on whose behalf
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter and each Affiliate thereof, of Registrable
Securities held by or issuable to each Holder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the 1933 Act or any rule or regulation promulgated thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of
-11-
<PAGE> 12
its officers, directors and general and limited partners and each of its
Affiliates, and each such underwriter and each of its Affiliates, for any legal
or other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however,
that the Company shall not be liable to a Holder in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or the underwriter of any such Holder
and stated to be specifically for use therein.
(b) Each of the Holders shall, if Registrable Securities held by them
are included in the securities as to which such registration, qualification or
compliance is being effected, severally indemnify the Company, each of its
directors and officers who sign such registration statement, each Affiliate of
the Company, each underwriter, if any, of the Company's securities covered by
such registration statement, each other Holder and each Affiliate thereof
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such directors, officers, employees, Affiliates, other Holders or
underwriters for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of each Holder hereunder shall
be limited to an amount equal to the proceeds to each Holder of securities sold
as contemplated herein.
(c) Each party entitled to indemnification under this Section 1 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party, and the Indemnified Party
may participate in such defense at such party's expense; and provided, further,
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
1. No Indemnifying Party, in the defense of any such
-12-
<PAGE> 13
claim or litigation, shall, except with the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.9 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with any underwritten public offering contemplated by this
Agreement are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall be controlling.
1.10 Lockup Agreement
In consideration for the Company agreeing to its obligations under this
Section 1, each Holder agrees in connection with any registration effected by
the Company hereunder (other than (i) a registration relating solely to employee
benefit plans on Form S-1, S-8 or similar forms which may be promulgated in the
future, or (ii) a registration on Form S-4 or similar form which may be
promulgated in the future relating solely to a Commission Rule 145 transaction)
of the Company's securities, upon the request of the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 120 days) from the
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<PAGE> 14
effective date of such registration as the Company or the underwriters may
specify; provided, however, that (i) such Holder shall have no obligation to
enter into the agreement described herein unless all executive officers and
directors of the Company enter into similar agreements, and (ii) nothing herein
shall prevent any Holder that is a partnership from making a distribution of
Registrable Securities to the partners thereof that is otherwise in compliance
with applicable securities laws, based on an opinion of counsel, which opinion
and counsel are each reasonably satisfactory to the Company.
1.11 Information about the Purchasers
Each Holder shall promptly furnish to the Company such information
regarding itself, its Affiliates or subsidiaries and the distribution proposed
by it as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 1.
1.12 Conditions to Registration
As a condition to the Company's obligation hereunder to cause a
registration statement to be filed or Registrable Securities to be included in a
registration statement, each Holder shall provide such information and execute
such documents as may reasonably be required in connection with such
registration. In addition, the Company shall not be obligated to file a
registration statement or to include Registrable Securities in a registration
statement hereunder as to any Holder, (i) if the Company shall have received
opinions of counsel reasonably satisfactory to such Holder and the Company to
the effect that the proposed disposition of such Registrable Securities by such
Holder may be effected without registration under the 1933 Act or (ii) to the
extent all such Registrable Securities can then be sold during a single three
month period pursuant to Rule 144 under the 1933 Act.
1.13 Rule 144
With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of the restricted securities to
the public without registration, the Company agrees to:
(a) Make and keep public information available as those terms are
understood and defined in Rule 144 under the 1933 Act at all times from and
after ninety (90) days following the closing date of the first registration
under the 1933 Act filed by the Company for an offering of its securities to the
general public;
(b) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Exchange Act at
any time after it has become subject to such reporting requirements; and
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<PAGE> 15
(c) So long as each Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the 1933 Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such securities without registration.
1.14 Rights Granted to Subsequent Investors
Without the written consent of Holders of at least 50% of the
outstanding Registrable Securities (assuming conversions), the Company may not
grant registration rights to future investors in the Company except as described
in this Section 1.14. The Company may grant to future investors registration
rights pertaining only to shares of the Company's Common Stock (including shares
of Common Stock into which any other securities of the Company may be
convertible) and only on the following terms:
(a) Prior to the closing of the first Company-initiated underwritten
public offering of the Company's securities, the Company shall not grant to
future investors any registration rights other than (i) the right to request
inclusion in registrations initiated by the Company, but only in respect of that
portion of such registration as is available to the Holders, with the allocation
of the number of shares to be included by each such holder to be pro rata based
on the number of shares of the Company's Common Stock (assuming conversion) with
registration rights held by the respective holders (including the Holders), and
(ii) the right to request registration, provided that the Holders simultaneously
are granted the right to participate in such requested registration on a
nonpreferential, pro rata basis in accordance with the relative amounts of
Common Stock (assuming conversion) with registration rights held by the
respective holders (including the Holders).
(b) The Company shall not grant any registration rights with respect to
presently outstanding securities of the Company other than the right to
participate in registrations initiated by the Company or its shareholders
(including the Holders), and such rights may be granted only as to such portion
of the registration available after all shares requested to be included in such
registration by the Holders have been so included.
1.15 Partnership Distribution.
In the event that any Holder which is a limited partnership advises the
Company that it desires to exercise one of the registration rights granted to it
under Sections 1.2, 1.3 or 1.4 of this Agreement as a Holder of Registrable
Securities in order to effect a distribution of some or all of such Registrable
Securities to its partners, then, notwithstanding any provision of this
Agreement conditioning the inclusion of Registrable Securities in a
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<PAGE> 16
registration statement upon the Holder's participation in an underwriting, such
Holder may refrain from including such shares in an underwriting and
nevertheless cause such shares to be included in the applicable registration
statement, provided only that (a) such registration is not the initial
registration hereunder of the Company's securities, and (b) such Holder agrees
not to effect such distribution until the expiration of a standstill period
after the effective date of such registration, such period, not to exceed 90
days, to be of that duration requested by the managing underwriter of the
underwriting of the other securities included in such registration.
1.16 Limitation of Registration Rights.
Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not be required to include in any registration statement filed
pursuant to Section 1.3 of this Agreement (other than, subject to Section
1.3(b), the initial registration effected by the Company under this Agreement)
any Registrable Securities held by a Holder if, in the opinion of counsel to the
Company concurred in by counsel to such Holder, all of such Registrable
Securities may be sold by such Holder pursuant to Rule 144 under the 1933 Act
(or any successor rule) within a period of not more than three calendar months
from the date of such opinion.
SECTION 2. Assignability.
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, personal representatives, successors and assigns of the
parties hereto.
SECTION 3. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
SECTION 4. Amendment.
Any modification, amendment or waiver of this Agreement or any
provision hereof shall be in writing and executed by Holders of not less than
50% of the Registrable Securities; provided, however, that no such modification,
amendment or waiver shall reduce the aforesaid percentage of Registrable
Securities without the consent of all of the Holders of the Registrable
Securities.
SECTION 5. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
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<PAGE> 17
IN WITNESS WHEREOF, the Company and each of the undersigned parties has
executed this Agreement effective for all purposes as of the 13th day of March,
1992.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
By /s/ Joseph P. Landy
-----------------------------
WARBURG, PINCUS INVESTORS, L.P.
By: WARBURG, PINCUS & CO.
General Partner
/s/ Richard Slansky By /s/ Joseph P. Landy
- -------------------------------- -----------------------------
Richard Slansky
/s/ Georges Chappuis ABS MB (C-N) Limited
- -------------------------------- Partnership
Georges Chappuis
By: ABS MB Ltd.
/s/ John Snow
- --------------------------------
John Snow By: /s/ Frederick L. Bryant
----------------------------
Vice President
-17-
<PAGE> 1
EXHIBIT 10(f)(ii)
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
AMENDMENT TO SUBSCRIPTION AND SHAREHOLDER AGREEMENT
AND REGISTRATION RIGHTS AGREEMENT
JANUARY 4, 1993
Amendment Agreement, dated as of January 4, 1993, among
Warburg, Pincus Investors, L.P., ABS MB (C-N) Limited Partnership, Richard
Slansky, John T. Snow, and Georges Chappuis (the "Original Investors"),
Calbiochem-Novabiochem International, Inc., a Delaware corporation (the
"Company"), and Stelios B. Papadopoulos ("Papadopoulos").
WHEREAS, each of the Original Investors and the Company are
parties to a Subscription and Shareholder Agreement, dated March 13, 1992,
relating to the shares of capital stock of the Company (the "Shareholder
Agreement"); and
WHEREAS, each of the Original Investors and the Company are
parties to a Registration Rights Agreement, dated March 13, 1992, relating to
the shares of capital stock of the Company (the "Registration Rights
Agreement"); and
WHEREAS, Papadopoulos has joined the Company as its Chief
Executive Officer and has, in addition, become a shareholder of the Company; and
WHEREAS, the Company and the Original Investors are willing to
grant rights to Papadopoulos under both the Shareholder Agreement and the
Registration Rights Agreement, in consideration of his undertaking the same
obligations as bind the Original Investors under such agreements, and Mr.
Papadopoulos is willing to agree to become subject to such obligations;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Shareholder Agreement is hereby amended by adding
Papadopoulos as a party to such agreement and by including him in the definition
of an "Investor" in such agreement, to the same effect, and having the same
rights and obligations thereunder, as if he had been one of the original
employee/shareholders executing such agreement.
2. The Registration Rights Agreement is hereby amended by
adding Papadopoulos as a party to such agreement and by including him in the
definition of a "Holder" in such agreement, to the same effect, and having the
same rights and
<PAGE> 2
obligations thereunder, as if he had been an original signatory to such
agreement.
3. Except as herein expressly provided, no amendments or
changes are effected to the Shareholder Agreement or Registration Rights
Agreement, such agreements being hereby ratified and confirmed by all parties
thereto.
IN WITNESS WHEREOF, the Company and each of the undersigned
parties has executed this Amendment effective as of the date hereinabove first
written.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL
By: /s/ Richard B. Slansky
----------------------------
WARBURG, PINCUS INVESTORS,
L.P.
/s/ Stelios B. Papadopoulos
- -------------------------------
Stelios B. Papadopoulos By: WARBURG, PINCUS & CO.
General Partner
/s/ Richard B. Slansky
- -------------------------------
Richard Slansky By: /s/ William H. Janeway
----------------------------
/s/ Georges Chappuis
- -------------------------------
Georges Chappuis ABS MB (C-N) Limited.
Partnership
/s/ John Snow By: ABS MB Ltd.
- -------------------------------
John Snow
By: /s/ Frederick L. Bryant
----------------------------
Vice President
<PAGE> 1
EXHIBIT 10(g)(i)
SHARED SERVICES AGREEMENT
THIS SHARED SERVICES AGREEMENT entered into on August 2, 1995, by and
between ONCOGENE SCIENCE, INC., a Delaware corporation ("Seller"), and
CALBIOCHEM-NOVABIOCHEM CORPORATION, a California corporation ("Buyer").
WITNESSETH
WHEREAS, Seller is a biopharmaceutical company which is engaged in its
Cambridge, Massachusetts facility in both a diagnostics business and a research
products business;
WHEREAS, the research products business markets research reagents, kits
and other research tools to the academic research, industrial research, and
clinical research markets;
WHEREAS, Seller has entered into an Asset Purchase Agreement (the
"Purchase Agreement"), dated as of June 26, 1995, with Buyer and
Calbiochem-Novabiochem International, Inc., a Delaware corporation, pursuant to
which Seller has agreed to sell its research products business (the "Business"),
while retaining the right in connection with its diagnostics business to
manufacture and sell research products to the clinical research market;
WHEREAS, Buyer has agreed to purchase the Business and to conduct the
Business in the academic research, industrial research, and clinical research
markets, recognizing that Seller will continue to have the right to manufacture
and sell products to the clinical research market and diagnostic products to the
diagnostic market;
WHEREAS, Seller is party to a Lease Agreement, dated as of October 1,
1991, as amended by a First Amendment to the Lease, dated as of April 2, 1993,
with the Trustees of The Cambridge East Trust, as landlord (the "Landlord")
(such Lease Agreement, as so amended, referred to in the Purchase Agreement and
herein as the "Cambridge Lease"), pursuant to which Seller has leased its
facility at 80-84 Rogers Street, Cambridge, Massachusetts (the "Cambridge
Facility") from the Landlord;
WHEREAS, Therion Biologics Corporation, a Delaware corporation
("Therion"), leases premises adjoining the Cambridge Facility at 76 Rogers
Street, Cambridge, Massachusetts, from the Landlord;
WHEREAS, Seller is party to an Operating Agreement, dated as of October
4, 1991, with Therion (the "Therion Agreement"), pursuant to which Seller and
Therion agreed to share specified portions of their respective premises and to
share specified services;
WHEREAS, pursuant to the terms of the Purchase Agreement, Seller and
Buyer, with the consent of the Landlord and Therion, are entering into a
Sublease (the "Cambridge Sublease"), pursuant to which Seller is subleasing to
Buyer a portion of the Cambridge Facility ("Buyer's Space") and retaining the
balance of the Cambridge Facility ("Seller's Space"); and
<PAGE> 2
WHEREAS, pursuant to the Purchase Agreement, Seller and Buyer agreed to
share certain facilities and services at the Cambridge Facility;
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the parties, intending to be legally bound, hereby agree
as follows:
1. CORE SERVICES.
(a) During the full term of the Cambridge Sublease, Seller
shall provide to Buyer the following services (the "Core Services"):
(i) Use, consistent with past usage by the Business,
of Seller's water purification system, dark room, animal facility,
glassware cleaning and sterilization facility; and
(ii) Supervisory and operating services relating to
the operation of the animal facility and the glassware cleaning and
sterilization facility.
(b) Buyer understands that, pursuant to the terms of the
Therion Agreement, Seller currently shares its water purification system, dark
room, animal facility and glassware cleaning and sterilization facility with
Therion. Accordingly, Buyer will be entitled to share Seller's permitted portion
of the utilization of such facilities on an equal basis.
(c) Seller shall provide Buyer with access to the water
purification system, dark room, animal facility and glassware cleaning facility
in Seller's Space subject to reasonable rules and regulations as may be adopted
by Seller from time to time; provided, however, that Seller shall not be
required to incur any additional costs or expenses (e.g., overtime pay or
security expenses) solely for the purpose of affording such access after regular
business hours unless Buyer agrees to pay and does pay such additional costs or
expenses.
2. PAYMENT FOR CORE SERVICES. During the first year of this Agreement,
Buyer shall pay Seller for the Core Services at the annual rate of $130,000,
payable monthly on the tenth day of each month hereunder. Promptly following the
expiration of each year under this Agreement, Seller shall develop its good
faith best estimate of the costs of providing the Core Services for the
forthcoming year and shall provide such estimate to Buyer. Seller and Buyer
shall exercise commercially reasonable efforts to negotiate an equitable sharing
of such costs for the forthcoming year, based upon the experience of the parties
as to Buyer's usage during the past year and the parties' best estimate of the
relative usage of the Core Services during the forthcoming year. Until the
parties have agreed on the new annual rate, Buyer's monthly payment shall be
based on the payment applicable in the prior year, with appropriate payment by
Seller to Buyer, or Buyer to Seller, as the case may be, as soon as the rate for
the forthcoming year has been determined. In the event that the parties shall be
unable to agree on the equitable sharing of costs for the forthcoming year
within 60 days after the end of the prior year, either party shall have the
right to terminate this Agreement upon thirty days' notice.
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<PAGE> 3
3. ACCESS TO RESEARCH AND DEVELOPMENT LABORATORY. For a period not to
exceed twelve months from the date of this Agreement, Seller shall provide Buyer
with access to and use, consistent with past usage by the Business, of Seller's
research and development laboratory (including, without limitation, use of
equipment, chemicals and supplies located therein) in Seller's Space ("R&D
Access"), subject to reasonable rules and regulations as may be adopted by
Seller from time to time. Buyer shall have the right to terminate its rights to
R&D Access on 30 days' notice. Buyer shall reimburse Seller for R&D Access at
the rate of $40,000 per year, payable in equal monthly installments on the tenth
day of each month hereunder. Seller shall not be required to incur any
additional costs or expenses (e.g., overtime pay or security expenses) solely
for the purpose of affording R&D Access after regular business hours unless
Buyer agrees to pay and does pay such additional costs or expenses.
4. ENLARGEMENT OF ANIMAL CARE FACILITIES. Subject to the requirements
of the Cambridge Lease and the Cambridge Sublease, within six months following
the date of this Agreement, Buyer shall, at its cost and expense, enlarge the
animal care facilities in accordance with a design to be agreed upon by Buyer
and Seller.
5. CONFIDENTIALITY. Each party recognize that as a result of the
sharing of facilities and services each of them may become aware of confidential
information of the other party. Each party accordingly shall keep confidential
(a) any and all confidential information received from the other party, and
shall not use such information for any purpose unrelated to the performance of
this Agreement without the prior written consent of the other party, both during
the term of this Agreement and for a period of ten (10) years following the
complete termination of this Agreement. Each party shall take all reasonable
steps to insure such confidential treatment and nonuse. Notwithstanding the
foregoing, such obligations of confidential treatment and nonuse shall not apply
to information which the receiving party shall sustain the burden of proving is
(a) in the possession of the receiving party prior to receipt thereof from the
transmitting party as shown by the receiving party's written records, (b)
already available or becomes available to the public through no fault of the
receiving party, (c) received by the receiving party from a third party having a
right to disclose it, or (d) is required to be disclosed by subpoena or other
legal process or applicable law or regulation.
6. TERM OF THE AGREEMENT. This Agreement shall continue for the term of
the Cambridge Sublease.
7. NOTICES. All notices, requests, demands and other communications
under this Agreement shall comply with the requirements of Section 15.9 of the
Purchase Agreement.
8. ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement and the agreements, exhibits, schedules, certificates and instruments
referred to therein or delivered in connection therewith, constitutes the entire
agreement and understanding between the parties hereto with respect to the
transactions contemplated by the Purchase Agreement and supersedes all prior
oral or written agreements and understandings relating to such subject matter.
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<PAGE> 4
9. MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by both
parties hereto.
10. WAIVERS AND CONSENTS. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
11. ASSIGNMENT. The rights and obligations under this Agreement may not
be assigned by either party hereto without the prior written consent of the
other party, in its sole discretion.
12. BENEFIT. Nothing in this Agreement shall be construed to create any
rights or obligations except between the parties hereto, and no person or entity
shall be regarded as a third- party beneficiary of this Agreement.
13. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of New York, without giving effect to the conflict of law
principles thereof.
14. SEVERABILITY. If any provision of this Agreement shall be void as
contrary to applicable law, it is agreed that such provision shall be omitted
from this Agreement and that the remainder hereof shall be and remain in full
force and effect as if such omitted provision had not been included herein.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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<PAGE> 5
15. INDEPENDENCE OF PARTIES. Nothing contained in this Agreement shall
be construed to place Seller and Buyer in a relationship as partners, joint
venturers, employer and employee or principal and agent, nor shall Buyer be
considered in any sense an affiliate of Seller.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SELLER: BUYER:
ONCOGENE SCIENCE, INC. CALBIOCHEM-NOVABIOCHEM
CORPORATION
By: /s/ Steven M. Peltzman By: /s/ Stelios B. Papadopoulos
---------------------- ---------------------------
Steven M. Peltzman Stelios B. Papadopoulos
President and Chief Chairman and Chief
Operating Officer Executive Officer
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<PAGE> 1
EXHIBIT 10(g)(ii)
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") entered into on August
2, 1995 by and between ONCOGENE SCIENCE, INC., a Delaware corporation
("Licensor"), and CALBIOCHEM-NOVABIOCHEM CORPORATION, a California corporation
("Licensee").
WITNESSETH
WHEREAS, Licensor is a biopharmaceutical company utilizing proprietary
technology to discover and develop drugs for the treatment of cancer,
cardiovascular disease and other human diseases associated with abnormalities of
cell growth and control;
WHEREAS, Licensor is engaged in its Cambridge, Massachusetts, facility
in both a diagnostics business and a research products business;
WHEREAS, the research products business (the "Business") markets
research reagents, kits and other research tools to the academic research,
industrial research, and clinical research markets;
WHEREAS, Licensor has entered into an Asset Purchase Agreement (the
"Purchase Agreement"), dated as of June 26, 1995, with Licensee and
Calbiochem-Novabiochem International, Inc., a Delaware corporation, pursuant to
which Licensor has sold to Licensee substantially all the assets and business of
the Business and the products thereof, while retaining the right in connection
with its Diagnostic Business (as defined in the Purchase Agreement) to
manufacture and sell research products to the clinical research market and
diagnostic products to the clinical diagnostic market;
WHEREAS, Licensor is the owner of the entire right, title and interest
in and to the trademark ONCOGENE SCIENCE and the related logo (the "Mark") and
the goodwill associated with the Mark;
WHEREAS, pursuant to the terms of the Purchase Agreement, Licensor has
agreed to grant to Licensee a non-exclusive and non-assignable license, for a
limited period of time, to use the Mark in connection with the sale to consumers
and distributors of Research Products (as defined below);
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the parties, intending to be legally bound, hereby agree
as follows:
<PAGE> 2
1. GRANT OF LICENSE.
(a) Licensor hereby grants to Licensee, subject to the
provisions of this Agreement, a non-exclusive, non-assignable, fully-paid,
non-renewable right, license and authority to use the Mark worldwide in
connection with Licensee's sale to consumers and distributors (the "License") of
(i) the research products sold to Licensee by Licensor pursuant to the Purchase
Agreement, (ii) products licensed by Licensee from Licensor in the future
pursuant to the New Product License Right of First Refusal Agreement dated
August 2, 1995 between Licensee and Licensor and (iii) research products
developed by Licensee in the future ("Future Research Products", and
collectively with the products referred to in clauses (i) and (ii), "Research
Products"). Licensee shall use the Mark at all times in accordance with the
terms set forth in this Agreement. During the Term (as defined below) of this
License, the Licensee shall transition its catalogues, product labeling and
promotional materials so as to de-emphasize the Mark and emphasize its own
corporate trademark, trade name and identification program.
(b) This Agreement shall in no way limit Licensor's use of the
Mark in its current operations or in any future endeavor which Licensor may
pursue or desire to pursue.
(c) The license granted hereunder shall be royalty free, and
Licensee shall not be required to make any additional payments to Licensor in
consideration of the grant of the License.
2. LICENSEE'S OBLIGATIONS AND UNDERTAKINGS.
(a) Licensee hereby agrees to limit its use of the Mark to the
sale of, and invoicing for, Research Products to Licensee's consumers and
distributors. Licensee may not use the Mark in connection with any other
products or services.
(b) Licensee will use the same high standards of quality and
integrity in the preparation of the Research Products as set by Licensor when
Licensor owned and prepared the Research Products referred to in Section 1(a)(i)
hereof. Licensee is, of course, free to alter the quality, integrity and
standards of one or more Research Products, but Licensee may not use or
associate the Mark with any such Research Product that has been so altered.
(c) Licensee shall present and use the Mark in accordance with
Licensor's guidelines as follows:
(i) For each use of the Mark in a font larger than 15
points, Licensee shall place "TM" or a superscript "(TM)" next to the mark.
-2-
<PAGE> 3
(ii) For each item bearing the Mark, such as a
package or box labeled for consumer use, an invoice or an advertisement or other
promotional item, Licensee will include at least one written notice to the
effect that: "ONCOGENE SCIENCE and the related logo are trademarks of Oncogene
Science, Inc." Such written notice may be on the box or on an insert included
with the box, or on any other written matter included with the item in such a
manner that it is easily found or observed by consumers or readers of the item.
(iii) For each item bearing the Mark, such as a
package or box labeled for consumer use, an invoice or an advertisement or other
promotional item, Licensee will place its own trade name and trademarks, or
both, in a commercially-reasonable manner identifying Licensee as the immediate
source of the item bearing the Mark.
(iv) Licensee may present the Mark in any font that
Licensor has previously used or which Licensor uses for its own goods and
services during the term of the License.
(v) Subject to Section 2(c)(iii) and (iv) hereof,
Licensee may not alter the Mark or combine it with any term, design,
designation, trademark or service mark, except that Licensee may use the phrases
"Oncogene Science Research Products" and "Oncogene Research Products" during the
term of this Agreement. Licensee may not use the Mark or any derivative thereof
in any manner that would suggest (i) that Licensor is an affiliate, division or
other business unit of Licensee or (ii) an inaccurate statement of fact.
(vi) Licensee may not use the Mark with any good,
service or product other than the Research Products.
(vii) Should Licensee desire to use the Mark in any
manner that does not meet the guidelines set forth in this Agreement, Licensee
shall submit to Licensor for Licensor's review and approval any and all such
uses. Licensor shall have thirty (30) days to review such uses, and Licensor
shall be deemed to have granted approval of such use if Licensor does not
respond within thirty (30) days of Licensor's receipt of Licensee's request. If
Licensor refuses approval of such use, Licensee will not use the Mark in such a
manner.
(d) During the term of the License, Licensor may request
samples of any one or more Research Products, which Licensee shall provide.
Licensor shall at its own expense conduct tests on the samples to insure that
Licensee is maintaining the same level of quality as that previously provided by
Licensor. If Licensor determines that one or more Research Products do not meet
Licensor's standards of quality in all material respects, then Licensor shall in
writing notify Licensee that it is in breach of this License and that Licensee
may cure the breach in accordance with the provisions of this Agreement. If the
breach is not cured pursuant to the terms of this Agreement, then Licensor's
sole remedy shall be to
-3-
<PAGE> 4
terminate the License to use the Mark in connection with such Research Products
pursuant to the termination provisions of this Agreement. A termination of the
License as to one Research Product shall not affect the License as to any other
Research Product.
With respect to samples of, or information relating
to, any Future Product ("confidential information"), Licensor shall keep
confidential (a) any and all confidential information received from Licensee or
derived by Licensor through its examination of such samples, and shall not use
such information for any purpose unrelated to examining samples for Future
Products to insure that Licensee is maintaining the level of quality required
hereunder without the prior written consent of Licensee, both during the term of
the Agreement and for a period of ten (10) years following the complete
termination of this Agreement. Licensor shall take all reasonable steps to
insure such confidential treatment and nonuse. Notwithstanding the foregoing,
such obligations of confidential treatment and nonuse shall not apply to
information which Licensor shall sustain the burden of proving is (a) in the
possession of Licensor prior to receipt thereof from Licensee as shown by
Licensor's written records, (b) already available or becomes available to the
public through no fault of Licensor, (c) received by License from a third party
having a right to disclose it, or (d) is required to be disclosed by subpoena or
other legal process of applicable law or regulation.
(e) During the term of the License, Licensor may request
samples of any advertising, promotional or marketing materials bearing the Mark,
which Licensee shall provide. If Licensor determines that one or more materials
does not meet Licensor's guidelines for the use of the Mark in all material
respects, then Licensor shall in writing notify Licensee that it is in breach of
this License and that Licensee may cure the breach in accordance with the
provisions of this Agreement. If the breach is not cured pursuant to the terms
of this Agreement, then Licensor's sole remedy shall be to terminate the License
to use the Mark in connection with such Research Products pursuant to the
termination provisions of this Agreement. A termination of the License as to one
Research Product shall not affect the License as to any other Research Product.
3. RIGHTS IN THE MARK.
(a) To the best of its knowledge, information and belief,
Licensor represents and warrants to the Licensee that the Mark is the valid and
existing trademark of Licensor. Licensor is the sole and exclusive owner of the
Mark and has not to date granted any license or other right with respect to the
Mark to any third party. Nothing contained in this Agreement shall give Licensee
any right, title or interest in the Mark, except the right to use the Mark in
strict accordance with the provisions of this Agreement, and Licensee shall not
attempt, directly or indirectly, to license or sublicense any other person to
use the Mark. All use by the Licensee of the Mark and related goodwill generated
thereby shall inure to the benefit of the Licensor.
-4-
<PAGE> 5
(b) During the term of this License, Licensee shall not adopt
any trademark or trade name, or any other designation, that, in the reasonable
judgment of Licensor, is deceptively or confusingly similar to the Mark.
(c) During the term of this License, Licensee shall not,
directly or indirectly, contest the validity of the Mark, or of Licensor's
rights to the Mark, or the use or licensing of the Mark by Licensor or any other
person or entity licensed by Licensor.
(d) Licensee shall promptly notify Licensor, in writing, of
any infringement or potential infringement of the Mark of which it has become
aware. Without the prior written consent of Licensor, Licensee shall have no
right to bring any action or proceeding relating to such infringement or
potential infringement or which involves, directly or indirectly, any issue the
litigation of which may affect the interest of Licensor. Licensee shall also
promptly notify Licensor of any suit or other proceeding filed against Licensee
in any court, governmental agency or arbitration board or panel.
(e) In further consideration of the rights granted to Licensee
pursuant to this Agreement, Licensee hereby assigns to Licensor, any trademark
rights and equities, and any titles incidental to such rights, that may have
vested in the Licensee related to the Mark as a result of any activities of
Licensee pursuant to this Agreement.
4. INDEMNIFICATION. Licensee agrees to indemnify and hold harmless
Licensor from and against any and all claims, liabilities, expenses, damages and
costs (including reasonable attorney's fees) arising out of or relating to
Licensee's use of the Mark.
5. TERM AND TERMINATION.
(a) This Agreement and the License hereunder shall continue
for a period of three (3) years from the effective date hereof (the "Term"),
unless sooner terminated upon the happening of any of the following:
(i) if Licensee shall breach any obligation under
this Agreement, in a material manner, then upon notice as provided in paragraph
6 and failure to cure, this Agreement and the License shall terminate;
(ii) if there is any attempt by Licensee to transfer
the rights to this License, any such transfer is null and void, and upon notice
as provided in paragraph 6 and failure to cure, this Agreement and the License
shall terminate; or
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<PAGE> 6
(iii) if Licensee and Licensor mutually agree to
terminate this Agreement and the License hereunder.
(b) On termination of the License, in whole or part for any
reason, Licensee shall immediately and completely discontinue all further use of
the Mark in connection with the Research Products that are the subject of the
terminated portion of the License. Notwithstanding the foregoing (but subject to
the requirements of the last sentence of Section 6 hereof), Licensee may sell in
the normal course of business any goods in inventory as of the date of
termination bearing the Mark.
6. NOTICE. Licensor shall give Licensee not less than thirty (30) days
written notice to Licensee of any intent to terminate all or part of this
License for breach of an obligation hereunder (except for any breach described
in Section 2(d) hereof, with respect to which the minimum notice period shall be
ninety (90) days) or of any attempt by Licensee to transfer this License.
Licensee shall be permitted to cure such breach or attempted transfer within
such thirty (30) day period (or ninety (90) day period in the case of a breach
as described in Section 2(d) hereof), and if the same be cured, no such
termination of the License shall occur. In the event of a breach of Section 2(d)
hereof, Licensee shall, during the cure period referred to above, remove any
product not meeting Licensor's standards of quality from the market (to the
extent any product is under Licensee's control) and refrain from marketing,
distributing or selling such product (unless such product is marketed,
distributed and sold devoid of the Mark).
7. MISCELLANEOUS.
(a) If any provision of this Agreement shall be void as
contrary to applicable law, it is agreed that such provision shall be omitted
from this Agreement and that the remainder hereof shall be and remain in full
force and effect as if such omitted provision had not been included herein.
(b) This Agreement, together with the Purchase Agreement and
the agreements, exhibits, schedules, certificates and instruments referred to
therein and delivered in connection therewith, constitutes the entire
understanding and agreement between the parties hereto with respect to the
transactions contemplated by the Purchase Agreement and supersedes all prior
understandings and agreements with respect to such subject matter. This
Agreement may not be altered, amended or modified in any manner except by
written agreement of the parties.
(c) Nothing contained in this Agreement shall be construed to
place Licensor and Licensee in a relationship as partners, joint venturers,
employer and employee or principal and agent, nor shall Licensee be considered
in any sense an affiliate of Licensor.
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<PAGE> 7
Licensee shall not have any authority to create or assume in Licensor's name or
in its behalf any obligation, express or implied, or to act or purport to act as
Licensor's agent or legally empowered representative for any purpose whatsoever.
(d) The rights and liabilities of this Agreement may be
assigned by Licensor, and this Agreement shall be binding on and inure to the
benefit of its successors and assigns. Licensee may assign its rights and
responsibilities only with the prior written approval of Licensor, which
Licensor may withhold in its sole discretion.
(e) All notices, requests, demands and other communications
under this Agreement shall comply with the requirement of Section 15.9 of the
Purchase Agreement.
(f) This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof.
(g) A waiver by either of the parties hereto of any breach of
any provision of this Agreement by the other party shall not be construed to be
a waiver of any succeeding breach or any such provision or waiver of the
provision itself.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LICENSOR: LICENSEE:
ONCOGENE SCIENCE, INC. CALBIOCHEM-NOVABIOCHEM
CORPORATION
By: /s/ Steven M. Peltzman By: /s/ Stelios B. Papadopoulos
-------------------------- ----------------------------
Steven M. Peltzman Stelios B. Papadopoulos
President and Chief President and Chief
Operating Officer Executive Officer
-7-
<PAGE> 1
EXHIBIT 10(g)(iii)
SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT ("Sublicense") entered into on
August 2, 1995, by and between ONCOGENE SCIENCE, INC., a Delaware corporation
("Licensee"), and CALBIOCHEM-NOVABIOCHEM CORPORATION, a California corporation
("Sublicensee").
WITNESSETH
WHEREAS, Licensee is a biopharmaceutical company which is
engaged in its Cambridge, Massachusetts facility in both a diagnostics business
and a research products business;
WHEREAS, the research products business markets research
reagents, kits and other research tools to the academic research, industrial
research, and clinical research markets;
WHEREAS, Licensee has entered into an Asset Purchase Agreement
(the "Purchase Agreement"), dated as of June 26, 1995, with
Calbiochem-Novabiochem Corporation, a California corporation ("Sublicensee"),
and Calbiochem-Novabiochem International, Inc., a Delaware corporation, pursuant
to which Licensee has agreed to sell its research products business, while
retaining the right in connection with its diagnostics business to manufacture
and sell research products to the clinical research market;
WHEREAS, Sublicensee has agreed to purchase the research
products business and to conduct such business in the academic research,
industrial research, and clinical research markets, recognizing that Licensee
will continue to have the right to manufacture and sell products to the clinical
research market and diagnostic products to the diagnostic market;
WHEREAS, Licensee is party to the license agreements described
on Exhibit "A" hereto (the "Master License Agreements") with the respective
licensors identified on Exhibit "A" (the "Licensors"), pursuant to which the
Licensors have granted to Licensee the right to make, have made, use, market,
distribute and sell the respective products identified on Exhibit "A" (the
"Licensed Products"); and
WHEREAS, pursuant to the terms of the Purchase Agreement,
Licensee has agreed to grant to Sublicensee sublicenses covering Licensee's
rights under the respective Master License Agreements, such sublicenses to be on
an exclusive basis insofar as such rights pertain to the academic research and
industrial research markets, and on a co-exclusive basis insofar as such rights
pertain to the clinical research market;
NOW THEREFORE, in consideration of the mutual covenants and
promises hereinafter set forth, the parties, intending to be legally bound,
hereby agree as follows:
<PAGE> 2
1. DEFINITIONS.
(a) The term "Research" shall refer to the use of research
products in life science research by research companies (including, without
limitation, pharmaceutical and biotechnology companies), institutions
(including, without limitation, medical centers, independent reference
laboratories and comprehensive cancer centers), and universities. The term
"Research" specifically excludes any Diagnostic use.
(b) The term "Clinical Research" shall refer to Research
engaged in by medical centers, independent reference laboratories and
comprehensive cancer centers where research is performed utilizing, for the most
part, human samples to establish clinical correlation with a diagnosis,
prognosis, or monitoring applications.
(c) The term "Diagnostic" shall refer to diagnosis, prognosis
or other evaluation of patients where such use, if performed in the United
States, would typically require approval by the United States Food and Drug
Administration.
2. GRANT OF SUBLICENSES.
(a) On the terms and conditions hereinafter set forth,
Licensee hereby grants to Sublicensee all of Licensee's rights under each of the
Master License Agreements to make, have made, use, market, distribute, and sell
the Licensed Products in the field of Research. The sublicenses granted pursuant
to the foregoing sentence shall be exclusive insofar as such rights pertain to
Research other than Clinical Research and shall be co-exclusive with Licensee
insofar as such rights pertain to Clinical Research. Licensee reserves unto
itself any rights under the Master License Agreements to engage in activities in
connection with its Diagnostic programs.
(b) Failure to Obtain Consent. This Agreement shall not
constitute an agreement to sublicense rights under any Master License Agreement
if an attempted sublicense would constitute a breach of such Master License
Agreement. If a consent from the respective Licensor to sublicense rights under
any Master License Agreement to Sublicensee has not been obtained by Licensee in
writing as of the date hereof, and such consent is required under the terms of
such Master License Agreement, then no sublicense with respect to such Master
License Agreement will be granted hereunder pending receipt of such written
consent. In such event, Licensee will cooperate with Sublicensee after the date
hereof in any reasonable arrangement requested by Sublicensee, including
subcontracting or subleasing, to provide for Sublicensee the benefits under any
such Master License Agreement, including enforcement at the cost of and for the
benefit of Sublicensee of any and all rights of Licensee against the other party
thereto with respect to such Master Licensee Agreement.
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<PAGE> 3
After the date hereof, upon Licensee's receipt of written
consent of the respective Licensor to the sublicense of rights under a
particular Master License Agreement, which consent shall not have been obtained
as of the date hereof, no further action shall be required to sublicense to
Sublicensee such rights under such Master License Agreement, and this Agreement
shall be deemed to constitute the sublicense to Sublicensee of such rights under
such Master License Agreement at such time.
3. SUBLICENSEE'S OBLIGATIONS. As between Licensee and Sublicensee, Sublicensee
shall be subject in all respects to the covenants and restrictions contained in
the Master License Agreements insofar as they pertain to the rights granted to
Sublicensee under this Sublicense. Without limiting the foregoing, (i)
Sublicensee shall be responsible for, and shall make payments directly to the
respective Licensors on a timely basis of, all royalties payable with respect to
sales of the Licensed Products by Sublicensee; and (ii) Sublicensee shall
provide Licensee with copies of all reports it is required to deliver to the
respective Licensors required under the Master License Agreements pertaining to
Sublicensee's activities.
4. LICENSEE'S OBLIGATIONS. Conditioned upon compliance by Sublicensee with its
obligations under this Sublicense, Licensee shall use its best efforts to comply
with its obligations under the Master License Agreements. Upon the termination
or nonrenewal of any particular Master License Agreement, Licensee shall, at
Sublicensee's request, exercise commercially reasonable efforts to cooperate
with Sublicensee in forming a direct relationship between the relevant Licensor
and Sublicensee for the purposes of allowing Sublicensee to license directly
from the Licensor the rights it enjoyed under this Sublicense with respect to
the terminated or nonrenewed Master License Agreement.
5. LEGAL ACTION.
(a) If information comes to the attention of either Licensee
or Sublicensee to the effect that any of the rights relating to the Licensed
Products covered by the Master License Agreements have been or are threatened to
be unlawfully infringed, such party shall notify the other party to this
Sublicense. As between Licensee and Sublicensee, the following shall be
applicable:
Licensee shall have the right, not the obligation, at
its expense, to take such action as it may deem necessary or
appropriate to prosecute such unlawful infringement, including the
right to bring any suit, action or proceeding involving any such
infringement. If Licensee determines that it is necessary or desirable
for Sublicensee to join any such suit, action or proceeding,
Sublicensee shall execute all papers and perform such other acts as may
be reasonably required to permit Licensee to act in Sublicensee's name
in connection with such suit, action or proceeding, in which event,
Licensee shall hold Sublicensee free, clear and harmless from any and
all costs and expenses of such litigation, including attorneys' fees.
If Licensee does not,
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<PAGE> 4
within one hundred and twenty (120) days after receiving notice of the
alleged infringement, notify Sublicensee of Licensee's intent to bring
suit against any infringer, Sublicensee shall have the right to bring
any suit, action or proceeding for such alleged infringement, but it
shall not be obligated to do so. If Sublicensee determines that it is
necessary or desirable for Licensee to join any such suit, action or
proceeding, Licensee shall execute all papers and perform such other
acts as may be reasonably required to permit Sublicensee to act in
Licensee's name in connection with such suit, action or proceeding, in
which event, Sublicensee shall hold Licensee free, clear and harmless
from any and all costs and expenses of such litigation, including
attorneys' fees. Each party shall always have the right to be
represented by counsel of its own selection and at its own expense in
any suit, action or proceeding instituted by the other for
infringement, and in which such party is joined under the terms of this
Section. If either party lacks standing to bring any such suit, action
or proceeding, then the other party shall do so at the request and
expense of the party lacking standing. To the extent royalties are
received pursuant to a judgment or settlement with an infringing party
relating to Products sold to the Clinical Research market, such
royalties shall be shared equally by Licensee and Sublicensee. To the
extent royalties are received pursuant to a judgment or settlement with
an infringing party relating to Products sold to the Research markets,
other than the Clinical Research market, Sublicensee shall be solely
entitled to all such royalties. All other sums recovered in any such
suit or settlement shall belong to the party that brought the suit,
action or proceeding.
(b) Licensee makes no representations or warranties in regard
to the validity of the Licensed Products and the corresponding intellectual
property rights granted to Sublicensee under this Sublicense. In the event a
third person alleges infringement of the intellectual property rights by reason
of Sublicensee's use of the patent rights or technology in the manufacture, use
or sale of the Licensed Products, Licensee has no obligation to defend any suit,
action or proceeding against Sublicensee. Licensee will, however, cooperate with
Sublicensee, at Sublicensee's expense, in the defense of any such suit, action
or proceeding against Sublicensee alleging such infringement. Upon receiving any
such information, Licensee shall give Sublicensee prompt written notice of the
commencement of any such suit, action or proceeding or claim of infringement.
Licensee shall execute all documents and take all other actions, including
giving testimony, which may reasonably be required in connection with the
defense of such suit, action or proceeding, and Sublicensee will hold Licensee
free, clear and harmless from any and all costs and expenses of such litigation,
including attorneys' fees.
6. CONFIDENTIALITY. With respect to confidential information relating to
Licensed Products ("confidential information"), each party shall keep
confidential (a) any and all confidential information received from the other
party, and shall not use such information for any purpose unrelated to the
performance of this Agreement without the prior written consent of the other
party, both during the term of this Agreement and for a period of ten (10) years
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<PAGE> 5
following the complete termination of this Agreement. Each party shall take all
reasonable steps to insure such confidential treatment and nonuse.
Notwithstanding the foregoing, such obligations of confidential treatment and
nonuse shall not apply to information which the receiving party shall sustain
the burden of proving is (a) in the possession of the receiving party (except in
the case of Licensee, confidential information transferred to Sublicensee in
connection with the consummation of the Purchase Agreement) prior to receipt
thereof from the transmitting party as shown by the receiving party's written
records, (b) already available or becomes available to the public through no
fault of the receiving party, (c) received by the receiving party from a third
party having a right to disclose it, or (d) is required to be disclosed by
subpoena or other legal process or applicable law or regulation.
7. TERM OF THE AGREEMENT. The term of the sublicense granted hereunder with
respect to any particular Master License Agreement shall be coextensive with the
term of such underlying Master License Agreement. The term of this Sublicense
Agreement shall continue until the expiration of the last to expire of the
Master License Agreements.
8. MISCELLANEOUS.
(a) If any provision of this Sublicense shall be void as
contrary to applicable law, it is agreed that such provision shall be omitted
from this Sublicense and that the remainder hereof shall be and remain in full
force and effect as if such omitted provision had not been included herein.
(b) Nothing contained in this Sublicense shall be construed to
place Licensee and Sublicensee in a relationship as partners, joint venturers,
employer and employee or principal and agent, nor shall Sublicensee be
considered in any sense an affiliate of Licensee. Sublicensee shall not have any
authority to create or assume in Licensee's name or in its behalf any
obligation, express or implied, or to act or purport to act as Licensee's agent
or legally empowered representative for any purpose whatsoever.
(c) All notices, requests, demands and other communications
under this Sublicense shall comply with the requirements of Section 15.9 of the
Purchase Agreement.
(d) This Sublicense, together with the Purchase Agreement and
the agreements, exhibits, schedules, certificates and instruments referred to
therein or delivered in connection therewith, constitutes the entire agreement
and understanding between the parties hereto with respect to the transactions
contemplated by the Purchase Agreement and supersedes all prior oral or written
agreements and understandings relating to such subject matter.
(e) The terms and provisions of this Sublicense may be
modified or amended only by written agreement executed by both parties hereto.
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<PAGE> 6
(f) The terms and provisions of this Sublicense may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Sublicense,
whether or not similar. Each such waiver or consent shall be effective only in
the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
(g) Subject to the requirements of the Master License
Agreements regarding sublicensing and assignment, this Sublicense shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and assigns.
(h) This Sublicense and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of New York, without giving effect to the conflict of law
principles thereof.
IN WITNESS WHEREOF, the parties have executed this Sublicense as of the
day and year first above written.
LICENSEE: SUBLICENSEE:
ONCOGENE SCIENCE, INC. CALBIOCHEM-NOVABIOCHEM
CORPORATION
By: /s/ Steven M. Peltzman By: /s/ Stelios B. Papadopoulos
---------------------- ---------------------------
Steven M. Peltzman Stelios B. Papadopoulos
President and Chief Chairman and Chief
Operating Officer Executive Officer
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<PAGE> 7
Schedule A
1. License Agreement, dated as of January 16, 1991, between
Ciba-Geigy Limited and Oncogene Science, Inc. (PAb 1620)
2. License Agreement, dated as of August 15, 1989, between CRC
Technology and Oncogene Science, Inc. (PAb 280)
3. License Agreement, dated as of April 16, 1992, between Cancer
Research Campaign Technology Limited and Oncogene Science,
Inc. (D01)
4. Research Agreement, dated as of April 30, 1992, between Cold
Spring Harbor Laboratory and Oncogene Science, Inc.
5. Non-Exclusive Licensing Agreement dated July 1, 1995 between
Dana-Farber Cancer Institute, Inc. and Oncogene Science, Inc.
(TE111)
6. License Agreement, dated as of May 5, 1995, between The Danish
Cancer Society and Oncogene Science, Inc. (MO-1) *
7. License Agreement, dated as of May 5, 1995, between The Danish
Cancer Society and Oncogene Science, Inc. (DCS 6, DCS 22,
DCS-50) *
8. License Agreement, dated as of September 30, 1994, between
Cancerforskningsfondet af 1989 (Finsen Laboratory) and
Oncogene Science, Inc. (PAI-1 technology)
9. License Agreement, dated as of July 13, 1992, between General
Hospital Corporation d/b/a Massachusetts General Hospital and
Oncogene Science, Inc. (GNS-1, GNS-3)
10. License Agreement, dated as of October 11, 1993, between
General Hospital Corporation d/b/a Massachusetts General
Hospital and Oncogene Science, Inc. (HD11, HE12, HE172, DC17,
DC34)
11. License Agreement, dated as of August 6, 1993, between
Hoffmann-La Roche, Inc. and Oncogene Science, Inc. (colon
cancer genes) *
12. License Agreement, dated as of February 12, 1987, between
Imperial Cancer Research Fund Patents Limited and Oncogene
Science, Inc. (PAb1801)
13. License Agreement, dated as of February 1, 1990, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (Pab240)
14. License Agreement, dated as of October 15, 1990, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (PAb246)
15. License Agreement, dated as of October 15, 1990, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. Letter dated September 23, 1991. (EGFR.1)
16. License Agreement, dated as of October 15, 1990, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (PC10)
17. License Agreement, dated as of November 19, 1991, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (P53 protein and gene sequences)
18. License Agreement, dated as of November 23, 1993, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (PS2)
19. License Agreement, dated as of January 30, 1995, between
Imperial Cancer Research Technology Limited and Oncogene
Science, Inc. (RTJ.2 and SGP.1)
1
<PAGE> 8
20. License Agreement, dated as of December 1, 1984, between
Imperial Cancer Research Fund Patents Limited and Oncogene
Science, Inc. Letter amending agreement dated October 2, 1985.
(421)
21. License Agreement, dated as of November 22, 1989, among
Massachusetts Eye and Ear Infirmary, The Whitehead Institute
for Biomedical Research, and Oncogenetics Partners (a
partnership of Applied Biotechnology, Inc. and E.I. du Pont De
Nemours & Co.). (Rb technology)
22. License Agreement, dated as of June 15, 1984 between
Massachusetts Institute of Technology and Applied
bioTechnology, Inc. Second Amendment to License Agreement,
dated as of April 8, 1987.
23. License Agreement, dated as of March 23, 1985, between
Sloan-Kettering Institute for Cancer Research and Oncogene
Science, Inc. (Y13-259 and Y13-238)
24. License Agreement, dated as of May 2, 1984, between
Max-Planck-Institut Fur Biophysikalische Chemie and Oncogene
Science, Inc. (V-9, DEB5, GA5, NN18, NE14, Ne14)
25. License Agreement, dated as of May 1, 1993, between Monozyme
Aps and Oncogene Science, Inc. (5,6,7 UPA) *
26. PHS Patent License Agreement--Nonexclusive dated January 7,
1994 between United States Public Health Service and Oncogene
Science, Inc. (NM23)
27. PHS Patent License Agreement--Nonexclusive dated May 23, 1994
between United States Public Health Service and Oncogene
Science, Inc. (T2-101)
28. PHS Patent License Agreement--Nonexclusive dated July 9, 1994
between United States Public Health Service and Oncogene
Science, Inc. (erb B3 technology)
29. License Agreement, dated as of February 26, 1985, between
National Research Development Corporation and Oncogene
Science, Inc. (Y3) *
30. License Agreement, dated as of October 15, 1988, between
National Technical Information Service and Oncogene Science,
Inc. (2G9C3)
31. License Agreement, dated as of November 10, 1988, between
Netherlands Cancer Institute and Oncogene Science, Inc. (9G6
and 3B5)
32. License Agreement, dated as of February 1, 1989, between The
Trustees of The University of Pennsylvania and Oncogene
Science, Inc. concerning B 504. (NCM II 100)
33. License Agreement, dated as of February 1, 1989, between The
Trustees of The University of Pennsylvania and Oncogene
Science, Inc. (7.16.4)
34. License Agreement dated April 24, 1986 between Regents of the
University of California and Oncogene Science, Inc. (255, 528,
455 and 579)
35. License Agreement, dated as of May 21, 1992, between The
Scripps Research Institute and Oncogene Science, Inc. *
36. License Agreement, dated as of May 11, 1990, between The
Scripps Research Institute and Oncogene Science, Inc. *
37. License Agreement, dated as of April 25, 1994, between
Sterling Winthrop, Inc. and Oncogene Science, Inc. (SWT3D1) *
2
<PAGE> 9
38. License Agreement, dated as of October 4, 1993, between St.
Jude Children's Research Hospital and Oncogene Science, Inc.
Amendment to License Agreement dated October 20, 1993.
(17A6-4, 34B1-3, A8B6-10 and D1-72-13G)
39. License Agreement, dated as of January 3, 1994, between Takeda
Chemical Industries, Ltd and Oncogene Science, Inc. (3H3, 98,
52)
40. License Agreement, dated as of September 18, 1989, between
Techniclone International Corp. and Oncogene Science, Inc.
(LN4, LNC, LN7, EOS) *
41. License Agreement, dated as of January 25, 1994, between The
Chancellor Masters and Scholars of the University of Oxford
and Oncogene Science, Inc. (bc1-2/100) *
* License Agreements with respect to which written consent has
not been received as of the Closing Date, as defined in the
Asset Purchase Agreement, dated as of June 26, 1995, by and
among Calbiochem-Novabiochem Corporation, Calbiochem-
Novabiochem International, Inc. and Oncogene Science, Inc.
3
<PAGE> 1
EXHIBIT 10(g)(iv)
SHARED INTELLECTUAL PROPERTY LICENSE AGREEMENT
THIS SHARED INTELLECTUAL PROPERTY LICENSE AGREEMENT
("Agreement") entered into on August 2, by and between ONCOGENE SCIENCE, INC., a
Delaware corporation ("Licensor"), and CALBIOCHEM-NOVABIOCHEM CORPORATION, a
California corporation ("Licensee").
WITNESSETH
WHEREAS, Licensor is a biopharmaceutical company which is
engaged in its Cambridge, Massachusetts facility in both a diagnostics business
and a research products business;
WHEREAS, the research products business markets research
reagents, kits and other research tools to the academic research, industrial
research, and clinical research markets;
WHEREAS, Licensor has entered into an Asset Purchase Agreement
(the "Purchase Agreement"), dated as of June 26, 1995, with
Calbiochem-Novabiochem Corporation, a California corporation ("Licensee"), and
Calbiochem-Novabiochem International, Inc., a Delaware corporation, pursuant to
which Licensor has agreed to sell its research products business, while
retaining the right in connection with its Diagnostics Business (as defined in
the Purchase Agreement) to manufacture and sell research products to the
clinical research market;
WHEREAS, Licensee has agreed to purchase the research products
business and to conduct such business in the academic research, industrial
research, and clinical research markets, recognizing that Licensor will continue
to have the right to manufacture and sell products to the clinical research
market and diagnostic products to the diagnostic market;
WHEREAS, pursuant to the terms of the Purchase Agreement,
Licensor has agreed to grant to Licensee a license of rights under patents of
Licensor and technology disclosed in patent applications of Licensor that are
used and useful in the manufacture, use and sale of the "Products" (as defined
below), but which have other uses in Licensor's other businesses;
WHEREAS, such grant shall be on an exclusive basis insofar as
such rights pertain to Research other than Clinical Research, and on a
co-exclusive basis insofar as such rights pertain to Clinical Research;
NOW THEREFORE, in consideration of the mutual covenants and
promises hereinafter set forth, the parties, intending to be legally bound,
hereby agree as follows:
<PAGE> 2
1. DEFINITIONS.
(a) The term "Assumed Contract" shall mean collectively the
Distributorship Agreements, Equipment Leases, License Agreements, Purchase
Orders, Sale Orders, and such other contracts to which the Licensor is a party
relating to the Research Products Business, as such contracts are described in
Section 5.17 of the Purchase Agreement.
(b) The term "Bulk Quantity" shall mean greater than ten (10)
milligrams in a single purchase or an aggregate of ten (10) milligrams in any
number of purchases in any rolling 180-day period.
(c) The term "Clinical Research" shall refer to Research
engaged in by medical centers, independent reference laboratories and
comprehensive cancer centers where research is performed utilizing, for the most
part, human samples to establish clinical correlation with a diagnosis,
prognosis, or monitoring applications.
(d) The term "Confidential Information" shall mean any and all
proprietary information, including trade secrets disclosed in patent
applications, of Licensor which may be disclosed to Licensee from time to time
during the term of this Agreement. Information shall not be considered
confidential to the extent that it:
(i) is publicly disclosed through no fault of any
party hereto, either before or after it becomes known to the Licensee; or
(ii) was known to the Licensee prior to the date of
this Agreement, which knowledge was acquired independently and not from another
party hereto (or such party's employees); or
(iii) is subsequently disclosed to the Licensee in
good faith by a third party who has a right to make such disclosure; or
(iv) has been published by a third party as a matter
of right.
(e) The term "Diagnostic" shall refer to diagnosis, prognosis
or other evaluation of patients where such use, if performed in the United
States, would typically require approval by the United States Food and Drug
Administration.
(f) The term "Licensed Territory" shall mean worldwide.
(g) The term "Products" shall mean (i) the products
manufactured and sold (including, but not limited to, Licensor's complete line
of research products contained in the Licensor's 1995 product catalogue, but
excluding TransProbe-1(R) and TransProbe Light(TM)) in connection with the
Research Products Business on the date hereof (including, but not limited to,
any product necessary and useful for the performance of any Assumed Contract)
and (ii)
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<PAGE> 3
those products which are in the process of development for manufacturing by
Licensor listed on Schedule 1.0 to the Purchase Agreement.
(h) The term "Research" shall refer to the use of research
products in life science research by research companies (including, without
limitation, pharmaceutical and biotechnology companies), institutions
(including, without limitation, medical centers, independent reference
laboratories and comprehensive cancer centers), and universities. The term
"Research" specifically excludes any Diagnostic use.
(i) The term "Research Products Business" shall mean the
research, development, manufacture, worldwide distribution and sale of research
reagent products, for sale into the academic, clinical and industrial research
markets, including, without limitation, such products as monoclonal and
polyclonal antibodies, DNA probes, transcription factors, growth factors, growth
factor receptors, and lymphoid cell surface markers, as such business is being
conducted by Licensor immediately prior to the effectiveness of this Agreement.
2. GRANT OF LICENSE.
(a) On the terms and conditions hereinafter set forth,
Licensor hereby grants to Licensee all of Licensor's rights under the patents of
Licensor described in Exhibit "A" and the technology disclosed in patent
applications of Licensor to make, have made, use, market, distribute, and sell
the Products in the field of Research within the Licensed Territory (the
"License"). The License granted pursuant to the foregoing sentence shall be
exclusive insofar as such rights pertain to Research other than Clinical
Research and shall be co-exclusive with Licensor insofar as such rights pertain
to Clinical Research. Licensor does not grant Licensee any rights in the field
of Diagnostics.
(b) The license granted hereunder shall be royalty free, and
Licensee shall not be required to make any additional payments to Licensor in
consideration of the grant of License.
(c) No rights are granted hereby allowing Licensee to grant
sublicenses without Licensor's prior, express, written consent, which consent
may not be withheld unreasonably (it being understood that Licensor's refusal to
consent to any proposed sublicense shall be deemed reasonable if the refusal is
based on, among other things, Licensor's good faith belief that effecting the
proposed sublicense would result in competitive harm to Licensor). Any attempt
by Licensee to sublicense any of the rights granted hereunder without such
consent of Licensor shall be void.
3. LICENSEE'S OBLIGATIONS.
(a) Licensee shall not sell in a Bulk Quantity to any third
party any Products that are not readily available in Bulk Quantity on the market
from sources other than Licensee without the prior written consent of Licensor
unless in each instance Licensee shall have made a reasonable inquiry with the
appropriate representative of the entity proposing to purchase the
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<PAGE> 4
Product in question (the "Purchasing Entity") as to the Purchasing Entity's
intended use of the Product and received confirmation from the Purchasing Entity
that it does not intend to use the Product in the manufacture or sale of any
product that will be distributed or sold for Diagnostic applications or
incorporated into other products for distribution and sale for Diagnostic
applications. The provisions of this Section 3(a) shall not be interpreted to
mean that the License granted to Licensee under this Agreement conveys any
rights with respect to Diagnostic applications or the sale of Products in any
quantity for Diagnostic applications.
In addition, Licensee shall not sell in Bulk Quantity to any
pharmaceutical or biotechnology company without the prior written consent of
Licensor any antibodies that bind specifically to the proteins identified below
(such antibodies are referred to herein as the "Restricted Technology"), unless
in each instance Licensee shall have made a reasonable inquiry with the
appropriate representative of the Purchasing Entity as to the Purchasing
Entity's intended use of the Restricted Technology and received confirmation
from the Purchasing Entity that it does not intend to use the Restricted
Technology in drug discovery or drug screening operations. For purposes of the
foregoing sentence, the proteins are as follows: WAF-1, MSH-2, RAS, R6, Neu,
PAI-1 and UPA.
(b) Licensee agrees to mark any product sold in the United
States that embodies any proprietary information gained from the patent rights
granted hereunder with all applicable patent numbers and all other proprietary
notices specified by Licensor. All such products shipped to or sold in other
countries shall be marked in such a manner as to conform with the patent and
other laws and practices of each such country of manufacture or sale, and shall
also bear all applicable patent numbers and all other proprietary notices
specified by Licensor.
(c) Licensee agrees that during the term of this Agreement,
and for a period of ten (10) years after this Agreement terminates for any
reason, Licensee receiving Confidential Information from Licensor will (i)
maintain in confidence such Confidential Information to the same extent Licensee
maintains its own proprietary information, (ii) not disclose such Confidential
Information to any third party without prior written consent of the Licensor and
(iii) not use such Confidential Information for any purpose except those
permitted by this Agreement.
(d) If Licensee intends to use the patent and other rights
granted in this license in any foreign country in which Licensor has not already
obtained a patent or filed a patent application, Licensee shall notify the
Licensor prior to such use. Licensor shall have the right, but not the
obligation, at Licensor's expense, to apply for the appropriate patents in that
foreign country. Licensee shall not make use of the patent or other rights in
such foreign country unless and until Licensor gives written permission to do
so, or unless Licensor does not, within one hundred twenty (120) days after
receiving Licensee's written notification, notify Licensee in writing of its
intent to apply for a patent, at which point Licensee shall have the right to
prosecute such a patent application at Licensee's own expense. If Licensor or
Licensee decides in accordance with this provision to file and prosecute patent
application in
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<PAGE> 5
such foreign country, Licensee shall not use such patent or other rights in such
foreign country until a patent application is filed.
(e) In the event that Licensee applies for a patent in a
foreign country under Section 3(d) of this Agreement, Licensee shall grant
Licensor a sublicense covering Licensee's rights under the patent, such grant to
be on an exclusive basis insofar as such rights pertain to Licensor's Diagnostic
Business and shall be non-exclusive insofar as such rights pertain to Clinical
Research.
4. LICENSOR'S OBLIGATIONS.
Licensor agrees that during the term of this Agreement,
Licensor will (i) maintain in confidence all "Licensee Confidential Information"
(defined below), (ii) not disclose Licensee Confidential Information to any
third party without the prior written consent of Licensee and (iii) not use
Licensee Confidential Information for any purpose except those permitted by this
Agreement. For the purposes of this Section 4, "Licensee Confidential
Information" shall mean all proprietary information embodied by the rights
granted to Licensee hereunder, except to the extent such information:
(a) is publicly disclosed through no fault of any party
hereto; or
(b) has been published by a third party as a matter of right.
5. LEGAL ACTION.
(a) If information comes to the attention of either of the
Licensor or Licensee to the effect that any of the rights granted under this
License have been or are threatened to be unlawfully infringed, such party shall
notify the other party to this License.
Licensor shall have the right, not the obligation, at its
expense, to take such action as it may deem necessary or appropriate to
prosecute such unlawful infringement, including the right to bring any suit,
action or proceeding involving any such infringement. If Licensor determines
that it is necessary or desirable for Licensee to join any such suit, action or
proceeding, Licensee shall execute all papers and perform such other acts as may
be reasonably required to permit Licensor to act in Licensee's name in
connection with such action, in which event, Licensor shall hold Licensee free,
clear and harmless from any and all costs and expenses of such litigation,
including attorneys' fees. If Licensor does not, within one hundred and twenty
(120) days after receiving notice of the alleged infringement, notify Licensee
of Licensor's intent to bring suit against any infringer, Licensee shall have
the right to bring suit for such alleged infringement, but it shall not be
obligated to do so. If Licensee determines that it is necessary or desirable for
Licensor to join any such suit, action or proceeding, Licensee may join Licensor
as party plaintiff, in which event Licensee shall hold Licensor free, clear and
harmless from any and all costs and expenses of such litigation, including
attorney's fees. Each party shall always have the right to be represented by
counsel of its own selection and at its own expense in any suit instituted by
the other for infringement,
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<PAGE> 6
and in which such party is joined under the terms of this Section. If Licensor
lacks standing to bring any such suit, action or proceeding, then Licensee shall
do so at the request of Licensor and at Licensor's expense. To the extent
royalties are received pursuant to a judgment or settlement with an infringing
party relating to Products sold to the Clinical Research market, such royalties
shall be shared equally by Licensor and Licensee. To the extent royalties are
received pursuant to a judgment or settlement with an infringing party relating
to Products sold to the Research markets, other than the Clinical Research
market, Licensee shall be solely entitled to all such royalties. All other sums
recovered in any such suit or settlement shall belong to the party that brought
the suit.
(b) Licensee shall not at any time contest, or assist others
in contesting, the validity, ownership or right of Licensor to use the patents
described in Exhibit "A".
(c) Licensor makes no representations or warranties in regard
to the validity of the patents and the corresponding intellectual property
rights granted to Licensee under this License. In the event a third person
alleges infringement of the intellectual property rights by reason of Licensee's
use of the patent rights or technology in the manufacture, use or sale of the
Product, Licensor has no obligation to defend any suit, action or proceeding
against Licensee. Licensor will, however, cooperate with Licensee, at Licensee's
expense, in the defense of any such suit, action or proceeding against Licensee
alleging such infringement. Upon receiving any such information Licensor shall
give Licensee prompt written notice of the commencement of any such suit, action
or proceeding or claim of infringement. Licensee shall execute all documents and
take all other actions, including giving testimony, which may reasonably be
required in connection with the defense of such suit, action or proceeding.
6. TERM OF THE AGREEMENT. The term of the License granted hereunder
with respect to any particular patent shall be co-extensive with the life of
such underlying patent. The term of this Agreement shall extend until the
expiration of the last to expire of the underlying patents (including, without
limitation, patents that may be issued under patent applications) described in
Exhibit "A" hereto.
7. MISCELLANEOUS.
(a) If any provision of this Agreement shall be void as
contrary to applicable law, it is agreed that such provision shall be omitted
from this Agreement and that the remainder hereof shall be and remain in full
force and effect as if such omitted provision had not been included herein.
(b) This Agreement, together with the Purchase Agreement and
the agreements, exhibits, schedules, certificates and instruments referred to
therein and delivered pursuant thereto, constitutes the entire understanding and
agreement between the parties with respect to the transactions contemplated by
the Purchase Agreement and supersedes all prior understandings and agreements
with respect to such subject matter. This Agreement may not be altered, amended
or modified in any manner except by written agreement of the parties hereto.
-6-
<PAGE> 7
(c) Nothing contained in this Agreement shall be construed to
place Licensor and Licensee in a relationship as partners, joint venturers,
employer and employee or principal and agent, nor shall Licensee be considered
in any sense an affiliate of Licensor. Licensee shall not have any authority to
create or assume in Licensor's name or in its behalf any obligation, express or
implied, or to act or purport to act as Licensor's agent or legally empowered
representative for any purpose whatsoever.
(d) The rights and liabilities under this Agreement may be
assigned by Licensor, and this Agreement shall be binding on and inure to the
benefit of its successors and assigns. Licensee may assign its rights and
responsibilities only with the prior written consent of Licensor, which consent
may not be withheld unreasonably (it being understood that Licensor's refusal to
give consent to any proposed assignment shall be deemed reasonable if it is
based on, among other things, Licensor's good faith belief that effecting such
assignment would result in competitive harm to Licensor); provided, however,
that Licensee may assign this Agreement and its rights and obligations
hereunder, without Licensor's consent, in connection with the sale of all or
substantially all of Licensee's assets related to its research products
business.
(e) All notices, requests, demands and other communications
under this Agreement shall comply with the requirements of Section 15.9 of the
Purchase Agreement.
(f) This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York without giving
effect to the conflicts of law principles thereof.
(g) A waiver by either of the parties hereto of any breach of
any provision of this Agreement by the other party shall not be construed to be
a waiver of any succeeding breach of any such provision or waiver of the
provision itself.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
LICENSOR: LICENSEE:
ONCOGENE SCIENCE, INC. CALBIOCHEM-NOVABIOCHEM
CORPORATION
By: /s/ Steven M. Peltzman By: /s/ Stelios B. Papadopoulos
---------------------- ---------------------------
Steven M. Peltzman Stelios B. Papadopoulos
President and Chief Chairman and Chief
Operating Officer Executive Officer
-7-
<PAGE> 8
ISSUED U.S. PATENTS
The following patents will be licensed to Buyer in accordance with the Shared
Intellectual Property License:
PATENT NUMBER & INVENTOR TITLE
DATE -------- -----
- ----
4,535,058 Weinberg Characterization of Oncogenes & Assays
8/13/85 Based Thereon
4,681,840 Stephenson Deoxyribonucleic Acid Molecules Useful
7/21/87 as Probes for Detecting Oncogenes
Incorporated into Chromosomal DNA
4,786,718 Weinberg Method of Preparing Antibodies to
11/22/88 Characterize Oncogenes
4,871,838 Carney Monoclonal Antibodies Reactive with
10/22/87 Activated and Oncogenic Ras P21
Proteins
4,935,341 Weinberg Detection of Point Mutations in New
76/19/90 Genes
5,028,527 Carney Monoclonal Antibodies Against Activated
7/2/91 Ras Proteins with Amino Acid Mutations
at Position 13 of the Protein
5,081,230 Carney Monoclonal Antibodies Reactive with
1/14/92 Normal and Oncogenic forms of the Ras
p21 Protein
5,084,380 Carney Monoclonal Antibodies Reactive with
1/28/92 Activated and Oncogenic Ras p21
Proteins
5,112,737 Carney Monoclonal Antibodies Against Active
5/12/92 Ras Proteins with Amino Acid Mutations
at Position 13 of the Protein
5,190,858 Sorvillo Monoclonal Antibodies Directed to
3/2/93 Epitopes of Human Transforming Factor,
Alpha and Uses Thereof.
5,217,896 Kramer Monoclonal Antibodies Recognizing
<PAGE> 9
PATENT NUMBER & INVENTOR TITLE
DATE -------- -----
- ----
6/8/93 Parathyroid Hormone Like Protein
5,262,523 Carney Monoclonal Antibodies Reactive with
5/12/92 Normal and Oncogenic Forms of the Ras
p21 Protein
5,300,631 Weinberg Antibodies Specific for Either Ras Proto
9/5/94 Oncogene Encoded p21 Proteins or Ras
Oncogene Encoded p21 Proteins But Not
Both and Method of Producing Same
5,401,638 Carney Detection and Quantification of neu
3/28/95 related protein in Biological Fluids of
Humans
-2-
<PAGE> 10
ALLOWED U.S. PATENT CLAIMS
Plasminogen Activator Inhibitor Monoclonal Antibodies, Hybridomas, Monoclonal
Antibody Production and Use of the Antibodies for Purification, Removal,
Inhibition of Assay of the Inhibitors.
Two Claims Allowed 8/94
Inventor - Dano
Detection, Quantitation and Classification of Ras Proteins in Body Fluids and
Tissues
U.S. Serial No. 08/078
Allowed 11/15/94
Inventor - Carney
<PAGE> 11
PENDING U.S. PATENT APPLICATIONS
23047-A2 Johannes L. Bos, et al., Probes and Methods for Detecting
Activated "ras" Oncogne
23384-D-PCT-US: Frederick Reynolds, Immunoassays for Detection of mutant
p53 polypeptide in Biological Fluids, USSN 719,172 filed June
21, 1992
40438-A-2: Walter P. Carney, Detection, Quantitation and Classification of
Ras Proteins in Body Fluids and Tissues. Divisional to be
filed.
40440-B2 Robert A. Weinberg, Oncogenes and Methods for Their
Detection
40441-D1 Walter P. Carney, et al., Detection and Quantification of Neu
Related Proteins in The Biological Fluids in Humans".
Divisional to be filed.
005005 T. Dryja et al., Diagnosis of Retinoblastoma
005006 T. Dryja et al., Diagnosis of Retinoblastoma
<PAGE> 12
GRANTED EUROPEAN PATENTS
Detection, Quantitation and Classification of Ras Proteins in Body Fluids and
Tissues
Australian Patent No. 634961
4/20/89
Inventor W.P. Carney
Monoclonal Antibody Against a Ras Oncogene P21 Related Dodecapeptide
European Patent Application No. 0190033
Granted 4/7/93
Inventor W.P. Carney
Monoclonal Antibodies Against Activated Ras Proteins with Amino Acid Mutations
at Position 13 of the Protein
Australia Patent No. 627169
Inventor W.P. Carney
Monclonal Antibodies Reactive with Activated and Oncogenic Ras P21 Proteins
Canadian Patent No. 1,294,902
1/28/92
Inventor W.P. Carney
Monoclonal Antibody Against a Ras Oncognee p21 Related Dodecapeptide
Canadian Patent No. 1,296,960
3/3/92
Inventor W.P. Carney
Monoclonal Antibodies Reactive with Normal and Oncogenis Forms of the Ras p21
Protein
Canadian Patent No. 1297048
Inventor W.P. Carney
Detection of Point Mutations, Amplification and Overexpression of Neu Genes and
Gene Products
40439 - PCT-EPO
Inventor R. Weinberg
Characterization of Oncogenes and Assays Based Therein
40439 - PCT-EPO Div I
European Application No. 87200461-9
Inventor R. Weinberg
Diagnosis of Retinoblastoma
005 EPI
European Application No. 87307095-7
Corresponding to USSN 895,163
8/11/86
Inventor
Diagnosis of Retinoblastoma
005AUI
Austrialian Patent No. 600293
8/11/87
Detection and Quantification of Neu Related Proteins in the Biological Fluids of
Humans. (P100)
European Patent Application No. 89912588.4
<PAGE> 13
Received Notice of Grant
Inventor W.P. Carney
Detection of Point Mutations, Amplification and Overexpression of Neu Genes and
Gene Products (p185)
European Application No. 89905846.5
Advance Notice of Allowance
Inventor W.P. Carney, R. Weinberg
Assay for Carcinogenesis Caused by Oncogenes
Inventor R. Weinberg
Monoclonal Antibody Against A Ras Oncogene p21 Related Dodecapeptide
French Patent No. 019033
Based on European Patent No. EPO190033B1
Granted April 7, 1993 form European Application No. 86300568.2
Inventor W.P. Carney
Monoclonal Antibody Against A Ras Oncogene p21 Related Dodecapeptide
French Patent No. 019033
Based on European Patent No. EPO190033B1
Granted April 7, 1993 form European Application No. 86300568.2
Inventor W.P. Carney
Diagnosis of Retinoblastoma?
Inventor T.T. Dryja
Plasminogen Activator Inhibitor Monoclonal Antibodies, Hybridomas, Monoclonal
Antibody Production and Use of the Antibodies of Purification, Removal
Inhibition or Assay of the Inhibitors.
Registered England, France, Germany, Italy
Inventor K. Dano
-2-
<PAGE> 14
PENDING FOREIGN PATENT APPLICATIONS
23384-D-PCT: Immunoassays for detection of mutant p53.
International Appln. No. PCT/US92/00878,
filed January 31, 1992 Polypeptide in
Biological fluids.
40438--A-Canada: Detection, Quantitiation and Classification of
Ras Proteins in Body Fluids and Tissues.
40438-A-PCT-EPO: Appln. No. 89 904 962.1, filed April 20,
1989.
40438-A-PCT-Japan: Appln. No. 504817/89, filed April 20, 1989.
40439-PCT-EPO-DIV II: Appln. No. 87 200 460.1, filed March 11,
1987
40439-PCT-EPO-DIV III: Appln. No. 93119195.1, filed Nov 29, 1993
40439-PCT-Japan: Appln. No. 503483/83, filed Sept 29, 1983
40439-PCT-Japan-DIV: Appln. No. 51821/92, filed March 10, 1992
40441-B-PCT: Detection of Point Mutations, Amplifications
and Over expression of Neu Genes and Gene
Products.
40441-B-PCT-EPO: Appln. No. 89 905 846.5, filed April 18,
1989
40441-B-PCT-Japan Appln. No. 505853/89, filed April 18, 1989
40441-C-Canada Appln. No. 2,026.250.8, filed Sept 26, 1990
40441-C-PCT-EPO: Detection and Quantification of New Related
Protein in the Biological Fluids of Humans.
<PAGE> 15
PAI-1 PATENTS AND PATENT APPLICATIONS
40441-C-PCT-Japan EP Application No. 89902154.7
corresponding to USSN 146,525 filed January
21, 1988 and USSN 300,667 filed January
23, 1989
005PCT: International Application PCT/US89/00293
filed January 23, 1989, based on USSN
146,525 filed January 21, 1988. Designated
States: Australia, Barbados, Bulgaria, Brazil,
Denmark, EPC states, Finland, Hungary,
Japan, N. Korea, S. Korea, Norway,
Romania, Sudan, Soviet Union.
005CA1: Canadian Applications 544093 filed August
10, 1987 corresponding to USSN 895,163
filed August 11, 1986.
005CA2: Canadian Application 588929 filed January
24, 1989 corresponding to USSN 146,525
filed January 21, 1988.
005JP1: Japanese Application 200755/87 filed August
11, 1987 corresponding to USSN 895,163
filed August 11, 1986.
005JP2: Japanese Application 1-502006 filed January
23, 1989 corresponding to USSN 146,525
filed January 21, 1988.
European Patent No. 0229126 issued on April
6, 1994, corresponding to European patent
application No. 86904118.6 (national phase
of PCT/DK86/00080 filed on July 11, 1986),
registered in Switzerland, to be registered
in Austria, Belgium, Germany, France, Great
Britain, Italy, Luxembourg, the Netherlands
and Sweden before July 6, 1994.
European patent application No. 93202290.8
(divisional application of EP 86904118.6
above) filed on August 3, 1993.
U.S. patent application No. 900,364
-2-
<PAGE> 16
(continuation of U.S. patent application No.
752,990 which is a continuation of U.S.
patent application No. 035,995, the national
phase filing of PCT/DK86/00080 filed on
July 11, 1986).
Japanese patent application No. 61-504151
(the national phase filing of PCT/DK86/00080
filed on July 11, 1986).
-3-
<PAGE> 1
EXHIBIT 10(h)
[Letterhead of Calbiochem-Novabiochem]
June 9, 1995
Mr. Richard B. Slansky
13973 Carriage Road
Poway, CA 92064
Dear Richard,
In recognition to your years of service with and valued contributions to
Calbiochem-Novabiochem International, Inc. ("CNI") and its predecessor entities,
I am pleased to set forth our mutual agreement regarding your resignation as an
officer and director of CNI, as follows:
1. By your countersignature on this letter, you hereby resign, effective
as of June 9, 1995, as an employee, officer and director of CNI and, to
the extent you currently hold such positions, as an officer and/or
director of each of CNI's directly or indirectly held subsidiaries.
2. In order to facilitate an orderly transition of your functions within
CNI, during the period that CNI will continue to pay your salary as
provided below, you agree to make yourself available, either in person
or by telephone, at mutually convenient times, to provide up to an
aggregate of twenty (20) hours of consultation to CNI's new Chief
Financial Officer.
3. During the period between the date hereof and December 31, 1995, (the
"Salary Continuation Period"), CNI will continue to pay you your
current base salary, in accordance with its standard payroll practices,
subject to appropriate state and federal tax withholding. You are
entitled to continue your current medical and dental group insurance
coverage for 18 months (COBRA continuation coverage) from 1 July 1995.
During the Salary Continuation period, CNI will pay the company's
portion of the premium from 1 July 1995 through 31 December 1995. The
Company will deduct the portion of the premium for which you were
responsible during your employment from the bi-weekly payments
described previously. After 31 December, in order to continue coverage,
you will be required to pay the full premium yourself. The rates for
1996 will be determined in December 1995. A right of Continuation
Notice will be mailed to you as soon as the 1996 rates are established.
In addition, CNI will pay you as a lump sum
<PAGE> 2
Richard Slansky
June 9, 1995
Page Two of Four
amount (subject to appropriate state and federal tax withholding) based
upon your salary for all vacation days, sick leave and holidays
(collective "Caltime") which you have accrued through June 30, 1995,
and not used. CNI will honor the 401(k) match through December 31,
1995. During the Salary Continuation Period, you will be under no
obligation to seek new employment or otherwise mitigate the costs to
CNI of the salary continuation payments provided for in this letter
agreement.
4. CNI will make available to you the services of Lee Hecht Harrison for a
period of four months, the employment counseling agency which has been
utilized in the past to assist employees of the company in obtaining
new employment.
5. As you know, CNI has asked Coopers & Lybrand to conduct a valuation of
the company to permit the Board of Directors to award stock options at
current fair market value. Upon completion of this valuation, CNI will
furnish a copy to you, which you agree to maintain in strict
confidence. Based upon the fair market value per share of CNI's Common
Stock as set forth in such valuation (the "FMV"), you will have the
option, exercisable by written notice given within thirty (30) days
after the delivery to you of such valuation, to sell to CNI (or upon
its request to other shareholders of CNI) all, but not less than all,
of your holdings of CNI capital stock, including shares issuable upon
exercise by you of stock options which have been granted to you to the
extent exercisable as of June 9, 1995, but not limited to any other
mutually acceptable arrangement between E.M. Warburg Pincus/Alex. Brown
& Sons and yourself:
1,195 shares of Series B Preferred Stock - at a price of
$100.00 per share;
5,085 shares of Common Stock at the FMV; and
20,160 shares of Common Stock issuable upon exercise of your
stock options at a price equal to the difference between the
FMV and your option exercise price of $1.00.
Should you elect to effect such a sale, the closing will take place at
the offices of CNI on the third business day following delivery of your
notice of election, and at such closing, you will deliver stock
certificates for the shares which you hold and your stock option, in
each case duly endorsed
<PAGE> 3
Richard Slansky
June 9, 1995
Page Three of Four
or assigned to CNI (or its designee) against delivery to you by CNI of
a check in the aggregate purchase price described above. Should you not
elect to effect such a sale, you will continue your CNI securities
subject to the Subscription and Shareholder Agreement dated March 13,
1992.
6. You will continue to be subject to all confidentiality and
non-disclosure policies of CNI and agreements relating to
confidentiality which you have previously executed with CNI in
accordance with the terms of such policies and agreements. You agree to
promptly return to CNI any and all company owned property, including
without limitation, keys, identification cards, credit cards or
telecommunications equipment, business plans or client or supplier
listings. You further agree that you will not make any statements at
any time that disparage the reputation of CNI, its subsidiaries and
affiliates.
7. Unless CNI has specifically consented thereto in writing, you agree not
to solicit, induce or knowingly hire, or to cause, or recommend to, any
entity with which you are affiliated to solicit, induce or hire, or to
make any such entity aware of the qualifications of, any employees
employed (or formerly employed within six months prior to the date of
solicitation, affiliates), during the period beginning on June 9, 1995,
and ending on June 8, 1996.
8. Subject only to the fulfillment by CNI of its obligation hereunder, you
hereby fully release CNI and its subsidiaries and affiliates and CNI
fully release you from any and all claims, agreements, obligations or
liabilities which you have had, may have had or now have against any of
them by virtue of your employment by CNI or its subsidiaries or the
termination of your employment. You further agree that this agreement
constitutes a waiver and release of any and all claims which would
otherwise be preserved by operation of Section 1542 of the California
Civil Code. Section 1542 provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTION THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
<PAGE> 4
Richard B. Slansky
June 9, 1995
Page Four of Four
9. This letter agreement supersedes all prior oral and written
understandings and agreements between you and CNI. This letter
agreement may be amended only by written agreement of you and CNI. This
letter agreement may not be assigned by either party without the
other's prior written consent. The letter agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
10. You acknowledge that you have had sufficient time to review and
consider the above terms and their financial consequences to you, and
that you have had a reasonable opportunity to consider advice from your
legal counsel before signing this letter.
11. This agreement will be governed by and construed in accordance with the
laws of the State of California.
If the foregoing is acceptable to you, please indicate your acceptance and
agreement in space provided below and return a signed copy of this letter to me.
On behalf of everyone here at CNI, I would like to wish you much success in your
future endeavors.
Very truly yours,
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
/s/ Stelios B. Papadopoulos
- ----------------------------------------
Stelios B. Papadopoulos
Chairman and Chief Executive Officer
ACCEPTED AND AGREED:
/s/ Richard B. Slansky
- ----------------------------------------
Richard B. Slansky
<PAGE> 1
EXHIBIT 10(i)
Calbiochem-Novabiochem International
a Delaware corporation
INDEMNIFICATION AGREEMENT
DIRECTOR
THIS AGREEMENT is made and entered into this____ day of____,
______ , between Calbiochem-Novabiochem International, a Delaware corporation
("Corporation"), and_________________ ("Director").
RECITALS
WHEREAS, Director, a member of the Board of Directors of
Corporation, performs a valuable service in such capacity for Corporation;
WHEREAS, the Bylaws of the Corporation (the "Bylaws") provide
for the indemnification of the officers, directors, agents and employees of
Corporation to the maximum extent authorized by Section 145 of the Delaware
General Corporation Law, as amended to date; and
WHEREAS, in order to induce Director to continue to serve as a
member of the Board of Directors of Corporation, Corporation has determined and
agreed to enter into this contract with Director;
NOW, THEREFORE, in consideration of Director's continued
service as a director after the date hereof, the parties hereto agree as
follows:
1. Indemnity of Director. Corporation hereby agrees to hold
harmless and indemnify Director to the fullest extent authorized by the
provisions of the Delaware Corporations Code, as it may be amended from time to
time.
2. Additional Indemnity. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Director:
(a) Against any and all expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
including an action by or in the right of Corporation) to which Director is, was
or at any time becomes a party, or is threatened to be made a party, by reason
of the fact that Director is, was or at any time becomes a director, officer,
employees or agent of Corporation, or is or was serving or at any time serves at
the request of Corporation as a director, officer, employee or agent
<PAGE> 2
of another corporation, partnership, joint venture, trust or other enterprise if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful; and
(b) Otherwise to the fullest extent as may be provided to
Director by Corporation under the indemnification provision of the Delaware
Corporations Code.
3. Limitations on Additional Indemnity.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) Except to the extent the aggregate of losses to
be indemnified thereunder exceeds the sum of such losses for which Director is
indemnified pursuant to Section 1 hereof or pursuant to any D & O Insurance
purchased and maintained by Corporation;
(ii) In respect to remuneration paid to Director if
it shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(iii) On account of any suit in which judgment is
rendered against a Director for an accounting of profits made from the purchase
or sale by Director of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local law as and if applicable;
(iv) If a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful; or
(v) On account of any action, suit or proceeding
(other than a proceeding referred to in Section 8(b) hereof) commenced by the
Director against Corporation or against any officer, director or stockholder of
Corporation unless authorized in the specific case of action of the Board of
Directors.
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an
action by or in the right of Corporation shall be paid by Corporation for any of
the following:
(i) On account of acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law on the part
of the Director;
2
<PAGE> 3
(ii) With respect to any transaction from which
Director derived an improper personal benefit;
(iii) On account of any breach of the Director's duty
of loyalty to Corporation or its stockholders;
(iv) With regard to any payment of unlawful dividends
or making unlawful stock repurchases or redemptions on the part of Director; and
(v) In respect to any claim, issue or matter as to
which Director shall have been adjudged to be liable to Corporation in the
performance of Director's duty to Corporation and its shareholders, unless and
only to the extent that the court in which such proceeding is or was pending
shall determine upon application that, in view of all the circumstances of the
case, Director is fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine;
4. Contribution. If the indemnification provided in Sections 1 and 2
is unavailable and may not be paid to Director for any reason other than those
set forth in Section 3, then in respect of any threatened, pending or completed
action, suit or proceeding in which Corporation is or is alleged to be jointly
liable with Director (or would be if joined in such action, suit or proceeding),
Corporation shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Director in such proportion as is appropriate to
reflect (i) the relative benefits received by Corporation on the one hand and
Director on the other hand from the transaction from which such action, suit or
proceeding arose, and (ii) the relative fault of Corporation on the one hand and
of Director on the other in connection with the events which resulted in such
expenses, judgments, fines or settlement amounts, as well as any other relevant
equitable considerations. The relative fault of Corporation on the one hand and
the Director on the other shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. Corporation agrees that it would not be
just and equitable if contribution pursuant to this Section 4 were determined by
pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
5. Continuation of Obligations. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
3
<PAGE> 4
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Director was serving
Corporation or any such other entity in any capacity referred to herein.
6. Notification and Defense of Claim. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of the commencement thereof; but the
omission so to notify Corporation will not relieve it from any liability which
it may have to Director otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, to the extent that it
may wish, corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Director. After notice from Corporation to Director of its
election so as to assume the defense thereof, Corporation will not be liable to
Director under this Agreement for any legal or other expenses subsequently
incurred by Director in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Director shall
have the right to employ his counsel in such action, suit or proceeding but the
fees and expenses of such counsel incurred after notice from Corporation of its
assumption of the defense thereof shall be at the expense of Director unless (i)
the employment of counsel by Director has been authorized by Corporation, (ii)
Director shall have reasonably concluded that there may be a conflict of
interest between corporation and director in the conduct of the defense of such
action or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
counsel shall be at the expense of Corporation. Corporation shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of Corporation or as to which Director shall have made the conclusion
provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation nor Director will
unreasonably withhold its or his or her consent to any proposed settlement.
4
<PAGE> 5
7. Advancement and Repayment of Expenses.
(a) In the event that Director employs his or her own counsel
pursuant to Section 6(b)(i) through (iii) above, Corporation shall advance to
Director, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation
for all reasonable expenses paid by Corporation in defending any civil or
criminal action, suit or proceeding against Director in the event and only to
the extent it shall be ultimately determined by a final judicial decision (from
which there is no right of appeal) that Director is not entitled, under
applicable law, the Bylaws, this Agreement and otherwise, to be indemnified by
Corporation for such expenses.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, corporation shall reimburse Director for all of Director's
reasonable attorneys' fees and expenses in bringing and pursuing such action.
9. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent or the others, so that if any
provision hereof shall be held to be invalid or unenforceable to any extent for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof, and the affected provision shall
be construed and enforced so as to effectuate the parties' intent to the maximum
extent possible.
10. Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Delaware as applied to
contracts entered into and to be performed wholly within such state.
11. Binding Effect. This Agreement shall be binding upon Director and
upon Corporation, its successors and assigns, and shall inure to the benefit of
Director, his or her heirs,
5
<PAGE> 6
personal representatives and assigns and to the benefit of Corporation, its
successors and assigns.
12. Amendment and Termination. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be effective for any purpose
unless set forth in a writing signed by both parties hereto.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
DIRECTOR: CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, a Delaware
corporation
By:
- -------------------------- -------------------------
(Signature) (Signature)
Stelios B. Papadopoulos, CEO
- -------------------------- ----------------------------
Printed Name Print Name and Title
7
<PAGE> 1
EXHIBIT 10(j)
Calbiochem-Novabiochem International
a Delaware corporation
INDEMNIFICATION AGREEMENT
OFFICER
THIS AGREEMENT is made and entered into this________ day of
_______, _________ between Calbiochem-Novabiochem International, a Delaware
corporation ("Corporation"), and _____________ ("Officer").
RECITALS
WHEREAS, Officer, an officer (but not currently a member of
the Board of Directors) of Corporation, performs a valuable service in such
capacity for Corporation;
WHEREAS, the Bylaws of the Corporation (the "Bylaws") provide
for the indemnification of the officers, directors, agents and employees of
Corporation to the maximum extent authorized by Section 145 of the Delaware
General Corporation Law, as amended to date; and
WHEREAS, in order to induce Officer to continue to serve as an
officer of Corporation, Corporation has determined and agreed to enter into this
contract with Officer;
NOW, THEREFORE, in consideration of Officer's continued
service an officer after the date hereof, the parties hereto agree as follows:
1. Indemnity of Officer. Corporation hereby agrees to hold
harmless and indemnify Officer to the fullest extent authorized by the
provisions of the Delaware Corporations Code, as it may be amended from time to
time.
2. Additional Indemnity. Subject only to the limitations set
forth in Section 3 hereof, Corporation hereby further agrees to hold harmless
and indemnify Officer:
(a) Against any and all expenses (including attorneys
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by Officer in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation) to which
Officer is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Officer is, was or at any time becomes a
director, officer,
<PAGE> 2
employee or agent of corporation, or is or was serving or at any time serves at
the request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of Corporation and, in respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; and
(b) Otherwise to the fullest extent as may be provided to
Officer by Corporation under the indemnification provision of the Delaware
Corporations Code.
3. Limitations on Additional Indemnity.
(a) No indemnity pursuant to Section 2 hereof shall be paid by
Corporation for any of the following:
(i) Except to the extent the aggregate of losses to
be indemnified thereunder exceeds the sum of such losses for which Officer is
indemnified pursuant to Section 1 hereof or pursuant to any D & O Insurance
purchased and maintained by Corporation;
(ii) In respect to remuneration paid to Officer if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(iii) On account of any suit in which judgment is
rendered against an Officer for an accounting of profits made from the purchase
or sale by Officer of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local law as and if applicable;
(iv) If a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful; or
(v) On account of any action, suit or proceeding
(other than a proceeding referred to in Section 8(b) hereof) commenced by the
Officer against Corporation or against any officer, director or stockholder of
Corporation unless authorized in the specific case of action of the Board of
Directors.
(b) In addition to those limitations set forth above in
paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an
action by or in the right of Corporation shall be paid by Corporation for any of
the following:
2
<PAGE> 3
(i) On account of acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law on the part
of Officer;
(ii) With respect to any transaction from which
Officer derived an improper personal benefit;
(iii) On account of any breach of the Officer's duty
of loyalty to Corporation or its stockholders;
(iv) With regard to any payment of unlawful dividends
or making unlawful stock repurchases of redemptions on the part of Officer; and
(v) In respect to any claim, issue or matter as to
which Officer shall have been adjudged to be liable to Corporation in the
performance of Officer's duty to Corporation and its shareholders, unless and
only to the extent that the court in which such proceeding is or was pending
shall determine upon application that, in view of all the circumstances of the
case, Officer is fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine.
4. Contribution. If the indemnification provided in Sections 1 and 2
is unavailable and may not be paid to Officer for any reason other than those
set forth in Section 3, then in respect of any threatened, pending or completed
action, suit or proceeding in which Corporation is or is alleged to be jointly
liable with Officer (or would be if joined in such action, suit or proceeding),
Corporation shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Officer in such proportion as is appropriate to
reflect (i) the relative benefits received by Corporation on the one hand and
Officer on the other hand from the transaction from which such action, suit or
proceeding arose, and (ii) the relative fault of Corporation on the one hand and
of Officer on the other in connection with the events which resulted in such
expenses, judgments, fines or settlement amounts, as well as any other relevant
equitable considerations. The relative fault of Corporation on the one hand and
the Officer on the other shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. Corporation agrees that it would not be
just and equitable if contribution pursuant to this Section 4 were determined by
pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
3
<PAGE> 4
5. Continuation of Obligations. All agreements and obligations of
Corporation contained herein shall continue during the period Officer is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Officer was serving
Corporation or any such other entity in any capacity referred to herein.
6. Notification and Defense of Claim. Promptly after receipt by Officer
of notice of the commencement of any action, suit or proceeding, Officer will,
if a claim in respect thereof is to be made against Corporation under this
Agreement, notify Corporation of the commencement thereof; but the omission so
to notify Corporation will not relieve it from any liability which it may have
to Officer otherwise than under this Agreement. With respect to any such action,
suit or proceeding as to which Officer notifies Corporation of the commencement
thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, to the extent that it
may wish, corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Officer. After notice from Corporation to Officer of its
election so as to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ his counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from Corporation of its
assumption of the defense thereof shall be at the expense of Officer unless (i)
the employment of counsel by Officer has been authorized by Corporation, (ii)
Officer shall have reasonably concluded that there may be a conflict of interest
between corporation and Officer in the conduct of the defense of such action or
(iii) Corporation shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of counsel shall be
at the expense of Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of Corporation
or as to which Officer shall have made the conclusion provided for in (ii)
above; and
4
<PAGE> 5
(c) Corporation shall not be liable to indemnify Officer under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Officer
without Officer's written consent. Neither Corporation nor Officer will
unreasonably withhold its or his or her consent to any proposed settlement.
7. Advancement and Repayment of Expenses.
(a) In the event that Officer employs his or her own counsel
pursuant to Section 6(b)(i) through (iii) above, Corporation shall advance to
Officer, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for
all reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under applicable law, the
Bylaws, this Agreement and otherwise, to be indemnified by Corporation for such
expenses.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Officer to continue as an Officer of Corporation, and
acknowledges that Officer is relying upon this Agreement in continuing in such
capacity.
(b) In the event Officer is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, corporation shall reimburse Officer for all of Officer's
reasonable attorneys' fees and expenses in bringing and pursuing such action.
9. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent or the others, so that if any provision
hereof shall be held to be invalid or unenforceable to any extent for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof, and the affected
5
<PAGE> 6
provision shall be construed and enforced so as to effectuate the parties'
intent to the maximum extent possible.
10. Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Delaware as applied to
contracts entered into and to be performed wholly within such state.
11. Binding Effect. This Agreement shall be binding upon Officer and
upon Corporation, its successors and assigns, and shall inure to the benefit of
Officer, his or her heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
12. Amendment and Termination. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be effective for any purpose
unless set forth in a writing signed by both parties hereto.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
OFFICER: CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC., a
Delaware corporation
_______________________________ By:___________________________
(Signature) (Signature)
Stelios B. Papadopoulos, CEO
_______________________________ ------------------------------
Printed Name Print Name and Title
7
<PAGE> 1
Exhibit 10(k)
AMENDED AND RESTATED
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
1992 STOCK OPTION PLAN
* * *
ARTICLE I
Purpose
The Calbiochem-Novabiochem International, Inc. 1992 Stock
Option Plan (the "Plan") is intended as an incentive to improve the performance,
encourage the continued employment, and increase the proprietary interest of
certain directors, officers, key employees and consultants of
Calbiochem-Novabiochem International, Inc. (the "Company") and its subsidiaries
who shall participate in the Plan. The Plan is designed to grant such directors,
officers, key employees and consultants the opportunity to share in the
Company's long-term success through stock ownership and to afford them the
opportunity for additional compensation related to the value of the Company's
stock.
The word "Employer", when used in the Plan, shall include the
Company or one of its subsidiaries, whichever one employs the Participant. The
word "subsidiary", when used in the Plan, shall mean any subsidiary corporation
of the Company within the meaning of Section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code").
It is intended that certain options granted under the Plan and
designated as incentive stock options in the option agreements qualify as
"incentive stock options" under Section 422 of the Code.
For purposes of the Plan, the term "Effective Date" shall mean
April 1, 1992.
ARTICLE II
Administration
The Plan shall be administered by a Stock Option Committee
(the "Committee") appointed by the Board of Directors
<PAGE> 2
of the Company (the "Board") from among its members and shall consist of not
less than two members thereof. Unless otherwise determined by the Board, the
membership of the Committee shall be structured so as to qualify option grants
for the exemption from Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") provided by Rule 16b-3, promulgated by the Securities and
Exchange Commission under the Exchange Act, as in effect from time to time.
Subject to the provisions of the Plan, the Committee shall
have sole authority, in its absolute discretion: (a) to determine, subject to
approval of the Board as provided in ARTICLE IV, which of the eligible
Participants (as hereinafter defined) shall be granted options; (b) to authorize
the granting of both incentive stock options and non-qualified stock options;
(c) to determine the times when options shall be granted and the number of
shares to be subject to options; (d) to determine the option price of the shares
subject to each option, which price shall be not less than the minimum specified
in ARTICLE V; (e) to determine the time or times when each option becomes
exercisable, the duration of the exercise period and any other restrictions on
the exercise of options issued hereunder; (f) to accelerate the exercisability
of any outstanding option; (g) to prescribe the form or forms of the option
agreements under the Plan (which forms shall be consistent with the terms of the
Plan but need not be identical and may contain such terms as the Committee may
deem appropriate to carry out the purposes of the Plan); (h) to determine the
nature of any rights and restrictions to be imposed on shares subject to options
issued hereunder; (i) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan; (j) to
construe and interpret the Plan, the option agreements under the Plan and the
rules and regulations adopted from time to time, if any; and (k) to make all
other determinations deemed necessary or advisable for the administration of the
Plan. All decisions, determinations and interpretations of the Committee shall
be final and binding on all optionees.
ARTICLE III
Stock
The stock to be subject to options granted under the Plan
shall be shares of authorized but unissued common stock, par value $0.01 (the
"Stock"), of the Company, or previously issued
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<PAGE> 3
shares of such Stock reacquired by the Company and held in its treasury, as
determined by the Board. Under the Plan, the total number of shares of Stock
which may be purchased pursuant to options granted hereunder shall not exceed,
in the aggregate, 835,000 shares, except as such number of shares shall be
adjusted in accordance with the provisions of ARTICLE X hereof.
Each option granted under the Plan shall be evidenced by an
option agreement between the Company and the optionee containing such provisions
as may be determined by the Committee, but shall be subject to the following
terms and conditions:
(a) Each share of Stock purchased through the exercise
of an option shall be paid for in full at the time of the
exercise; and
(b) Each option shall become exercisable by the optionee in
accordance with any vesting schedule established by the Committee pursuant to
ARTICLE VI of the Plan.
The number of shares of Stock available for grant of options
under the Plan shall be decreased by the sum of the number of shares with
respect to which options have been issued and are then outstanding and the
number of shares issued upon exercise of options. In the event that any
outstanding option for any reason expires, lapses, or is cancelled prior to the
end of the period during which options may be granted, the shares of Stock
called for by the unexercised portion of such option may again be subject to an
option under the Plan.
ARTICLE IV
Eligibility of Participants
Subject to ARTICLE VII, directors, officers, key employees and
consultants of the Company and its subsidiaries who have been selected by the
Committee and approved by the Board as participants (collectively referred to as
"Participants" and individually as a "Participant") shall be eligible to receive
grants of options under the Plan; provided, however, that notwithstanding any
other provision of the Plan to the contrary, only employees of the Company or
any of its subsidiaries shall be eligible to receive incentive stock options.
Participation in the Plan shall be limited to eligible Participants who have
entered into option agreements with the Company. No Participant,
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<PAGE> 4
however, shall at any time have a right to be selected for participation in the
Plan.
ARTICLE V
Option Price
The option price of each option granted under the Plan shall
be determined by the Committee; provided, however, that in the case of each
incentive stock option granted under the Plan, the option price shall not be
less than the fair market value at the time the option is granted. In no event
shall the option price of any option be less than the par value per share of
Stock on the date an option is granted.
At any time when the Stock is quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
fair market value shall be deemed to be the mean between the last quoted bid and
asked prices on NASDAQ on the date immediately preceding the date on which the
option is granted, or, if not quoted on that day, then on the last preceding
date on which such stock is quoted. If the Stock is listed on one or more
national securities exchanges, the fair market value shall be deemed to be the
mean between the highest and lowest sale prices reported on the principal
national securities exchange on which such stock is listed and traded on the
date immediately preceding the date on which the option is granted, or, if there
is no such sale on that date, then on the last preceding date on which such a
sale was reported. If the Stock is not quoted on NASDAQ or listed on an
exchange, or representative quotes are not otherwise available, the fair market
value of the Stock shall mean the amount determined by the Committee to be the
fair market value based upon a good faith attempt to value the Stock accurately
and computed in accordance with applicable regulations of the Internal Revenue
Service.
ARTICLE VI
Terms and Conditions of Options
Options granted under the Plan shall vest and become
exercisable in such installments as the Committee shall determine at the time of
grant. Options may be exercisable in whole or in part and if an option is
exercisable in part, the portion thereof which is exercisable and not exercised
shall remain exercisable.
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<PAGE> 5
Any other provision of the Plan notwithstanding and subject to
ARTICLE VII, (i) no option shall be granted after the date which is ten years
from the Effective Date, (ii) no option may be exercised after the date which is
ten years after the date that the option was granted (the "Termination Date"),
and (iii) in the event the Company files a registration statement under the
Securities Act of 1933 (the "Securities Act") for the initial public offering of
its equity securities (an "IPO"), the Company may restrict the exercisability of
options granted under the Plan during the 180-day period (or such longer period
required by the underwriter of such initial public offering) immediately
following the effective date of such registration statement.
Options granted hereunder may provide that if prior to the
Termination Date an optionee shall cease to be employed by the Employer for any
reason other than death, disability or for cause, the option will remain
exercisable by the optionee for a period not extending beyond three months after
the date of cessation of employment, but in no event later than the Termination
Date, to the extent it was exercisable at the time of cessation of employment.
Options granted hereunder may provide that if prior to the Termination Date an
optionee shall cease to be employed by the Employer for reasons of death or
disability, the option will remain exercisable by the optionee or, in the event
of his death, by the person or persons to whom the optionee's rights under the
option would pass by will or the applicable laws of descent and distribution for
a period not extending beyond one year after the date of death or disability,
but in no event later than the Termination Date, to the extent it was
exercisable at the time of death or disability. Options granted hereunder may
provide that if prior to the Termination Date an optionee shall cease to be
employed by the Employer by reason of termination of employment by the Employer
for cause, or by voluntary termination at a time when the Employer is entitled
to terminate such optionee's employment for cause, the option shall terminate
immediately. For purposes of the Plan, the Employer shall have "cause" to
terminate an optionee's employment hereunder upon (i) the commission by the
optionee of a proven act of fraud or embezzlement against the Employer, (ii) the
engaging by the optionee in willful misconduct or gross negligence which is
demonstrably and materially injurious to the Employer, monetarily or otherwise,
(iii) failure of the optionee to render services to the Employer in accordance
with such optionee's duties as an employee of the Employer or (iv) the optionee
being convicted of a misdemeanor involving an act of moral turpitude or
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<PAGE> 6
a felony. Alternatively, options granted hereunder may provide that "cause" has
the meaning set forth in an employment agreement between the optionee and the
Employer.
For purposes of the Plan, in the case of a Participant who is
a director, references to employment herein shall be deemed to refer to such
director's service to the Employer in such capacity.
Notwithstanding the foregoing, stock options granted hereunder
shall provide that no option shall be exercisable after the optionee's cessation
of employment with the Employer if at the time of exercise the By-Laws of the
Company limit the ownership of common stock of the Company to selected persons,
including employees of the Company and its wholly-owned subsidiaries.
ARTICLE VII
Special Provisions Applicable
Only to Incentive Stock Options
To the extent the aggregate fair market value (determined at
the time the option is granted) of the Stock with respect to which incentive
stock options may be exercisable for the first time by an optionee during any
calendar year (under this Plan and any other stock option plan of the Company
and any parent or subsidiary thereof) exceeds $100,000, such incentive stock
options shall be treated as options which are non-qualified stock options.
No incentive stock option may be granted to an individual who,
at the time the option is granted, owns directly, or indirectly within the
meaning of Section 424(d) of the Code, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of any
parent or subsidiary thereof, unless such option (i) has an option price of at
least 110% of the fair market value of the Stock on the date of the grant of
such option; and (ii) such option by its terms cannot be exercised more than
five years after the date it is granted.
Each optionee who receives an incentive stock option
must agree to notify the Company in writing immediately after the
optionee makes a disqualifying disposition of any Stock acquired
pursuant to the exercise of an incentive stock option. A
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<PAGE> 7
disqualifying disposition is any disposition (including any sale) of such Stock
before the later of (a) two years after the date the optionee was granted the
incentive stock option or (b) one year after the date the optionee acquired
Stock by exercising the incentive stock option.
ARTICLE VIII
Payment for Shares
Payment for shares of Stock acquired pursuant to an option
granted hereunder shall be made in full, upon exercise of the option, in
immediately available funds in United States dollars, by certified or bank
cashier's check. Payment may also be made by any other method established by the
Committee including, without limitation, the tendering of previously owned
shares of Stock, or pursuant to procedures for cashless "broker-assisted"
exercises approved by the Committee. Payment in full shall include payment of
any amounts required under paragraph (b) of ARTICLE XIX.
ARTICLE IX
Non-Transferability of Option Rights and Stock
During the lifetime of the optionee, the option shall be
exercisable only by the optionee. No option shall be transferable, except by
will or the laws of descent and distribution.
ARTICLE X
Adjustment for Recapitalization, Merger, Etc.
The aggregate number of shares of Stock which may be purchased
or acquired pursuant to options granted hereunder, the number of shares of Stock
covered by each outstanding option and the price per share thereof in each such
option shall be appropriately adjusted for any increase or decrease in the
number of outstanding shares of Stock resulting from a stock split or other
subdivision or consolidation of shares of Stock or for other capital adjustments
or payments of stock dividends or distributions or other increases or decreases
in the outstanding shares of Stock effected without receipt of consideration by
the Company. Any adjustment shall be conclusively determined by the Committee.
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<PAGE> 8
If the Company shall be the surviving corporation in any
merger or reorganization or other business combination, any option granted
hereunder shall cover the securities or other property to which a holder of the
number of shares of Stock covered by the unexercised portion of the option would
have been entitled pursuant to the terms of the merger. Upon any merger or
reorganization or other business combination in which the Company shall not be
the surviving corporation, or a dissolution or liquidation of the Company, or a
sale of all or substantially all of the Company's assets, all outstanding
options shall terminate; provided, however, that the Company shall cause either
(i) the optionees to be paid an amount equal to the difference between (A) the
aggregate fair market value (determined in accordance with ARTICLE V of the
Plan) of the Stock subject to options held by the optionees at the time of such
transaction and (B) the aggregate exercise price of such options, or (ii) the
surviving or resulting corporation to grant the optionees substitute options to
purchase its shares on such terms and conditions, both as to the number of
shares and otherwise, which the Committee shall deem appropriate.
Stock option agreements under the Plan may, at the discretion
of the Committee, provide that upon stockholder approval of a merger,
reorganization or other business combination, whether or not the Company is the
surviving corporation, or a sale of all or substantially all of the Company's
assets, all unmatured installments of the options shall vest and become
immediately exercisable in full.
The foregoing adjustments and the manner of application of the
foregoing provisions, including the issuance of any substitute options, shall be
determined by the Committee in its sole discretion. Any such adjustment may
provide for the elimination of any fractional share which might otherwise become
subject to an option.
ARTICLE XI
No Obligation to Exercise Option
Granting of an option shall impose no obligation on the
recipient to exercise such option.
ARTICLE XII
Use of Proceeds
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<PAGE> 9
The proceeds received from the sale of Stock pursuant to the
Plan shall be used for general corporate purposes.
ARTICLE XIII
Rights as a Stockholder
An optionee shall have no rights as a stockholder with respect
to any share covered by his option until such person shall have become the
holder of record of such share, and such person shall not be entitled to any
dividends or distributions or other rights in respect of such share for which
the record date is prior to the date on which such person shall have become the
holder of record thereof, except as otherwise provided in ARTICLE X.
ARTICLE XIV
Employment Rights
No provision in the Plan or in any option granted hereunder
shall confer on any optionee any right to continue in the employ of the Company,
or to interfere in any way with the right of the Company to terminate the
optionee's employment at any time.
ARTICLE XV
Compliance with Law
The Company is relieved from any liability for the
non-issuance or non-transfer or any delay in the issuance or transfer of any
shares of Stock subject to options under the Plan which results from the
inability of the Company to obtain, or from any delay in obtaining, from any
regulatory body having jurisdiction or authority, any requisite approval to
issue or transfer any such shares if counsel for the Company deems such approval
necessary for lawful issuance or transfer thereof.
Each option granted under the Plan is subject to the
requirement that if at any time the Board determines, in its discretion, that
the listing, registration or qualification of shares of Stock issuable upon
exercise of options is required by any securities exchange or under any state or
Federal law, or that the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection
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<PAGE> 10
with, the grant of options or the issuance of shares of Stock, no shares of
Stock shall be issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions or with such conditions as are acceptable to the Board.
ARTICLE XVI
Cancellation of Options
The Committee, in its discretion, may, with the consent of any
optionee, cancel any outstanding option hereunder.
ARTICLE XVII
Effective Date; Expiration Date of Plan
The Plan shall become effective upon adoption by the Company's
Board of Directors and approval by the stockholders of the Company in a manner
which complies with both Rule 16b-3 under the Exchange Act and Section 422(b)(1)
of the Code and the Treasury Regulations thereunder. The expiration date of the
Plan, after which no option may be granted hereunder, shall be the tenth
anniversary of the later of (i) adoption of the Plan by the Board of Directors
or (ii) the approval of the Plan by the stockholders of the Company pursuant to
the previous sentence.
ARTICLE XVIII
Amendment or Discontinuance of Plan
The Board may terminate, amend or modify the Plan in its sole
discretion at any time or from time to time after the Effective Date.
Notwithstanding the preceding provisions of this ARTICLE XVIII, no such action
shall, without shareholder approval, increase the number of shares as to which
options may be granted under the Plan.
ARTICLE XIX
Miscellaneous
(a) Options shall be evidenced by option agreements (which
need not be identical) in such forms as the Committee may from time to time
approve. Such agreements shall conform to the terms and conditions of the Plan
and may provide that the grant of any option under the Plan and Stock acquired
pursuant to the
-10-
<PAGE> 11
Plan shall also be subject to such other conditions (whether or not applicable
to the option or Stock received by any other optionee) as the Committee
determines appropriate, including without limitation, provisions to assist the
optionee in financing the purchase of Stock through the exercise of options,
provisions for the forfeiture of, or restrictions on, resale or other
disposition of shares under the Plan, provisions giving the Company the right to
repurchase shares acquired under the Plan in the event the participant elects to
dispose of such shares, and provisions to comply with Federal and state
securities laws and Federal and state income tax withholding requirements.
(b) The Company may, in its discretion, require that an
optionee pay to the Company, at the time of exercise, such amount as the Company
deems necessary to satisfy its obligations to withhold Federal, state, or local
income or other taxes incurred by reason of the exercise or the transfer of
shares thereupon.
(c) Each optionee shall file with the Committee a written
designation of one or more persons as beneficiary, who shall be entitled to
exercise options which are exercisable, if any, or to receive shares of Stock
distributable, if any, under the Plan upon the optionee's death. An optionee
may, from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the optionee's death, and
in no event shall it be effective as of a date prior to such receipt.
(d) If the Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly
appointed legal representative), may, if the Committee so directs the Company,
be paid to his spouse, child, relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Committee and
the Company therefor.
-11-
<PAGE> 12
(e) No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on his
behalf in his capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Company shall indemnify and hold harmless
each member of the Committee and each other employee, officer or director of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith;
provided, however, that approval of the Board shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(f) The Plan shall be governed by and construed in accordance
with the internal laws of the State of Delaware without reference to the
principles of conflicts of law thereof.
(g) No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Optionees shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
(h) Each member of the Committee and each member of the Board
shall be fully justified in relying, acting or failing to act, and shall not be
liable for having so relied, acted or failed to act in good faith, upon any
report made by the independent public accountant of the Company and upon any
other information furnished in connection with the Plan by any person or persons
other than such member.
-12-
<PAGE> 13
(i) Except as otherwise specifically provided in the relevant
plan document, no payment under the Plan shall be taken into account in
determining any benefits under any pension, retirement, profit-sharing, group
insurance or other benefit plan of the Company.
(j) The expenses of administering the Plan shall be
borne by the Company.
(k) Masculine pronouns and other words of masculine gender
shall refer to both men and women.
* * *
As Amended and Restated
by the Board of Directors
of Calbiochem-Novabiochem
International, Inc. on
July 16, 1996
-13-
<PAGE> 14
INCENTIVE
STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement"), is made as of this day __
of ______, ____ between Calbiochem-Novabiochem International, Inc., a Delaware
corporation (the "Company"), and the person signing this Agreement adjacent to
the caption "Participant" on the signature page hereof, which person (the
"Participant" is an employee or employee/director of the Company or one of its
wholly-owned subsidiaries (the "Employer"). Capitalized terms used and not
otherwise defined herein shall have the meanings attributed thereto in the
Calbiochem-Novabiochem International, Inc. 1992 Stock Option Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desires to afford the
Participant the opportunity to purchases shares of the Company's $0.01 per value
Common Stock (the "Stock");
NOW, THEREFORE, in connection with the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Options. The Company hereby grants to the Participant the
right and option (the right to purchase any one share of Stock pursuant to this
Plan being an "Option") to purchase an aggregate ________ shares of Stock, such
shares being subject to adjustment as provided in ARTICLE X of the Plan, and on
the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Stock covered
by the Options shall be equal to $___________ per share.
3. Terms of Options. The term of the Options shall be for a period of
five (5) years from the date hereof.
4. Vesting of Options. Subject to the terms, conditions and
limitations contained herein, twenty percent (20%) of the Options granted
hereunder shall vest and become exercisable on the first anniversary of the date
hereof, and an additional twenty percent (20%) of the Options granted hereunder
shall vest on each of the next four anniversaries of such date. Notwithstanding
the above, one hundred percent (100%) of the Options granted hereunder shall
vest and become exercisable upon a Change of Control of the Company. For this
purpose, a "Change of Control" shall mean a single transaction, or a series of
related transactions, which results in the transfer of ownership of securities
representing fifty percent (50%) of the voting power of all securities of the
Company entitled to vote.
5. Termination of Employment. (a) In the event Participant's
employment with the Employer is terminated for reasons other than due to death,
disability or Cause, the Options
<PAGE> 15
shall remain exercisable for a period of up to three months after cessation of
employment, to the extent they were exercisable at the time of cessation of
employment. In the event the Participant's employment with the Employer
terminates by death or disability, the Options shall remain exercisable for a
period of up to twelve months after cessation of employment, to the extent they
were exercisable at the time of cessation of employment.
(b) If the Participant's employment with the Employer is terminated
for cause, or, at the time of the Participant's voluntary termination the
Employer is entitled to terminate the Participant for cause, as defined in the
Plan, all unexercised Options granted to the Participant shall lapse and be
cancelled.
6. Transferability of Option and Stock. A Participant may not
voluntarily or involuntarily sell, pledge, mortgage, hypothecate, give,
transfer, create a security interest in, or a lien or trust (voting or
otherwise) with respect to, or assign or otherwise encumber or dispose of any
Option or any share of Stock issued upon the exercise of an Option except as
expressly permitted pursuant to the Plan. Stock acquired through the exercise of
options granted hereunder shall be, prior to an IPO by the Company, subject to
the following right of first refusal. The Participant shall not sell any Stock
acquired through the exercise of the options granted hereby prior to delivering
a notice to the Company and to Warburg, Pincus Investors, L.P. ("Warburg")
stating the price, terms and conditions under which such sale is proposed to be
made and offering to sell to the Company all, but not less than all, of the
Stock subject to such proposed sale at the same price and under the same terms
and conditions. The Company shall have 30 days from the receipt of such notice
to so purchase such Stock. If it fails to do so, Warburg shall have the right to
purchase all, but not less than all, of such Stock at such price and under such
terms and conditions for the following 30-day period. If it fails to do so, the
Participant may then sell such Stock, but only at the price and under the terms
and conditions described in such notice. Stock issued pursuant to the exercise
of Options granted hereunder shall bear a legend indicating that such Stock is
subject to the above restrictions on transfer.
7. No Rights as a Shareholder. The Participant shall have no rights
as a shareholder with respect to any shares of Stock covered by the Options
until the date of issuance of a stock certificate for such Stock. No
adjustments, other than as provided in ARTICLE X of the Plan, shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions for which the record date is prior to the date such
stock certificate is issued.
8. Registration; Governmental Approval. Each Option granted herein is
subject to the requirement that, if at any time the Board determined, in its
discretion, that the listing, registration, or qualifications of shares of Stock
issuable upon exercise of Options is required by any securities exchange or
2
<PAGE> 16
under any state or Federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with the grant or Options, or the issuance of shares of Stock, no shares of
Stock shall be issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions or with such conditions as are acceptable to the Board.
9. Method of Exercising Option. Subject to the terms and conditions
of this Agreement, the Options may be exercised by written notice to the Company
at its offices located at San Diego, California. Such notice shall state the
election to exercise Options and the number of shares of Stock in respect of
which they are being exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall either:
(a) be accompanied by payment of the full purchase price of such
share of Stock, in which event the Company shall deliver a certificate or
certificates representing such shares of Stock as soon as practicable after the
notice shall be received; or
(b) fix a date, not less than five (5) nor more than ten (10)
business days from the date such notice shall be received by the Company, for
the payment of the full purchase price of such shares of Stock against delivery
of a certificate or certificates representing such shares of Stock.
Payment of such purchase price shall be made in United States dollars
by certified check or bank cashier's check payable to the order of the Company.
The certificate or certificates for the shares of stock as to which the Options
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Options; or if the Options shall be exercised by the
Participant, and if the Participant shall so request in the notice exercising
the Options, such shares shall be registered in the name of the Participant and
another person, as joint tenants with right of survivorship, and shall be
delivered as provided above to or upon the written order of the person or
persons exercising the Options. All shares of Stock that shall be purchased upon
the exercise of Options as provided herein shall be fully paid and
non-assessable.
10. Income Tax Withholding. Upon the exercise of an Option, in whole
or in part, or except where an election is made under Section 83(b) of the Code,
upon such later date as the Stock acquired pursuant to such exercise ceases to
be subject to a substantial risk of forfeiture under Section 83(c)(1) of the
Code or ceases to be non-transferable within the meaning of Section 83(c)(2) of
the Code, the excess of the fair market value (determined as of the date of such
exercise or such later date, as the case may be) of the Stock subject to the
portion of the Option so exercised over the purchase price of such Stock will be
treated
3
<PAGE> 17
as compensation or other income subject to withholding for income tax purposes.
The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to an Option, including,
but not limited to, deducting the amount of any such withholding taxes from the
amount to be paid hereunder, whether in Stock or in cash, or from any other
amount then or thereafter payable to the optionee, or requiring the Participant,
his beneficiary or legal representative, to pay to the Company the amount
required to be withheld or to execute such documents as the Company deems
necessary or desirable to enable it to satisfy its withholding obligations.
11. Incentive Stock Options. The Options granted hereunder are
intended to be incentive stock options within the meaning of Section 422 of the
Code.
12. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
13. Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Delaware.
14. Headings. Headings are for the convenience of the parties and are
not deemed to be part of this Agreement.
15. Plan. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconsistency between
discretionary terms and provision of the Plan and the express provisions of this
Agreement, this Agreement shall govern and control. In all other instances of
conflicts or inconsistencies or omissions, the terms and provisions of the Plan
shall govern and control.
4
<PAGE> 18
EXECUTED the day and year first written above.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
COMPANY:
By: ____________________________________
Name: Stelios B. Papadopoulos
Title: Chief Executive Officer
PARTICIPANT:
By: ____________________________________
Name:
Title:
5
<PAGE> 19
NON QUALIFIED
STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement"), is made as of this
_________ day of __________________, ____________ between Calbiochem-
Novabiochem International, Inc., a Delaware corporation (the "Company"), and the
person signing this Agreement adjacent to the caption "Participant" on the
signature page hereof, which person (the "Participant" is an employee or
director or member of the Technology Council of the Company or one of its
wholly-owned subsidiaries (the "Employer"). Capitalized terms used and not
otherwise defined herein shall have the meanings attributed thereto in the
Calbiochem-Novabiochem International, Inc., 1992 Stock Option Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desired to afford
the Participant the opportunity to purchase shares of the Company's $0.01 par
value Common Stock (the "Stock");
NOW, THEREFORE, in connection with the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. Grant of Options. The Company hereby grants to the
Participant the right and option (the right to purchase any one share of Stock
pursuant to this Plan being an "Option") to purchase an aggregate ________
shares of Stock, such shares being subject to adjustment as provided in ARTICLE
X of the Plan, and on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Stock
covered by the Options shall be equal to $__________ per share.
3. Term of Options. The term of the Options shall be for a
period of five (5) years from the date hereof.
4. Vesting of Options. Subject to the terms, conditions and
limitations contained herein, twenty percent (20%) of the Options granted
hereunder shall vest and become exercisable on the first anniversary of the date
hereof, and an additional twenty percent (20%) of the Options granted hereunder
shall vest on each of the next four anniversaries of such date. Notwithstanding
the above, one hundred percent (100%) of the Options granted hereunder shall
vest and become exercisable upon a Change of Control of the Company. For this
purpose, a "Change of Control" shall mean a single transaction, or a series of
related transactions, which results in the transfer of ownership of securities
representing fifty percent (50%) of the voting power of all securities of the
Company entitled to vote.
5. Termination of Employment. (a) In the event Participant's
employment with the Employer is terminated for reasons other than due to death,
disability or Cause, the Options
<PAGE> 20
shall remain exercisable for a period of up to three months after cessation of
employment, to the extent they were exercisable at the time of cessation of
employment. In the event the Participant's employment with the Employer
terminates by death or disability, the Options shall remain exercisable for a
period of up to twelve months after cessation of employment, to the extent they
were exercisable at the time of cessation of employment.
(b) If the Participant's employment with the Employer is
terminated for cause, or, at the time of the Participant's voluntary termination
of Employer is entitled to terminate the Participant for cause, as defined in
the Plan, all unexercised Options granted to the Participant shall lapse and be
cancelled.
6. Transferability of Option and Stock. A Participant may not
voluntarily or involuntarily sell, pledge, mortgage, hypothecate, give,
transfer, create a security interest in, or a lien or trust (voting or
otherwise) with respect to, or assign or otherwise encumber or dispose of any
Option or any share of Stock issued upon the exercise of an Option except as
expressly permitted pursuant to the Plan. Stock acquired through the exercise of
options granted hereunder shall be, prior to an IPO by the Company, subject to
the following right of first refusal. The Participant shall not sell any Stock
acquired through the exercise of the options granted hereby prior to delivering
a notice to the Company and to Warburg, Pincus Investors, L.P. ("Warburg")
stating the price, terms and conditions under which such sale is proposed to be
made and offering to sell to the Company all, but not less than all, of the
Stock subject to such proposed sale at the same price and under the same terms
and conditions. The Company shall have 30 days from the receipt of such notice
to so purchase such Stock. If it fails to do so, Warburg shall have the right to
purchase all, but not less than all, of such Stock at such price and under such
terms and conditions for the following 30-day period. If it fails to do so, the
Participant may then sell such Stock, but only at the price and under the terms
and conditions described in such notice. Stock issued pursuant to the exercise
of Options granted hereunder shall bear a legend indicating that such Stock is
subject to the above restrictions on transfer.
7. No Rights as a Shareholder. The Participant shall have no
rights as a shareholder with respect to any shares of Stock covered by the
Options until the date of issuance of a stock certificate for such Stock. No
adjustments, other than as provided in ARTICLE X of the Plan, shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions for which the record date is prior to the date such
stock certificate is issued.
8. Registration; Governmental Approval. Each Option granted
herein is subject to the requirement that, if at any time the Board determined,
in its discretion, that the listing, registration, or qualifications of shares
of Stock issuable upon exercise of Options is required by any securities
exchange or
2
<PAGE> 21
under any state or Federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with the grant or Options, or the issuance of shares of Stock, no shares of
Stock shall be issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions or with such conditions as are acceptable to the Board.
9. Method of Exercising Option. Subject to the terms and
conditions of this Agreement, the Options may be exercised by written notice to
the Company at its offices located at San Diego, California. Such notice shall
state the election to exercise Options and the number of shares of Stock in
respect of which they are being exercised, and shall be signed by the person or
persons so exercising the Option. Such notice shall either:
(a) be accompanied by payment of the full purchase price of
such share of Stock, in which event the Company shall deliver a certificate or
certificates representing such shares of Stock as soon as practicable after the
notice shall be received; or
(b) fix a date, not less than five (5) nor more than ten (10)
business days from the date such notice shall be received by the Company, for
the payment of the full purchase price of such shares of Stock against delivery
of a certificate or certificates representing such shares of Stock.
Payment of such purchase price shall be made in United States
dollars by certified check or bank cashier's check payable to the order of the
Company. The certificate or certificates for the shares of stock as to which the
Options shall have been so exercised shall be registered in the name of the
person or persons so exercising the Options; or if the Options shall be
exercised by the Participant, and if the Participant shall so request in the
notice exercising the Options, such shares shall be registered in the name of
the Participant and another person, as joint tenants with right of survivorship,
and shall be delivered as provided above to or upon the written order of the
person or persons exercising the Options. All shares of Stock that shall be
purchased upon the exercise of Options as provided herein shall be fully paid
and non-assessable.
10. Income Tax Withholding. Upon the exercise of an Option, in
while or in part, or, except where an election is made under Section 83(b) of
the Code, upon such later date as the Stock acquired pursuant to such exercise
ceases to be subject to a substantial risk of forfeiture under Section 83 (c)(1)
of the Code or ceases to be non-transferable within the meaning of Section 83
(c)(2) of the Code, the excess of the fair market value (determined as of the
date of such exercise or such later date, as the case may be) of the Stock
subject to the portion of the Option so exercised over the purchase price of
such Stock will be treated
3
<PAGE> 22
as compensation or other income subject to withholding for income tax purposes.
The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to an Option, including,
but not limited to, deducting the amount of any such withholding taxes from the
amount to be paid hereunder, whether in Stock or in cash, or from any other
amount then or thereafter payable to the optionee, or requiring the Participant,
his beneficiary or legal representative, to pay to the Company the amount
required to be withheld or to execute such documents as the Company deems
necessary or desirable to enable it to satisfy its withholding obligations.
11. Non-Qualified Options. The Options granted hereunder are
not intended to be incentive stock options within the meaning of Section 422 of
the Code.
12. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
13. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware.
14. Headings. Headings are for the convenience of the parties
and are not deemed to be part of this Agreement.
15. Plan. The terms and provisions of the Plan are
incorporated herein by reference. In the event of a conflict or inconsistency
between discretionary terms and provisions of the Plan and the express
provisions of this Agreement, this Agreement shall govern and control. In all
other instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.
4
<PAGE> 23
EXECUTED the day and year first written above.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
COMPANY:
By: ___________________________________
Name: Stelios B. Papadopoulos
Title: Chief Executive Officer
PARTICIPANT:
By: ___________________________________
Name:
Title:
5
<PAGE> 1
EXHIBIT 10(l)
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of January 1, 1996, between
Calbiochem-Novabiochem International, Inc., a Delaware corporation (the
"Company"), and Stelios B. Papadopoulos (the "Employee").
1. Effective Date. This Agreement shall become effective on
January 4, 1996 (the "Effective Date").
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein set
forth.
3. Duties. The Employee is engaged as the Chairman of the
Board and Chief Executive Officer of the Company and hereby promises to perform
and discharge well and faithfully the duties which may be assigned to him from
time to time by the Company in connection with the conduct of its business. If
the Employee is elected as a director or officer of any subsidiary of the
Company, the Employee shall serve in such capacity or capacities without further
compensation.
4. Extent of Services. The Employee shall devote his entire
time, attention and energies to the business of the Company and shall not during
the term of this Agreement be engaged in any other business activity whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing the Employee from
investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any services on the part of
the Employee in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, nor shall this be construed as preventing the Employee from purchasing
securities in any corporation whose securities are regularly traded provided
that such purchase shall not result in his collectively owning beneficially at
any time one percent (1%) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company.
5. Compensation.
(a) For services rendered under this Agreement, the
Company shall pay the Employee a salary at the rate of $225,000 per annum (the
"Base Salary"), payable (after deduction of applicable payroll taxes) in equal
bi-weekly installments on the 15th and last day of each month or on the
preceding business day if such day is a Saturday, Sunday or holiday. The
Employee shall also be eligible for and participate in such fringe benefits as
shall be generally provided to executives of the Company, including medical
insurance and retirement programs
<PAGE> 2
which may be adopted from time to time during the term hereof by the Company.
(b) The Board of Directors of the Company shall review
the Employee's compensation at east once a year and award such bonuses and
effect such increases in the Base Salary as the Board of Directors, in its sole
discretion, determines are merited, based upon the Employee's performance and
consistent with the Company's compensation policies.
(c) In addition to his participation in any group life
insurance programs that the Company may provide to its employees, the Company
shall, at its sole expense, provide for the Employee term life insurance in the
amount of $150,000.
6. Vacation. During the term of this Agreement, the Employee
shall be entitled to an annual vacation of twenty (20) working days each year
consistent with the Company's customary vacation policy. Vacation time not used
in any one year may be carried forward to any future year, provided that in the
aggregate the Employee shall not be entitled to take more than twenty-five (25)
vacation days in any one calendar year.
7. Expenses. During the term of this Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Agreement upon the Employee's presentation
to the Company of an itemized accounting of such expenses with reasonable
supporting data. The Employee shall be entitled to utilize business (or club)
class service for all international flights, and first-class service for all
transcontinental flights within the United States, in each case, in connection
with business-related travel.
8. Term.
(a) The Employee's employment under this Agreement shall
commence on the Effective Date and shall expire on the second anniversary of
such date. Notwithstanding the foregoing, the Company may at its election,
subject to paragraph 8(b) below, terminate the Employee's employment hereunder
as follows:
(i) Upon 30 days' notice if the Employee becomes
physically or mentally incapacitated or is injured so that he
is unable to perform the services required of him hereunder
and such inability to perform continues for a period in excess
of six months and is continuing at the time of such notice; or
(ii) For "Cause" upon notice of such termination to the
Employee. For purposes of this Agreement, the Company shall
have "Cause" to terminate its obligations
-2-
<PAGE> 3
hereunder upon (A) the determination by the Board of Directors
of the Company (the "Board") that the Employee has ceased to
perform his duties hereunder (other than as a result of his
incapacity due to physical or mental illness or injury), which
failure amounts to an intentional and extended neglect of his
duties hereunder, (B) the Board's determination that the
Employee has engaged or is about to engage in conduct
materially injurious to the Company, (C) the Employee's having
been convicted of a felony, or (D) the Employee's
participation in activities proscribed by the provisions of
paragraphs 11 or 13 hereof or a material breach by the
Employee of any of the other covenants or representations
herein; or
(iii) Without Cause upon 30 days' notice of such
termination to the Employee; or
(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Agreement upon
notice to the Company if he shall have been assigned to duties which are
materially inconsistent with those specified in paragraph 3 hereof (a "Material
Demotion").
(b) (i) If this Agreement is terminated pursuant to paragraph
8(a)(i) above, the Employee shall receive disability pay from the date of such
termination until the second anniversary of the Effective Date at the rate of
50% of the Base Salary, reduced by applicable payroll taxes and further reduced
by the amount received by the Employee during such period under any
Company-maintained disability insurance policy or plan or under Social Security
or similar laws. Such disability payments shall be paid periodically to the
Employee as provided in paragraph 5(a) for the payment of salary.
(ii) If this Agreement is terminated pursuant to
paragraph 8(a)(ii) or 8(a)(iv) above, the Employee shall
receive no salary continuation pay or severance pay.
(iii) If this Agreement is terminated pursuant to
paragraph 8(a)(iii) above or as a result of the Employee
having terminated this Agreement following a Material
Demotion, or if the Company does not offer to continue the
Employee's employment with the Company at the expiration of
the stated term of this Agreement at a Base Salary at least
equal to his then most recent Base Salary, the Employee shall
receive salary continuation pay for twelve (12) months from
the date of such termination (the "Salary Continuation
Period") equal to the Base Salary. Such salary continuation
payments (less applicable payroll taxes) shall be paid
-3-
<PAGE> 4
periodically to the Employee as provided in paragraph 5(a) for
the payment of the Base Salary.
(c) During the Salary Continuation Period, the Employee
shall be under no obligation to mitigate the costs to the Company of the salary
continuation payments, and, provided that the Employee is not in breach of his
obligations under paragraph 13 hereof, no compensation that the Employee may
receive from another employer during the Salary Continuation Period shall be
offset against amounts owed to Employee hereunder.
(d) Not later than ninety (90) days prior to the
expiration of the stated term of this Agreement, the parties shall begin to
negotiate in good faith the terms of any extension of this Agreement, provided
that neither party shall be under any obligation to enter into such an
extension.
9. Stock Options. If this Agreement is terminated pursuant to
paragraph 8(a)(iii) above, any stock options relating to Company Common Stock
then held by the Employee shall become exercisable to the full extent that they
would otherwise have become exercisable on January 4, 1998, without regard to
any restrictions or deferrals of the right to exercise such options upon such
termination, and the Employee shall have the right to exercise such options
during the thirty (30) day period following such termination.
10. Representations. The Employee hereby represents to the
Company that (a) he is legally entitled to enter into this Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to grant
to the Company the rights contemplated by paragraph 12 hereof, and (c) he does
not now have, nor within the last three years has he had, any ownership interest
in any business enterprise (other than interests in publicly traded corporations
where his ownership does not exceed one percent (1%) or more of the equity
capital) which is a customer of the Company, any of its subsidiaries, or from
which the Company or any of its subsidiaries purchases any goods or services or
to whom such corporations owe any financial obligations or are required or
directed to make any payments.
11. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of the
Company and its subsidiaries (the "C-N Group") as they may exist from time to
time are valuable, special and unique assets of the business of the C-N Group,
access to and knowledge of which are essential to the performance of the
Employee's duties hereunder. The Employee will not, during or after the term of
his employment by the Company, in whole or in part, disclose such secrets,
know-how or processes to any person, firm, corporation, association or other
entity for
-4-
<PAGE> 5
any reason or purpose whatsoever, nor shall the Employee make use of any such
property for his own purposes or for the benefit of any person, firm,
corporation or other entity (except the Company or a member of the C-N Group)
under any circumstances during or after the term of his employment, provided
that after the term of his employment these restrictions shall not apply to such
secrets, know-how and processes which are then in the public domain (provided
that the Employee was not responsible, directly or indirectly, for such secrets,
know-how or processes entering the public domain without the Company's consent).
12. Inventions.
(a) The Employee hereby sells, transfers and assigns to
the Company or to any person, or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or jointly,
during the term hereof which relate to methods, apparatus, designs, products,
processes or devices, sold, leased, used or under consideration or development
by the Company or any of its subsidiaries, or which otherwise relate to or
pertain to the business, functions or operations of the Company or any of its
subsidiaries or which arise from the efforts of the Employee during the course
of his employment for the Company or any of its subsidiaries. The Employee shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and the Employee shall execute
and deliver to the Company such formal transfers and assignments and such other
papers and documents as may be necessary or required of the Employee to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain
copyright thereof. Any invention relating to the business of the C-N Group and
disclosed by the Employee within one year following the termination of this
Agreement shall be deemed to fall within the provisions of this paragraph unless
proved to have been first conceived and made following such termination.
(b) The Employee has been notified and understands that
the provisions of this paragraph 12 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(a) Any provision in an employment agreement
which provides that an employee shall assign, or
offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to
an invention that the employee developed
entirety on his or her own time without using the
-5-
<PAGE> 6
employer's equipment, supplies, facilities, or trade
secret information except for those inventions that
either:
(1) Relate at the time of conception or
reduction to practice of the invention to
the employer's business, or actual or
demonstrably anticipated research or
development of the employer.
(2) Result from any work performed by
the employee for the employer.
(b) To the extent a provision in an employment
agreement purports to require an employee to assign
an invention otherwise excluded from being required
to be assigned under subdivision (a), the provision
is against the public policy of this state and is
unenforceable.
13. Covenants Not To Compete or Interfere. For a period ending
twelve months from and after the date of termination of the Employee's
employment hereunder, except for a termination of employment pursuant to
paragraph 8(a)(i) or 8(a)(iii) or a voluntary termination by the Employee
following a Material Demotion or following any change in control of the Company
or the sale or transfer of the Company to, or the merger of the Company with or
into, a party not controlled by, or under common control of, Warburg, Pincus
Investors, L.P., the Employee shall not engage in any business (whether as an
officer, director, owner, employee, partner or other direct or indirect
participant) which is engaged in the manufacturing, distribution or research and
development of any products being sold by, or under development by, the Company
or its subsidiaries as of the date of such termination of employment, in any
geographic area where the Company or such subsidiaries are then so manufacturing
or distributing such products, nor shall the Employee interfere with, disrupt or
attempt to disrupt the relationship, contractual or otherwise, between the
Company and any customer, supplier, lessor, lessee or employee of the Company.
It is the desire and intent of the parties that the provisions
of this paragraph 13 shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular portion of this paragraph 13 shall be
adjudicated to be invalid or unenforceable, this paragraph 13 shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of this
paragraph in the particular jurisdiction in which such adjudication is made.
-6-
<PAGE> 7
14. Injunctive Relief. If there is a breach or threatened
breach of the provisions of paragraph 11, 12 or 13 of this Agreement, the
Company shall be entitled to an injunction restraining the Employee from such
breach. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies for such breach or threatened breach.
15. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the Employee
shall submit to such physical examination and supply such information as may be
required in connection therewith.
16. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and if sent by registered
mail to Stelios B. Papadopoulos at his home address as reflected on the records
of the Company, in the case of the Employee, or, in the case of the Company, to
Calbiochem-Novabiochem International, Inc., 10394 Pacific Center Court, San
Diego, California 92121, Attention: Chief Financial Officer, or to such other
officer or address as the Company shall notify Employee.
17. Waiver of Breach. A waiver by the Company or Employee of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
18. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of laws provisions
thereof.
19. Assignment. This Agreement may be assigned, without the
consent of the Employee, by the Company to any person, partnership, corporation,
or other entity which has purchased substantially all the assets of the Company,
provided such assignee assumes all the liabilities of the Company hereunder.
20. Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letters of
intent or understandings between the Employee and (a) the Company, (b) any
member of the C-N Group or (c) any of the Company's principal shareholders,
affiliates or
-7-
<PAGE> 8
subsidiaries. This Agreement may be changed only by an agreement in writing
signed by a party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day first hereinabove written.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
By: /s/ James G. Stewart
--------------------------------------
James G. Stewart
Chief Financial Officer
EMPLOYEE
/s/ Stelios B. Papadopoulos
-----------------------------------------
Stelios B. Papadopoulos
-8-
<PAGE> 1
EXHIBIT 10(m)(i)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 23rd day of February 1996,
between Calbiochem-Novabiochem International, Inc., a Delaware corporation (the
"Company") and Ben Matzilevich (the "Employee").
1. Effective Date. This Employment Agreement shall become
effective on the 3rd day of April 1996 (the "Effective Date").
2. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment all upon the terms and conditions herein set forth.
3. Duties. The Employee is engaged as Vice President, Market
Development/Niche Applications and will report to the Chairman and Chief
Executive Officer of the Company and hereby promises to perform and discharge
well and faithfully all duties of this position. The important elements of this
position entail the identification of product opportunities associated with high
growth life science niche applications, the sourcing, licensing and/or internal
development of such products and the assembling of these products into a niche
catalogue that is then distributed and represented in the market place. The
responsibilities of this position include being the architect as well as the
executor with the end result being to develop the Company into a premier,
innovative life science entity within the industry.
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during the
term of this Employment Agreement be engaged in any other business activity
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage; but this shall not be construed as preventing the Employee
from investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any services on the part of
the Employee in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, nor shall this be construed as preventing the Employee from purchasing
securities in any corporation whose securities are regularly traded provided
that such purchases shall not result in his collectively owning beneficially at
any time one percent (1%) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company, without the express
prior written consent of the Company.
5. Compensation.
(a) For services rendered under this Employment Agreement, the
Company shall pay the Employee a salary at the rate of $124,000 per annum (the
"Base Salary"), payable (after
<PAGE> 2
deduction of applicable payroll taxes as an employee in the State of California)
in equal bi-weekly installments. The Employee shall also be eligible for and
participate in such fringe benefits as shall be generally provided to executives
of the Company, including medical insurance and retirement programs which may be
adopted from time to time during the term hereof by the Company. On an annual
basis, the Company shall review Employee's salary and make such adjustment as
may be warranted based upon Employee performance, Company financial performance,
economic conditions, etc.
(b) At the conclusion of each Fiscal Year, the Employee shall
be eligible for, and the Company in its sole discretion, may award an executive
bonus in a range of 30% to 35% of base salary, based on the achievement of
mutually acceptable objectives.
(c) The Company shall provide the Employee with the full use
of the Company van while the Employee is in San Diego. In the event that the
Company requires the use of the Company van, the Company shall provide Employee
with a medium size rental vehicle.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to twenty-nine (29) paid days off pursuant to the
Company's customary paid time off policy ("CalTime").
7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data.
8. Term.
(a) The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the two year
anniversary date thereof. Notwithstanding the foregoing, the Company may at its
election, terminate the Employee's employment hereunder as follows:
(i) Upon thirty (30) days notice if the Employee
becomes physically or mentally incapacitated or is injured so that he is unable
to perform the services required of him hereunder and such inability to perform
continues for a period in excess of ninety (90) days and is continuing at the
time of such notice; or
(ii) For "Cause" upon notice of such termination to
the Employee. For purposes of this Employment Agreement, the Company shall have
"Cause" to terminate its obligations hereunder
2
<PAGE> 3
upon (A) the reasonable determination by the Chief Executive Officer that the
Employee has ceased to perform his duties hereunder (other than as a result of
his incapacity due to physical or mental illness or injury), which failure
amounts to an intentional and extended neglect of his duties hereunder, (B) the
Chief Executive Officer's reasonable determination that the Employee has engaged
or is about to engage in conduct materially injurious to the Company, (C) the
Employee's having been convicted of a felony, or (D) A material breach by the
Employee of any of the other covenants or representations herein; or
(iii) Without Cause by honoring the remaining term of
this Employment Agreement as salary continuation. If the Company shall decide
not to renew this Employment Agreement, the ninety (90) day notification of the
Company's intention not to renew prior to expiration of the initial or any
subsequent annual term, shall serve as adequate termination notice and the
Employee hereby agrees to make a smooth transition of responsibilities during
that ninety (90) day period and the Employee further agrees not to take any
legal action against the Company related to said non-renewal and termination of
employment.
(iv) Upon the death of the Employee.
(b) Not later than ninety (90) days prior to the expiration of
the stated term of this Employment Agreement, the parties shall begin to
negotiate in good faith the terms of any extension of this Employment Agreement,
provided that neither party shall be under any obligation to enter into such an
extension. In the case of a renewal and unless otherwise agreed to in writing by
both parties, the terms and conditions of this Employment Agreement shall apply
to any renewals or extensions thereto.
9. Representations. The Employee hereby represents to the Company that
(a) he is legally entitled to enter into this Employment Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to grant
to the Company the rights contemplated by paragraph 10 hereof, and (c) he does
not now have, nor within the last three years has he had, any ownership interest
in any business enterprise (other than interest in publicly traded corporations
where his ownership does not exceed one percent (1%) or more of the equity
capital) which is a customer of the Company, any of its subsidiaries, or from
which the Company or any of its subsidiaries purchases any goods or services or
to whom such corporations owe any financial obligations or are required or
directed to make any payments.
3
<PAGE> 4
10. Inventions.
(a) The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, during the term
hereof which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by the Company
or any of its subsidiaries, or which otherwise relate to or pertain to the
business, functions or operations of the Company or any of its subsidiaries or
which arise from the efforts of the Employee during the course of his employment
for the Company or any of its subsidiaries. The Employee shall communicate
promptly and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and its
subsidiaries and disclosed by the Employee within one year following the
termination of this Agreement shall be deemed to fall within the provisions of
this paragraph unless proved to have been first conceived and made following
such termination.
(b) The Employee has been notified and understands that the
provisions of this Section 11 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement which
provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information except
for those inventions that either:
(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer.
(b) Result from any work performed by the
employee for the employer.
4
<PAGE> 5
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under subsection (i), the provision
is against the public policy of this state and is unenforceable.
11. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith.
12. Notices. Any notice required or permitted to be given under this
Employment Agreement shall be sufficient if in writing and if sent by registered
mail to Mr. Ben Matzilevich at his home address as reflected on the records of
the Company, in the case of the Employee, or Mr. Stelios B. Papadopoulos, Chief
Executive Officer, Calbiochem-Novabiochem International, 10394 Pacific Center
Court, San Diego, CA 92121, in the case of the Company.
13. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
14. Governing Law. This Employment Agreement shall be governed by and
construed and enforce in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of laws provisions
thereof.
15. Assignment. This Employment Agreement may be assigned, without the
consent of the Employee, by the Company to any person, partnership, corporation,
or other entity which has purchased substantially all the assets of the Company,
provided such assignee assumes all the liabilities of the Company hereunder.
16. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of intent
or understandings between the Employee and (a) the Company, (b) any member of
the Calbiochem Novabiochem Group or (c) any of the Company's principal
shareholders, affiliates or subsidiaries regarding employment. This Employment
Agreement may be changed only by an agreement in writing signed by a party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day first herein above written.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos
-------------------------------------
Stelios B. Papadopoulos
Chief Executive Officer
By: /s/ Ben Matzilevich
-------------------------------------
Ben Matzilevich
Employee
6
<PAGE> 1
EXHIBIT 10(m)(ii)
SECURED RECOURSE PROMISSORY NOTE
$96,000.00 January 31, 1996
FOR VALUE RECEIVED, Ben Matzilevich (the "Maker") hereby
promises to pay to the order of Calbiochem-Novabiochem International, Inc., a
Delaware corporation (the "Company"), at 10394 Pacific Center Court, San Diego,
California 92121, or such address as the Company or the holder of this Note
shall have given to the Maker, the principal sum of Ninety-Six Thousand Dollars
($96,000.00) on January 31, 1998, together with interest thereon, compounded
annually, at the rate of 5.65% per annum.
Payments of principal and interest shall be made in such
currency of the United States at the time of payment shall be legal tender for
the payment of public and private debts.
This Note evidences a loan made by the Company under the Loan
and Pledge Agreement dated the date hereof (the "Agreement") between the Company
and the Maker providing, among other things, for the securing of the Note by a
pledge of certain shares of Common Stock, par value $0.01 of the Company, owned
by the Maker, for the mandatory prepayment of this Note under certain
circumstances and for the acceleration of the maturity of this Note following an
Event of Default, all on the terms set forth in the Agreement.
This Note may be prepaid in whole or in part at any time and
from time to time without penalty or premium.
Upon the occurrence of an Event of Default (as defined in the
Agreement), this Note shall become due and payable as set forth in the
Agreement.
The Maker agrees to pay to the holder hereof all expenses
incurred by such holder, including reasonable attorneys' fees, in enforcing and
collecting this Note.
The Maker hereby forever waives presentment, demand,
presentment for payment, protest, notice of protest, notice of dishonor of this
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
This Note shall be paid without deduction by reason of any
set-off, defense or counterclaim of the Maker.
This Note shall be governed by and construed in
accordance with the laws of the State of California
<PAGE> 2
applicable to agreements made and to be performed entirely in such State and
shall be binding upon the heirs or legal representatives of the Maker and shall
inure to the benefits of the successors and assigns of the Company.
/s/ Ben Matzilevich
--------------------------------------
Ben Matzilevich
Maker
<PAGE> 1
EXHIBIT 10(m)(iii)
RESTRICTED STOCK PURCHASE AGREEMENT
RESTRICTED STOCK PURCHASE AGREEMENT, dated as of the 31st day
of January, 1996, between Calbiochem-Novabiochem International, Inc., a Delaware
corporation (the "Company") and Ben Matzilevich (the "Employee").
WHEREAS, the Employee and the Company are parties to an
Employment Agreement, dated March 17, 1995 (the "Employment Agreement"); and
WHEREAS, the Employment Agreement contemplated the sale to the
Employee of shares of both the Company's Common Stock and Series B Preferred
Stock, in order to provide the Employee an equity stake in the Company; and
WHEREAS, both the Company and the Employee have determined
that it would be appropriate for the Employee's investment in the Company to be
solely in Common Stock of the Company;
NOW, THEREFORE, in consideration of the premises and the
mutual undertakings herein set forth, the parties hereto hereby agree as
follows:
1. Modification of Employment Agreement. Effective as of the
date hereof, Section 6 of the Employment Agreement is hereby terminated in all
respects, and neither party shall have any further rights or obligations under
such Section 6. Except for the foregoing modification, the Employment Agreement
remains in full force and effect.
2. Investment.
(a) On the date hereof, the Company will issue and sell to the
Employee, and the Employee will purchase from the Company, 12,000 shares of
Common Stock at a purchase price of eight dollars ($8.00) per share. Such shares
of Common Stock shall initially constitute restricted stock (the "Restricted
Stock") subject to the restrictions and other provisions set forth below. All
shares of Restricted Stock sold hereunder (including any shares received by the
Employee as a result of stock dividends, stock splits or any other forms of
recapitalization) shall be subject to the following restrictions:
(i) No shares of Restricted Stock shall be disposed
of by the Employee either voluntarily or involuntarily, directly or
indirectly, during the period commencing on the date hereof and ending
on the fifth anniversary of the date hereof (the "Restricted Stock
<PAGE> 2
Period") unless such shares of Restricted Stock shall have then been
released from such restriction pursuant to subparagraph 2(a)(ii), and
any attempted disposition of shares of Restricted Stock while they are
restricted shall be null and void and of no effect.
(ii) The restrictions imposed under subparagraph
2(a) above, upon shares of Restricted Stock shall terminate with
respect to 20% of the shares of Common Stock sold to the Employee
hereunder on each successive anniversary of the date hereof commencing
on the first anniversary of the date hereof; provided, that upon the
consummation of an initial underwritten public offering by the Company,
all such restrictions shall terminate.
(iii) If the Employee's employment with the Company
is terminated at any time during the Restricted Stock Period for any
reason, or the Company does not exercise its right to extend the
Employee's employment for another year at the time his employment comes
up for renewal, then within the thirty-day period following the
termination of employment, the Company shall have the right to buy and
the Employee (or the Employee's personal representative if the Employee
is deceased or incompetent) shall sell to the Company all of the shares
of Restricted Stock which are then restricted under this Agreement for
a cash purchase price of $8.00 per share (with such amount to be
appropriately adjusted to reflect any stock splits, stock combinations,
stock dividends or similar capital adjustments between the date hereof
and the date of any such purchase).
(iv) During the Restricted Stock Period, the Company
shall retain possession of all stock certificates evidencing Restricted
Stock. Promptly after the release of any portion of the Restricted
Stock from the restrictions provided for in this Agreement, the Company
shall deliver a certificate evidencing such portion to the Employee.
(b) The Employee hereby confirms that he shall acquire the
shares of Company Common Stock sold to him hereunder (the "Securities") solely
for his own account for investment and not with a view to any distribution or
public offering thereof. The Employee agrees that he shall not at any time sell,
offer for sale, pledge or otherwise dispose of any of the Securities or any
interest therein in the absence of either an effective current registration
statement relating thereto under the Securities Act of 1933, as amended (the
"Act") or an opinion of counsel, in form and substance satisfactory to the
Company, to the effect that registration is not required. The Employee hereby
acknowledges having been advised that (i) he must hold the Securities
indefinitely unless they are registered under the Act, or an exemption from
registration becomes available, (ii) there is no assurance that any exemption
from the Act will be available, or, if available, that such exemption will allow
him to dispose of or
-2-
<PAGE> 3
otherwise transfer any or all of such Securities in the amounts, or at the times
he might desire, (iii) at the present time Rule 144 promulgated under the Act by
the Securities and Exchange Commission ("Rule 144") is not applicable to sales
of the Securities because the Common Stock of the Company is not registered
under Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act"),
and there is not publicly available the information concerning the Company
specified in Rule 144, (iv) the Company is not presently under any obligation to
register under Section 12 of the Exchange Act or to make publicly available the
information specified in Rule 144 and that it may never be required to do so.
(c) In connection with, and as a condition to, the sale to the
Employee of the Securities, the Employee hereby agrees with the Company and its
current stockholders to be bound by Sections 5 and 6 of that certain
Subscription and Shareholder Agreement and by that certain Registration Rights
Agreement, each dated as of March 13, 1992, among the Company and its
stockholders, and the Company hereby undertakes to provide or cause to be
provided to the Employee the rights under such Sections of the Subscription and
Shareholder Agreement and under the Registration Rights Agreement as if he had
been an original signatory to such agreements.
(d) The certificates evidencing the Securities sold to the
Employee under this Employment Agreement shall bear the following legends:
"The securities evidenced hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), and
may not be transferred except pursuant to an effective
registration under the Act or in a transaction which, in the
opinion of counsel reasonably satisfactory to the Company,
qualifies as an exempt transaction under the Act and the rules
and regulations promulgated thereunder.
The shares of stock represented by this certificate are
subject to all the terms of that certain Subscription and
Shareholder Agreement, dated as of March 13, 1992, as amended,
among the Company and certain of its stockholders, a copy of
which is on file at the office of the Company. Such agreement
provides that the shares represented hereby are subject to
rights of first refusal in favor of certain stockholders and
the Company.
Transfer of this certificate and the shares represented hereby
is restricted pursuant to
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<PAGE> 4
the terms of a Restricted Stock Purchase Agreement, dated as
of January __, 1996, between Calbiochem-Novabiochem
International, Inc. and Ben Matzilevich. A copy of such
agreement is on file at the principal offices of the Company."
and stop transfer instruction shall be delivered by the Company to any transfer
agent for the shares of Common Stock. At the time or times when the restrictions
in subparagraph 2(a) hereof are terminated with respect to the Restricted Stock
or the shares of Common Stock are registered under the Act, the legends on the
certificates evidencing the shares of Common Stock shall be appropriately
amended and the stop transfer instructions shall be appropriately modified. If
shares of Restricted Stock are repurchased by the Company pursuant to
subparagraph 2(a)(iii) hereof, then any property of any description distributed
with respect to the shares repurchased, including but not limited to stock
dividends, but excluding cash dividends, shall be transferred to the Company at
the same time the shares so repurchased are transferred to the Company.
3. No Employment Rights Conferred. Nothing contained in this
Agreement shall confer upon the Employee any continued right to employment by
the Company or any of its subsidiaries.
4. Notices. Any notice required or permitted to be given under
this Restricted Stock Purchase Agreement shall be sufficient if in writing and
if sent by registered mail to Mr. Ben Matzilevich at his home address as
reflected on the records of the Company, in the case of the Employee, or Chief
Executive Officer, Calbiochem-Novabiochem International, Inc., 10394 Pacific
Center Court, San Diego, CA 92121, in the case of the Company.
5. Governing Law. This Restricted Stock Purchase Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of California without giving effect to the choice of law or conflict
of laws provisions thereof.
6. Entire Agreement. This Restricted Stock Purchase Agreement
(together with the agreements referred to in Section 2(c) hereof) contains the
entire agreement of the parties relating to the sale of Company Common Stock
contemplated hereby and supersedes any and all agreements, letters of intent or
understandings between the Employee and (a) the Company, (b) any member of the
Calbiochem Novabiochem Group or (c) any of the Company's principal shareholders,
affiliates or subsidiaries relating to the sale of equity interests to the
Employee. This Restricted Stock Purchase Agreement may be changed only by an
agreement in writing signed by a party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
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<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Restricted
Stock Purchase Agreement as of the day first herein above written.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos
------------------------------------------
Stelios B. Papadopoulos
Chief Executive Officer
By: /s/ Ben Matzilevich
------------------------------------------
Ben Matzilevich
Employee
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<PAGE> 1
EXHIBIT 10(m)(iv)
LOAN AND PLEDGE AGREEMENT
This Agreement dated January, 31, 1996, is by and between
Calbiochem-Novabiochem International, Inc., a Delaware corporation (the
"Company"), and Ben Matzilevich (the "Employee").
1. The Company hereby loans to the Employee Ninety-Six
Thousand Dollars ($96,000) for the purchase of 12,000 shares (the "Shares") of
common stock, par value $0.01 per share, of the Company (the "Common Stock").
The Employee hereby transfers to the Company simultaneously with the execution
of this Agreement the full amount of such loan in full and complete payment for
the subscription price due to the Company in respect of the Shares.
2. The loan is evidenced by a promissory note of even date
herewith (the "Note"), secured by a pledge of the Shares as set forth below.
3. The Note shall be repaid on the second anniversary of the
date of this Agreement. The Note shall bear interest at 5.65% per annum, payable
upon maturity of the Note. The Employee may prepay the Note in whole or from
time to time in part, without premium or penalty.
4. In the event the Employee sells any shares of Common Stock
of the Company or otherwise realizes any cash or other consideration in respect
of such shares prior to repayment in full of the Note, whether pursuant to a
dividend, private sale, public offering, merger, recapitalization, liquidation
or dissolution of the Company (each, a "Realization Event"), the Employee shall,
within ten days of the Realization Event, make a mandatory prepayment of the
Note in an amount equal to one hundred percent (100%) of the net after tax
proceeds received by or for the account of the Employee in respect of the
Realization Event.
5. The Employee hereby grants to the Company a first priority
security interest in the Shares, as collateral security for the due and punctual
payment of the Note in accordance with its terms and the performance by the
Employee of his obligations under the Note (which include any other securities
or property receivable or distributable with respect thereto after the date
hereof). The certificates representing the Shares, each together with a stock
power attached thereto executed in blank, are being delivered to the Company and
shall be retained by the Company until all obligations under the Note have been
paid in full. At such time, the Company shall return to the
<PAGE> 2
Employee the certificates representing the pledged Shares, each together with
the stock power attached thereto.
6. So long as no Event of Default (as hereinafter defined)
shall have occurred and be continuing, the Employee shall have the right to vote
and have all other consensual rights with respect to the Shares, and the Company
shall deliver to the Employee any proxies, reports or other materials delivered
to its shareholders generally, which are necessary to enable the Employee to
exercise such rights. Upon the occurrence of an Event of Default, all voting and
other consensual rights of the Employee in the Shares shall cease and may be
exercised by the Company.
7. Upon the occurrence of an Event of Default, the Company
shall have and may exercise all rights and remedies afforded to a secured party
under the California Uniform Commercial Code applicable thereto, including,
without limitation, the right to sell the Shares at a public or private sale
(provided that the Company shall give the Employee at least 15 days prior
written notice of the date in which any public sale is to be held or the date
after which any private sale may be made), at which sale the Company may
purchase such Shares (free from any right of redemption by the Employee, which
right is hereby waived and released) and have the right to retain the Shares in
partial or full satisfaction of the Employee's obligations under the Note in
accordance with the provisions of the California Uniform Commercial Code, with
the Employee remaining liable for any deficiency.
8. Each of the Employee and the Company has all power and
authority necessary to enter into and consummate the transactions contemplated
by this Agreement and this Agreement is valid and enforceable against each of
the Company and the Employee in accordance with its terms. The Employee has not
created or permitted any lien or encumbrance to attach to the Shares, other than
the pledge set forth in this Agreement.
9. If any of the following events ("Events of Default") shall
occur:
(a) The Employee shall default in the payment of any
part of the principal or interest on the Note when the same shall
become due and payable, whether at maturity, by acceleration or
otherwise and such default continues for more than 10 days after
receipt of written notice from the Company;
(b) The Employee shall default in the performance or
compliance with any term or provision contained in this Agreement;
2
<PAGE> 3
(c) All outstanding principal of the Note has not
been paid within 30 days of the date on which the Employee either
receives or gives notice that he is for any reason leaving the employ
of the Company;
(d) The Employee shall (i) become insolvent or be
unable, or admit in writing his inability, to pay his debts as they
become due; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated as bankrupt or insolvent or file a
voluntary petition in bankruptcy; (iv) file a petition or an answer
seeking an arrangement with creditors to take advantage of any
insolvency law or (v) file an answer admitting to the material
obligations or consent to, or default in answering, or fail to have
dismissed within 60 days after the filing thereof, a petition filed
against him in any bankruptcy or insolvency proceeding; or
(e) If any of the Shares shall be encumbered,
pledged, attached or levied upon or seized at any legal proceeding,
except as contemplated by this Agreement, and such encumbrance, pledge,
attachment or levy remains uncured for more than 15 days;
then the holder of the Note may at any time by written notice to the Employee
(or without such notice with respect to subsection (d) above), declare the
entire unpaid principal of the Note to be forthwith due and payable, without
other notices or demands of any kind, all of which are hereby waived by the
Employee.
10. The Employee will do, execute, acknowledge, deliver, file
and record all such further acts, conveyances, transfers and assurances as the
Company may deem necessary or advisable to perform, preserve, protect and
continue the pledge granted by this Agreement.
11. All notices and communications provided for herein shall
be delivered or mailed by registered or certified mail, postage prepaid, or
telegraphed, addressed as follows:
If to the Company:
10394 Pacific Center Court
San Diego, California 92121
Attention: Chief Financial Officer
If to the Employee, at his home address appearing
on the records of the Company,
3
<PAGE> 4
or such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.
12. All representations and warranties made by the Employee
and the Company herein shall survive the making of the loan and the delivery of
the Note hereunder.
13. No delay on the part of the Company in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof, or the exercise of any other right,
power or privilege.
14. This Agreement and the Note shall be construed under the
laws of the State of California applicable to agreements made and performed
entirely in such State.
15. This Agreement shall be binding upon the successors and
assigns of the parties hereto; provided however, that this Agreement and the
Shares shall not be assignable by the Employee without the prior written consent
of the Company.
16. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos
--------------------------------------------
Name:
Title: CEO
THE EMPLOYEE
/s/ Ben Matzilevich
----------------------------------------
Ben Matzilevich
4
<PAGE> 1
EXHIBIT 10(n)(i)
[SILICON VALLEY BANK LOGO]
LOAN AND SECURITY AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa
Clara, California 95054-2895 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").
1. LOANS.
1.1 LOANS. Silicon, in its reasonable discretion, will make loans to the
Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount (the "Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default has
occurred. The Borrower is responsible for monitoring the total amount of Loans
and other Obligations outstanding from time to time, and Borrower shall not
permit the same, at any time, to exceed the Credit Limit. If at any time the
total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's deposit
accounts maintained with Silicon.
1.3 FEES. The Borrower shall pay to Silicon a loan origination fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.
2. GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means the
following: the obligation to pay all Loans and all interest thereon when due,
and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon, whether joint or several, monetary
or non-monetary, and whether created pursuant to this Agreement or any other
present or future agreement or otherwise. Silicon may, in its discretion,
require that Borrower pay monetary Obligations in cash to Silicon, or charge
them to Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans. Silicon may also, in its discretion, charge
any monetary Obligations to Borrower's deposit accounts maintained with Silicon.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby grants
Silicon a continuing security interest in all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): (a) All accounts, contract
rights, chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) All inventory, goods, merchandise, materials, raw materials, work
in process, finished goods, farm products, advertising, packaging and shipping
materials, supplies, and all other tangible personal property which is held for
sale or lease or furnished under contracts of service or consumed in the
Borrower's business, and all warehouse receipts and other documents; and (c) All
equipment, including without limitation all machinery, fixtures, trade fixtures,
vehicles, furnishings, furniture, materials, tools, machine tools, office
equipment, computers and peripheral devices, appliances, apparatus, parts, dies,
and jigs; (d) All general intangibles including, but not limited to, deposit
accounts, goodwill, names, trade names, trademarks and the
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<PAGE> 2
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
goodwill of the business symbolized thereby, trade secrets, drawings,
blueprints, customer lists, patents, patent applications, copyrights, security
deposits, loan commitment fees, federal, state and local tax refunds and claims,
all rights in all litigation presently or hereafter pending for any cause or
claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against Silicon, all rights
to purchase or sell real or personal property, all rights as a licensor or
licensee of any kind, all royalties, licenses, processes, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (e) All books and
records, whether stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets, and other technology) shall be subject to any
licenses or rights now or in the future granted by the Borrower to any third
parties in the ordinary course of Borrower's business; provided that if the
Borrower proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
discretion.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the Borrower
covenants that the following representations will continue to be true, and that
the Borrower will comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower, if a corporation, is and
will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The Borrower is and
will continue to be qualified and licensed to do business in all jurisdictions
in which any failure to do so would have a material adverse effect on the
Borrower. The execution, delivery and performance by the Borrower of this
Agreement, and all other documents contemplated hereby have been duly and
validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of, and are not grounds
for acceleration under, any agreement or instrument which is binding upon the
Borrower.
3.2 NAME; TRADE NAMES AND STYLES. The name of the Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule hereto are
all prior names of the Borrower and all of Borrower's present and prior trade
names. The Borrower shall give Silicon 15 days' prior written notice before
changing its name or doing business under any other name. The Borrower has
complied, and will in the future comply, with all laws relating to the conduct
of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is the Borrower's chief executive office. In addition,
the Borrower has places of business and Collateral is located only at the
locations set forth on the Schedule to this Agreement. The Borrower will give
Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of equipment which are leased by the Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for the following ("Permitted Liens"):
(i) purchase money security interests in specific items of equipment; (ii)
leases of specific items of equipment; (iii) liens for taxes not yet payable;
(iv) additional security interests and liens consented to in writing by Silicon
in its reasonable discretion, which consent shall not be unreasonably withheld;
and (v) security interests being terminated substantially concurrently with this
Agreement. Silicon will have the right to require, as a condition to its consent
under subparagraph (iv) above, that the holder of the additional security
interest or lien sign an intercreditor agreement on Silicon's then standard
form, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding, and
that the Borrower agree that any uncured default in any obligation secured by
the subordinate security interest shall also constitute an Event of Default
under this Agreement. Silicon now has, and will continue to have, a perfected
and enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and the Borrower will at all times defend Silicon and the
Collateral against all claims of others. None of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture.
3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the Collateral in
good working condition, and the Borrower will not use the Collateral for any
unlawful purpose. The Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
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<PAGE> 3
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
3.6 BOOKS AND RECORDS. The Borrower has maintained and will maintain at the
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or in
the future delivered to Silicon have been, and will be, prepared in conformity
with generally accepted accounting principles and now and in the future will
completely and accurately reflect the financial condition of the Borrower, at
the times and for the periods therein stated. Since the last date covered by any
such statement, there has been no material adverse change in the financial
condition or business of the Borrower. The Borrower is now and will continue to
be solvent. The Borrower will provide Silicon: (i) within 30 days after the end
of each month, a monthly financial statement prepared by the Borrower*, and a
Compliance Certificate in such form as Silicon shall reasonably specify, signed
by the Chief Financial Officer of the Borrower, certifying that as of the end of
such month the Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance
with the financial covenants set forth on the Schedule and such other
information as Silicon shall reasonably request; and (ii) within 120 days
following the end of the Borrower's fiscal year, complete annual financial
statements*, certified by independent certified public accountants ** acceptable
to Silicon and accompanied by the unqualified report thereon by said independent
certified public accountants. ***
* AND CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC. (THE "PARENT"), INCLUDING
CONSOLIDATING AND CONSOLIDATED FINANCIAL STATEMENTS RELATING TO THE PARENT AND
BORROWER
** REASONABLY
*** BORROWER AGREES TO CAUSE PARENT TO PROVIDE TO SILICON COPIES OF ALL
REPORTS AND OTHER INFORMATION PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION
WITHIN THE EARLIER OF 5 DAYS AFTER THE DATE DUE, IF ANY, OR WHEN SO PROVIDED.
FURTHER, BORROWER AGREES TO DELIVER TO SILICON A COPY, UPON RECEIPT BY
BORROWER, OF THE AUDIT TO BE CONDUCTED BY KPMG PEAT MARWICK L.L.P. IN CONNECTION
WITH THE CONSUMMATION OF THE ACQUISITION (AS DEFINED IN THE SCHEDULE), WHICH
AUDIT IS TO BE COMPLETED WITHIN 120 DAYS OF THE CLOSING OF THE ACQUISITION.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and the Borrower has timely paid, and will timely
pay, all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by the Borrower. The Borrower may,
however, defer payment of any contested taxes, provided that the Borrower (i) in
good faith contests the Borrower's obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (ii) notifies
Silicon in writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. The Borrower is
unaware of any claims or adjustments proposed for any of the Borrower's prior
tax years which could result in additional taxes becoming due and payable by the
Borrower. The Borrower has paid, and shall continue to pay all amounts necessary
to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and the Borrower has not and will not
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any such plan which
could result in any liability of the Borrower, including, without limitation,
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.
3.9 COMPLIANCE WITH LAW. The Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to the Borrower, including, but not limited to,
those relating to the Borrower's ownership of real or personal property, conduct
and licensing of the Borrower's business, and environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $250,000.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
3.12 ACQUISITION; ETC. BORROWER HAS DELIVERED TO SILICON COMPLETE AND CORRECT
COPIES OF THE PURCHASE AGREEMENT (AS DEFINED IN THE SCHEDULE ATTACHED HERETO)
AND ALL EXHIBITS AND SCHEDULES THERETO AND THE SAME HAVE NOT BEEN AMENDED SINCE
THE DATE OF DELIVERY THEREOF TO SILICON. EACH OF THE REPRESENTATIONS AND
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<PAGE> 4
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
WARRANTIES IN THE PURCHASE AGREEMENT IS TRUE AND CORRECT AS OF THE DATE HEREOF,
AND WILL BE TRUE AND CORRECT AS OF THE TIME OF THE MAKING OF THE INITIAL LOANS
HEREUNDER.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule to this
Agreement.
4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit, without
limiting Silicon's other remedies, and whether or not Silicon declares an Event
of Default, Borrower shall remit to Silicon all checks and other proceeds of
Borrower's accounts and general intangibles, in the same form as received by
Borrower, within one day after Borrower's receipt of the same, to be applied to
the Obligations in such order as Silicon shall determine in its discretion.
4.3 INSURANCE. The Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole and absolute discretion, except that,
provided no Event of Default has occurred, Silicon shall release to the Borrower
insurance proceeds with respect to equipment totaling less than $100,000, which
shall be utilized by the Borrower for the replacement of the equipment with
respect to which the insurance proceeds were paid. Silicon may require
reasonable assurance that the insurance proceeds so released will be so used. If
the Borrower fails to provide or pay for any insurance, Silicon may, but is not
obligated to, obtain the same at the Borrower's expense. The Borrower shall
promptly deliver to Silicon copies of all reports made to insurance companies.
4.4 REPORTS. The Borrower shall provide Silicon with such written reports
with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify.
4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times, and
upon one business day notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy the Borrower's
accounting books and records and Borrower's books and records relating to the
Collateral. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
audits shall be at Silicon's expense, except that the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for semi-annual accounts
receivable audits by third parties retained by Silicon, and Silicon may debit
Borrower's deposit accounts with Silicon for the cost of such semi-annual
accounts receivable audits (in which event Silicon shall send notification
thereof to the Borrower). Notwithstanding the foregoing, after the occurrence of
an Event of Default all audits shall be at the Borrower's expense.
4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule hereto,
the Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation, except that the
Borrower may merge or consolidate with another corporation if the Borrower is
the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined in the Schedule) as of the end of the month prior to the effective date
of the merger, and the assets of the corporation acquired in the merger are not
subject to any liens or encumbrances, except Permitted Liens; (ii) acquire any
assets outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined in the Schedule) as
of the end of the month prior to the effective date of the acquisition; (iii)
enter into any other transaction outside the ordinary course of business (except
as permitted by the other provisions of this Section); (iv) sell or transfer any
Collateral, except for the sale of finished inventory in the ordinary course of
the Borrower's business, and except for the sale of obsolete or unneeded
equipment in the ordinary course of business; (v) make any loans of any money or
any other assets; (vi) incur any debts, outside the ordinary course of business,
which would have a material, adverse effect on the Borrower or on the prospect
of repayment of the Obligations; (vii) guarantee or otherwise become liable with
respect to the obligations of another party or entity; (viii) pay or declare any
dividends on the Borrower's stock (except for dividends payable solely in stock
of the Borrower); (ix) redeem, retire, purchase or otherwise acquire, directly
or indirectly, any of the Borrower's stock; (x) make any change in the
Borrower's capital structure which has a material adverse effect on the Borrower
or on the prospect of repayment of the Obligations; or (xi) dissolve or elect to
dissolve. Transactions permitted by the foregoing provisions of this Section are
only permitted if no Event of Default and no event which (with notice or passage
of time or both) would constitute an Event of Default would occur as a result of
such transaction.
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<PAGE> 5
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to the Borrower, the Borrower shall, without expense to Silicon, make
available the Borrower and its officers, employees and agents and the Borrower's
books and records to the extent that Silicon may deem them reasonably necessary
in order to prosecute or defend any such suit or proceeding.
4.8 VERIFICATION. Silicon may, from time to time, following prior
notification to Borrower, verify directly with the respective account debtors
the validity, amount and other matters relating to the Borrower's accounts, by
means of mail, telephone or otherwise, either in the name of the Borrower or
Silicon or such other name as Silicon may reasonably choose, provided that no
prior notification to Borrower shall be required following an Event of Default.
4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its expense, on
request by Silicon, to execute all documents in form satisfactory to Silicon, as
Silicon, may deem reasonably necessary or useful in order to perfect and
maintain Silicon's perfected security interest in the Collateral, and in order
to fully consummate all of the transactions contemplated by this Agreement.
5. TERM.
5.1 MATURITY DATE. This Agreement shall continue in effect until the maturity
date set forth on the Schedule hereto (the "Maturity Date").
5.2 EARLY TERMINATION. This Agreement may be terminated, without penalty*,
prior to the Maturity Date as follows: (i) by the Borrower, effective three
business days after written notice of termination is given to Silicon; or (ii)
by Silicon at any time after the occurrence of an Event of Default, without
notice, effective immediately.
* OTHER THAN WITH RESPECT TO LIBOR RATE LOANS (AS DEFINED IN THE SUPPLEMENT
TO SCHEDULE TO LOAN AGREEMENT (THE "SUPPLEMENT") ATTACHED TO THE SCHEDULE
HERETO) AS MORE FULLY SET FORTH ON THE SUPPLEMENT
5.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, the Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding letters of
credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the reasonable
discretion of Silicon, Silicon may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or
impair any right or remedy of Silicon, nor shall any such termination relieve
the Borrower of any Obligation to Silicon, until all of the Obligations have
been paid and performed in full. Upon payment and performance in full of all the
Obligations, Silicon shall promptly deliver to the Borrower termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and the Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by the Borrower or
any of the Borrower's officers, employees or agents, now or in the future, shall
be untrue or misleading in any material respect; or (b) the Borrower shall fail
to pay when due any Loan or any interest thereon or any other monetary
Obligation; or (c) the total Loans and other Obligations outstanding at any time
exceed the Credit Limit; or (d) the Borrower shall fail to comply with any of
the financial covenants set forth in the Schedule or shall fail to perform any
other non-monetary Obligation which by its nature cannot be cured; or (e) the
Borrower shall fail to pay or perform any other non-monetary Obligation, which
failure is not cured within 5 business days after the date due; or (f) Any levy,
assessment, attachment, seizure, lien or encumbrance is made on all or any part
of the Collateral which is not cured within 10 days after the occurrence of the
same; or (g) Dissolution, termination of existence, insolvency or business
failure of the Borrower; or appointment of a receiver, trustee or custodian, for
all or any part of the property of, assignment for the benefit of creditors by,
or the commencement of any proceeding by the Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (h) the commencement of any proceeding against the Borrower or any guarantor
of any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in
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<PAGE> 6
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
the future in effect, which is not cured by the dismissal thereof within 30 days
after the date commenced; (i) revocation or termination of, or limitation or
denial of liability upon, any guaranty of the Obligations or any attempt to do
any of the foregoing; or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (j) revocation or
termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind
pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing; or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (k) the Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement or if any person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or
(l) there shall be a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of the Borrower,
in one or more transactions, compared to the ownership of outstanding shares of
stock of the Borrower in effect on the date hereof, without the prior written
consent of Silicon; or (m) the Borrower shall generally not pay its debts as
they become due; or the Borrower shall conceal, remove or transfer any part of
its property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law or (o) any default by Borrower
or Parent under any agreement, document or instrument relating to any
indebtedness for borrowed money owing to any person other than Silicon, or any
capitalized lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in favor of
any person other than Silicon, in any case in an amount in excess of $100,000,
which default continues for more than the applicable cure period, if any, with
respect thereto, or any default by Borrower or any Obligor under any material
contract, lease, license or other obligation to any person other than Lender,
which default continues for more than the applicable cure period, if any, with
respect thereto. Silicon may cease making any Loans hereunder during any of the
above cure periods, and thereafter if an Event of Default has occurred.
6.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
Accelerate and declare all or any part of the Obligations to be immediately due,
payable, and performable, notwithstanding any deferred or installment payments
allowed by any instrument evidencing or relating to any Obligation; (c) Take
possession of any or all of the Collateral wherever it may be found, and for
that purpose the Borrower hereby authorizes Silicon without judicial process to
enter onto any of the Borrower's premises without interference to search for,
take possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive control
thereof without charge for so long as Silicon deems it reasonably necessary in
order to complete the enforcement of its rights under this Agreement or any
other agreement; provided, however, that should Silicon seek to take possession
of any or all of the Collateral by Court process, the Borrower hereby
irrevocably waives: (i) any bond and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession; (ii) any demand for possession prior to the commencement of any suit
or action to recover possession thereof; and (iii) any requirement that Silicon
retain possession of and not dispose of any such Collateral until after trial or
final judgment; (d) Require the Borrower to assemble any or all of the
Collateral and make it available to Silicon at places designated by Silicon
which are reasonably convenient to Silicon and the Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable; (e) Require Borrower
to deliver to Silicon, in kind, all checks and other payments received with
respect to all accounts and general intangibles, together with any necessary
indorsements, within one day after the date received by the Borrower; (f)
Complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use the Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (g) Sell, lease
or otherwise dispose of any of the Collateral in its condition at the time
Silicon obtains possession of it or after further manufacturing, processing or
repair, at any one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit, and to adjourn any such sale
from time to time without notice other than oral announcement at the time
scheduled for sale. Silicon shall have the right to conduct such disposition on
the Borrower's premises without charge, for such time or times as Silicon deems
reasonable, or on Silicon's premises, or elsewhere and the Collateral need not
be located at the place of disposition. Silicon may directly or through any
affiliated company purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve the
Borrower of any liability the Borrower may have if any Collateral is defective
as to title or physical condition or otherwise at the time of sale; (h) Demand
payment of, and collect any accounts and general
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<PAGE> 7
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
intangibles comprising Collateral and, in connection therewith, the Borrower
irrevocably authorizes Silicon to endorse or sign the Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to the Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon's
sole discretion, to grant extensions of time to pay, compromise claims and
settle accounts and the like for less than face value; (i) Offset against any
sums in any of Borrower's general, special or other deposit accounts with
Silicon; and (j) Demand and receive possession of any of the Borrower's federal
and state income tax returns and the books and records utilized in the
preparation thereof or referring thereto. All reasonable attorneys' fees,
expenses, costs, liabilities and obligations incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. Without limiting any of Silicon's rights
and remedies, from and after the occurrence of any Event of Default, the
interest rate applicable to the Obligations shall be increased by an additional
four percent per annum.
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.
6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default, without
limiting Silicon's other rights and remedies, the Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to the
Borrower, and at the Borrower's expense, to do any or all of the following, in
the Borrower's name or otherwise: (a) Execute on behalf of the Borrower any
documents that Silicon may, in its sole and absolute discretion, deem advisable
in order to perfect and maintain Silicon's security interest in the Collateral,
or in order to exercise a right of the Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
present and future agreements; (b) Execute on behalf of the Borrower any
document exercising, transferring or assigning any option to purchase, sell or
otherwise dispose of or to lease (as lessor or lessee) any real or personal
property which is part of Silicon's Collateral or in which Silicon has an
interest; (c) Execute on behalf of the Borrower, any invoices relating to any
account, any draft against any account debtor and any notice to any account
debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements. Silicon
shall exercise the foregoing powers in a commercially reasonable manner. Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's
rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of the Borrower.
6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations
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<PAGE> 8
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
and attorneys' fees incurred by Silicon in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations, and third to
the principal of the Obligations, in such order as Silicon shall determine in
its sole discretion. Any surplus shall be paid to the Borrower or other persons
legally entitled thereto; the Borrower shall remain liable to Silicon for any
deficiency. If, Silicon, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
sale or other disposition of Collateral, Silicon shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of purchase price or deferring the reduction
of the Obligations until the actual receipt by Silicon of the cash therefor.
6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
7. GENERAL PROVISIONS.
7.1 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.
7.2 SEVERABILITY. Should any provision of this Agreement be held by any court
of competent jurisdiction to be void or unenforceable, such defect shall not
affect the remainder of this Agreement, which shall continue in full force and
effect.
7.3 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between the Borrower and Silicon and supersede all prior
and contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.
7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general
intangible, document or guaranty at any time held by Silicon on which the
Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.
7.5 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by the
Borrower or any other party through the ordinary negligence of Silicon, or any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
7.6 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by the Borrower and a duly authorized
officer of Silicon.
7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
7.8 ATTORNEYS FEES AND COSTS. The Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this
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<PAGE> 9
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
Agreement (whether or not a lawsuit is filed), including, but not limited to,
any reasonable attorneys' fees and costs Silicon incurs in order to do the
following: prepare and negotiate this Agreement and the documents relating to
this Agreement; obtain legal advice in connection with this Agreement; enforce,
or seek to enforce, any of its rights; prosecute actions against, or defend
actions by, account debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in
bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party
claim, or other claim; examine, audit, copy, and inspect any of the Collateral
or any of the Borrower's books and records; protect, obtain possession of,
lease, dispose of, or otherwise enforce Silicon's security interest in, the
Collateral; and otherwise represent Silicon in any litigation relating to the
Borrower. In satisfying Borrower's obligation hereunder to reimburse Silicon for
attorneys fees, Borrower may, for convenience, issue checks directly to
Silicon's attorneys, Levy, Small & Lallas, but Borrower acknowledges and agrees
that Levy, Small & Lallas is representing only Silicon and not Borrower in
connection with this Agreement. If either Silicon or the Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to which Silicon
may be entitled pursuant to this Paragraph shall immediately become part of the
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.
7.9 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of the parties hereto; provided, however, that
the Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release the
Borrower from its liability for the Obligations.
7.10 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than one
person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
7.11 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. The Borrower acknowledges that the headings may
not describe completely the subject matter of the applicable paragraph, and the
headings shall not be used in any manner to construe, limit, define or interpret
any term or provision of this Agreement. This Agreement has been fully reviewed
and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against Silicon or
the Borrower under any rule of construction or otherwise.
7.12 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY CONDUCT, ACTS
OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR THE
BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
7.13 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall,
at Silicon's option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Orange County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights the Borrower may have to object to
the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
[Signatures on the following page]
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<PAGE> 10
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives.
BORROWER:
CALBIOCHEM-NOVABIOCHEM CORPORATION
BY /s/ Stelios B. Papadopoulos
-------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
-------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
-------------------------------------
TITLE VP
----------------------------------
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<PAGE> 11
[SILICON VALLEY BANK LOGO]
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
CREDIT LIMIT
(Section 1.1): The sum of (A), (B) and (C) below:
(A) Revolving Loan Facility. An amount
not to exceed the lesser of (i) or (ii):
(i) $2,000,000 at any one time
outstanding; or
(ii) (a) 80% of the Net Amount of
Borrower's accounts, which Silicon in
its discretion deems eligible for
borrowing plus (b) 10% of the Value of
Borrower's inventory, which Silicon in
its discretion deems eligible for
borrowing, up to a maximum of $500,000
total at any one time outstanding with
respect to inventory (Loans under
(ii)(a) above with respect to accounts
are referred to as "Accounts Loans";
Loans under (ii)(b) above with respect
to inventory are referred to as
"Inventory Loans" and together with the
Accounts Loans are collectively referred
to as the "Revolving Loans"; and the
loan facility under this subsection (A)
is referred to as the "Revolving Loan
Facility");
PLUS
(B) Working Capital Term Loan Facility.
The amount under the Working Capital
Term Loan Facility (as defined below);
PLUS
(C) Acquisition Term Loan Facility. The
amount under the Acquisition Term Loan
Facility (as defined below).
"Net Amount" of an account means the
gross amount of the account, minus all
applicable sales, use, excise and other
similar taxes and minus all discounts,
credits and allowances of any nature
granted or claimed. "Value" of inventory
means the lower of cost or wholesale
market value. Without limiting the fact
that the determination of which accounts
are eligible for borrowing is a matter
of Silicon's discretion, the following
will not be deemed eligible for
borrowing: accounts outstanding for more
than 90 days from the invoice date,
accounts subject to any contingencies,
accounts owing from the United States or
any department, agency or
instrumentality of the United States or
any state, city or municipality*,
accounts owing from an account debtor
outside the United States (unless
pre-approved by Silicon in its
discretion, or backed by a letter of
credit satisfactory to Silicon, or FCIA
insured satisfactory to Silicon),
accounts owing from one account debtor
to the extent they exceed 25% of the
total eligible accounts outstanding,
accounts owing from an affiliate of
Borrower, and accounts
<PAGE> 12
owing from an account debtor to whom
Borrower is or may be liable for goods
purchased from such account debtor or
otherwise. In addition, if more than 50%
of the accounts owing from an account
debtor are outstanding more than 90 days
from the invoice date or are otherwise
not eligible accounts, then all accounts
owing from that account debtor will be
deemed ineligible for borrowing. * TO
THE EXTENT SUCH ACCOUNTS EXCEED 20% OF
THE TOTAL ELIGIBLE ACCOUNTS OUTSTANDING
LETTER OF CREDIT SUBLIMIT: Silicon, in its reasonable discretion,
will from time to time during the term
of this Agreement issue letters of
credit for the account of the Borrower
("Letters of Credit"), in an aggregate
amount at any one time outstanding not
to exceed $500,000, upon the request of
the Borrower, provided that, on the date
the Letters of Credit are to be issued,
Borrower has availability under the
Revolving Loan Facility in an amount
equal to or greater than the face amount
of the Letters of Credit to be issued.
Prior to the issuance of any Letters of
Credit, Borrower shall execute and
deliver to Silicon Applications for
Letters of Credit and such other
documentation as Silicon shall specify
(the "Letter of Credit Documentation").
Fees for the Letters of Credit shall be
as provided in the Letter of Credit
Documentation. Letters of Credit may
have a maturity date up to twelve months
beyond the Maturity Date in effect from
time to time, provided that if on the
Maturity Date, or on any earlier
effective date of termination, there are
any outstanding letters of credit issued
by Silicon or issued by another
institution based upon an application,
guarantee, indemnity or similar
agreement on the part of Silicon, then
on such date Borrower shall provide to
Silicon cash collateral in an amount
equal to the face amount of all such
letters of credit plus all interest,
fees and costs due or to become due in
connection therewith, to secure all of
the Obligations relating to said letters
of credit, pursuant to Silicon's then
standard form cash pledge agreement.
The Credit Limit set forth above
regarding the Revolving Loan Facility
and the Loans available thereunder at
any time shall be reduced by the face
amount of Letters of Credit from time to
time outstanding.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT Up to $3,000,000 (the "Contract Limit")
may be utilized for spot and future
foreign exchange contracts (the
"Exchange Contracts"). The Credit Limit
regarding the Revolving Loan Facility
available at any time shall be reduced
by the following amounts (the "Foreign
Exchange Reserve") on each day (the
"Determination Date"): (i) on all
outstanding Exchange Contracts on which
delivery is to be effected or settlement
allowed more than two business days from
the Determination Date, 10% of the gross
amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange
Contracts on which delivery is to be
effected or settlement allowed within
two business days after the
Determination Date, 100% of the gross
amount of the Exchange Contracts. In
lieu of the Foreign Exchange Reserve for
100% of the gross amount of any Exchange
Contract, the Borrower may request that
Silicon debit the Borrower's bank
account with Silicon for such amount,
provided Borrower has immediately
available funds in such amount in its
bank account.
Silicon may, in its discretion,
terminate the Exchange Contracts at any
time (a) that an Event of Default occurs
or (b) that there is not sufficient
availability under the Credit Limit and
Borrower does not have available funds
in its bank account to satisfy the
Foreign Exchange Reserve. If either
Silicon or Borrower terminates the
Exchange Contracts, and without
limitation of the FX Indemnity
Provisions (as referred to below),
Borrower agrees to reimburse Silicon for
any and all fees, costs and expenses
relating thereto or arising in
connection therewith.
<PAGE> 13
Borrower shall not permit the total
gross amount of all Exchange Contracts
on which delivery is to be effected and
settlement allowed in any two business
day period to be more than $500,000 (the
"Settlement Limit"), nor shall Borrower
permit the total gross amount of all
Exchange Contracts to which Borrower is
a party, outstanding at any one time, to
exceed the Contract Limit.
Notwithstanding the above, however, the
amount which may be settled in any two
(2) business day period may, in
Silicon's sole discretion, be increased
above the Settlement Limit up to, but in
no event to exceed, the amount of the
Contract Limit (the "Discretionary
Settlement Amount") under either of the
following circumstances (the
"Discretionary Settlement
Circumstances"):
(i) if there is sufficient
availability under the Credit Limit
regarding the Revolving Loan
Facility in the amount of the
Foreign Exchange Reserve as of each
Determination Date, provided that
Silicon in advance shall reserve the
full amount of the Foreign Exchange
Reserve against the Credit Limit
regarding the Revolving Loan
Facility; or
(ii) if there is insufficient
availability under the Credit Limit
regarding the Revolving Loan
Facility as to settlements within
any two (2) business day period if
Silicon is able to: (A) verify good
funds overseas prior to crediting
Borrower's deposit account with
Silicon (in the case of Borrower's
sale of foreign currency); or (B)
debit Borrower's deposit account
with Silicon prior to delivering
foreign currency overseas (in the
case of Borrower's purchase of
foreign currency);
Provided that it is expressly understood
that Silicon's willingness to adopt the
Discretionary Settlement Amount is a
matter of Silicon's sole discretion and
the existence of the Discretionary
Settlement Circumstances in no way means
or implies that Silicon shall be
obligated to permit the Borrower to
exceed the Settlement Limit in any two
business day period.
In the case of Borrower's purchase of
foreign currency, Borrower in advance
shall instruct Silicon upon settlement
either to treat the settlement amount as
an advance under the Credit Limit
regarding the Revolving Loan Facility,
or to debit Borrower's account for the
amount settled.
The Borrower shall execute all standard
form applications and agreements of
Silicon in connection with the Exchange
Contracts, and without limiting any of
the terms of such applications and
agreements, the Borrower will pay all
standard fees and charges of Silicon in
connection with the Exchange Contracts.
Without limiting any of the other terms
of this Loan Agreement or any such
standard form applications and
agreements of Silicon, Borrower agrees
to indemnify Silicon and hold it
harmless, from and against any and all
claims, debts, liabilities, demands,
obligations, actions, costs and expenses
(including, without limitation,
attorneys' fees of counsel of Silicon's
choice), of every nature and
description, which it may sustain or
incur, based upon, arising out of, or in
any way relating to any of the Exchange
Contracts or any transactions relating
thereto or contemplated thereby
(collectively referred to as the "FX
Indemnity Provisions").
The Exchange Contracts shall have
maturity dates no later than the
Maturity Date.
WORKING CAPITAL TERM
LOAN FACILITY An amount up to $2,500,000 (such Loan is
the "Working Capital Term Loan" and the
loan facility relating thereto is the
"Working Capital Term Loan Facility") to
be utilized by the Borrower concurrently
with closing of the Acquisition (as
defined
<PAGE> 14
below). Once amounts under the Working
Capital Term Loan Facility are repaid,
such amounts may not be reborrowed.
Borrower shall repay to Silicon the
outstanding aggregate principal amount
of the Working Capital Term Loan in 60
consecutive monthly installments on the
first day of each month commencing
September 1, 1995 of which the first 59
installments shall each be in the amount
of $41,666.67, and the last installment
shall be in the amount of the entire
unpaid balance of the Working Capital
Term Loan, provided that the entire
amount of the Working Capital Term Loan,
all accrued and unpaid interest thereon
and all other Obligations relating
thereto shall be paid in full no later
than August 1, 2000, subject, however,
to repayments as required pursuant to
the Excess Cash Flow Repayment Covenant
(as defined in paragraph 4 of the
section hereof entitled "Other
Covenants" (Section 4.1)).
Borrower hereby further promises to pay
interest to Silicon on the unpaid
principal balance of the Working Capital
Term Loan at the Interest Rate (as
defined below). Such interest shall be
paid each month in accordance with the
terms of the Loan Agreement.
ACQUISITION TERM
LOAN FACILITY An amount up to $6,000,000 (such Loan is
the "Acquisition Term Loan" and the loan
facility relating thereto is the
"Acquisition Term Loan Facility") to be
utilized by the Borrower for the purpose
of financing the assets acquired by
Borrower pursuant to the Asset Purchase
Agreement dated as of June 26, 1995 (the
"Purchase Agreement") by and among
Oncogene Science, Inc., as seller,
Borrower, as buyer, and
Calbiochem-Novabiochem International,
Inc. ("Parent"). The acquisition and
related transactions contemplated by the
Purchase Agreement are collectively
referred to as the "Acquisition". Once
amounts under the Acquisition Term Loan
Facility are repaid, such amounts may
not be reborrowed.
Borrower hereby further promises to pay
interest to Silicon on the unpaid
principal balance of the Acquisition
Term Loan at the Interest Rate (as
defined below). Such interest shall be
paid each month in accordance with the
terms of the Loan Agreement.
Borrower shall repay to Silicon the
outstanding aggregate principal amount
of the Acquisition Term Loan in 60
consecutive monthly installments on the
first day of each month commencing
September 1, 1995 as follows:
(A) The first installment through and
including the twelfth installment shall
each be in the amount of $41,666.67;
(B) The thirteenth installment through
and including the twenty-fourth
installment shall each be in the amount
of $83,333.33; and
(C) The twenty-fifth installment through
and including the sixtieth installment
shall each be in the amount of $125,000;
Provided that the entire principal
amount of the Acquisition Term Loan, all
accrued and unpaid interest thereon and
all other Obligations relating thereto
shall be paid in full no later than
August 1, 2000; subject, however, to
repayments as required pursuant to the
Excess Cash Flow Repayment Covenant.
<PAGE> 15
SUPPLEMENT: The Supplement to Schedule to Loan
Agreement (the "Supplement") attached
hereto is hereby incorporated into and
forms a part of this Schedule and this
Loan Agreement.
INTEREST RATE (Section 1.2): Interest on the Loans shall be paid at
the applicable Interest Rate (as defined
in the Supplement).
Interest shall be calculated on the
basis of a 360-day year for the actual
number of days elapsed.
"Prime Rate" means the rate announced
from time to time by Silicon as its
"prime rate;" it is a base rate upon
which other rates charged by Silicon are
based, and it is not necessarily the
best rate available at Silicon. The
interest rate applicable to the Prime
Rate-based Obligations shall change on
each date there is a change in the Prime
Rate.
LOAN ORIGINATION FEE
(Section 1.3): Revolving Loan Facility: 50 basis points
per annum of the maximum amount
available thereunder, which has been
paid by the Borrower for the term ending
on the Maturity Date;
Working Capital Term Loan Facility: 50
basis points of the maximum amount
available thereunder, which has been
paid by the Borrower; and
Acquisition Term Loan Facility: 50 basis
points of the maximum amount available
thereunder, which has been paid by the
Borrower.
MATURITY DATE
(Section 5.1): The Maturity Date shall be considered
to be JULY __, 1996 for all purposes
hereof other than with respect to the
maturities of the Working Capital
Term Loan and the Acquisition Term Loan,
which shall have maturities as set forth
in Section 1.1 above.
PRIOR NAMES OF BORROWER
(Section 3.2): CALBIOCHEM CORPORATION; CBC ACQUISITION
CORPORATION
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): BOULEVARD INDUSTRIAL PARK, PADGE ROAD,
BEESTON, NOTTINGHAM UNITED KINGDOM NG9
2JR; 80-84 ROGERS STREET, CAMBRIDGE,
MASSACHUSETTS.
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent,
Borrower may do the following, provided
that, after giving effect thereto, no
Event of Default has occurred and no
event has occurred which, with notice or
passage of time or both, would
constitute an Event of Default, and
provided that the following are done in
compliance with all applicable laws,
rules and regulations: (i) Borrower may
upstream funds to the Parent in order to
permit the Parent to repurchase shares
of Parent's stock pursuant to any
employee stock purchase or benefit plan,
provided that the total amount that the
Borrower upstreams for such purpose does
not exceed $100,000 in any fiscal year,
provided, the Borrower is also permitted
on a one-time basis to upstream funds to
the Parent in order to permit the Parent
to repurchase shares of Parent's stock
owned by Richard B. Slansky as long as
such additional amount that the
<PAGE> 16
Borrower upstreams for such purpose does
not exceed $400,000; and (ii) Borrower
may loan funds to the Parent in an
aggregate amount not to exceed $500,000
at any one time outstanding for the
purpose of the Parent's financing of
Calbiochem-Novabiochem AG.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall cause the Parent to
comply with all of the following
covenants on a consolidated basis
effective with the month ending
September 30, 1995. Compliance shall be
determined as of the end of each month,
except as otherwise specifically
provided below:
QUICK ASSET RATIO: Parent shall maintain a ratio of "Quick
Assets" to current liabilities of not
less than 1.0 to 1.
TANGIBLE NET WORTH: Parent shall maintain a tangible net
worth of not less than $11,500,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Parent shall maintain a ratio of total
liabilities to tangible net worth of not
more than 1.50 to 1.
DEBT SERVICE RATIO: Parent shall maintain a Debt Service
Ratio (as referred to below) of 2.00 to
1 as of the end of each fiscal quarter.
DEFINITIONS: "Current assets," and "current
liabilities" shall have the meanings
ascribed to them in accordance with
generally accepted accounting
principles. "Tangible net worth" means
the excess of total assets over total
liabilities, determined in accordance
with generally accepted accounting
principles, excluding however all assets
which would be classified as intangible
assets under generally accepted
accounting principles, including without
limitation goodwill, licenses, patents,
trademarks, trade names, copyrights,
capitalized software and organizational
costs, licences and franchises. "Quick
Assets" means cash on hand or on deposit
in banks, readily marketable securities
issued by the United States, readily
marketable commercial paper rated "A-1"
by Standard & Poor's Corporation (or a
similar rating by a similar rating
organization), certificates of deposit
and banker's acceptances, and accounts
receivable (net of allowance for
doubtful accounts).
"Debt Service Ratio" means the ratio of
(a) consolidated net income of Parent
before interest, taxes, depreciation and
other non-cash amortization expenses and
other non-cash expenses of the Parent,
determined in accordance with generally
accepted accounting principles,
consistently applied, to (b) the
consolidated amount of Parent's
obligations relating to payment of
interest and current maturities of
principal on Parent's outstanding
indebtedness, determined in accordance
with generally accepted accounting
principles, consistently applied.
DEFERRED REVENUES: For purposes of the above quick asset
ratio, deferred revenues shall not be
counted as current liabilities. For
purposes of the above debt to tangible
net worth ratio, deferred revenues shall
not be counted in determining total
liabilities but shall be counted in
determining tangible net worth for
purposes of such ratio. For all other
purposes deferred revenues shall be
counted as liabilities in accordance
with generally accepted accounting
principles.
<PAGE> 17
SUBORDINATED DEBT: "Liabilities" for purposes of the
foregoing covenants do not include
indebtedness which is subordinated to
the indebtedness to Silicon under a
subordination agreement in form
specified by Silicon or by language in
the instrument evidencing the
indebtedness which is acceptable to
Silicon.
<PAGE> 18
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with
all of the following additional
covenants:
1. BANKING RELATIONSHIP. Borrower shall
at all times maintain its primary
banking relationship with Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE
AND LISTING. Within 20 days after the
end of each month, Borrower shall
provide Silicon with a Borrowing Base
Certificate in such form as Silicon
shall specify, and an aged listing of
Borrower's accounts receivable.
3. WARRANTS. Borrower shall cause Parent
to provide Silicon with five-year
warrants to purchase 1,280 shares of
Common stock of Parent, at $2.50 per
share, on the terms and conditions in
the Warrant to Purchase Stock and
related documents being executed
concurrently with this Agreement.
4. EXCESS CASH FLOW REPAYMENT COVENANT.
Borrower shall be caused to be paid to
Silicon, within 90 days after the end of
each fiscal year of Parent, 25% of the
Excess Cash Flow (as defined below)
relating to such prior fiscal year, to
be applied in inverse order of maturity
to the outstanding principal balance of
each of the Working Capital Term Loan
and the Acquisition Term Loan, pro rata,
based on the proportion that each such
Loan bears to the sum of both such Loans
(collectively referred to as the "Excess
Cash Flow Repayment Covenant").
As used herein the term "Excess Cash
Flow" means for each fiscal year of
Parent, on a consolidated basis, (a) the
Parent's net income (after taxes), plus
(b) depreciation and amortization
(including amortizing finance charges),
plus (c) non-cash interest charges,
minus (d) all capital expenditures
(including any capitalization of
software), minus (e) scheduled principal
payments on all of Parent's indebtedness
for the succeeding twelve month period,
(f) if there has been an increase in the
Parent's net Working Capital since the
end of the prior fiscal year, then plus
the amount of any such increase, and (g)
if there has been an decrease in the
Parent's net Working Capital (as defined
below) since the end of the prior fiscal
year, then minus the amount of any such
decrease, with all of the foregoing
determined in accordance with generally
accepted accounting principles,
consistently applied. As used herein the
term "Working Capital" means the amount
represented by the difference between
Parent's current assets and current
liabilities, determined in accordance
with generally accepted accounting
principles, consistently applied.
5. GUARANTY BY PARENT; PLEDGE; SECURITY
AGREEMENT. Parent shall execute and
deliver to Silicon the following: (a) a
continuing guaranty of the Obligations
on Silicon's standard form, (b) a
general security agreement
collateralizing such guaranty
obligations on Silicon's standard form
and (c) a pledge agreement on Silicon's
standard form regarding the pledge to
Silicon of the stock of Borrower,
Calbiochem-Novabiochem GmbH,
Calbiochem-Novabiochem (UK) Ltd. and
Calbiochem-Novabiochem AG.
6. GUARANTY BY CALBIOCHEM-NOVABIOCHEM
AG; PLEDGE. Calbiochem-Novabiochem AG
shall execute and deliver to Silicon:
(a) a continuing guaranty of the
Obligations on Silicon's standard form,
and (b) a pledge agreement on Silicon's
standard form regarding the pledge to
Silicon of the stock of Clinalfa AG.
Borrower agrees to cause the foregoing
agreements to be delivered no later than
60 days from the the making of the
initial Loans hereunder, and failure to
do so shall constitute an Event of
Default hereunder.
7. PLEDGE BY BORROWER. Borrower shall
execute and deliver to Silicon a pledge
agreement on Silicon's standard form
regarding the pledge to Silicon of the
stock of Calbiochem-Novabiochem PTY and
Calbiochem-Novabiochem Japan (the "Japan
Stock"), provided that Borrower shall
have up to 60 days from the making of
the initial Loans hereunder to deliver
the Japan Stock to Silicon.
<PAGE> 19
8. SUBORDINATION AGREEMENT. Parent shall
execute and deliver to Silicon a
subordination agreement on Silicon's
standard form regarding the indebtedness
owing from Borrower to Parent.
9. ACQUISITION; ETC. Prior to the making
of the initial Loans hereunder, Silicon
shall have received and approved, in its
discretion, final copies of the Purchase
Agreement (together with all exhibits
and schedules thereto) and all material
certificates, documents and opinions
delivered in connection therewith.
Concurrently with funding of the initial
Loans hereunder, the Acquisition shall
be consummated under all applicable law;
and all conditions precedent set forth
in the Purchase Agreement shall have
been fulfilled and the transactions
contemplated thereby shall have been
consummated substantially in accordance
therewith.
10. LEGAL OPINIONS. Prior to the making
of the initial Loans hereunder: (a)
Silicon shall have received copies of
the legal opinions delivered to each of
Borrower and Oncogene Science, Inc.
under the terms of the Purchase
Agreement and each of such opinions
shall state that Silicon is permitted to
rely thereon; and (b) Silicon shall have
received from counsel to the Borrower a
legal opinion in form and substance
satisfactory to Silicon with respect to
the Parent, the Borrower and the other
subsidiaries of Parent incorporating
those opinion matters set forth in
Section 12.6 of the Purchase Agreement,
provided, however, no opinion as to the
enforceability of the loan documentation
shall be required.
11. LANDLORD CONSENT. Within 30 days
from the making of the initial Loans
hereunder, Borrower shall cause the
landlord of the premises of Borrower in
San Diego, California to execute and
deliver to Silicon a landlord's consent
on Silicon's standard form or otherwise
in form acceptable to Silicon.
12. SWISS LOAN FACILITY; AGREEMENT
REGARDING TERMINATION; ETC.
Calbiochem-Novabiochem AG has entered
into a loan facility with
Basellandschaftliche Kantonalbank (the
"Swiss Loan Facility"). Borrower hereby
represents and warrants to Silicon that
there is no outstanding indebtedness
under the Swiss Loan Facility. Further,
Borrower hereby agrees that it will
cause Calbiochem-Novabiochem AG: (a) not
to incur any indebtedness thereunder and
(b) to terminate the Swiss Loan Facility
within 180 days from the date hereof.
13. INITIAL AUDIT. The first,
semi-annual audit referred to in Section
4.5 of this Agreement shall be
completed, with satisfactory results,
prior to the making of any Loans
hereunder.
<PAGE> 20
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed by their duly authorized
representatives.
BORROWER:
CALBIOCHEM-NOVABIOCHEM CORPORATION
BY /s/ Stelios P. Papadopoulos
--------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
--------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
------------------------------
TITLE VP
---------------------
<PAGE> 21
SUPPLEMENT TO SCHEDULE TO LOAN AGREEMENT
This Supplement to Schedule to Loan Agreement is a supplement to the
Schedule to Loan and Security Agreement (the "Schedule") dated July 28, 1995
between Silicon Valley Bank and Calbiochem-Novabiochem Corporation, a California
corporation, and forms a part of and is incorporated into the Schedule.
1. Definitions.
"Business Day" means a day of the year (a) that is not a Saturday,
Sunday or other day on which banks in the State of California are authorized or
required to close and (b) on which dealings are carried on in the interbank
market in which Silicon customarily participates.
"Interest Period" means for each LIBOR Rate Loan, a period of
approximately one, two or three months as the Borrower may elect, provided that
the last day of an Interest Period for a LIBOR Rate Loan shall be determined in
accordance with the practices of the LIBOR interbank market as from time to time
in effect, provided, further, in all cases such period shall expire not later
than the applicable Maturity Date.
"Interest Rate" shall mean as to: (a) Prime Rate Revolving Loans, a
rate per annum equal to the Prime Rate; (b) Prime Rate Term Loans, a rate per
annum equal to the Prime Rate plus .375%; (c) LIBOR Rate Revolving Loans, a rate
of 2.85% per annum in excess of the LIBOR Rate (based on the LIBOR Rate
applicable for the Interest Period selected by the Borrower); and (d) LIBOR Rate
Term Loans, a rate of 3.22% per annum in excess of the LIBOR Rate (based on the
LIBOR Rate applicable for the Interest Period selected by the Borrower).
"LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Loan,
the rate of interest per annum determined by Silicon to be the per annum rate of
interest at which deposits in United States Dollars are offered to Silicon in
the London interbank market in which Silicon customarily participates at 11:00
A.M. (local time in such interbank market) two Business Days before the first
day of such Interest Period for a period approximately equal to such Interest
Period and in an amount approximately equal to the amount of such Loan.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Loan,
a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
equal to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1
minus the Reserve Requirement for such Interest Period.
"LIBOR Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the LIBOR Rate in accordance with the terms hereof.
"LIBOR Rate Revolving Loans" means the Revolving Loans or any portion
thereof on which interest is payable based on the LIBOR Rate in accordance with
the terms hereof.
"LIBOR Rate Term Loans" means the Working Capital Term Loans and/or the
Acquisition Term Loans or any portion thereof on which interest is payable based
on the LIBOR Rate in accordance with the terms hereof.
<PAGE> 22
"Prime Rate" means the rate announced from time to time by Silicon as
its "prime rate;" it is a base rate upon which other rates charged by Silicon
are based, and it is not necessarily the best rate available at Silicon. The
interest rate applicable to the Prime Rate-based Obligations shall change on
each date there is a change in the Prime Rate.
"Prime Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
"Prime Rate Revolving Loans" means the Revolving Loans or any portion
thereof on which interest is payable based on the Prime Rate in accordance with
the terms hereof.
"Prime Rate Term Loans" means the Working Capital Term Loans and/or the
Acquisition Term Loans or any portion thereof on which interest is payable based
on the Prime Rate in accordance with the terms hereof.
"Regulatory Change" means, with respect to Silicon, any change on or
after the date of this Agreement in United States federal, state or foreign laws
or regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
lenders including Silicon of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reserve Requirement" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Silicon by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Loans.
2. Requests for Loans; Confirmation of Initial Loans. Each LIBOR Rate
Loan shall be made upon the irrevocable written request of Borrower received by
Silicon not later than 11:00 a.m. (Santa Clara, California time) on the Business
Day three (3) Business Days prior to the date such Loan is to be made. Each such
notice shall specify the date such Loan is to be made, which day shall be a
Business Day; the amount of such Loan, the Interest Period for such Loan, and
comply with such other requirements as Silicon determines are reasonable or
desirable in connection therewith.
Each written request for a LIBOR Rate Loan shall be in the
form of a Interest Rate Certificate as set forth on Exhibit A, which shall be
duly executed by the Borrower.
Each Prime Rate Loan shall be made upon the irrevocable
written request of Borrower received by Silicon not later than 11:00 a.m. (Santa
Clara, California time) on the Business Day one Business Day prior to the date
such Loan is to be made. Each such notice shall
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<PAGE> 23
specify the date such Loan is to be made, which day shall be a Business Day and
the amount of such Loan, and comply with such other requirements as Silicon
determines are reasonable or desirable in connection therewith.
Borrower hereby confirms its request that the Working Capital
Term Loan and the Acquisition Term Loan shall initially be funded as LIBOR Rate
Loans having a three month Interest Period, and that the initial Revolving Loan
shall be a Prime Rate Loan.
3. Conversion/Continuation of Loans.
(a) Borrower may from time to time request that Prime Rate Loans be
converted to LIBOR Rate Loans or that any existing LIBOR Rate Loans continue for
an additional Interest Period. Such request shall specify the amount of the
Prime Rate Loans which will constitute LIBOR Rate Loans (subject to the limits
set forth below) and the Interest Period to be applicable to such LIBOR Rate
Loans. Subject to the terms and conditions contained herein, three (3) Business
Days after Silicon's receipt of such a request from Borrower, such Prime Rate
Loans shall be converted to LIBOR Rate Loans or such LIBOR Rate Loans shall
continue, as the case may be, provided that:
(i) no Event of Default, or event which with notice or passage of time
or both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of termination of this
Agreement;
(iii) Borrower shall have complied with such customary procedures as
Silicon has established from time to time for Borrower's requests for LIBOR Rate
Loans;
(iv) the amount of a LIBOR Rate Revolving Loan shall be $250,000 or
such greater amount which is an integral multiple of $50,000, and the amount of
each LIBOR Rate Term Loan shall be the full amount of each LIBOR Rate Term Loan;
and
(v) Silicon shall have determined that the Interest Period or LIBOR
Rate is available to Silicon which can be readily determined as of the date of
the request for such LIBOR Rate Loan.
Each written request for a conversion of a Prime Rate Loan to a LIBOR
Rate Loan or a continuation of a LIBOR Rate Loan as set forth above shall be in
the form of a Interest Rate Certificate as set forth on Exhibit A, which shall
be duly executed by the Borrower.
Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans
or to continue any existing LIBOR Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Silicon shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Loans, but
the provisions hereof shall be deemed to apply as if Silicon had purchased such
deposits to fund the LIBOR Rate Loans.
(b) Any LIBOR Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Silicon has
received and approved a complete and
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<PAGE> 24
proper request to continue such LIBOR Rate Loan at least three (3) Business Days
prior to such last day in accordance with the terms hereof. Any LIBOR Rate Loans
shall, at Silicon's option, upon notice by Silicon to Borrower, convert to Prime
Rate Loans in the event that (i) an Event of Default or event which with the
notice or passage of time or both would constitute an Event of Default, shall
exist, (ii) this Agreement shall terminate, or (iii) the aggregate principal
amount of the Prime Rate Revolving Loans which have previously been converted to
LIBOR Rate Revolving Loans, or the aggregate principal amount of existing LIBOR
Rate Revolving Loans continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed either (A)
the aggregate principal amount of the loans then outstanding or (B) the
Revolving Loans then available to Borrower hereunder. Borrower agrees to pay to
Silicon, upon demand by Silicon (or Silicon may, at its option, charge
Borrower's loan account) any amounts required to compensate Silicon for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of LIBOR Rate Loans to Prime Rate Loans
pursuant to any of the foregoing.
(c) On all Loans, Interest shall be payable by Borrower to Silicon
monthly in arrears not later than the first day of each calendar month at the
applicable Interest Rate.
4. Additional Requirements/Provisions Regarding LIBOR Rate Loans; Etc.
(a) If for any reason (including voluntary or mandatory prepayment or
acceleration), Silicon receives all or part of the principal amount of a LIBOR
Rate Loan prior to the last day of the Interest Period for such Loan, Borrower
shall, on demand by Silicon, pay Silicon the amount (if any) by which (i) the
additional interest which would have been payable on the amount so received had
it not been received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Silicon by placing the amount so
received on deposit in the certificate of deposit markets or the offshore
currency interbank markets, as the case may be, for a period starting on the
date on which it was so received and ending on the last day of such Interest
Period at the interest rate determined by Silicon in its reasonable discretion.
Silicon's determination as to such amount shall be conclusive absent manifest
error.
(b) Borrower shall pay to Silicon, upon demand by Silicon, from time to
time such amounts as Silicon may determine to be necessary to compensate it for
any costs incurred by Silicon that Silicon determines are attributable to its
making or maintaining of any Loans hereunder or its obligation to make any Loans
hereunder, or any reduction in any amount receivable by Silicon hereunder in
respect of any Loans relating thereto (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), in each case
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to Silicon
under this Agreement in respect of any Loans (other than changes which affect
taxes measured by or imposed on the overall net income of Silicon by the
jurisdiction in which such Silicon has its principal office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, Silicon
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<PAGE> 25
(including any Loans or any deposits referred to in the definition of "LIBOR
Base Rate", but excluding any requirements referred to above in the definition
of LIBOR Rate relating to Reserve Requirements which have already been included
in the determination of the LIBOR Rate); or
(iii) imposes any other condition affecting this Agreement (or any of
such extensions of credit or liabilities).
Silicon will notify Borrower of any event occurring after the date of
this Agreement which will entitle Silicon to compensation pursuant to this
section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Silicon will furnish Borrower with a
statement setting forth the basis and amount of each request by Silicon for
compensation under this Section 4. Determinations and allocations by Silicon for
purposes of this Section 4 of the effect of any Regulatory Change on its costs
of maintaining its obligations to make Loans or of making or maintaining Loans
or on amounts receivable by it in respect of Loans, and of the additional
amounts required to compensate Silicon in respect of any Additional Costs, shall
be conclusive absent manifest error.
(c) Borrower shall pay to Silicon, upon the request of Silicon, such
amount or amounts as shall be sufficient (in the sole good faith opinion of such
Silicon) to compensate it for any loss, costs or expense incurred by it as a
result of any failure by Borrower to borrow a Loan on the date for such
borrowing specified in the relevant notice of borrowing hereunder.
(d) If Silicon shall determine that the adoption or implementation of
any applicable law, rule, regulation or treaty regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Silicon (or
its applicable lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on capital of Silicon or any person or entity controlling Silicon (a
"Parent") as a consequence of its obligations hereunder to a level below that
which Silicon (or its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by Silicon to be material, then from time to time,
within 15 days after demand by Silicon, Borrower shall pay to Silicon such
additional amount or amounts as will compensate Silicon for such reduction. A
statement of Silicon claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.
(e) If at any time Silicon, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Loans for periods equal to the
corresponding Interest Periods are not available to Silicon in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Silicon of lending the LIBOR Rate Loan, then Silicon shall promptly
give notice thereof to Borrower, and upon the giving of such notice Silicon's
obligation to make the LIBOR Rate Loans shall terminate, unless Silicon and the
Borrower agree in writing to a different interest rate applicable to LIBOR Rate
Loans. If it shall become unlawful for Silicon to continue to fund or maintain
any Loans, or to perform its obligations hereunder, upon demand by
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<PAGE> 26
Silicon, Borrower shall prepay the Loans in full with accrued interest thereon
and all other amounts payable by Borrower hereunder (including, without
limitation, any amount payable in connection with such prepayment pursuant to
Section 4(a)).
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<PAGE> 27
EXHIBIT A
INTEREST RATE CERTIFICATE
The undersigned hereby certifies as follows:
I, _______________________, am the duly elected and acting
___________________ of Calbiochem-Novabiochem Corporation ("Borrower").
This certificate is delivered pursuant to Section [2] [3] of that
certain Supplement to Schedule to Loan Agreement (the "Supplement") together
with the Loan and Security Agreement by and between Borrower and Silicon Valley
Bank ("Bank") (collectively, the "Loan Agreement"). The terms used in this
Borrowing Certificate which are defined in the Loan Agreement have the same
meaning herein as ascribed to them therein.
[Borrower is confirming its request for a Loan as follows:
(a) The date on which the Loan is to be made is ______________, 19___.
(b) The amount of the Loan is to be ___________________________
($__________), for an Interest Period of ___________ month[s].]
[Borrower is confirming its request to convert Prime Rate Loans to
LIBOR Rate Loans as follows:
(a) The amount of the Loan to be converted from a Prime Rate Loan to a
LIBOR Rate Loan is __________________________ and this amount conforms to the
requirements of the Supplement.
(b) The date on which such conversion is to be effected is
___________________, which is three Business Days from the date hereof.]
[Borrower is confirming its request to continue existing an LIBOR Rate
Loan with the following new Interest Period relating thereto and this request is
being made at least three Business Days prior to the expiration of the current
Interest Period relating to such Loan:
The Interest Period relating to the continuation of existing LIBOR Rate
Loans is to be _________________________.]
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of this request; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
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<PAGE> 28
IN WITNESS WHEREOF, this Borrowing Certificate is executed by the
undersigned as of this _________ day of ______________, 19___.
Calbiochem-Novabiochem Corporation
By: ____________________________
Title:________________________
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<PAGE> 1
EXHIBIT 10(n)(ii)
[SILICON VALLEY BANK LOGO]
PLEDGE AGREEMENT
PLEDGOR: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated the above date, is
entered into at between SILICON VALLEY BANK ("Silicon"), whose address is 3000
Lakeside Drive, Santa Clara, California 95054-2895, and the pledgor named above
("Pledgor"), whose address is set forth above.
1. PLEDGE OF STOCK. Pledgor shall concurrently deliver to Silicon the the
stock certificates and other securities listed on Exhibit A hereto, together
with duly executed instruments of assignment thereof to Silicon (which, together
with all replacements and substitutions therefor are hereinafter referred to as
the "Securities"). Pledgor hereby pledges to Silicon and grants Silicon a
security interest in the Securities, and all rights and remedies relating to, or
arising out of, any and all of the foregoing, and all proceeds thereof
(collectively, the "Collateral") to secure the payment and performance of all
debts, duties, obligations, liabilities, representations, warranties and
guaranties of Pledgor to Silicon, heretofore, now, or hereafter made, incurred
or created, of every kind and nature (collectively, the "Obligations"),
including, but not limited to, those arising under the Loan and Security
Agreement of even date herewith (the "Loan Agreement"). Any and all stock
dividends, rights, warrants, options, puts, calls, conversion rights and other
securities and any and all property and money distributed or delivered with
respect to the Securities or issued upon the exercise of any puts, calls,
conversion rights, options, warrants or other rights included in or pertaining
to the Securities shall be included in the term "Securities" as used herein and
shall be subject to this Pledge Agreement, and Pledgor shall deliver the same to
Silicon immediately upon receipt thereof together with any necessary instruments
of transfer; provided, however, that until an Event of Default (as hereinafter
defined) shall occur, Pledgor may retain any dividends paid in cash or its
equivalent, with respect to any stock included in the Securities and any
interest paid with respect to any bonds, debentures or other evidences of
indebtedness included in the Securities. Pledgor hereby acknowledges that the
acceptance of the pledge of the Securities by Silicon shall not constitute a
commitment of any kind by Silicon to permit Pledgor to incur Obligations.
2. VOTING AND OTHER RIGHTS. Pledgor shall have the right to exercise all
voting rights with respect to the Securities, provided no Event of Default (as
hereinafter defined) has occurred. Upon the occurrence of any Event of Default,
Silicon shall have the right (but not any obligation) to exercise all voting
rights with respect to the Securities. Provided no Event of Default has
occurred, Pledgor shall have the right to exercise all puts, calls, straddles,
conversion rights, options, warrants, and other rights and remedies with respect
to the Securities, provided Pledgor obtains the prior written consent of Silicon
thereto. Silicon shall have no responsibility or liability whatsoever for the
exercise of, or failure to exercise, any puts, calls, straddles, conversion
rights, options, warrants, rights to vote or consent, or other rights with
respect to any of the Securities. Whether or not an Event of Default has
occurred, Silicon shall have the right from time to time to transfer all or any
part of the Securities to Silicon's own name or the name of its nominee.
3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to
Silicon that Pledgor now has, and throughout the term of this Agreement will at
all times have, good title to the Securities and the other Collateral, free and
clear of any and all security interests, liens and claims of any kind
whatsoever.
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<PAGE> 2
SILICON VALLEY BANK PLEDGE AGREEMENT
- --------------------------------------------------------------------------------
4. EVENTS OF DEFAULT. If any one or more of the following events shall occur,
any such event shall constitute an Event of Default and Pledgor shall provide
Silicon with immediate notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Pledgor or any
of Pledgor's officers, employees or agents now or hereafter is incorrect, false,
untrue or misleading in any material respect; or (b) Pledgor shall fail to
promptly pay or perform when due part or all of any of the Obligations, or any
default or event of default shall occur under the Loan Agreement or any other
present or future instrument, document or agreement between Silicon and Pledgor.
5. REMEDIES. If an Event of Default shall occur, Pledgor shall give immediate
written notice thereof to Silicon. Upon the occurence of an Event of Default,
and at any time thereafter, Silicon shall have the right, without notice to or
demand upon Pledgor, to exercise any one or more of the following remedies: (a)
accelerate and declare all or any part of the Obligations to be immediately due,
payable and performable, notwithstanding any deferred or installment payments
allowed by any agreement or instrument evidencing or relating to any of the
same; (b) sell or otherwise dispose of the Securities, and other Collateral, at
a public or private sale, for cash, or other property, or on credit, with the
authority to adjourn or postpone any such sale from time to time without notice
other than oral announcement at the time scheduled for sale. Silicon may
directly or through any affiliate purchase the Securities, and other Collateral,
at any such public disposition, and if permissible under applicable law, at any
private disposition. Pledgor and Silicon hereby agree that it shall conclusively
be deemed commercially reasonable for Silicon, in connection with any sale or
disposition of the Securities, to impose restrictions and conditions as to the
investment intent of a purchaser or bidder, the ability of a purchaser or bidder
to bear the economic risk of an investment in the Securities, the knowledge and
experience in business and financial matters of a purchaser or bidder, the
access of a purchaser or bidder to information conerning the issuer of the
Securities, as well as legend conditions and stop transfer instructions
restricting subsequent transfer of the Securities, and any other restrictions or
conditions which Silicon believes to be necessary or advisable in order to
comply with any state or federal securities or other laws. Pledgor acknowledges
that the foregoing restrictions may result in fewer proceeds being received upon
such sale then would otherwise be the case. Pledgor hereby agrees to provide to
Silicon any and all information required by Silicon in connection with any sales
of Securities by Silicon hereunder. If, after the occurrence of any Event of
Default, Rule 144 promulgated by the Securities and Exchange Commission (or any
other similar rule) is available for use by Silicon in connection with the sales
of any Securities hereunder, Pledgor agrees not to utilize Rule 144 in the sale
of any securities held by Pledgor of the same class as the Securities, without
the prior written consent of Silicon. Any and all attorneys' fees, expenses,
costs, liabilities and obligations incurred by Silicon in connection with the
foregoing shall be added to and become a part of the Obligations and shall be
due from Pledgor to Silicon upon demand.
6. REMEDIES, CUMULATIVE; NO WAIVER. The failure of Silicon to enforce any of
the provisions of this Agreement at any time or for any period of time shall not
be construed to be a waiver of any such provision or the right thereafter to
enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Silicon by law.
7. TERM. This Agreement and Silicon's rights hereunder shall continue in full
force and effect until all of the Obligations have been fully paid, performed
and discharged and the Loan Agreement and all other agreements between Pledgor
and Silicon have terminated. Upon termination, Silicon shall return the
Collateral to Pledgor, with any necessary instruments of transfer.
8. REVIVOR. If any payment made on any of the Obligations shall for any
reason be required to be returned by the Silicon, whether on the ground that
such payment constituted a preference or for any other reason, then for purposes
of this Agreement, and notwithstanding any prior termination of this Agreement,
such payment on the Obligations shall be treated as not having been made, and
this Agreement shall in all respects be effective with respect to the
Obligations as though such payment had not been made; and if the Collateral has
been released or returned to Pledgor, then Pledgor shall return the Collateral
to Silicon, to be held and dealt with in accordance with the terms of this
Agreement.
9. GENERAL PROVISIONS. This Agreement and the documents referred to herein
are the entire and only agreements between Pledgor and Silicon with respect to
the subject matter hereof, and all representations, warranties, agreements, or
undertakings heretofore or contemporaneously made, with respect to the subject
matter hereof, which are not set forth herein or therein, are superseded hereby.
The terms and provisions hereof may not be waived, altered, modified, or amended
except in a writing executed by Pledgor and Silicon. All rights, benefits and
privileges hereunder shall inure to the benefit of and be enforceable by Silicon
and its successors and assigns and shall be binding upon Pledgor and its
successors and assigns; provided that Pledgor may not transfer any of its rights
hereunder without the prior written consent of Silicon. Paragraph headings are
used herein for convenience only. Pledgor acknowledges that the same may not
describe completely the subject matter of the applicable paragraph, and the same
shall not be used in
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<PAGE> 3
SILICON VALLEY BANK PLEDGE AGREEMENT
- --------------------------------------------------------------------------------
any manner to construe, limit, define or interpret any term or provision hereof.
Pledgor shall upon demand reimburse Silicon for all costs, fees and expenses
(including without limitation attorneys' fees, whether or not suit be brought),
which are incurred by Silicon in connection with, or arising out of, this
Agreement. This Agreement and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed, and
interpreted in accordance with the internal laws (and not conflict of laws
rules) of the State of California. Pledgor hereby agrees that all actions or
proceedings relating directly or indirectly hereto may, at the option of
Silicon, be litigated in courts located within said State, and Pledgor hereby
expressly consents to the jurisdiction of any such court and consents to the
service of process in any such action or proceeding by personal delivery or by
certified or registered mailing directed to Pledgor at its last address known to
Silicon.
10. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. SILICON AND PLEDGOR EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND PLEDGOR; OR (iii) ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR PLEDGOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR PLEDGOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
PLEDGOR:
CALBIOCHEM-NOVABIOCHEM
CORPORATION
BY /s/ James G. Stewart
---------------------
TITLE: VP
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
---------------------------
TITLE VP
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<PAGE> 4
Exhibit A to Pledge Agreement Dated July 31, 1995 Between
Silicon Valley Bank and Calbiochem-Novabiochem Corporation
99 shares of Davsted Pty. Limited (now Calbiochem-Novabiochem. Pty. Ltd.)
represented by Certificate No. 1
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<PAGE> 1
EXHIBIT 10(n)(iii)
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT
This Collateral Assignment, Patent Mortgage and Security Agreement is
made as of July 28, 1995, by and between Calbiochem-Novabiochem Corporation
("Assignor"), and Silicon Valley Bank, a California banking corporation
("Assignee").
RECITALS
A. Assignee has agreed to lend to Assignor certain funds (the "Loans"),
pursuant to a Loan and Security Agreement of even date herewith (the "Loan
Agreement") and Assignor desires to borrow such funds from Assignee.
B. In order to induce Assignee to make the Loans, Assignor has agreed
to assign certain intangible property to Assignee for purposes of securing the
obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Assignment, Patent Mortgage and Grant of Security Interest. As
collateral security for the prompt and complete payment and performance of all
of Assignor's present or future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, but not as an ownership
interest, in and to Assignor's entire right, title and interest in, to and under
the following (all of which shall collectively be called the "Collateral"):
(a) All of present and future United States registered
copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in Exhibit A-1 to this Agreement (and including all
of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. Section 106 and any exclusive rights which may in the future
arise by act of Congress or otherwise) and all present and future applications
for copyright registrations (including applications for copyright registrations
of derivative works and compilations) (collectively, the "Registered
Copyrights"), and any and all royalties, payments, and other amounts payable to
Assignor in connection with the Registered Copyrights, together with all
renewals and extensions of the Registered Copyrights, the right to recover for
all past, present, and future infringements of the Registered Copyrights, and
all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property embodying or incorporating
the Registered Copyrights, and all other rights of every kind whatsoever
accruing thereunder or pertaining thereto.
(b) All present and future copyrights which are not registered
in the United States Copyright Office (the "Unregistered Copyrights"), whether
now owned or hereafter acquired, including without limitation the Unregistered
Copyrights listed in Exhibit A-2 to this Agreement, and any and all royalties,
payments, and other amounts payable to Assignor in connection with the
Unregistered Copyrights, together with all renewals and extensions of the
Unregistered Copyrights, the right to recover for all past, present, and future
infringements of the Unregistered Copyrights, and all computer programs,
computer databases, computer program flow diagrams, source codes, object codes
and all tangible property embodying or incorporating the Unregistered
Copyrights, and all other rights of every kind whatsoever accruing thereunder or
pertaining thereto. The Registered Copyrights and the Unregistered Copyrights
collectively are referred to herein as the "Copyrights."
(c) All right, title and interest in and to any and all
present and future license agreements with respect to the Copyrights, including
without limitation the license agreements listed in Exhibit A-3 to this
Agreement (the "Licenses").
(d) All present and future accounts, accounts receivable and
other rights to payment arising from, in connection with or relating to the
Copyrights.
(e) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
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<PAGE> 2
(f) Any and all design rights which may be available to
Assignor now or hereafter existing, created, acquired or held;
(g) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(h) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks")
(i) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(j) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(k) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents; and
(l) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.
2. Authorization and Request. Assignor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.
3. Covenants and Warranties. Assignor represents, warrants, covenants
and agrees as follows:
(a) Assignor is now the sole owner of the Collateral, except
for non-exclusive licenses granted by Assignor to its customers in the ordinary
course of business.
(b) Listed on Exhibits A-1 and A-2 are all copyrights owned by
Assignor, in which Assignor has an interest, or which are used in Assignor's
business.
(c) Each employee, agent and/or independent contractor who has
participated in the creation of the property constituting the Collateral has
either executed an assignment of his or her rights of authorship to Assignor or
is an employee of Assignor acting within the scope of his or her employment and
was such an employee at the time of said creation.
(d) All of Assignor's present and future software, computer
programs and other works of authorship subject to United States copyright
protection, the sale, licensing or other disposition of which results in
royalties receivable, license fees receivable, accounts receivable or other sums
owing to Assignor (collectively, "Receivables"), have been and shall be
registered with the United States Copyright Office prior to the date Assignor
requests or accepts any loan from Assignee with respect to such Receivables and
prior to the date Assignor includes any such Receivables in any accounts
receivable aging, borrowing base report or certificate or other similar report
provided to Assignee, and Assignor shall provide to Assignee copies of all such
registrations promptly upon the receipt of the same.
-2-
<PAGE> 3
(e) Assignor shall undertake all reasonable measures to cause
its employees, agents and independent contractors to assign to Assignor all
rights of authorship to any copyrighted material in which Assignor has or may
subsequently acquire any right or interest.
(f) Performance of this Assignment does not conflict with or
result in a breach of any agreement to which Assignor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this Assignment constitutes an assignment.
(g) During the term of this Agreement, Assignor will not
transfer or otherwise encumber any interest in the Collateral, except for
non-exclusive licenses granted by Assignor in the ordinary course of business or
as set forth in this Assignment;
(h) Each of the Patents is valid and enforceable, and no part
of the Collateral has been judged invalid or unenforceable, in whole or in part,
and no claim has been made that any part of the Collateral violates the rights
of any third party;
(i) Assignor shall promptly advise Assignee of any material
adverse change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Assignor in or to any Trademark, Patent
or Copyright not specified in this Assignment;
(j) Assignor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Assignee in writing of material infringements
detected and (iii) not allow any Trademarks, Patents, or Copyrights to be
abandoned, forfeited or dedicated to the public without the written consent of
Assignee, which shall not be unreasonably withheld unless Assignor determines
that reasonable business practices suggest that abandonment is appropriate.
(k) Assignor shall promptly register the most recent version
of any of Assignor's Copyrights, if not so already registered, and shall, from
time to time, execute and file such other instruments, and take such further
actions as Assignee may reasonably request from time to time to perfect or
continue the perfection of Assignee's interest in the Collateral;
(l) This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and perfected first
priority security interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Loan Agreement upon
making the filings referred to in clause (m) below;
(m) To its knowledge, except for, and upon, the filing with
the United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights
necessary to perfect the security interests and assignment created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority or
U.S. regulatory body is required either (i) for the grant by Assignor of the
security interest granted hereby or for the execution, delivery or performance
of this Assignment by Assignor in the U.S. or (ii) for the perfection in the
United States or the exercise by Assignee of its rights and remedies thereunder;
(n) All information heretofore, herein or hereafter supplied
to Assignee by or on behalf of Assignor with respect to the Collateral is
accurate and complete in all material respects.
(o) Assignor shall not enter into any agreement that would
materially impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be unreasonably
withheld. Assignor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Assignor's rights and interest in
any property included within the definition of the Collateral acquired under
such contracts,
-3-
<PAGE> 4
except that certain contracts may contain anti-assignment provisions that could
in effect prohibit the creation of a security interest in such contracts.
(p) Upon any executive officer of Assignor obtaining actual
knowledge thereof, Assignor will promptly notify Assignee in writing of any
event that materially adversely affects the value of any material Collateral,
the ability of Assignor to dispose of any material Collateral or the rights and
remedies of Assignee in relation thereto, including the levy of any legal
process against any of the Collateral.
4. Assignee's Rights. Assignee shall have the right, but not the
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.
5. Inspection Rights. Assignor hereby grants to Assignee and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, and any of Assignor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested, but not more than one (1) in every six (6) months;
provided, however, nothing herein shall entitle Assignee access to Assignor's
trade secrets and other proprietary information.
6. Further Assurances; Attorney in Fact.
(a) Upon an Event of Default, on a continuing basis
thereafter, Assignor will, subject to any prior licenses, encumbrances and
restrictions and prospective licenses, make, execute, acknowledge and deliver,
and file and record in the proper filing and recording places in the United
States, all such instruments, including, appropriate financing and continuation
statements and collateral agreements and filings with the United States Patent
and Trademarks Office and the Register of Copyrights, and take all such action
as may reasonably be deemed necessary or advisable, or as requested by Assignee,
to perfect Assignee's security interest in all Copyrights, Patents and
Trademarks and otherwise to carry out the intent and purposes of this Collateral
Assignment, or for assuring and confirming to Assignee the grant or perfection
of a security interest in all Collateral.
(b) Upon an Event of Default, Assignor hereby irrevocably
appoints Assignee as Assignor's attorney-in-fact, with full authority in the
place and stead of Assignor and in the name of Assignor, Assignee or otherwise,
from time to time in Assignee's discretion, upon Assignor's failure or inability
to do so, to take any action and to execute any instrument which Assignee may
deem necessary or advisable to accomplish the purposes of this Collateral
Assignment, including:
(i) To modify, in its sole discretion, this
Collateral Assignment without first obtaining Assignor's approval of or
signature to such modification by amending Exhibit A-1, Exhibit A-2, Exhibit
A-3, Exhibit B and Exhibit C, thereof, as appropriate, to include reference to
any right, title or interest in any Copyrights, Patents or Trademarks acquired
by Assignor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents or Trademarks in which Assignor no
longer has or claims any right, title or interest; and
(ii) To file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of Assignor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement; or
-4-
<PAGE> 5
(b) Assignor breaches any warranty or agreement made by
Assignor in this Assignment.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Assignee shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Assignor to assemble the Collateral and any tangible
property in which Assignee has a security interest and to make it available to
Assignee at a place designated by Assignee. Assignee shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Assignee to exercise its rights and remedies upon
the occurrence of an Event of Default. Assignor will pay any expenses (including
reasonable attorney's fees) incurred by Assignee in connection with the exercise
of any of Assignee's rights hereunder, including without limitation any expense
incurred in disposing of the Collateral. All of Assignee's rights and remedies
with respect to the Collateral shall be cumulative.
9. Indemnity. Assignor agrees to defend, indemnify and hold harmless
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee as a
result of or in any way arising out of, following or consequential to
transactions between Assignee and Assignor, whether under this Assignment or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising form or out of Assignee's gross
negligence or willful misconduct.
10. Release. At such time as Assignor shall completely satisfy all of
the obligations secured hereunder, Assignee shall execute and deliver to
Assignor all assignments and other instruments as may be reasonably necessary or
proper to terminate Assignee's security interest in the Collateral, subject to
any disposition of the Collateral which may have been made by Assignee pursuant
to this Agreement. For the purpose of this Agreement, the obligations secured
hereunder shall be deemed to continue if Assignor enters into any bankruptcy or
similar proceeding at a time when any amount paid to Assignee could be ordered
to be repaid as a preference or pursuant to a similar theory, and shall continue
until it is finally determined that no such repayment can be ordered.
11. No Waiver. No course of dealing between Assignor and Assignee, nor
any failure to exercise nor any delay in exercising, on the part of Assignee,
any right, power, or privilege under this Agreement or under the Loan Agreement
or any other agreement, shall operate as a waiver. No single or partial exercise
of any right, power, or privilege under this Agreement or under the Loan
Agreement or any other agreement by Assignee shall preclude any other or further
exercise of such right, power, or privilege or the exercise of any other right,
power, or privilege by Assignee.
12. Rights Are Cumulative. All of Assignee's rights and remedies with
respect to the Collateral whether established by this Agreement, the Loan
Agreement, or any other documents or agreements, or by law shall be cumulative
and may be exercised concurrently or in any order.
13. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
14. Attorneys' Fees. If any action relating to this Assignment is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.
15. Amendments. This Assignment may be amended only by a written
instrument signed by both parties hereto. To the extent that any provision of
this Agreement conflicts with any provision of the Loan Agreement, the provision
giving Assignee greater rights or remedies shall govern, it being understood
that the purpose of this Agreement is to add to, and not detract from, the
rights granted to Assignee under the Loan Agreement. This Agreement, the Loan
Agreement, and the documents relating thereto comprise the entire agreement of
the parties with respect to the matters addressed in this Agreement.
-5-
<PAGE> 6
16. Severability. The provisions of this Agreement are severable. If
any provision of this Agreement is held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other jurisdiction, or any
other provision of this Agreement in any jurisdiction.
17. Counterparts. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
18. California Law and Jurisdiction. This Assignment shall be governed
by the laws of the State of California, without regard for choice of law
provisions. Assignor and Assignee consent to the nonexclusive jurisdiction of
any state or federal court located in Orange County, California.
19. Confidentiality. In handling any confidential information, Assignee
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Assignment
except that the disclosure of this information may be made (i) to the affiliates
of the Assignee, (ii) to prospective transferee or purchasers of an interest in
the obligations secured hereby, provided that they have entered into a
comparable confidentiality agreement in favor of Assignor and have delivered a
copy to Assignor, (iii) as required by law, regulation, rule or order, subpoena
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Assignee.
20. WAIVER OF RIGHT TO JURY TRIAL. ASSIGNEE AND ASSIGNOR EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN ASSIGNEE AND ASSIGNOR; OR (III) ANY
CONDUCT, ACTS OR OMISSIONS OF ASSIGNEE OR ASSIGNOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
ASSIGNEE OR ASSIGNOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.
[SIGNATURE ON FOLLOWING PAGE]
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on
the day and year first above written.
ADDRESS OF ASSIGNOR: ASSIGNOR:
10394 Pacific Center Court CALBIOCHEM-NOVABIOCHEM
CORPORATION
San Diego, CA 92121
By: /s/ James G. Stewart
-----------------------
Name: James G. Stewart
-----------------------
-7-
<PAGE> 8
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On July 28, 1995, before me, Sonia Wegner, Notary Public, personally
appeared James G. Stewart, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
Witness my hand and official seal.
/s/ Sonia Wegner
----------------
(Seal)
-8-
<PAGE> 9
EXHIBIT A-1
COPYRIGHTS
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL
None
ONCOGENE
None
<PAGE> 10
EXHIBIT A-2
UNREGISTERED COPYRIGHTS
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL
Biologics quarterly newsletter
Product data sheets
PANSORBIN(R) monograph
Cleland's Reagent monograph
A Guide to the Handling of Hazardous Compounds monograph
The Human lgG Subclasses monograph
Detergents monograph
ONCOGENE
None
<PAGE> 11
EXHIBIT A-3
COPYRIGHT LICENSE AGREEMENTS
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL
None
ONCOGENE
None
<PAGE> 12
EXHIBIT B
PATENTS
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL
- - US PATENT 4,228,237 Determination of Ligand in Liquid Medium with
Enzyme Labeled Avidin and Biotin Labeled
Reagents
INVENTORS Richard C. Hevey and Mark K. Malmros
COVERAGE October 14, 1980 through October 13, 1997
PRODUCTS COVERED All Avidin/Biotin Reagents listed on Pages 397-
406 of the 1994/95 CALBIOCHEM Catalog
APPLICATION Very valuable patent which allows CNI to
continue to sell Avidin/Biotin reagents.
- - US PATENT 4,464,165 Material and Method for Removing
Immunoglobulins From Whole Blood
INVENTOR John K. Pollard
COVERAGE August 7, 1984 through August 6, 2001
PRODUCTS COVERED None
APPLICATION This patent is of no commercial value.
- - US PATENT 4,709,037 Biotinylating Agents
INVENTOR Gerald Sigler
COVERAGE February 17, 1987 through February 16, 2004
PRODUCTS COVERED PDP-Biocytin, Catalog Number 544005, page 402
APPLICATION This patent is of no commercial value.
- - US PATENT 4,492,704 Quinoline Quinones and Antiasthmatic Use
Thereof
INVENTORS Gerome H. Fleisch, Winston S. Marshall, &
George J. Cullinan
COVERAGE January 8, 1985 through January 7, 2002
PRODUCTS COVERED LY-83583, Catalog Number 440205, page 211
APPLICATION Very valuable patent which allows world
exclusivity of this item.
<PAGE> 13
- - US Patent 5,126,273 Monitoring Method for the Synthesis of a Linear
Combination of Amino Acid Residues
Inventors Robert Sheppard and Morten Meldahl
Coverage June 30, 1992 through June 30, 2009
Application Used in solid phase peptide synthesis employing
Dhbt-OH and O-Dhbt Esters to monitor reaction
completion spectrophotometrically at 440 nm.
Application is to automated peptide synthesis
as a part of a machine used for the synthesis
of multiple peptides simultaneously or peptide
libraries.
- - US Patent 5,262,331 A Method For Monitoring in Peptide Synthesis
Inventors Stephen Salisbury, John Tremeer, David Owen,
and John Davies
Coverage November 16, 1993 through November 15, 2010
Application Supports GEM and Crystal Peptide Synthesizers
- - US Patent 5,324,833 Protected Amino Acids and Process for the
Preparation Thereof
Coverage June 28, 1994 through June 27, 2011
Inventors Peter Sieber and Bernhard Riniker
- - Eur. Patent 0,394,194 Geschutzte Amionsauren und Verfahren zu ihrer
Herstellung
Coverage April 10, 1990 through April 9, 2007
Inventors Peter Sieber and Bernhard Riniker
- - US Patent 5,300,651 Protected Derivatives of Tryptophan, Processes
for Their Preparation and Their Use For The
Preparation of Dipeptide, Polypeptide or
Protein Structures
Inventors Peter D. White
Coverage April 5, 1994 through April 4, 2011
- - Eur. Patent 0,516,070 Geschutzte Derivate von Alphaaminosaure, die
einen Heterocyclous aufwisen, Verfahren zu
deren Herstellung und Verwendung (Protected
Derivatives of [alpha symbol]-Amino Acids)
Inventor Peter D. White
Coverage May 25, 1991 through May 25, 2012
ONCOGENE
None
<PAGE> 14
EXHIBIT C
TRADEMARK AND SERVICE MARK RIGHTS
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL
REGISTERED TRADEMARKS
<TABLE>
<S> <C>
AZOCOLL(R) Substrate(1) CALBIO(R)(2)
CALBIOCHEM(R) Biochemicals(3) CALIMMUNOCHEM(R)(4)
CELLULYSIN(R) Cellulase(5) CLINALFA(R)(6)
Fmoc-Xpress(R)(7) MACERASE(R) Pectinase(8)
NOVABIOCHEM(R)(9) NOVASYN(R)(10)
OMNISORB(R) Cells(11) PADAC(R) (Beta Symbol) 8-Lactamase Substrate(12)
PANSORBIN(R) Cells(13) PRONASE(R) Protease(14)
PROTEIN GRADE(R) Detergents(15) PyBOP(R) Reagent(16)
SANSORBIN(R) Cells(17) SEROCLEAR(R) Reagent(18)
</TABLE>
- ----------------------
(1) AZOCOLL(R) is registered in the United States (1,597,020, Class 1) through
May 20, 2006.
(2) CALBIO(R) is registered in Australia (A248,748, Class 5).
(3) CALBIOCHEM(R) is registered in Australia (A246,747, Class 5), France
(1,702,981, Class 1 and 5), Germany (1,076,982, Class 1 and 5), Great
Britain (882,246), Japan (1,568,033, Class 1, script characters; 1,526,466,
Class 1, Katakama characters), Switzerland (392,985, Class 1 and 5), and
the United States (967,930, International Class 1 through September 11,
2003, 1,668,201 Class 1 and 5); and is pending in Canada (691,441) and
Italy (TO91C002370).
(4) CALIMMUNOCHEM(R) is registered in France (1,702,982, Class 5), Germany
(2,026,963, Class 1 and 5), Italy (T091C002369) and Switzerland (395,048).
We formally abandoned trademark applications in Canada, Great Britain,
Japan, and the United States on April 1, 1993.
(5) CELLULYSIN(R) is registered in the United States (1,310,642, Class 1).
(6) CLINALFA(R) is registered in Great Britain (1,427,476, Class 1 and
1,427,477, Class 5), Switzerland (365,724, Class 1, 3 and 5); and
internationally (530,019, Class 1, 3 and 5); and is pending in Japan and
the United States. We will abandon current applications and/or renewals
effective immediately in all other countries.
(7) Fmoc-XPRESS(R) is registered in Germany (590,758, Internationally), Japan
(number pending, Class 1), Switzerland (395,134, Class 1) and
Internationally (590,758, Class 1); and is pending in Great Britain
(M-1170/92, 11-20-92), and the United States (M-1179/92, 1-22-93). We will
abandon current applications and/or renewals effective immediately in all
other countries.
(8) MACERASE(R) is registered in the United States (1,316,385, Class 1).
(9) NOVABIOCHEM(R) is registered in Great Britain (1,345,642, Class 1),
Switzerland (396,391, Class 1 and 5) and the United States (1,657,891,
Class 1): and is pending in Germany (Class 1), Japan and the United States
(Class 5). We will abandon current applications and/or renewals effective
immediately in all other countries.
(10) NovaSyn(R) is registered in Great Britain (1,345,641, Class 1 and
1,473,597, Class 9), Japan (2,413,247, Class 1 - 2,634,282, Class 9 -
2,634,282, and Class 10 - 2,704,011), Switzerland (384,953, Class 1, 5 and
9), the United States (1,640,095, Class 1 and 1,754,991, Class 9) and
Internationally (529,660, Class 1 and 5, and 575,106, Class 9); and is
pending in Canada (618,807). We will abandon current applications and/or
renewals effective immediately in all other countries.
(11) OMNISORB(R) is registered in the United States (1,560,324, Class 1).
(12) PADAC(R) is registered in the United States (1,246,706, Class 1).
(13) PANSORBIN(R) is registered in Australia (A356,695), Canada (266,295),
Denmark (2,031/1982, Class 5), France (1,171,516, Class 1), Germany
(1,034,553), Great Britain (1,152,733, Class 1), Italy (33,911 C/81), Japan
(1,862,798), Norway (111,656), and the United States (1,130,624, Class 1).
We will abandon this mark in Australia, Denmark, Italy and Norway at the
time of renewal.
(14) PRONASE(R) is registered in the United States (747,784, Class 1).
(15) PROTEIN GRADE(R) is registered in the United States (1,564,053, Class 1).
(16) PyBOP(R) is registered in the United Kingdom (2,008,589, Class 1).
(17) SANSORBIN(R) is registered in the United States (1,170,803, Class 1).
<PAGE> 15
SPUTOLYSIN(R) Reagent(19) TAGIT(R) Reagent(20)
THIOLYTE(R) Reagent(21) ULTROL(R) Grade(22)
ZWITTERGENT(R) Detergents(23)
Trademarks
CALBIOSORB(TM) Absorbent CENTA(TM) [Beta symbol]-Lactamase Substrate
DM-Nitrophen(TM) Reagent ELUGENT(TM) Detergent
FluorSave(TM) Reagent ImmunoPen(TM)
PHM-L LIPOSORB(TM) Absorbent POLYGELINE(TM) Collagen
PyBroP(TM) Reagent REDUCTACRYL(TM) Reagent
ZINCOV(TM) Inhibitor
ONCOGENE
Registered Trademarks
None
Trademarks
Discovery Tools(TM) KappaLock(TM)
MutaProbe(TM) Oncogene Science(TM)
PhosphoBind(TM) PhosphoBlot(TM)
PhosphoSHure(TM) PointPrimer(TM)
Raytide(TM) Raytide EL(TM)
TransPrimer(TM) UniTect(TM)
- -------------------------------------------------------------------------------
18 SEROCLEAR(R) is registered in the United States (1,597,019, Class 1) through
May 20, 2006.
19 SPUTOLYSIN(R) is registered in the United States (888,527, Class 1).
20 TAGIT(R) is registered in the United States (1,031,862, Class 1).
21 THIOLYTE(R) is registered in the United States (1,217,144, Class 1).
22 ULTROL(R) is registered in the United States (1,135,381, Class 1).
23 ZWITTERGENT(R) is registered in the United States (1,181,697, Class 1).
<PAGE> 1
[SILICON VALLEY BANK LOGO] EXHIBIT 10(n)(iv)
SECURITY AGREEMENT
OBLIGOR: CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
THIS SECURITY AGREEMENT is entered into on the above date between SILICON VALLEY
BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa Clara, California
95054-2895 and the person named above (the "Obligor"), whose chief executive
office is located at the above address ("Obligor's Address").
1. GRANT OF SECURITY INTEREST.
1.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means
the following: the obligation to pay and perform when due all present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Obligor to Silicon, whether joint or
several, monetary or non-monetary, and whether created pursuant to this
Agreement or any other present or future agreement or otherwise, including
without limitation the obligations of the Obligor under the Obligor's
Cross-Corporate Continuing Guaranty of even date herewith in favor of Silicon of
all present and future indebtedness, liabilities and obligations of
CALBIOCHEM-NOVABIOCHEM CORPORATION to Silicon.
1.2 COLLATERAL. As security for all Obligations, the Obligor hereby
grants Silicon a continuing security interest in all of the Obligor's interest
in the types of property described below, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): (a) All
accounts, contract rights, chattel paper, letters of credit, documents,
securities, money, and instruments, and all other obligations now or in the
future owing to the Obligor; (b) All inventory, goods, merchandise, materials,
raw materials, work in process, finished goods, farm products, advertising,
packaging and shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under contracts of service
or consumed in the Obligor's business, and all warehouse receipts and other
documents; and (c) All equipment, including without limitation all machinery,
fixtures, trade fixtures, vehicles, furnishings, furniture, materials, tools,
machine tools, office equipment, computers and peripheral devices, appliances,
apparatus, parts, dies, and jigs; (d) All general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trade secrets, drawings,
blueprints, customer lists, patents, patent applications, copyrights, security
deposits, loan commitment fees, federal, state and local tax refunds and claims,
all rights in all litigation presently or hereafter pending for any cause or
claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Obligor against Silicon, all rights
to purchase or sell real or personal property, all rights as a licensor or
licensee of any kind, all royalties, licenses, processes, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (e) All books and
records, whether stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets, and other technology) shall be subject to any
licenses or rights now or in the future granted by the Obligor to any third
parties in the ordinary course of Obligor's business; provided that if the
Obligor proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys
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SILICON VALLEY BANK SECURITY AGREEMENT
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a major part of the economic value of that technology, Silicon shall first be
requested to release its security interest in the same, and Silicon may withhold
such release in its discretion.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OBLIGOR.
The Obligor represents and warrants to Silicon as follows, and the
Obligor covenants that the following representations will continue to be true,
and that the Obligor will comply with all of the following covenants:
2.1 CORPORATE EXISTENCE AND AUTHORITY. The Obligor, if a corporation,
is and will continue to be, duly authorized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Obligor is
and will continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse effect
on the Obligor. The execution, delivery and performance by the Obligor of this
Agreement, and all other documents contemplated hereby have been duly and
validly authorized, are enforceable against the Obligor in accordance with their
terms, and do not violate any law or any provision of, and are not grounds for
acceleration under, any agreement or instrument which is binding upon the
Obligor.
2.2 NAME; TRADE NAMES AND STYLES. The name of the Obligor set forth in
the heading to this Agreement is its correct name. Listed on the Schedule to
this Agreement (the "Schedule") are all prior names of the Obligor and all of
Obligor's present and prior trade names. The Obligor shall give Silicon 15 days'
prior written notice before changing its name or doing business under any other
name. The Obligor has complied, and will in the future comply, with all laws
relating to the conduct of business under a fictitious business name.
2.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is the Obligor's chief executive office. In
addition, the Obligor has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Obligor will give
Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location.
2.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Obligor is now, and will
at all times in the future be, the sole owner of all the Collateral, except for
items of equipment which are leased by the Obligor. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for the following ("Permitted Liens"):
(i) purchase money security interests in specific items of equipment; (ii)
leases of specific items of equipment; (iii) liens for taxes not yet payable;
(iv) additional security interests and liens consented to in writing by Silicon
in its sole discretion, which consent shall not be unreasonably withheld; and
(v) security interests being terminated substantially concurrently with this
Agreement. Silicon will have the right to require, as a condition to its consent
under subparagraph (iv) above, that the holder of the additional security
interest or lien sign an intercreditor agreement on Silicon's then standard
form, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree to give written notice of any default to
Silicon at least 60 days prior to taking any action to enforce its subordinate
security interest, and that the Obligor agree that any uncured default in any
obligation secured by the subordinate security interest shall also constitute an
Event of Default under this Agreement. Silicon now has, and will continue to
have, a perfected and enforceable security interest in all of the Collateral,
subject only to the Permitted Liens, and the Obligor will at all times defend
Silicon and the Collateral against all claims of others. None of the Collateral
now is or will be affixed to any real property in such a manner, or with such
intent, as to become a fixture.
2.5 MAINTENANCE OF COLLATERAL. The Obligor will maintain the Collateral
in good working condition, and the Obligor will not use the Collateral for any
unlawful purpose. The Obligor will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
2.6 BOOKS AND RECORDS. The Obligor has maintained and will maintain at
the Obligor's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
2.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of the
Obligor, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Obligor. The Obligor is now and will
continue to be solvent. The Obligor will provide Silicon: (i) within 30 days
after the end of each month, a monthly financial statement prepared by the
Obligor*, and setting forth such other information as Silicon shall reasonably
request; and (ii) within 120 days following the end of the Obligor's fiscal
year, complete annual financial statements*, certified by independent certified
public accountants acceptable to Silicon and accompanied by the unqualified
report thereon by said independent certified public accountants. **
* INCLUDING CONSOLIDATING AND CONSOLIDATED FINANCIAL STATEMENTS
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** OBLIGOR AGREES TO PROVIDE TO SILICON COPIES OF ALL REPORTS AND OTHER
INFORMATION PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION WITHIN THE
EARLIER OF 5 DAYS AFTER THE DATE DUE, IF ANY, OR WHEN SO PROVIDED.
2.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Obligor has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Obligor has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owed by the Obligor. The Obligor may,
however, defer payment of any contested taxes, provided that the Obligor (i) in
good faith contests the Obligor's obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (ii) notifies
Silicon in writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. The Obligor is
unaware of any claims or adjustments proposed for any of the Obligor's prior tax
years which could result in additional taxes becoming due and payable by the
Obligor. The Obligor has paid, and shall continue to pay all amounts necessary
to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and the Obligor has not and will not
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any such plan which
could result in any liability of the Obligor, including, without limitation, any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.
2.9 COMPLIANCE WITH LAW. The Obligor has complied, and will comply, in
all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Obligor, including, but not limited
to, those relating to the Obligor's ownership of real or personal property,
conduct and licensing of the Obligor's business, and environmental matters.
2.10 LITIGATION. Except as disclosed in the schedule or after the date
hereof, as promptly disclosed to Silicon in writing from time to time, there is
no claim, suit, litigation, proceeding or investigation pending or (to best of
the Obligor's knowledge) threatened by or against or affecting the Obligor in
any court or before any governmental agency (or any basis therefor known to the
Obligor) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Obligor,
or in any material impairment in the ability of the Obligor to carry on its
business in substantially the same manner as it is now being conducted. The
Obligor will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Obligor involving amounts in excess of $250,000.
3. ADDITIONAL DUTIES OF OBLIGOR.
3.1 INSURANCE. The Obligor shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require. All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon. Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its sole and absolute discretion,
except that, provided no Event of Default has occurred, Silicon shall release to
the Obligor insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Obligor for the replacement of the
equipment with respect to which the insurance proceeds were paid. Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used. If the Obligor fails to provide or pay for any insurance, Silicon may, but
is not obligated to, obtain the same at the Obligor's expense. The Obligor shall
promptly deliver to Silicon copies of all reports made to insurance companies.
3.2 REPORTS. The Obligor shall provide Silicon with such written
reports with respect to the Obligor (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify.
3.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy the Obligor's
accounting books and records and Obligor's books and records relating to the
Collateral. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process.
3.4 NEGATIVE COVENANTS. Except as may be permitted in the Schedule
hereto, the Obligor shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except that
the Obligor may merge or consolidate with another corporation if the Obligor is
the surviving corporation in the merger, and the assets of the corporation
acquired in the merger are not subject to any liens or encumbrances, except
Permitted Liens; (ii) enter into any transaction outside the ordinary course of
business; (iii) sell or
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transfer any Collateral, except for the sale of finished inventory in the
ordinary course of the Obligor's business, and except for the sale of obsolete
or unneeded equipment in the ordinary course of business; (iv) make any loans of
any money or any other assets; (v) incur any debts, outside the ordinary course
of business, which would have a material, adverse effect on the Obligor or on
the prospect of repayment of the Obligations; (vii) guarantee or otherwise
become liable with respect to the obligations of another party or entity*; (vii)
pay or declare any dividends on the Obligor's stock (except for dividends
payable solely in stock of the Obligor); (viii) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of the Obligor's stock; (ix) make
any change in the Obligor's capital structure which has a material adverse
effect on the Obligor or on the prospect of repayment of the Obligations; or (x)
dissolve or elect to dissolve. Transactions permitted by the foregoing
provisions of this Section are only permitted if no Event of Default and no
event which (with notice or passage of time or both) would constitute an Event
of Default would occur as a result of such transaction. **
* OTHER THAN WITH RESPECT TO OBLIGATIONS OF OBLIGOR UNDER PURCHASE
AGREEMENT (AS DEFINED IN THE LOAN AND SECURITY AGREEMENT OF EVEN DATE HEREWITH
BETWEEN SILICON AND CALBIOCHEM-NOVABIOCHEM CORPORATION)
** SILICON CONSENTS TO THE INITIAL PUBLIC OFFERING OF THE OBLIGOR'S
STOCK (THE "IPO") PROVIDED THAT THE OBLIGOR RECEIVES NET PROCEEDS THEREFROM IN
AN AMOUNT NOT LESS THAN THE THEN OUTSTANDING AGGREGATE AMOUNT OF OBLIGATIONS.
OTHERWISE, IF THE ANTICIPATED NET PROCEEDS FROM THE IPO ARE LESS THAN THE THEN
OUTSTANDING AGGREGATE AMOUNT OF OBLIGATIONS, THEN THE TERMS OF THE IPO ARE TO BE
REASONABLY ACCEPTABLE TO SILICON.
3.5 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Obligor, the Obligor shall, without expense to Silicon,
make available the Obligor and its officers, employees and agents and the
Obligor's books and records to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
3.6 VERIFICATION. Silicon may, from time to time, following prior
notification to Obligor, verify directly with the respective account debtors the
validity, amount and other matters relating to the Obligor's accounts, by means
of mail, telephone or otherwise, either in the name of the Obligor or Silicon or
such other name as Silicon may reasonably choose, provided that no prior
notification to Obligor shall be required following an Event of Default.
3.7 EXECUTE ADDITIONAL DOCUMENTATION. The Obligor agrees, at its
expense, on request by Silicon, to execute all documents in form satisfactory to
Silicon, as Silicon, may deem reasonably necessary or useful in order to perfect
and maintain Silicon's perfected security interest in the Collateral, and in
order to fully consummate all of the transactions contemplated by this
Agreement.
4. TERM.
4.1 MATURITY DATE. This Agreement shall continue in effect until all
Obligations have been paid and performed in full.
4.2 PAYMENT OF OBLIGATIONS. Upon payment and performance in full of all
the Obligations, Silicon shall promptly deliver to the Obligor termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests.
5. EVENTS OF DEFAULT AND REMEDIES.
5.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Obligor
shall give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Obligor or any of the Obligor's officers, employees or agents, now or in the
future, shall be untrue or misleading in any material respect; or (b) the
Obligor shall fail to pay when due any monetary Obligation; or (c) the Obligor
shall fail to perform any non-monetary Obligation which by its nature cannot be
cured; or (d) the Obligor shall fail to pay or perform any other non-monetary
Obligation, which failure is not cured within 5 business days after the date
due; or (e) Any levy, assessment, attachment, seizure, lien or encumbrance is
made on all or any part of the Collateral which is not cured within 10 days
after the occurrence of the same; or (f) Dissolution, termination of existence,
insolvency or business failure of the Obligor; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding by the Obligor
under any reorganization, bankruptcy, insolvency, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, now or in
the future in effect; or (g) the commencement of any proceeding against the
Obligor or any guarantor of any of the Obligations under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 30 days after the date
commenced; (h) revocation or termination of, or limitation of liability upon,
any guaranty of the Obligations; or commencement of proceedings by or against
any guarantor of any of the Obligations under any bankruptcy or insolvency law;
or (j) the Obligor makes any payment on account of any indebtedness or
obligation which has been subordinated to
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the Obligations or if any person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or (k)
the Obligor shall generally not pay its debts as they become due; or the Obligor
shall conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or suffer any transfer of any of
its property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law.
5.2 REMEDIES. Upon the occurrence of any Event of Default, and at any
time thereafter, Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by the Obligor), may do any one
or more of the following: (a) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding any
deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (b) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose the Obligor hereby authorizes
Silicon without judicial process to enter onto any of the Obligor's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any or all of the Collateral by Court
process, the Obligor hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (c) Require the Obligor to
assemble any or all of the Collateral and make it available to Silicon at places
designated by Silicon which are reasonably convenient to Silicon and the
Obligor, and to remove the Collateral to such locations as Silicon may deem
advisable; (d) Require Obligor to deliver to Silicon, in kind, all checks and
other payments received with respect to all accounts and general intangibles,
together with any necessary indorsements, within one day after the date received
by the Obligor; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use the Obligor's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at any one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on the Obligor's premises without charge, for such time
or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve the Obligor of any liability the Obligor may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any accounts and general intangibles
comprising Collateral and, in connection therewith, the Obligor irrevocably
authorizes Silicon to endorse or sign the Obligor's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to the Obligor and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle accounts and
the like for less than face value; (i) Offset against any sums in any of
Obligor's general, special or other deposit accounts with Silicon; and (h)
Demand and receive possession of any of the Obligor's federal and state income
tax returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional four percent per annum.
5.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Obligor
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Obligor at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and
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6:00 p.m.; (v) Payment of the purchase price in cash or by cashier's check or
wire transfer is required; (vi) With respect to any sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective
purchaser to ascertain directly from the Obligor any and all information
concerning the same. Silicon may employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.
5.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Obligor grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Obligor, and at the Obligor's expense, to do any or all of the
following, in the Obligor's name or otherwise: (a) Execute on behalf of the
Obligor any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Obligor or Silicon, or in
order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Obligor any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Obligor, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Obligor upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Obligor's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Obligor to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Obligor
pursuant to this Agreement and any other present or future agreements. Silicon
shall exercise the foregoing powers in a commercially reasonable manner. Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's
rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of the Obligor.
5.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the exercise
of its rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Silicon shall determine in its sole discretion. Any surplus shall be paid to the
Obligor or other persons legally entitled thereto; the Obligor shall remain
liable to Silicon for any deficiency. If, Silicon, in its sole discretion,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale or other disposition of Collateral,
Silicon shall have the option, exercisable at any time, in its sole discretion,
of either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Silicon
of the cash therefor.
5.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the California Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or in
the future entered into between Silicon and the Obligor, and all of such rights
and remedies are cumulative and none is exclusive. Exercise or partial exercise
by Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
6. GENERAL PROVISIONS.
6.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail
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return receipt requested, addressed to Silicon or the Obligor at the addresses
shown in the heading to this Agreement, or at any other address designated in
writing by one party to the other party. All notices shall be deemed to have
been given upon delivery in the case of notices personally delivered to the
Obligor or to Silicon, or at the expiration of two business days following the
deposit thereof in the United States mail, with postage prepaid.
6.2 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
6.3 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Obligor and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. There
are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed
by the parties in connection herewith.
6.4 WAIVERS. The failure of Silicon at any time or times to require the
Obligor to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between the Obligor and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Obligor and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Obligor. The
Obligor waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general
intangible, document or guaranty at any time held by Silicon on which the
Obligor is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.
6.5 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of
its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by the Obligor or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
6.6 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Obligor and a duly
authorized officer of Silicon.
6.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Obligor of each and every obligation under this Agreement.
6.8 ATTORNEYS FEES AND COSTS. The Obligor shall reimburse Silicon for
all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of the
Obligor's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce Silicon's security interest in, the Collateral; and
otherwise represent Silicon in any litigation relating to the Obligor. If either
Silicon or the Obligor files any lawsuit against the other predicated on a
breach of this Agreement, the prevailing party in such action shall be entitled
to recover its reasonable costs and attorneys' fees, including (but not limited
to) reasonable attorneys' fees and costs incurred in the enforcement of,
execution upon or defense of any order, decree, award or judgment. All
attorneys' fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of the Obligor's Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations.
6.9 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of the parties hereto; provided,
however, that the Obligor may not assign or transfer any of its rights under
this Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
the Obligor from its liability for the Obligations.
-7-
<PAGE> 8
SILICON VALLEY BANK SECURITY AGREEMENT
- --------------------------------------------------------------------------------
6.10 JOINT AND SEVERAL LIABILITY. If the Obligor consists of more than
one person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Obligor shall not constitute a compromise
with, or a release of, any other Obligor.
6.11 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. The Obligor acknowledges that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly against
Silicon or the Obligor under any rule of construction or otherwise.
6.12 MUTUAL WAIVER OF JURY TRIAL. THE OBLIGOR AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE OBLIGOR, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR THE OBLIGOR OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR THE
OBLIGOR, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
6.13 Governing Law; Jurisdiction; Venue. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Obligor shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Obligor (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall,
at Silicon's option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Orange County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights the Obligor may have to object to
the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
[Signatures On Following Page]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives.
OBLIGOR:
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
BY /s/ Stelios B. Papadopoulos
-------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
-------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
-------------------------------------
TITLE VP
-------------------------------------
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<PAGE> 9
[SILICON VALLEY BANK LOGO]
SCHEDULE TO
SECURITY AGREEMENT
OBLIGOR: CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
Prior Names of Obligor (Section
2.2): NONE
TRADE NAMES OF OBLIGOR
(Section 2.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 2.3): NONE
MATERIAL ADVERSE LITIGATION
(Section 2.10): NONE
-1-
<PAGE> 1
EXHIBIT 10(n)(v)
[SILICON VALLEY BANK LOGO]
SILICON VALLEY BANK
PLEDGE AGREEMENT
PLEDGOR: CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JULY 28, 1995
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated the above date, is
entered into at between SILICON VALLEY BANK ("Silicon"), whose address is 3000
Lakeside Drive, Santa Clara, California 95054-2895, and the pledgor named above
("Pledgor"), whose address is set forth above.
1. PLEDGE OF SECURITIES. Pledgor shall concurrently deliver to Silicon the
stock certificates and other securities listed on Exhibit A hereto, together
with duly executed instruments of assignment thereof to Silicon (which, together
with all replacements and substitutions therefor are hereinafter referred to as
the "Securities"). Pledgor hereby pledges to Silicon and grants Silicon a
security interest in the Securities, and all rights and remedies relating to, or
arising out of, any and all of the foregoing, and all proceeds thereof
(collectively, the "Collateral") to secure the payment and performance of all
debts, duties, obligations, liabilities, representations, warranties and
guaranties of Pledgor to Silicon, heretofore, now, or hereafter made, incurred
or created, of every kind and nature (collectively, the "Obligations"),
including, but not limited to, those arising under the Continuing Guaranty of
even date with respect to CALBIOCHEM-NOVABIOCHEM CORPORATION (the "Guaranty").
Any and all stock dividends, rights, warrants, options, puts, calls, conversion
rights and other securities and any and all property and money distributed or
delivered with respect to the Securities or issued upon the exercise of any
puts, calls, conversion rights, options, warrants or other rights included in or
pertaining to the Securities shall be included in the term "Securities" as used
herein and shall be subject to this Pledge Agreement, and Pledgor shall deliver
the same to Silicon immediately upon receipt thereof together with any necessary
instruments of transfer; provided, however, that until an Event of Default (as
hereinafter defined) shall occur, Pledgor may retain any dividends paid in cash
or its equivalent, with respect to any stock included in the Securities and any
interest paid with respect to any bonds, debentures or other evidences of
indebtedness included in the Securities. Pledgor hereby acknowledges that the
acceptance of the pledge of the Securities by Silicon shall not constitute a
commitment of any kind by Silicon to permit Pledgor to incur Obligations.
2. VOTING AND OTHER RIGHTS. Pledgor shall have the right to exercise all
voting rights with respect to the Securities, provided no Event of Default (as
hereinafter defined) has occurred. Upon the occurrence of any Event of Default,
Silicon shall have the right (but not any obligation) to exercise all voting
rights with respect to the Securities. Provided no Event of Default has
occurred, Pledgor shall have the right to exercise all puts, calls, straddles,
conversion rights, options, warrants, and other rights and remedies with respect
to the Securities, provided Pledgor obtains the prior written consent of Silicon
thereto. Silicon shall have no responsibility or liability whatsoever for the
exercise of, or failure to exercise, any puts, calls, straddles, conversion
rights, options, warrants, rights to vote or consent, or other rights with
respect to any of the Securities. Whether or not an Event of Default has
occurred, Silicon shall have the right from time to time to transfer all or any
part of the Securities to Silicon's own name or the name of its nominee.
3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants
to Silicon that Pledgor now has, and throughout the term of this Agreement will
at all times have, good title to the Securities and the other Collateral, free
and clear of any and all security interests, liens and claims of any kind
whatsoever.
4. EVENTS OF DEFAULT. If any one or more of the following events shall
occur, any such event shall constitute an Event of Default and Pledgor shall
provide Silicon with immediate notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Pledgor or any
of Pledgor's officers, employees or agents now or hereafter is incorrect, false,
untrue or misleading in any material respect; or (b) Pledgor shall fail to
promptly pay or perform when due part or all of any of the Obligations, or any
default or event of default shall occur under the Guaranty or any other present
or future
-1-
<PAGE> 2
SILICON VALLEY BANK PLEDGE AGREEMENT
- -------------------------------------------------------------------------------
instrument, document or agreement between Silicon and Pledgor.
5. REMEDIES. If an Event of Default shall occur, Pledgor shall give
immediate written notice thereof to Silicon. Upon the occurrence of an Event of
Default, and at any time thereafter, Silicon shall have the right, without
notice to or demand upon Pledgor, to exercise any one or more of the following
remedies: (a) accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any agreement or instrument evidencing or
relating to any of the same; (b) sell or otherwise dispose of the Securities,
and other Collateral, at a public or private sale, for cash, or other property,
or on credit, with the authority to adjourn or postpone any such sale from time
to time without notice other than oral announcement at the time scheduled for
sale. Silicon may directly or through any affiliate purchase the Securities, and
other Collateral, at any such public disposition, and if permissible under
applicable law, at any private disposition. Pledgor and Silicon hereby agree
that it shall conclusively be deemed commercially reasonable for Silicon, in
connection with any sale or disposition of the Securities, to impose
restrictions and conditions as to the investment intent of a purchaser or
bidder, the ability of a purchaser or bidder to bear the economic risk of an
investment in the Securities, the knowledge and experience in business and
financial matters of a purchaser or bidder, the access of a purchaser or bidder
to information concerning the issuer of the Securities, as well as legend
conditions and stop transfer instructions restricting subsequent transfer of the
Securities, and any other restrictions or conditions which Silicon believes to
be necessary or advisable in order to comply with any state or federal
securities or other laws. Pledgor acknowledges that the foregoing restrictions
may result in fewer proceeds being received upon such sale then would otherwise
be the case. Pledgor hereby agrees to provide to Silicon any and all information
required by Silicon in connection with any sales of Securities by Silicon
hereunder. If, after the occurrence of any Event of Default, Rule 144
promulgated by the Securities and Exchange Commission (or any other similar
rule) is available for use by Silicon in connection with the sales of any
Securities hereunder, Pledgor agrees not to utilize Rule 144 in the sale of any
securities held by Pledgor of the same class as the Securities, without the
prior written consent of Silicon. Any and all attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon in connection with the foregoing
shall be added to and become a part of the Obligations and shall be due from
Pledgor to Silicon upon demand.
6. REMEDIES, CUMULATIVE; NO WAIVER. The failure of Silicon to enforce any
of the provisions of this Agreement at any time or for any period of time shall
not be construed to be a waiver of any such provision or the right thereafter to
enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Silicon by law.
7. TERM. This Agreement and Silicon's rights hereunder shall continue in
full force and effect until all of the Obligations have been fully paid,
performed and discharged and the Guaranty and all other agreements between
Borrower and Silicon have terminated. Upon termination, Silicon shall return the
Collateral to Pledgor, with any necessary instruments of transfer.
8. REVIVOR. If any payment made on any of the Obligations shall for any
reason be required to be returned by the Silicon, whether on the ground that
such payment constituted a preference or for any other reason, then for purposes
of this Agreement, and notwithstanding any prior termination of this Agreement,
such payment on the Obligations shall be treated as not having been made, and
this Agreement shall in all respects be effective with respect to the
Obligations as though such payment had not been made; and if the Collateral has
been released or returned to Pledgor, then Pledgor shall return the Collateral
to Silicon, to be held and dealt with in accordance with the terms of this
Agreement.
9. GENERAL PROVISIONS. This Agreement and the documents referred to herein
are the entire and only agreements between Pledgor and Silicon with respect to
the subject matter hereof, and all representations, warranties, agreements, or
undertakings heretofore or contemporaneously made, with respect to the subject
matter hereof, which are not set forth herein or therein, are superseded hereby.
The terms and provisions hereof may not be waived, altered, modified, or amended
except in a writing executed by Pledgor and Silicon. All rights, benefits and
privileges hereunder shall inure to the benefit of and be enforceable by Silicon
and its successors and assigns and shall be binding upon Pledgor and its
successors and assigns; provided that Pledgor may not transfer any of its rights
hereunder without the prior written consent of Silicon. Paragraph headings are
used herein for convenience only. Pledgor acknowledges that the same may not
describe completely the subject matter of the applicable paragraph, and the same
shall not be used in any manner to construe, limit, define or interpret any term
or provision hereof. Pledgor shall upon demand reimburse Silicon for all
reasonable costs, fees and expenses (including without limitation attorneys'
fees, whether or not suit be brought), which are incurred by Silicon in
connection with, or arising out of, this Agreement. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed, and interpreted in accordance with the
internal laws (and not conflict of laws rules) of the State of California.
Pledgor hereby agrees that all actions or proceedings relating directly or
indirectly hereto may, at the option of Silicon, be litigated in courts located
within said State, and Pledgor hereby expressly consents to the jurisdiction of
any such court and consents to the service of process in any such action or
proceeding by personal delivery or by certified or registered mailing directed
to Pledgor at its last address known to Silicon.
-2-
<PAGE> 3
SILICON VALLEY BANK PLEDGE AGREEMENT
- -------------------------------------------------------------------------------
9. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. SILICON AND PLEDGOR EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND PLEDGOR; OR (iii) ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR PLEDGOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR PLEDGOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
PLEDGOR:
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
BY /s/ James G. Stewart
--------------------
TITLE:
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
---------------
TITLE VP
-3-
<PAGE> 4
SILICON VALLEY BANK PLEDGE AGREEMENT
- -------------------------------------------------------------------------------
Exhibit A to Pledge Agreement Dated July 31, 1995 Between Silicon
Valley Bank and Calbiochem-Novabiochem International, Inc.
1,000 shares of Common Stock of Calbiochem-Novabiochem Corporation represented
by Certificate No. 3.
499,999 ordinary shares of Calbiochem-Novabiochem (UK) Ltd. represented by Share
Certificate No. 9.
35,000 shares of Novabiochem AG (now Calbiochem-Novabiochem AG) represented by
Certificate Nos. 1-12
Shares in the capital of Novabiochem GmbH (now Calbiochem-Novabiochem GmbH)
having an aggregate nominal value of DM 100,000.
-4-
<PAGE> 1
EXHIBIT 10(n)(vi)
[SILICON VALLEY BANK LOGO]
CROSS-CORPORATE CONTINUING GUARANTY
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
GUARANTOR: CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
DATE: JULY 28, 1995
THIS CROSS-CORPORATE CONTINUING GUARANTY is executed by the above-named
guarantor (the "Guarantor"), as of the above date, in favor of SILICON VALLEY
BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa Clara, California
95054-2895, with respect to the Indebtedness of each and all of the above-named
borrowers (jointly and severally, the "Borrower").
1. CONTINUING GUARANTY. Guarantor hereby unconditionally guarantees and
promises to pay on demand to Silicon in lawful money of the United States, and
to perform for the benefit of Silicon, all of the Borrower's present and future
Indebtedness (as defined below) to Silicon.
2. "INDEBTEDNESS." As used in this Guaranty, the term "Indebtedness" is
used in its most comprehensive sense and shall mean and include without
limitation: (a) any and all debts, duties, obligations, liabilities,
representations, warranties and guaranties of Borrower or any one or more of
them, heretofore, now, or hereafter made, incurred, or created, whether directly
to Silicon or acquired by Silicon by assignment or otherwise, or held by Silicon
on behalf of others, however arising, whether voluntary or involuntary, due or
not due, absolute or contingent, liquidated or unliquidated, certain or
uncertain, determined or undetermined, monetary or nonmonetary, written or oral,
and whether Borrower may be liable individually or jointly with others, and
regardless of whether recovery thereon may be or hereafter become barred by any
statute of limitations, discharged or uncollectible in any bankruptcy,
insolvency or other proceeding, or otherwise unenforceable; and (b) any and all
amendments, modifications, renewals and extensions of any or all of the
foregoing, including without limitation amendments, modifications, renewals and
extensions which are evidenced by any new or additional in strument, document or
agreement; and (c) any and all attorneys' fees, court costs, and collection
charges incurred in endeavoring to collect or enforce any of the foregoing
against Borrower, Guarantor, or any other person liable thereon (whether or not
suit be brought) and any other expenses of, for or incidental to collection
thereof.
3. WAIVERS. Guarantor hereby waives: (a) presentment for payment,
notice of dishonor, demand, protest, and notice thereof as to any instrument,
and all other notices and demands to which Guarantor might be entitled,
including without limitation notice of all of the following: the acceptance
hereof; the creation, existence, or acquisition of any Indebtedness; the amount
of the Indebtedness from time to time outstanding; any foreclosure sale or other
disposition of any property which secures any or all of the Indebtedness or
which secures the obligations of any other guarantor of any or all of the
Indebtedness; any adverse change in Borrower's financial position; any other
fact which might increase Guarantor's risk; any default, partial payment or
non-payment of all or any part of the Indebtedness; the occurrence of any other
Event of Default (as hereinafter defined); any and all agreements and
arrangements between Silicon and Borrower and any changes, modifications, or
extensions thereof, and any revocation, modification or release of any guaranty
of any or all of the Indebtedness by any person (including without limitation
any other person signing this Guaranty); (b) any right to require Silicon to
institute suit against, or to exhaust its rights and remedies against, Borrower
or any other person, or to proceed against any property of any kind which
secures all or any part of the Indebtedness, or to exercise any right of offset
or other right with respect to any reserves, credits or deposit accounts held by
or maintained with Silicon or any indebtedness of Silicon to Borrower, or to
exercise any other right or power, or pursue any other remedy Silicon may have;
(c) any defense arising by reason of any disability or other defense of Borrower
or any other guarantor or any endorser, co-maker or other person, or by reason
of the cessation from any cause whatsoever of any liability of Borrower or any
other guarantor or any endorser, co-maker or other person, with respect to all
or any part of the Indebtedness, or by reason of any act or omission of Silicon
or others which directly or indirectly results in the discharge or release of
Borrower or any other guarantor or any other person or any Indebtedness or any
security therefor, whether by operation of law or otherwise; (d) any defense
arising by reason of any failure of Silicon to obtain, perfect, maintain or keep
in force any security interest in, or lien or encumbrance upon, any property of
Borrower or any other person; (e) any defense based upon any failure of Silicon
to give Guarantor notice of any sale or other disposition of any property
securing any or all of the Indebtedness, or any defects in any such notice that
may be given, or any failure
-1-
<PAGE> 2
SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
- --------------------------------------------------------------------------------
of Silicon to comply with any provision of applicable law in enforcing any
security interest in or lien upon any property securing any or all of the
Indebtedness including, but not limited to, any failure by Silicon to dispose of
any property securing any or all of the Indebtedness in a commercially
reasonable manner; (f) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against Borrower or any other guarantor
or any endorser, co-maker or other person, including without limitation any
discharge of, or bar against collecting, any of the Indebtedness (including
without limitation any interest thereon), in or as a result of any such
proceeding; and (g) the benefit of any and all statutes of limitation with
respect to any action based upon, arising out of or related to this Guaranty.
Until all of the Indebtedness has been paid, performed, and discharged in full,
nothing shall discharge or satisfy the liability of Guarantor hereunder except
the full performance and payment of all of the Indebtedness. If any claim is
ever made upon Silicon for repayment or recovery of any amount or amounts
received by Silicon in payment of or on account of any of the Indebtedness,
because of any claim that any such payment constituted a preferential transfer
or fraudulent conveyance, or for any other reason whatsoever, and Silicon repays
all or part of said amount by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over Silicon or any of its
property, or by reason of any settlement or compromise of any such claim
effected by Silicon with any such claimant (including without limitation the
Borrower), then and in any such event, Guarantor agrees that any such judgment,
decree, order, settlement and compromise shall be binding upon Guarantor,
notwithstanding any revocation or release of this Guaranty or the cancellation
of any note or other instrument evidencing any of the Indebtedness, or any
release of any of the Indebtedness, and the Guarantor shall be and remain liable
to Silicon under this Guaranty for the amount so repaid or recovered, to the
same extent as if such amount had never originally been received by Silicon, and
the provisions of this sentence shall survive, and continue in effect,
notwithstanding any revocation or release of this Guaranty. Guarantor hereby
expressly and unconditionally waives all rights of subrogation, reimbursement
and indemnity of every kind against Borrower, and all rights of recourse to any
assets or property of Borrower, and all rights to any collateral or security
held for the payment and performance of any Indebtedness, including (but not
limited to) any of the foregoing rights which Guarantor may have under any
present or future document or agreement with any Borrower or other person, and
including (but not limited to) any of the foregoing rights which Guarantor may
have under any equitable doctrine of subrogation, implied contract, or unjust
enrichment, or any other equitable or legal doctrine. Neither Silicon, nor any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by Guarantor or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
4. CONSENTS. Guarantor hereby consents and agrees that, without notice
to or by Guarantor and without affecting or impairing in any way the
obligations or liability of Guarantor hereunder, Silicon may, from time to time
before or after revocation of this Guaranty, do any one or more of the following
in Silicon's sole and absolute discretion: (a) accelerate, accept partial
payments of, compromise or settle, renew, extend the time for the payment,
discharge, or performance of, refuse to enforce, and release all or any parties
to, any or all of the Indebtedness; (b) grant any other indulgence to Borrower
or any other person in respect of any or all of the Indebtedness or any other
matter; (c) accept, release, waive, surrender, enforce, exchange, modify,
impair, or extend the time for the performance, discharge, or payment of, any
and all property of any kind securing any or all of the Indebtedness or any
guaranty of any or all of the Indebtedness, or on which Silicon at any time may
have a lien, or refuse to enforce its rights or make any compromise or
settlement or agreement therefor in respect of any or all of such property; (d)
substitute or add, or take any action or omit to take any action which results
in the release of, any one or more endorsers or guarantors of all or any part of
the Indebtedness, including, without limitation one or more parties to this
Guaranty, regardless of any destruction or impairment of any right of
contribution or other right of Guarantor; (e) amend, alter or change in any
respect whatsoever any term or provision relating to any or all of the
Indebtedness, including the rate of interest thereon; (f) apply any sums
received from Borrower, any other guarantor, endorser, or co-signer, or from the
disposition of any collateral or security, to any indebtedness whatsoever owing
from such person or secured by such collateral or security, in such manner and
order as Silicon determines in its sole discretion, and regardless of whether
such indebtedness is part of the Indebtedness, is secured, or is due and
payable; (g) apply any sums received from Guarantor or from the disposition of
any collateral or security securing the obligations of Guarantor, to any of the
Indebtedness in such manner and order as Silicon determines in its sole
discretion, regardless of whether or not such Indebtedness is secured or is due
and payable. Guarantor consents and agrees that Silicon shall be under no
obligation to marshal any assets in favor of Guarantor, or against or in payment
of any or all of the Indebtedness. Guarantor further consents and agrees that
Silicon shall have no duties or responsibilities whatsoever with respect to any
property securing any or all of the Indebtedness. Without limiting the
generality of the foregoing, Silicon shall have no obligation to monitor,
verify, audit, examine, or obtain or maintain any insurance with respect to, any
property securing any or all of the Indebtedness.
5. NO COMMITMENT. Guarantor acknowledges and agrees that acceptance by
Silicon of this Guaranty shall not constitute a commitment of any kind by
Silicon to extend such credit or other financial accommodation to Borrower or to
permit Borrower to incur Indebtedness to Silicon.
6. EXERCISE OF RIGHTS AND REMEDIES; FORECLOSURE OF TRUST DEEDS.
Guarantor consents and agrees that, without notice to or by Guarantor and
without affecting or impairing in any way the obligations or liability of
Guarantor hereunder, Silicon may, from time to time, before or after revocation
of this Guaranty, exercise any right or remedy it may have with respect to any
or all of the Indebtedness or any property securing any or all of the
Indebtedness or any guaranty thereof, including without limitation judicial
foreclosure, nonjudicial foreclosure, exercise of a power of sale, and taking a
deed, assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly waives any defense based upon the exercise of any such right
or remedy, notwithstanding the effect thereof upon any of Guarantor's rights,
including without limitation, any destruction of Guarantor's right of
subrogation against Borrower and any
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
- --------------------------------------------------------------------------------
destruction of Guarantor's right of contribution or other right against any
other guarantor of any or all of the Indebtedness or against any other person,
whether by operation of Sections 580a, 580d or 726 of the California Code of
Civil Procedure, or any similar or comparable provisions of the laws of any
other jurisdiction, or any other statutes or rules of law now or hereafter in
effect, or otherwise. Without limiting the generality of the foregoing,
Guarantor understands and agrees that, in the event Silicon in its sole
discretion forecloses any trust deed now or hereafter securing any or all of the
Indebtedness, by nonjudicial foreclosure, Guarantor will remain liable to
Silicon for any deficiency, even though Guarantor will lose its right of
subrogation against the Borrower, and even though Guarantor will be unable to
recover from the Borrower the amount of the deficiency for which Guarantor is
liable, and even though Guarantor would have retained its right of subrogation
against Borrower if Silicon had foreclosed said trust deed by judicial
foreclosure as opposed to nonjudicial foreclosure.
7. ACCELERATION. Notwithstanding the terms of all or any part of the
Indebtedness, the obligations of the Guarantor hereunder to pay and perform all
of the Indebtedness shall, at the option of Silicon, immediately become due and
payable, without notice, and without regard to the expressed maturity of any of
the Indebtedness, in the event: (a) Guarantor shall fail to pay or perform when
due any of its obligations under this Guaranty; or (b) any default or event of
default occurs under any present or future loan agreement or other instrument,
document, or agreement between Silicon and Borrower or between Silicon and
Guarantor The foregoing are referred to in this Guaranty as "Events of Default".
8. INDEMNITY. Guarantor hereby agrees to indemnify Silicon and hold
Silicon harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including without limitation attorneys' fees), of every nature, character and
description, which Silicon may sustain or incur based upon or arising out of any
of the Indebtedness, any actual or alleged failure to collect and pay over any
withholding or other tax relating to Borrower or its employees, any relationship
or agreement between Silicon and Borrower, any actual or alleged failure of
Silicon to comply with any writ of attachment or other legal process relating to
Borrower or any of its property, or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Silicon relating in any way to
Borrower or the Indebtedness (except any such amounts sustained or incurred as
the result of the gross negligence or willful misconduct of Silicon or any of
its directors, officers, employees, agents, attorneys, or any other person
affiliated with or representing Silicon). Notwithstanding any provision in this
Guaranty to the contrary, the indemnity agreement set forth in this Section
shall survive any termination or revocation of this Guaranty and shall for all
purposes continue in full force and effect.
9. SUBORDINATION. Any and all rights of Guarantor under any and all
debts, liabilities and obligations owing from Borrower to Guarantor, including
any security for and guaranties of any such obligations, whether now existing or
hereafter arising, are hereby subordinated in right of payment to the prior
payment in full of all of the Indebtedness. No payment in respect of any such
subordinated obligations shall at any time be made to or accepted by Guarantor
if at the time of such payment any Indebtedness is outstanding. If any Event of
Default has occurred, Borrower and any assignee, trustee in bankruptcy,
receiver, or any other person having custody or control over any or all of
Borrower's property are hereby authorized and directed to pay to Silicon the
entire unpaid balance of the Indebtedness before making any payments whatsoever
to Guarantor, whether as a creditor, shareholder, or otherwise; and insofar as
may be necessary for that purpose, Guarantor hereby assigns and transfers to
Silicon all rights to any and all debts, liabilities and obligations owing from
Borrower to Guarantor, including any security for and guaranties of any such
obligations, whether now existing or hereafter arising, including without
limitation any payments, dividends or distributions out of the business or
assets of Borrower. Any amounts received by Guarantor in violation of the
foregoing provisions shall be received and held as trustee for the benefit of
Silicon and shall forthwith be paid over to Silicon to be applied to the
Indebtedness in such order and sequence as Silicon shall in its sole discretion
determine, without limiting or affecting any other right or remedy which Silicon
may have hereunder or otherwise and without otherwise affecting the liability of
Guarantor hereunder. Guarantor hereby expressly waives any right to set-off or
assert any counterclaim against Borrower.
10. REVOCATION. This is a Continuing Guaranty relating to all of the
Indebtedness, including Indebtedness arising under successive transactions
which from time to time continue the Indebtedness or renew it after it has been
satisfied. The obligations of Guarantor hereunder may be terminated only as to
future transactions and only by giving 90 days' advance written notice thereof
to Silicon at its address above by registered first-class U.S. mail, postage
prepaid, return receipt requested. No such revocation shall be effective until
90 days following the date of actual receipt thereof by Silicon. Notwithstanding
such revocation, this Guaranty and all consents, waivers and other provisions
hereof shall continue in full force and effect as to any and all Indebtedness
which is outstanding on the effective date of revocation and all extensions,
renewals and modifications of said Indebtedness (including without limitation
amendments, extensions, renewals and modifications which are evidenced by new or
additional instruments, documents or agreements executed after revocation), and
all interest thereon, then and thereafter accruing, and all attorneys' fees,
court costs and collection charges theretofore and thereafter incurred in
endeavoring to collect or enforce any of the foregoing against Borrower,
Guarantor or any other person liable thereon (whether or not suit be brought)
and any other expenses of, for or incidental to collection thereof.
11. INDEPENDENT LIABILITY. Guarantor hereby agrees that one or more
successive or concurrent actions may be brought hereon against Guarantor, in the
same action in which Borrower may be sued or in separate actions, as often as
deemed advisable by Silicon. The liability of Guarantor hereunder is exclusive
and in dependent of any other guaranty of any or all of the Indebtedness whether
executed by Guarantor or by any other guarantor (including without limitation
any other persons signing this Guaranty). The liability of Guarantor hereunder
shall not be af fected, revoked, impaired, or reduced by any one or more of the
following: (a) the fact that the Indebtedness exceeds the maximum amount of
Guarantor's liability, if any, specified herein or elsewhere (and no agreement
specifying a maximum amount of Guarantor's liability shall be enforceable unless
set forth in a writing signed by Silicon or set forth in this Guaranty); or (b)
any direction as to the application of payment by Borrower or by any
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
- --------------------------------------------------------------------------------
other party; or (c) any other continuing or restrictive guaranty or undertaking
or any limitation on the liability of any other guarantor (whether under this
Guaranty or under any other agreement); or (d) any payment on or reduction of
any such other guaranty or undertaking; or (e) any revocation, amendment,
modification or release of any such other guaranty or undertaking; or (f) any
dissolution or termination of, or increase, decrease, or change in membership of
any Guarantor which is a partnership. Guarantor hereby expressly represents that
it was not induced to give this Guaranty by the fact that there are or may be
other guarantors either under this Guaranty or otherwise, and Guarantor agrees
that any release of any one or more of such other guarantors shall not release
Guarantor from its obligations hereunder either in full or to any lesser extent.
12. FINANCIAL CONDITION OF BORROWER. Guarantor is fully aware of the
financial condition of Borrower and is executing and delivering this Guaranty at
Borrower's request and based solely upon its own independent investigation of
all matters pertinent hereto, and Guarantor is not relying in any manner upon
any representation or statement of Silicon with respect thereto. Guarantor
represents and warrants that it is in a position to obtain, and Guarantor hereby
assumes full responsibility for obtaining, any additional information concerning
Borrower's financial condition and any other matter pertinent hereto as
Guarantor may desire, and Guarantor is not relying upon or expecting Silicon to
furnish to him any information now or hereafter in Silicon's possession
concerning the same or any other matter.
13. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants that (i) it is in Guarantor's direct interest to assist Borrower in
procuring credit, because Borrower is an affiliate of Guarantor, furnishes goods
or services to Guarantor, purchases or acquires goods or services from
Guarantor, and/or otherwise has a direct or indirect corporate or business
relationship with Guarantor, (ii) this Guaranty has been duly and validly
authorized, executed and delivered and constitutes the valid and binding
obligation of Guarantor, enforceable in accordance with its terms, and (iii) the
execution and delivery of this Guaranty does not violate or constitute a default
under (with or without the giving of notice, the passage of time, or both) any
order, judgment, decree, instrument or agreement to which Guarantor is a party
or by which it or its assets are affected or bound.
14. COSTS; INTEREST. Whether or not suit be instituted, Guarantor
agrees to reimburse Silicon on demand for all reasonable attorneys' fees and all
other reasonable costs and expenses incurred by Silicon in enforcing this
Guaranty, or arising out of or relating in any way to this Guaranty, or in
enforcing any of the Indebtedness against Borrower, Guarantor, or any other
person, or in connection with any property of any kind securing all or any part
of the Indebtedness. Without limiting the generality of the foregoing, and in
addition thereto, Guarantor shall reimburse Silicon on demand for all reasonable
attorneys' fees and costs Silicon incurs in any way relating to Guarantor,
Borrower or the Indebtedness, in order to: obtain legal advice; enforce or seek
to enforce any of its rights; commence, intervene in, respond to, or defend any
action or proceeding; file, prosecute or defend any claim or cause of action in
any action or proceeding (including without limitation any probate claim,
bankruptcy claim, third-party claim, secured creditor claim, reclamation
complaint, and complaint for relief from any stay under the Bankruptcy Code or
otherwise); protect, obtain possession of, sell, lease, dispose of or otherwise
enforce any security interest in or lien on any property of any kind securing
any or all of the Indebtedness; or represent Silicon in any litigation with
respect to Borrower's or Guarantor's affairs. In the event either Silicon or
Guarantor files any lawsuit against the other predicated on a breach of this
Guaranty, the prevailing party in such action shall be entitled to recover its
attorneys' fees and costs of suit from the non-prevailing party. All sums due
under this Guaranty shall bear interest from the date due until the date paid at
the highest rate charged with respect to any of the Indebtedness.
15. NOTICES. Any notice which a party shall be required or shall desire
to give to the other hereunder (except for notice of revocation, which shall be
governed by Section 10 of this Guaranty) shall be given by personal delivery or
by telecopier or by depositing the same in the United States mail, first class
postage pre-paid, addressed to Silicon at its address set forth in the heading
of this Guaranty and to Guarantor at its address provided by Guarantor to
Silicon in writing, and such notices shall be deemed duly given on the date of
personal delivery or one day after the date telecopied or 3 business days after
the date of mailing as aforesaid. Silicon and Guarantor may change their address
for purposes of receiving notices hereunder by giving written notice thereof to
the other party in accordance herewith. Guarantor shall give Silicon immediate
written notice of any change in its address.
16. CLAIMS. Guarantor agrees that any claim or cause of action by
Guarantor against Silicon, or any of Silicon's directors, officers, employees,
agents, accountants or attorneys, based upon, arising from, or relating to this
Guaranty, or any other present or future agreement between Silicon and Guarantor
or between Silicon and Borrower, or any other transaction contemplated hereby or
thereby or relating hereto or thereto, or any other matter, cause or thing
whatsoever, whether or not relating hereto or thereto, occurred, done, omitted
or suffered to be done by Silicon, or by Silicon's directors, officers,
employees, agents, accountants or attorneys, whether sounding in contract or in
tort or otherwise, shall be barred unless asserted by Guarantor by the
commencement of an action or proceeding in a court of competent jurisdiction
within Los Angeles County, California, by the filing of a complaint within one
year after the first act, occurrence or omission upon which such claim or cause
of action, or any part thereof, is based and service of a summons and complaint
on an officer of Silicon or any other person authorized to accept service of
process on behalf of Silicon, within 30 days thereafter. Guarantor agrees that
such one year period is a reasonable and sufficient time for Guarantor to
investigate and act upon any such claim or cause of action. The one year period
provided herein shall not be waived, tolled, or extended except by a specific
written agreement of Silicon. This provision shall survive any termination of
this Guaranty or any other agreement.
17. CONSTRUCTION; SEVERABILITY. The term "Guarantor" as used herein
shall be deemed to refer to all and any one or more such persons and their
obligations hereunder shall be joint and several. As used in this Guaranty, the
term "property" is used in its most comprehensive sense and shall mean all
property of every kind and nature whatsoever, including without limitation real
property, personal property, mixed property, tangible property and intangible
property. If any provision of this Guaranty or the
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<PAGE> 5
SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
- --------------------------------------------------------------------------------
application thereof to any party or circumstance is held invalid, void,
inoperative or unenforceable, the remainder of this Guaranty and the application
of such provision to other parties or circumstances shall not be affected
thereby, the provisions of this Guaranty being severable in any such instance.
18. GENERAL PROVISIONS. Silicon shall have the right to seek recourse
against Guarantor to the full extent provided for herein and in any other
instrument or agreement evidencing obligations of Guarantor to Silicon, and
against Borrower to the full extent of the Indebtedness. No election in one form
of action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of Silicon's right to proceed in any other form of action or
proceeding or against any other party. The failure of Silicon to enforce any of
the provisions of this Guaranty at any time or for any period of time shall not
be construed to be a waiver of any such provision or the right thereafter to
enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Silicon by law or under any
other instrument or agreement. Time is of the essence in the performance by
Guarantor of each and every obligation under this Guaranty. Silicon shall have
no obligation to inquire into the power or authority of Borrower or any of its
officers, directors, employees, or agents acting or purporting to act on its
behalf, and any Indebtedness made or created in reliance upon the professed
exercise of any such power or authority shall be included in the Indebtedness
guaranteed hereby. This Guaranty is the entire and only agreement between
Guarantor and Silicon with respect to the guaranty of the Indebtedness of
Borrower by Guarantor, and all representations, warranties, agreements, or
undertakings heretofore or contemporaneously made, which are not set forth
herein, are superseded hereby. No course of dealings between the parties, no
usage of the trade, and no parol or extrinsic evidence of any nature shall be
used or be relevant to supplement or explain or modify any term or provision of
this Guaranty. There are no conditions to the full effectiveness of this
Guaranty. The terms and provisions hereof may not be waived, altered, modified,
or amended except in a writing executed by Guarantor and a duly authorized
officer of Silicon. All rights, benefits and privileges hereunder shall inure to
the benefit of and be enforceable by Silicon and its successors and assigns and
shall be binding upon Guarantor and its successors and assigns. Section headings
are used herein for convenience only. Guarantor acknowledges that the same may
not describe completely the subject matter of the applicable Section, and the
same shall not be used in any manner to construe, limit, define or interpret any
term or provision hereof.
19. GOVERNING LAW; VENUE AND JURISDICTION. This instrument and all
acts and transactions pursuant or relating hereto and all rights and obligations
of the parties hereto shall be governed, construed, and interpreted in
accordance with the internal laws of the State of California. In order to induce
Silicon to accept this Guaranty, and as a material part of the consideration
therefor, Guarantor (i) agrees that all actions or proceedings relating directly
or indirectly hereto shall, at the option of Silicon, be litigated in courts
located within Orange County, California, (ii) consents to the jurisdiction of
any such court and consents to the service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights Guarantor may have to transfer or change the venue of
any such action or proceeding.
20. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. SILICON AND GUARANTOR HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, LAWSUIT OR PROCEEDING
BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS GUARANTEE OR ANY
SUPPLE MENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT
OR AGREEMENT BE TWEEN SILICON AND GUARANTOR ; OR (iii) ANY BREACH, CONDUCT, ACTS
OR OMISSIONS OF SILICON OR GUARANTOR OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR
REPRESENTING SILICON OR GUARANTOR; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
21. RECEIPT OF COPY. Guarantor acknowledges receipt of a copy of this
Guaranty.
Guarantor Signature:
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
By /s/ Stelios B. Papadopoulos
-------------------------------
Title
------------------------------
By /s/ James G. Stewart
-------------------------------
Title VP & Secy
------------------------------
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<PAGE> 1
EXHIBIT 10 (n)(vii)
[SILICON VALLEY BANK LOGO]
PLEDGE AGREEMENT
PLEDGOR: CALBIOCHEM-NOVABIOCHEM AG
ADDRESS: WEIDENMATTWEG 4
CH-4448 LAEUFELFINGEN
SWITZERLAND
DATE: JULY 27, 1995
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated the above date, is
entered into at between SILICON VALLEY BANK ("Silicon"), whose address is 3000
Lakeside Drive, Santa Clara, California 95054-2895, and the pledgor named above
("Pledgor"), whose address is set forth above.
1. PLEDGE OF SECURITIES. Pledgor shall concurrently deliver to Silicon
the stock certificates and other securities listed on Exhibit A hereto, together
with duly executed instruments of assignment thereof to Silicon (which, together
with all replacements and substitutions therefor are hereinafter referred to as
the "Securities"). Pledgor hereby pledges to Silicon and grants Silicon a
security interest in the Securities, and all rights and remedies relating to, or
arising out of, any and all of the foregoing, and all proceeds thereof
(collectively, the "Collateral") to secure the payment and performance of all
debts, duties, obligations, liabilities, representations, warranties and
guaranties of Pledgor to Silicon, heretofore, now, or hereafter made, incurred
or created, of every kind and nature (collectively, the "Obligations"),
including, but not limited to, those arising under the Continuing Guaranty of
even date with respect to CALBIOCHEM-NOVABIOCHEM CORPORATION (the "Guaranty").
Any and all stock dividends, rights, warrants, options, puts, calls, conversion
rights and other securities and any and all property and money distributed or
delivered with respect to the Securities or issued upon the exercise of any
puts, calls, conversion rights, options, warrants or other rights included in or
pertaining to the Securities shall be included in the term "Securities" as used
herein and shall be subject to this Pledge Agreement, and Pledgor shall deliver
the same to Silicon immediately upon receipt thereof together with any necessary
instruments of transfer; provided, however, that until an Event of Default (as
hereinafter defined) shall occur, Pledgor may retain any dividends paid in cash
or its equivalent, with respect to any stock included in the Securities and any
interest paid with respect to any bonds, debentures or other evidences of
indebtedness included in the Securities. Pledgor hereby acknowledges that the
acceptance of the pledge of the Securities by Silicon shall not constitute a
commitment of any kind by Silicon to permit Pledgor to incur Obligations.
2. VOTING AND OTHER RIGHTS. Pledgor shall have the right to exercise
all voting rights with respect to the Securities, provided no Event of Default
(as hereinafter defined) has occurred. Upon the occurrence of any Event of
Default, Silicon shall have the right (but not any obligation) to exercise all
voting rights with respect to the Securities. Provided no Event of Default has
occurred, Pledgor shall have the right to exercise all puts, calls, straddles,
conversion rights, options, warrants, and other rights and remedies with respect
to the Securities, provided Pledgor obtains the prior written consent of Silicon
thereto. Silicon shall have no responsibility or liability whatsoever for the
exercise of, or failure to exercise, any puts, calls, straddles, conversion
rights, options, warrants, rights to vote or consent, or other rights with
respect to any of the Securities. Whether or not an Event of Default has
occurred, Silicon shall have the right from time to time to transfer all or any
part of the Securities to Silicon's own name or the name of its nominee.
3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to Silicon that Pledgor now has, and throughout the term of this
Agreement will at all times have, good title to the Securities and the other
Collateral, free and clear of any and all security interests, liens and claims
of any kind whatsoever.
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<PAGE> 2
SILICON VALLEY BANK PLEDGE AGREEMENT
- --------------------------------------------------------------------------------
4. EVENTS OF DEFAULT. If any one or more of the following events shall
occur, any such event shall constitute an Event of Default and Pledgor shall
provide Silicon with immediate notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Pledgor or any
of Pledgor's officers, employees or agents now or hereafter is incorrect, false,
untrue or misleading in any material respect; or (b) Pledgor shall fail to
promptly pay or perform when due part or all of any of the Obligations, or any
default or event of default shall occur under the Guaranty or any other present
or future instrument, document or agreement between Silicon and Pledgor.
5. REMEDIES. If an Event of Default shall occur, Pledgor shall give
immediate written notice thereof to Silicon. Upon the occurrence of an Event of
Default, and at any time thereafter, Silicon shall have the right, without
notice to or demand upon Pledgor, to exercise any one or more of the following
remedies: (a) accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any agreement or instrument evidencing or
relating to any of the same; (b) sell or otherwise dispose of the Securities,
and other Collateral, at a public or private sale, for cash, or other property,
or on credit, with the authority to adjourn or postpone any such sale from time
to time without notice other than oral announcement at the time scheduled for
sale. Silicon may directly or through any affiliate purchase the Securities, and
other Collateral, at any such public disposition, and if permissible under
applicable law, at any private disposition. Pledgor and Silicon hereby agree
that it shall conclusively be deemed commercially reasonable for Silicon, in
connection with any sale or disposition of the Securities, to impose
restrictions and conditions as to the investment intent of a purchaser or
bidder, the ability of a purchaser or bidder to bear the economic risk of an
investment in the Securities, the knowledge and experience in business and
financial matters of a purchaser or bidder, the access of a purchaser or bidder
to information concerning the issuer of the Securities, as well as legend
conditions and stop transfer instructions restricting subsequent transfer of the
Securities, and any other restrictions or conditions which Silicon believes to
be necessary or advisable in order to comply with any state or federal
securities or other laws. Pledgor acknowledges that the foregoing restrictions
may result in fewer proceeds being received upon such sale then would otherwise
be the case. Pledgor hereby agrees to provide to Silicon any and all information
required by Silicon in connection with any sales of Securities by Silicon
hereunder. If, after the occurrence of any Event of Default, Rule 144
promulgated by the Securities and Exchange Commission (or any other similar
rule) is available for use by Silicon in connection with the sales of any
Securities hereunder, Pledgor agrees not to utilize Rule 144 in the sale of any
securities held by Pledgor of the same class as the Securities, without the
prior written consent of Silicon. Any and all attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon in connection with the foregoing
shall be added to and become a part of the Obligations and shall be due from
Pledgor to Silicon upon demand.
6. REMEDIES, CUMULATIVE; NO WAIVER. The failure of Silicon to enforce
any of the provisions of this Agreement at any time or for any period of time
shall not be construed to be a waiver of any such provision or the right
thereafter to enforce the same. All remedies hereunder shall be cumulative and
shall be in addition to all rights, powers and remedies given to Silicon by law.
7. TERM. This Agreement and Silicon's rights hereunder shall continue
in full force and effect until all of the Obligations have been fully paid,
performed and discharged and the Guaranty and all other agreements between
Borrower and Silicon have terminated. Upon termination, Silicon shall return the
Collateral to Pledgor, with any necessary instruments of transfer.
8. REVIVOR. If any payment made on any of the Obligations shall for any
reason be required to be returned by the Silicon, whether on the ground that
such payment constituted a preference or for any other reason, then for purposes
of this Agreement, and notwithstanding any prior termination of this Agreement,
such payment on the Obligations shall be treated as not having been made, and
this Agreement shall in all respects be effective with respect to the
Obligations as though such payment had not been made; and if the Collateral has
been released or returned to Pledgor, then Pledgor shall return the Collateral
to Silicon, to be held and dealt with in accordance with the terms of this
Agreement.
9. GENERAL PROVISIONS. This Agreement and the documents referred to
herein are the entire and only agreements between Pledgor and Silicon with
respect to the subject matter hereof, and all representations, warranties,
agreements, or undertakings heretofore or contemporaneously made, with respect
to the subject matter hereof, which are not set forth herein or therein, are
superseded hereby. The terms and provisions hereof may not be waived, altered,
modified, or amended except in a writing executed by Pledgor and Silicon. All
rights, benefits and privileges hereunder shall inure to the benefit of and be
enforceable by Silicon and its successors and assigns and shall be binding upon
Pledgor and its successors and assigns; provided that Pledgor may not transfer
any of its rights hereunder without the prior written consent of Silicon.
Paragraph headings are used herein for convenience only. Pledgor acknowledges
that the same may not describe completely the subject matter of the applicable
paragraph, and the same shall not be used in
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<PAGE> 3
SILICON VALLEY BANK PLEDGE AGREEMENT
- --------------------------------------------------------------------------------
any manner to construe, limit, define or interpret any term or provision hereof.
Pledgor shall upon demand reimburse Silicon for all reasonable costs, fees and
expenses (including without limitation attorneys' fees, whether or not suit be
brought), which are incurred by Silicon in connection with, or arising out of,
this Agreement. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed,
and interpreted in accordance with the internal laws (and not conflict of laws
rules) of the State of California. Pledgor hereby agrees that all actions or
proceedings relating directly or indirectly hereto may, at the option of
Silicon, be litigated in courts located within said State, and Pledgor hereby
expressly consents to the jurisdiction of any such court and consents to the
service of process in any such action or proceeding by personal delivery or by
certified or registered mailing directed to Pledgor at its last address known to
Silicon.
9. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. SILICON AND PLEDGOR EACH
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND PLEDGOR; OR (iii)
ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR PLEDGOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR PLEDGOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
PLEDGOR:
CALBIOCHEM-NOVABIOCHEM AG
BY /s/ ANDREAS MUELLER
--------------------------
TITLE: President
SILICON:
SILICON VALLEY BANK
BY /s/ RITA PIRKL
----------------------------------
TITLE: Vice President
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<PAGE> 4
SILICON VALLEY BANK PLEDGE AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT A
Calbiochem Novabiochem A.G.
Silicon Valley Bank Pledge Agreement
2,000 shares of Clinalfa A.G. stock with par value of 100 Swiss Francs,
representing 100% of the ownership of Clinalfa A.G.
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<PAGE> 1
EXHIBIT 10(n)(viii)
[SILICON VALLEY BANK LOGO]
CROSS-CORPORATE CONTINUING GUARANTY
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
GUARANTOR: CALBIOCHEM-NOVABIOCHEM AG
DATE: JULY 28, 1995
THIS CROSS-CORPORATE CONTINUING GUARANTY is executed by the above-named
guarantor (the "Guarantor"), as of the above date, in favor of SILICON VALLEY
BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa Clara, California
95054-2895, with respect to the Indebtedness of each and all of the above-named
borrowers (jointly and severally, the "Borrower").
1. CONTINUING GUARANTY. Guarantor hereby unconditionally guarantees and
promises to pay on demand to Silicon in lawful money of the United States, and
to perform for the benefit of Silicon, all of the Borrower's present and future
Indebtedness (as defined below) to Silicon.
2. "INDEBTEDNESS." As used in this Guaranty, the term "Indebtedness" is used
in its most comprehensive sense and shall mean and include without limitation:
(a) any and all debts, duties, obligations, liabilities, representations,
warranties and guaranties of Borrower or any one or more of them, heretofore,
now, or hereafter made, incurred, or created, whether directly to Silicon or
acquired by Silicon by assignment or otherwise, or held by Silicon on behalf of
others, however arising, whether voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated, certain or uncertain,
determined or undetermined, monetary or nonmonetary, written or oral, and
whether Borrower may be liable individually or jointly with others, and
regardless of whether recovery thereon may be or hereafter become barred by any
statute of limitations, discharged or uncollectible in any bankruptcy,
insolvency or other proceeding, or otherwise unenforceable; and (b) any and all
amendments, modifications, renewals and extensions of any or all of the
foregoing, including without limitation amendments, modifications, renewals and
extensions which are evidenced by any new or additional instrument, document or
agreement; and (c) any and all attorneys' fees, court costs, and collection
charges incurred in endeavoring to collect or enforce any of the foregoing
against Borrower, Guarantor, or any other person liable thereon (whether or not
suit be brought) and any other expenses of, for or incidental to collection
thereof.
3. WAIVERS. Guarantor hereby waives: (a) presentment for payment, notice of
dishonor, demand, protest, and notice thereof as to any instrument, and all
other notices and demands to which Guarantor might be entitled, including
without limitation notice of all of the following: the acceptance hereof; the
creation, existence, or acquisition of any Indebtedness; the amount of the
Indebtedness from time to time outstanding; any foreclosure sale or other
disposition of any property which secures any or all of the Indebtedness or
which secures the obligations of any other guarantor of any or all of the
Indebtedness; any adverse change in Borrower's financial position; any other
fact which might increase Guarantor's risk; any default, partial payment or
non-payment of all or any part of the Indebtedness; the occurrence of any other
Event of Default (as hereinafter defined); any and all agreements and
arrangements between Silicon and Borrower and any changes, modifications, or
extensions thereof, and any revocation, modification or release of any guaranty
of any or all of the Indebtedness by any person (including without limitation
any other person signing this Guaranty); (b) any right to require Silicon to
institute suit against, or to exhaust its rights and remedies against, Borrower
or any other person, or to proceed against any property of any kind which
secures all or any part of the Indebtedness, or to exercise any right of offset
or other right with respect to any reserves, credits or deposit accounts held by
or maintained with Silicon or any indebtedness of Silicon to Borrower, or to
exercise any other right or power, or pursue any other remedy Silicon may have;
(c) any defense arising by reason of any disability or other defense of Borrower
or any other guarantor or any endorser, co-maker or other person, or by reason
of the cessation from any cause whatsoever of any liability of Borrower or any
other guarantor or any endorser, co-maker or other person, with respect to all
or any part of the Indebtedness, or by reason of any act or omission of Silicon
or others which directly or indirectly results in the discharge or release of
Borrower or any other guarantor or any other person or any Indebtedness or any
security therefor, whether by operation of law or otherwise; (d) any defense
arising by reason of any failure of Silicon to obtain, perfect, maintain or keep
in force any security interest in, or lien or encumbrance upon, any property of
Borrower or any other person; (e) any defense based upon any failure of Silicon
to give Guarantor notice of any sale or other disposition of any property
securing any or all of the Indebtedness, or any defects in any such notice that
may be given, or any failure
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
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of Silicon to comply with any provision of applicable law in enforcing any
security interest in or lien upon any property securing any or all of the
Indebtedness including, but not limited to, any failure by Silicon to dispose of
any property securing any or all of the Indebtedness in a commercially
reasonable manner; (f) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against Borrower or any other guarantor
or any endorser, co-maker or other person, including without limitation any
discharge of, or bar against collecting, any of the Indebtedness (including
without limitation any interest thereon), in or as a result of any such
proceeding; and (g) the benefit of any and all statutes of limitation with
respect to any action based upon, arising out of or related to this Guaranty.
Until all of the Indebtedness has been paid, performed, and discharged in full,
nothing shall discharge or satisfy the liability of Guarantor hereunder except
the full performance and payment of all of the Indebtedness. If any claim is
ever made upon Silicon for repayment or recovery of any amount or amounts
received by Silicon in payment of or on account of any of the Indebtedness,
because of any claim that any such payment constituted a preferential transfer
or fraudulent conveyance, or for any other reason whatsoever, and Silicon repays
all or part of said amount by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over Silicon or any of its
property, or by reason of any settlement or compromise of any such claim
effected by Silicon with any such claimant (including without limitation the
Borrower), then and in any such event, Guarantor agrees that any such judgment,
decree, order, settlement and compromise shall be binding upon Guarantor,
notwithstanding any revocation or release of this Guaranty or the cancellation
of any note or other instrument evidencing any of the Indebtedness, or any
release of any of the Indebtedness, and the Guarantor shall be and remain liable
to Silicon under this Guaranty for the amount so repaid or recovered, to the
same extent as if such amount had never originally been received by Silicon, and
the provisions of this sentence shall survive, and continue in effect,
notwithstanding any revocation or release of this Guaranty. Guarantor hereby
expressly and unconditionally waives all rights of subrogation, reimbursement
and indemnity of every kind against Borrower, and all rights of recourse to any
assets or property of Borrower, and all rights to any collateral or security
held for the payment and performance of any Indebtedness, including (but not
limited to) any of the foregoing rights which Guarantor may have under any
present or future document or agreement with any Borrower or other person, and
including (but not limited to) any of the foregoing rights which Guarantor may
have under any equitable doctrine of subrogation, implied contract, or unjust
enrichment, or any other equitable or legal doctrine. Neither Silicon, nor any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by Guarantor or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
4. CONSENTS. Guarantor hereby consents and agrees that, without notice to or
by Guarantor and without affecting or impairing in any way the obligations or
liability of Guarantor hereunder, Silicon may, from time to time before or after
revocation of this Guaranty, do any one or more of the following in Silicon's
sole and absolute discretion: (a) accelerate, accept partial payments of,
compromise or settle, renew, extend the time for the payment, discharge, or
performance of, refuse to enforce, and release all or any parties to, any or all
of the Indebtedness; (b) grant any other indulgence to Borrower or any other
person in respect of any or all of the Indebtedness or any other matter; (c)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Indebtedness or any guaranty of any or all
of the Indebtedness, or on which Silicon at any time may have a lien, or refuse
to enforce its rights or make any compromise or settlement or agreement therefor
in respect of any or all of such property; (d) substitute or add, or take any
action or omit to take any action which results in the release of, any one or
more endorsers or guarantors of all or any part of the Indebtedness, including,
without limitation one or more parties to this Guaranty, regardless of any
destruction or impairment of any right of contribution or other right of
Guarantor; (e) amend, alter or change in any respect whatsoever any term or
provision relating to any or all of the Indebtedness, including the rate of
interest thereon; (f) apply any sums received from Borrower, any other
guarantor, endorser, or co-signer, or from the disposition of any collateral or
security, to any indebtedness whatsoever owing from such person or secured by
such collateral or security, in such manner and order as Silicon determines in
its sole discretion, and regardless of whether such indebtedness is part of the
Indebtedness, is secured, or is due and payable; (g) apply any sums received
from Guarantor or from the disposition of any collateral or security securing
the obligations of Guarantor, to any of the Indebtedness in such manner and
order as Silicon determines in its sole discretion, regardless of whether or not
such Indebtedness is secured or is due and payable. Guarantor consents and
agrees that Silicon shall be under no obligation to marshal any assets in favor
of Guarantor, or against or in payment of any or all of the Indebtedness.
Guarantor further consents and agrees that Silicon shall have no duties or
responsibilities whatsoever with respect to any property securing any or all of
the Indebtedness. Without limiting the generality of the foregoing, Silicon
shall have no obligation to monitor, verify, audit, examine, or obtain or
maintain any insurance with respect to, any property securing any or all of the
Indebtedness.
5. NO COMMITMENT. Guarantor acknowledges and agrees that acceptance by Silicon
of this Guaranty shall not constitute a commitment of any kind by Silicon to
extend such credit or other financial accommodation to Borrower or to permit
Borrower to incur Indebtedness to Silicon.
6. EXERCISE OF RIGHTS AND REMEDIES; FORECLOSURE OF TRUST DEEDS. Guarantor
consents and agrees that, without notice to or by Guarantor and without
affecting or impairing in any way the obligations or liability of Guarantor
hereunder, Silicon may, from time to time, before or after revocation of this
Guaranty, exercise any right or remedy it may have with respect to any or all of
the Indebtedness or any property securing any or all of the Indebtedness or any
guaranty thereof, including without limitation judicial foreclosure, nonjudicial
foreclosure, exercise of a power of sale, and taking a deed, assignment or
transfer in lieu of foreclosure as to any such property, and Guarantor expressly
waives any defense based upon the exercise of any such right or remedy,
notwithstanding the effect thereof upon any of Guarantor's rights, including
without limitation, any destruction of Guarantor's right of subrogation against
Borrower and any
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
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destruction of Guarantor's right of contribution or other right against any
other guarantor of any or all of the Indebtedness or against any other person,
whether by operation of Sections 580a, 580d or 726 of the California Code of
Civil Procedure, or any similar or comparable provisions of the laws of any
other jurisdiction, or any other statutes or rules of law now or hereafter in
effect, or otherwise. Without limiting the generality of the foregoing,
Guarantor understands and agrees that, in the event Silicon in its sole
discretion forecloses any trust deed now or hereafter securing any or all of the
Indebtedness, by nonjudicial foreclosure, Guarantor will remain liable to
Silicon for any deficiency, even though Guarantor will lose its right of
subrogation against the Borrower, and even though Guarantor will be unable to
recover from the Borrower the amount of the deficiency for which Guarantor is
liable, and even though Guarantor would have retained its right of subrogation
against Borrower if Silicon had foreclosed said trust deed by judicial
foreclosure as opposed to nonjudicial foreclosure.
7. ACCELERATION. Notwithstanding the terms of all or any part of the
Indebtedness, the obligations of the Guarantor hereunder to pay and perform all
of the Indebtedness shall, at the option of Silicon, immediately become due and
payable, without notice, and without regard to the expressed maturity of any of
the Indebtedness, in the event: (a) Guarantor shall fail to pay or perform when
due any of its obligations under this Guaranty; or (b) any default or event of
default occurs under any present or future loan agreement or other instrument,
document, or agreement between Silicon and Borrower or between Silicon and
Guarantor. The foregoing are referred to in this Guaranty as "Events of
Default".
8. INDEMNITY. Guarantor hereby agrees to indemnify Silicon and hold Silicon
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses (including
without limitation attorneys' fees), of every nature, character and description,
which Silicon may sustain or incur based upon or arising out of any of the
Indebtedness, any actual or alleged failure to collect and pay over any
withholding or other tax relating to Borrower or its employees, any relationship
or agreement between Silicon and Borrower, any actual or alleged failure of
Silicon to comply with any writ of attachment or other legal process relating to
Borrower or any of its property, or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Silicon relating in any way to
Borrower or the Indebtedness (except any such amounts sustained or incurred as
the result of the gross negligence or willful misconduct of Silicon or any of
its directors, officers, employees, agents, attorneys, or any other person
affiliated with or representing Silicon). Notwithstanding any provision in this
Guaranty to the contrary, the indemnity agreement set forth in this Section
shall survive any termination or revocation of this Guaranty and shall for all
purposes continue in full force and effect.
9. SUBORDINATION. Any and all rights of Guarantor under any and all debts,
liabilities and obligations owing from Borrower to Guarantor, including any
security for and guaranties of any such obligations, whether now existing or
hereafter arising, are hereby subordinated in right of payment to the prior
payment in full of all of the Indebtedness. No payment in respect of any such
subordinated obligations shall at any time be made to or accepted by Guarantor
if at the time of such payment any Indebtedness is outstanding. If any Event of
Default has occurred, Borrower and any assignee, trustee in bankruptcy,
receiver, or any other person having custody or control over any or all of
Borrower's property are hereby authorized and directed to pay to Silicon the
entire unpaid balance of the Indebtedness before making any payments whatsoever
to Guarantor, whether as a creditor, shareholder, or otherwise; and insofar as
may be necessary for that purpose, Guarantor hereby assigns and transfers to
Silicon all rights to any and all debts, liabilities and obligations owing from
Borrower to Guarantor, including any security for and guaranties of any such
obligations, whether now existing or hereafter arising, including without
limitation any payments, dividends or distributions out of the business or
assets of Borrower. Any amounts received by Guarantor in violation of the
foregoing provisions shall be received and held as trustee for the benefit of
Silicon and shall forthwith be paid over to Silicon to be applied to the
Indebtedness in such order and sequence as Silicon shall in its sole discretion
determine, without limiting or affecting any other right or remedy which Silicon
may have hereunder or otherwise and without otherwise affecting the liability of
Guarantor hereunder. Guarantor hereby expressly waives any right to set-off or
assert any counterclaim against Borrower.
10. REVOCATION. This is a Continuing Guaranty relating to all of the
Indebtedness, including Indebtedness arising under successive transactions which
from time to time continue the Indebtedness or renew it after it has been
satisfied. The obligations of Guarantor hereunder may be terminated only as to
future transactions and only by giving 90 days' advance written notice thereof
to Silicon at its address above by registered first-class U.S. mail, postage
prepaid, return receipt requested. No such revocation shall be effective until
90 days following the date of actual receipt thereof by Silicon. Notwithstanding
such revocation, this Guaranty and all consents, waivers and other provisions
hereof shall continue in full force and effect as to any and all Indebtedness
which is outstanding on the effective date of revocation and all extensions,
renewals and modifications of said Indebtedness (including without limitation
amendments, extensions, renewals and modifications which are evidenced by new or
additional instruments, documents or agreements executed after revocation), and
all interest thereon, then and thereafter accruing, and all attorneys' fees,
court costs and collection charges theretofore and thereafter incurred in
endeavoring to collect or enforce any of the foregoing against Borrower,
Guarantor or any other person liable thereon (whether or not suit be brought)
and any other expenses of, for or incidental to collection thereof.
11. INDEPENDENT LIABILITY. Guarantor hereby agrees that one or more successive
or concurrent actions may be brought hereon against Guarantor, in the same
action in which Borrower may be sued or in separate actions, as often as deemed
advisable by Silicon. The liability of Guarantor hereunder is exclusive and
independent of any other guaranty of any or all of the Indebtedness whether
executed by Guarantor or by any other guarantor (including without limitation
any other persons signing this Guaranty). The liability of Guarantor hereunder
shall not be affected, revoked, impaired, or reduced by any one or more of the
following: (a) the fact that the Indebtedness exceeds the maximum amount of
Guarantor's liability, if any, specified herein or elsewhere (and no agreement
specifying a maximum amount of Guarantor's liability shall be enforceable unless
set forth in a writing signed by Silicon or set forth in this Guaranty); or (b)
any direction as to the application of payment by Borrower or by any
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
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other party; or (c) any other continuing or restrictive guaranty or undertaking
or any limitation on the liability of any other guarantor (whether under this
Guaranty or under any other agreement); or (d) any payment on or reduction of
any such other guaranty or undertaking; or (e) any revocation, amendment,
modification or release of any such other guaranty or undertaking; or (f) any
dissolution or termination of, or increase, decrease, or change in membership of
any Guarantor which is a partnership. Guarantor hereby expressly represents that
it was not induced to give this Guaranty by the fact that there are or may be
other guarantors either under this Guaranty or otherwise, and Guarantor agrees
that any release of any one or more of such other guarantors shall not release
Guarantor from its obligations hereunder either in full or to any lesser extent.
12. FINANCIAL CONDITION OF BORROWER. Guarantor is fully aware of the financial
condition of Borrower and is executing and delivering this Guaranty at
Borrower's request and based solely upon its own independent investigation of
all matters pertinent hereto, and Guarantor is not relying in any manner upon
any representation or statement of Silicon with respect thereto. Guarantor
represents and warrants that it is in a position to obtain, and Guarantor hereby
assumes full responsibility for obtaining, any additional information concerning
Borrower's financial condition and any other matter pertinent hereto as
Guarantor may desire, and Guarantor is not relying upon or expecting Silicon to
furnish to him any information now or hereafter in Silicon's possession
concerning the same or any other matter.
13. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and warrants
that (i) it is in Guarantor's direct interest to assist Borrower in procuring
credit, because Borrower is an affiliate of Guarantor, furnishes goods or
services to Guarantor, purchases or acquires goods or services from Guarantor,
and/or otherwise has a direct or indirect corporate or business relationship
with Guarantor, (ii) this Guaranty has been duly and validly authorized,
executed and delivered and constitutes the valid and binding obligation of
Guarantor, enforceable in accordance with its terms, and (iii) the execution and
delivery of this Guaranty does not violate or constitute a default under (with
or without the giving of notice, the passage of time, or both) any order,
judgment, decree, instrument or agreement to which Guarantor is a party or by
which it or its assets are affected or bound.
14. COSTS; INTEREST. Whether or not suit be instituted, Guarantor agrees to
reimburse Silicon on demand for all reasonable attorneys' fees and all other
reasonable costs and expenses incurred by Silicon in enforcing this Guaranty, or
arising out of or relating in any way to this Guaranty, or in enforcing any of
the Indebtedness against Borrower, Guarantor, or any other person, or in
connection with any property of any kind securing all or any part of the
Indebtedness. Without limiting the generality of the foregoing, and in addition
thereto, Guarantor shall reimburse Silicon on demand for all reasonable
attorneys' fees and costs Silicon incurs in any way relating to Guarantor,
Borrower or the Indebtedness, in order to: obtain legal advice; enforce or seek
to enforce any of its rights; commence, intervene in, respond to, or defend any
action or proceeding; file, prosecute or defend any claim or cause of action in
any action or proceeding (including without limitation any probate claim,
bankruptcy claim, third-party claim, secured creditor claim, reclamation
complaint, and complaint for relief from any stay under the Bankruptcy Code or
otherwise); protect, obtain possession of, sell, lease, dispose of or otherwise
enforce any security interest in or lien on any property of any kind securing
any or all of the Indebtedness; or represent Silicon in any litigation with
respect to Borrower's or Guarantor's affairs. In the event either Silicon or
Guarantor files any lawsuit against the other predicated on a breach of this
Guaranty, the prevailing party in such action shall be entitled to recover its
attorneys' fees and costs of suit from the non-prevailing party. All sums due
under this Guaranty shall bear interest from the date due until the date paid at
the highest rate charged with respect to any of the Indebtedness.
15. NOTICES. Any notice which a party shall be required or shall desire to
give to the other hereunder (except for notice of revocation, which shall be
governed by Section 10 of this Guaranty) shall be given by personal delivery or
by telecopier or by depositing the same in the United States mail, first class
postage pre-paid, addressed to Silicon at its address set forth in the heading
of this Guaranty and to Guarantor at its address provided by Guarantor to
Silicon in writing, and such notices shall be deemed duly given on the date of
personal delivery or one day after the date telecopied or 3 business days after
the date of mailing as aforesaid. Silicon and Guarantor may change their address
for purposes of receiving notices hereunder by giving written notice thereof to
the other party in accordance herewith. Guarantor shall give Silicon immediate
written notice of any change in its address.
16. CLAIMS. Guarantor agrees that any claim or cause of action by Guarantor
against Silicon, or any of Silicon's directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this
Guaranty, or any other present or future agreement between Silicon and Guarantor
or between Silicon and Borrower, or any other transaction contemplated hereby or
thereby or relating hereto or thereto, or any other matter, cause or thing
whatsoever, whether or not relating hereto or thereto, occurred, done, omitted
or suffered to be done by Silicon, or by Silicon's directors, officers,
employees, agents, accountants or attorneys, whether sounding in contract or in
tort or otherwise, shall be barred unless asserted by Guarantor by the
commencement of an action or proceeding in a court of competent jurisdiction
within Los Angeles County, California, by the filing of a complaint within one
year after the first act, occurrence or omission upon which such claim or cause
of action, or any part thereof, is based and service of a summons and complaint
on an officer of Silicon or any other person authorized to accept service of
process on behalf of Silicon, within 30 days thereafter. Guarantor agrees that
such one year period is a reasonable and sufficient time for Guarantor to
investigate and act upon any such claim or cause of action. The one year period
provided herein shall not be waived, tolled, or extended except by a specific
written agreement of Silicon. This provision shall survive any termination of
this Guaranty or any other agreement.
17. CONSTRUCTION; SEVERABILITY. The term "Guarantor" as used herein shall be
deemed to refer to all and any one or more such persons and their obligations
hereunder shall be joint and several. As used in this Guaranty, the term
"property" is used in its most comprehensive sense and shall mean all property
of every kind and nature whatsoever, including without limitation real property,
personal property, mixed property, tangible property and intangible property. If
any provision of this Guaranty or the
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SILICON VALLEY BANK CROSS-CORPORATE CONTINUING GUARANTY
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application thereof to any party or circumstance is held invalid, void,
inoperative or unenforceable, the remainder of this Guaranty and the application
of such provision to other parties or circumstances shall not be affected
thereby, the provisions of this Guaranty being severable in any such instance.
18. GENERAL PROVISIONS. Silicon shall have the right to seek recourse against
Guarantor to the full extent provided for herein and in any other instrument or
agreement evidencing obligations of Guarantor to Silicon, and against Borrower
to the full extent of the Indebtedness. No election in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Silicon's right to proceed in any other form of action or proceeding
or against any other party. The failure of Silicon to enforce any of the
provisions of this Guaranty at any time or for any period of time shall not be
construed to be a waiver of any such provision or the right thereafter to
enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Silicon by law or under any
other instrument or agreement. Time is of the essence in the performance by
Guarantor of each and every obligation under this Guaranty. Silicon shall have
no obligation to inquire into the power or authority of Borrower or any of its
officers, directors, employees, or agents acting or purporting to act on its
behalf, and any Indebtedness made or created in reliance upon the professed
exercise of any such power or authority shall be included in the Indebtedness
guaranteed hereby. This Guaranty is the entire and only agreement between
Guarantor and Silicon with respect to the guaranty of the Indebtedness of
Borrower by Guarantor, and all representations, warranties, agreements, or
undertakings heretofore or contemporaneously made, which are not set forth
herein, are superseded hereby. No course of dealings between the parties, no
usage of the trade, and no parol or extrinsic evidence of any nature shall be
used or be relevant to supplement or explain or modify any term or provision of
this Guaranty. There are no conditions to the full effectiveness of this
Guaranty. The terms and provisions hereof may not be waived, altered, modified,
or amended except in a writing executed by Guarantor and a duly authorized
officer of Silicon. All rights, benefits and privileges hereunder shall inure to
the benefit of and be enforceable by Silicon and its successors and assigns and
shall be binding upon Guarantor and its successors and assigns. Section headings
are used herein for convenience only. Guarantor acknowledges that the same may
not describe completely the subject matter of the applicable Section, and the
same shall not be used in any manner to construe, limit, define or interpret any
term or provision hereof.
19. GOVERNING LAW; VENUE AND JURISDICTION. This instrument and all acts and
transactions pursuant or relating hereto and all rights and obligations of the
parties hereto shall be governed, construed, and interpreted in accordance with
the internal laws of the State of California. In order to induce Silicon to
accept this Guaranty, and as a material part of the consideration therefor,
Guarantor (i) agrees that all actions or proceedings relating directly or
indirectly hereto shall, at the option of Silicon, be litigated in courts
located within Orange County, California, (ii) consents to the jurisdiction of
any such court and consents to the service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights Guarantor may have to transfer or change the venue of
any such action or proceeding.
20. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. SILICON AND GUARANTOR HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, LAWSUIT OR PROCEEDING BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS GUARANTEE OR ANY
SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT
OR AGREEMENT BETWEEN SILICON AND GUARANTOR ; OR (iii) ANY BREACH, CONDUCT, ACTS
OR OMISSIONS OF SILICON OR GUARANTOR OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR
REPRESENTING SILICON OR GUARANTOR; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
21. RECEIPT OF COPY. Guarantor acknowledges receipt of a copy of this
Guaranty.
Guarantor Signature:
CALBIOCHEM-NOVABIOCHEM AG
By /s/ Andreas Mueller
----------------------------
Title President
--------------------------
By /s/ Stelios B. Papadopoulos
----------------------------
Title Chairman & CEO
--------------------------
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<PAGE> 1
EXHIBIT 10(n)(ix)
[Silicon Valley Bank Logo]
SUBORDINATION AGREEMENT
(DEBT)
CREDITOR: BORROWER:
CALBIOCHEM-NOVABIOCHEM CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC. CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT DATE: JULY 28, 1995
SAN DIEGO, CA 92121
THIS SUBORDINATION AGREEMENT is entered into between SILICON VALLEY BANK
("Silicon") and the creditor named above (the "Creditor").
1. SUBORDINATION. To induce Silicon in its discretion to extend credit to
the above-named borrower (the "Borrower") at any time, in such manner, upon such
terms and for such amounts as may be mutually agreeable to Silicon and the
Borrower (but without obligation on Silicon's part to do so), the Creditor
hereby agrees to subordinate and does hereby subordinate payment by the Borrower
of any and all indebtedness of the Borrower, now or hereafter incurred, created
or evidenced, to the Creditor, however such indebtedness may be hereafter
extended, renewed or evidenced (together with all collateral, security and
guarantees, if any, for the payment of any such indebtedness) (collectively, the
"Junior Debt"), to the payment in full in cash to Silicon of any and all present
and future indebtedness, liabilities, guarantees and other obligations, of every
kind and description, of the Borrower to Silicon (collectively, the "Senior
Debt"), and the Creditor agrees not to ask for, demand, sue for, take or receive
any payments with respect to all or any part of the Junior Debt or any security
therefor, unless and until all of the Senior Debt has been paid and performed in
full.
The word "indebtedness" is used herein in its most comprehensive sense and
includes without limitation any and all present and future loans, advances,
credit, debts, obligations, liabilities, representations, warranties, and
guarantees, of any kind and nature, absolute or contingent, liquidated or
unliquidated, and individual or joint. Creditor represents and warrants to
Silicon that the Borrower is now indebted to the Creditor in the following
amounts under the following described notes and/or documents and that the same
is all outstanding indebtedness owing from the Borrower to the Creditor:
$3,712,000 under the Loan Agreement dated March 12, 1992 between Borrower and
Creditor.
2. DISTRIBUTION OF ASSETS. The Creditor further agrees that upon any
distribution of the assets or readjustment of the indebtedness of the Borrower
whether by reason of liquidation, composition, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of all or any of the Junior Debt, or the
application of the assets of the Borrower to the payment or liquidation thereof,
Silicon shall be entitled to receive payment in full in cash of all of the
Senior Debt prior to the payment of all or any part of the Junior Debt, and in
order to enable Silicon to enforce its rights hereunder in any such action or
proceeding, Silicon is hereby irrevocably authorized and empowered in its
discretion (but without any obligation on Silicon's part) to make and present
for and on behalf of the Creditor such proofs of claim against the Borrower on
account of the Junior Debt as Silicon may deem expedient or proper and to vote
such proofs of claim in any such proceeding and to receive and collect any and
all dividends or other payments or disbursements made thereon in whatever form
the same may be paid or issued and to apply same on account of the Senior Debt.
The
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SILICON VALLEY BANK SUBORDINATION AGREEMENT
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Creditor further agrees to execute and deliver to Silicon such assignments or
other instruments as may be required by Silicon in order to enable Silicon to
enforce any and all such claims and to collect any and all dividends or other
payments or disbursements which may be made at any time on account of all and
any of the Junior Debt.
3. TRANSFER OF SUBORDINATED DEBT. The Creditor shall not sell, pledge,
assign or otherwise transfer, at any time while this Agreement remains in
effect, any rights, claim or interest of any kind in or to any of the Junior
Debt, either principal or interest, without first notifying Silicon and making
such transfer expressly subject to this Subordination Agreement in form and
substance satisfactory to Silicon. The Creditor represents and warrants to
Silicon that the Creditor has not sold, pledged, assigned or otherwise
transferred any of the Junior Debt, or any interest therein or collateral or
security therefor to any other person. The Creditor will concurrently endorse
all notes and other written evidence of the Junior Debt with a statement that
they are subordinated to the Senior Debt pursuant to the terms of this
Agreement, in such form as Silicon shall require, and the Creditor will exhibit
the originals of such notes and other written evidence of the Junior Debt to
Silicon so that Silicon can confirm that such endorsement has been made (but no
failure to do any of the foregoing shall affect the subordination of the Junior
Debt provided for herein, which shall be fully effective upon execution of this
Agreement).
4. SILICON'S RIGHTS. This is a continuing agreement of subordination and
Silicon may continue, without notice to the Creditor, to extend credit or other
accommodation or benefit and loan monies to or for the account of the Borrower
in reliance hereon. Silicon may at any time, in its discretion, renew or extend
the time of payment of all or any Senior Debt, modify the Senior Debt and any
terms or provisions thereof or of any agreement relating thereto, waive or
release any collateral which may be held therefor at any time, and make and
enter into any such agreement or agreements as Silicon may deem proper or
desirable relating to the Senior Debt, without notice to or further consent from
the Creditor and without any manner impairing or affecting this Agreement or any
of Silicon's rights hereunder. The Creditor waives notice of acceptance hereof,
notice of the creation of any Senior Debt, the giving or extension of any credit
by Silicon to the Borrower, or the taking, waiving or releasing of any security
therefor, or the making of any modifications, and the Creditor waives
presentment, demand, protest, notice of protest, notice of default, and all
other notices to which the Creditor might otherwise be entitled.
5. REVIVOR. If, after payment of the Senior Debt, the Borrower thereafter
becomes liable to Silicon on account of the Senior Debt, or any payment made on
the Senior Debt shall for any reason be returned by Silicon, this Agreement
shall thereupon in all respects become effective with respect to such subsequent
or reinstated Senior Debt, without the necessity of any further act or agreement
between Silicon and the Creditor.
6. MUTUAL WAIVER OF JURY TRIAL. SILICON AND CREDITOR EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND CREDITOR; OR (III) ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR CREDITOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR CREDITOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.
7. GENERAL. This Agreement sets forth in full all of the representations
and agreements of the parties with respect to the subject matter hereof and
supersedes all prior discussions, representations, agreements and understandings
between the parties. This Agreement may not be modified or amended, nor may any
rights hereunder be waived, except in a writing signed by the parties hereto. In
the event of any litigation between the parties based upon, arising out of, or
in any way relating to this Agreement, the prevailing party shall be entitled to
recover all of his costs and expenses (including without limitation attorneys'
fees) from the non-prevailing party. The parties agree to cooperate fully with
each other and take all further actions and execute all further documents from
time to time as may be reasonably necessary to carry out the purposes of this
Agreement. At Silicon's option, all actions and proceedings based upon, arising
out of or relating in any way directly or indirectly to, this Agreement shall be
litigated exclusively in
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SILICON VALLEY BANK SUBORDINATION AGREEMENT
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courts located within Orange County, California, and Creditor consents to the
jurisdiction of any such court and consents to the service of process in any
such action or proceeding by personal delivery, first-class mail, or any other
method permitted by law, and waives any and all rights to transfer or change the
venue of any such action or proceeding to any court located outside Orange
County, California. This Agreement is being entered into, and shall be governed
by the laws of the State of California. This Agreement is being entered into,
and shall Agreement shall be binding upon the Subordinating Creditor and its
successors and assigns and shall inure to the benefit of Silicon and Silicon's
successors and assigns.
CREDITOR:
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
BY /s/ Stelios B. Papadopoulos
-----------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
-----------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
-----------------------------
TITLE VP
-------------------------
BORROWER'S AGREEMENT
The undersigned Borrower hereby acknowledges receipt of a copy of the
foregoing Subordination Agreement and agrees not to pay any Junior Debt, except
as provided therein. In the event Borrower breaches this Agreement or any of the
provisions of the foregoing Subordination Agreement, Borrower agrees that, in
addition to all other rights and remedies Silicon has, all of the Senior Debt
shall, at Silicon's option and without notice or demand, become immediately due
and payable, unless Silicon expressly agrees in writing to waive such breach. No
waiver by Silicon of any breach shall be effective unless in writing signed by
one of Silicon's authorized officers, and no such waiver shall be deemed to
extend to or waive any other or subsequent breach. Borrower further agrees that
any default or event of default by Borrower on the Junior Debt or under any
present or future instrument or agreement between Borrower and the Creditor
shall constitute a default and event of default under all present and future
instruments and agreements between Borrower and Silicon. Borrower further agrees
that, at any time and from time to time, the foregoing Subordination Agreement
may be altered, modified or amended by Silicon and the Creditor without notice
to Borrower and without further consent by Borrower.
BORROWER:
CALBIOCHEM-NOVABIOCHEM
CORPORATION
BY /s/ James G. Stewart
-----------------------------
PRESIDENT OR VICE PRESIDENT
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<PAGE> 1
EXHIBIT 10(n)(x)
[SILICON VALLEY BANK LOGO]
ANTIDILUTION AGREEMENT
ISSUER: CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC.
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CA 92121
DATE: JULY 28, 1995
THIS AGREEMENT is entered into as of the above date by and between SILICON
VALLEY BANK ("Purchaser"), whose address is 3000 Lakeside Drive, Santa Clara,
California 95054-2895, and the above Company, whose address is set forth above.
RECITALS
A. Concurrently with the execution of this Antidilution Agreement, the
Purchaser is purchasing from the Company a Warrant to Purchase Stock (the
"Warrant") pursuant to which Purchaser has the right to acquire from the Company
the Shares (as defined in the Warrant).
B. By this Antidilution Agreement, the Purchaser and the Company desire to
set forth the adjustment in the number of Shares issuable upon exercise of the
Warrant as a result of a Diluting Issuance (as defined in Exhibit A to the
Warrant).
C. Capitalized terms used herein shall have the same meaning as set forth in
the Warrant.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. DEFINITIONS. As used in this Antidilution Agreement, the following terms
have the following respective meanings:
(a) "Option" means any right, option, or warrant to subscribe for, purchase,
or otherwise acquire common stock or Convertible Securities.
(b) "Convertible Securities" means any evidences of indebtedness, shares of
stock, or other securities directly or indirectly convertible into or
exchangeable for common stock.
(c) "Issue" means to grant, issue, sell, assume, or fix a record date for
determining persons entitled to receive, any security (including Options),
whichever of the foregoing is the first to occur.
(d) "Additional Common Shares" means all common stock (including reissued
shares) issued (or deemed to be issued pursuant to Section 2) after the date of
the Warrant. Additional Common Shares does not include, however, any common
stock issued in a transaction described in Sections 2.1 and 2.2 of the Warrant;
any common stock Issued upon conversion of preferred stock outstanding on the
date of the Warrant; the Shares; or common stock Issued as incentive or in a
nonfinancing transaction to employees, officers, directors, or consultants to
the Company*.
* ; OR ANY COMMON STOCK ISSUED UPON CONVERSION OF CLASS A COMMON STOCK,
WHICH, IN TURN, HAS BEEN ISSUED UPON CONVERSION OF ANY SERIES A CONVERTIBLE
PREFERRED STOCK OUTSTANDING ON THE DATE OF THE WARRANT.
(e) The shares of common stock ultimately Issuable upon exercise of an Option
(including the shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security Issuable pursuant to an Option) are deemed to
be Issued when the Option is Issued. The shares of common stock ultimately
Issuable upon conversion or exercise of a Convertible Security (other than a
Convertible Security Issued pursuant to an Option) shall be deemed Issued upon
Issuance of the Convertible Security.
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SILICON VALLEY BANK ANTIDILUTION AGREEMENT
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2. DEEMED ISSUANCE OF ADDITIONAL COMMON SHARES. The shares of common stock
ultimately Issuable upon exercise of an Option (including the shares of common
stock ultimately Issuable upon conversion or exercise of a Convertible Security
Issuable pursuant to an Option) are deemed to be Issued when the Option is
Issued. The shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security (other than a Convertible Security Issued
pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible
Security. The maximum amount of common stock Issuable is determined without
regard to any future adjustments permitted under the instrument creating the
Options or Convertible Securities.
3. ADJUSTMENT OF WARRANT PRICE FOR DILUTING ISSUANCES.
3.1 WEIGHTED AVERAGE ADJUSTMENT. If the Company Issues Additional Common
Shares after the date of the Warrant and the consideration per Additional Common
Share (determined pursuant to Section 9) is less than the Warrant Price in
effect immediately before such Issue, the Warrant Price in effect immediately
before such Issue shall be reduced, concurrently with such Issue, to a price
(calculated to the nearest hundredth of a cent) determined by multiplying the
Warrant Price by a fraction:
(a) the numerator of which is the amount of common stock outstanding
immediately before such Issue plus the amount of common stock that the aggregate
consideration received by the Company for the Additional Common Shares would
purchase at the Warrant Price in effect immediately before such Issue, and
(b) the denominator of which is the amount of common stock outstanding
immediately before such Issue plus the number of such Additional Common Shares.
3.2 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Warrant
Price, the number of Shares issuable upon exercise of the Warrant shall be
increased to equal the quotient obtained by dividing (a) the product resulting
from multiplying (i) the number of Shares issuable upon exercise of the Warrant
and (ii) the Warrant Price, in each case as in effect immediately before such
adjustment, by (b) the adjusted Warrant Price.
3.3 SECURITIES DEEMED OUTSTANDING. For the purpose of this Section 3, all
securities issuable upon exercise of any outstanding Convertible Securities or
Options, warrants, or other rights to acquire securities of the Company shall be
deemed to be outstanding.
4. NO ADJUSTMENT FOR ISSUANCES FOLLOWING DEEMED ISSUANCES. No adjustment to
the Warrant Price shall be made upon the exercise of Options or conversion of
Convertible Securities.
5. ADJUSTMENT FOLLOWING CHANGES IN TERMS OF OPTIONS OR CONVERTIBLE
SECURITIES. If the consideration payable to, or the amount of common stock
Issuable by, the Company increases or decreases, respectively, pursuant to the
terms of any outstanding Options or Convertible Securities, the Warrant Price
shall be recomputed to reflect such increase or decrease. The recomputation
shall be made as of the time of the Issuance of the Options or Convertible
Securities. Any changes in the Warrant Price that occurred after such Issuance
because other Additional Common Shares were Issued or deemed Issued shall also
be recomputed.
6. RECOMPUTATION UPON EXPIRATION OF OPTIONS OR CONVERTIBLE SECURITIES. The
Warrant Price computed upon the original Issue of any Options or Convertible
Securities, and any subsequent adjustments based thereon, shall be recomputed
when any Options or rights of conversion under Convertible Securities expire
without having been exercised. In the case of Convertible Securities or Options
for common stock, the Warrant Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities. In the case of
Options for Convertible Securities, the Warrant Price shall be recomputed as if
the only Convertible Securities Issued were the Convertible Securities actually
Issued upon the exercise thereof, if any, and as if the only consideration
received therefor was the consideration actually received by the Company
(determined pursuant to Section 9), if any, upon the Issue of the Options for
the Convertible Securities.
7. LIMIT ON READJUSTMENTS. No readjustment of the Warrant Price pursuant to
Sections 5 or 6 shall increase the Warrant Price more than the amount of any
decrease made in respect of the Issue of any Options or Convertible Securities.
8. 30 DAY OPTIONS. In the case of any Options that expire by their terms not
more than 30 days after the date of Issue thereof, no adjustment of the Warrant
Price shall be made until the expiration or exercise of all such Options.
9. COMPUTATION OF CONSIDERATION. The consideration received by the Company
for the Issue of any Additional Common Shares shall be computed as follows:
(a) Cash shall be valued at the amount of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or accrued dividends.
(b) Property. Property other than cash shall be computed at the fair market
value thereof at the time of
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SILICON VALLEY BANK ANTIDILUTION AGREEMENT
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the Issue as determined in good faith by the Board of Directors of the Company.
(c) Mixed Consideration. The consideration for Additional common Shares
Issued together with other property of the Company for consideration that covers
both shall be determined in good faith by the Board of Directors.
(d) Options and Convertible Securities. The consideration per Additional
Common Share for Options and Convertible Securities shall be determined by
dividing:
(i) the total amount, if any, received or receivable by the Company for the
Issue of the Options or Convertible Securities, plus the minimum amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon exercise of the Options or
conversion of the Convertible Securities, by
(ii) the maximum amount of common stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) ultimately Issuable upon the exercise of
such Options or the conversion of such Convertible Securities.
10. GENERAL.
10.1 GOVERNING LAW. This Antidilution Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
10.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
10.3 ENTIRE AGREEMENT. Except as set forth below, this Antidilution
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
10.4 NOTICES. ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Purchaser at Purchaser's address as set forth in the heading
to this Agreement, or at such other address as Purchaser shall have furnished to
the Company in writing, or (b) if to the Company, at the Company's address set
forth in the heading to this Agreement, or at such other address as the Company
shall have furnished to the Purchaser in writing.
10.5 SEVERABILITY. In case any provision of this Antidilution Agreement
shall be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Antidilution Agreement shall
not in any way be affected or impaired thereby.
10.6 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Antidilution Agreement.
10.7 COUNTERPARTS. This Antidilution Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[Signatures on Following Page]
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SILICON VALLEY BANK ANTIDILUTION AGREEMENT
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
by their duly authorized representatives.
COMPANY:
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
BY /s/ Stelios B. Papadopoulos
--------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
--------------------------------
SECRETARY OR ASS'T SECRETARY
PURCHASER:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
--------------------------------
TITLE VP
--------------------------------
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<PAGE> 1
EXHIBIT 10(n)(xi)
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
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WARRANT TO PURCHASE STOCK
WARRANT TO PURCHASE 1,280 ISSUE DATE: JULY 28, 1995
SHARES OF THE COMMON EXPIRATION DATE: JULY 28, 2000
STOCK OF CALBIOCHEM-NOVABIOCHEM INITIAL EXERCISE PRICE: $2.50 PER SHARE
INTERNATIONAL, INC.
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other
good and valuable consideration, SILICON VALLEY BANK ("Holder") is entitled to
purchase the number of fully paid and non-assessable shares of the class of
securities (the "Shares") of the corporation (the "Company") at the initial
exercise price per Share (the "Warrant Price") all as set forth above and as
adjusted pursuant to Article 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise in substantially the form attached as Appendix 1 to
the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Section 1.2, Holder shall also deliver to the Company a check
for the aggregate Warrant Price for the Shares being purchased.
1.2 CONVERSION RIGHT. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant Section 1.4.
1.3 [Not used]
1.4 FAIR MARKET VALUE. If the Shares are traded in a public market, the fair
market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment
banking firm is greater than that determined by the Board of Directors, then all
fees and expenses of such investment banking firm shall be paid by the Company.
In all other circumstances, such fees and expenses shall be paid by Holder.
1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder exercises
or converts this Warrant, the Company shall deliver to Holder certificates for
the Shares acquired and, if this Warrant has not been fully exercised or
converted and has not expired, a new Warrant representing the Shares not so
acquired.
1.6 REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, or surrender and cancellation of this Warrant, the Company
at its expense shall execute and deliver, in lieu of this Warrant, a new warrant
of like tenor.
1.7 REPURCHASE ON SALE, MERGER OR CONSOLIDATION OF THE COMPANY.
1.7.1. "ACQUISITION". For the purpose of this Warrant, "Acquisition" means
any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
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WARRANT TO PURCHASE STOCK
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Company where the holders of the Company's securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.
1.7.2. ASSUMPTION OF WARRANT. If upon the closing of any Acquisition the
successor entity assumes the obligations of this Warrant, then this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on the record date for the
Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.
1.7.3. NONASSUMPTION. If upon the closing of any Acquisition the successor
entity does not assume the obligations of this Warrant and Holder has not
otherwise exercised this Warrant in full, then the unexercised portion of this
Warrant shall be deemed to have been automatically converted pursuant to Section
1.2 and thereafter Holder shall participate in the acquisition on the same terms
as other holders of the same class of securities of the Company.
1.7.4. [Not used]
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a dividend
on its common stock (or the Shares if the Shares are securities other than
common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. Such an
event shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company's Articles of Incorporation upon the
closing of a registered public offering of the Company's common stock. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including, without limitation, adjustments to the
Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant. The provisions of this Section 2.2 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares, the Warrant Price shall be proportionately increased.
2.4 ADJUSTMENTS FOR DILUTING ISSUANCES. The Warrant Price and the number of
Shares issuable upon exercise of this Warrant or, if the Shares are Preferred
Stock, the number of shares of common stock issuable upon conversion of the
Shares, shall be subject to adjustment, from time to time in the manner set
forth on Exhibit A in the event of Diluting Issuances (as defined on Exhibit A).
2.5 NO IMPAIRMENT. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.
2.6 FRACTIONAL SHARES. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and
-2-
<PAGE> 3
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
the number of Shares to be issued shall be rounded down to the nearest whole
Share. If a fractional share interest arises upon any exercise or conversion of
the Warrant, the Company shall eliminate such fractional share interest by
paying Holder amount computed by multiplying the fractional interest by the fair
market value of a full Share.
2.7 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant Price,
the Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based. The Company shall,
upon written request, furnish Holder a certificate setting forth the Warrant
Price in effect upon the date thereof and the series of adjustments leading to
such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Holder as follows:
(a) [Not used]
(b) All Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 INFORMATION RIGHTS. So long as the Holder holds this Warrant and/or any
of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) within forty-five (45) days after the end of each of the first three
quarters of each fiscal year, the Company's quarterly, unaudited financial
statements.
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. The Company agrees
that the Shares or, if the Shares are convertible into common stock of the
Company, such common stock, shall be subject to the registration rights set
forth on Exhibit B, if attached.
ARTICLE 4. MISCELLANEOUS.
4.1 TERM: NOTICE OF EXPIRATION. This Warrant is exercisable, in whole or in
part, at any time and from time to time on or before the Expiration Date set
forth above. The Company shall give Holder written notice of Holder's right to
exercise this Warrant in the form attached as Appendix 2 not more than 90 days
and not less than 30 days before the Expiration Date. If the notice is not so
given, the Expiration Date shall automatically be extended until 30 days after
the date the Company delivers the notice to Holder.
4.2 LEGENDS. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
-3-
<PAGE> 4
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the Shares
issuable upon exercise of this Warrant (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, if reasonably requested by the Company).
The Company shall not require Holder to provide an opinion of counsel if the
transfer is to an affiliate of Holder or if there is no material question as to
the availability of current information as referenced in Rule 144(c), Holder
represents that it has complied with Rule 144(d) and (e) in reasonable detail,
the selling broker represents that it has complied with Rule 144(f), and the
Company is provided with a copy of Holders notice of proposed sale.
4.4 TRANSFER PROCEDURE. Subject to the provisions of Section 4.2, Holder may
transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder if applicable). Unless
the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this Warrant to any person who directly competes with
the Company.
4.5 NOTICES. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 ATTORNEYS FEES. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
[Signatures on Following Page]
-4-
<PAGE> 5
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed
by its duly authorized representatives.
CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
BY /s/ Stelios B. Papadopoulos
------------------------------------
CHAIRMAN OF THE BOARD, PRESIDENT OR
VICE PRESIDENT
BY /s/ James G. Stewart
------------------------------------
SECRETARY OR ASS'T SECRETARY
-5-
<PAGE> 6
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ____________ shares of the
Common/Series ____ Preferred [strike one] Stock of __________ pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into Shares
in the manner specified in the Warrant. This conversion is exercised with
respect to _______ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name as is specified below:
------------------------------
(NAME)
------------------------------
------------------------------
(ADDRESS)
3. The undersigned represents it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
- -------------------------------------
(Signature)
- -------------------------------------
(Date)
-6-
<PAGE> 7
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
APPENDIX 2
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
-------------, --
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ____________:
This is to advise you that the Warrant issued to you described below will
expire on ________________, 19__.
Issuer:
Issue Date:
Class of Security Issuable:
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any questions
you may have concerning exercise of the Warrant. This is your only notice of
pending expiration.
(Name of Issuer)
By_____________________________
Its____________________________
EXHIBIT A
ANTI-DILUTION PROVISIONS
In the event of the issuance (a "Diluting Issuance") by the Company, after
the Issue Date of the Warrant, of securities at a price per share less than the
Warrant Price, or, if the Shares are common stock, less than the then conversion
price of the Company's Series __ Preferred Stock, then the number of shares of
common stock issuable upon conversion of the Shares, or if the Shares are common
stock, the number of Shares issuable upon exercise of the Warrant, shall be
adjusted as a result of Diluting Issuances in accordance with the Holder's
standard form of Anti-Dilution Agreement in effect on the Issue Date.
Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance.
-7-
<PAGE> 8
WARRANT TO PURCHASE STOCK
- --------------------------------------------------------------------------------
EXHIBIT B
REGISTRATION RIGHTS
The Shares (if common stock), or the common stock issuable upon conversion of
the Shares, shall be deemed "registrable securities" in accordance with the
terms of the following agreement (the "Agreement") between the Company and its
investor(s):
Registration Rights Agreement dated as of March 13, 1992 by and among
Calbiochem-Novabiochem International, Inc., a Delaware corporation, and the
signatories thereto, as in effect on the date hereof.
Further, Holder hereunder shall be considered to be a "Holder" under and as
defined in the Agreement, provided it is understood and agreed that Holder
hereunder shall not be permitted to initiate a registration pursuant to Section
1.2 of the Agreement as an "Initiating Holder" (as defined in the Agreement).
The Company agrees that no amendments will be made to the Agreement which
would have an adverse impact on Holder's registration rights thereunder without
the consent of Holder.
-8-
<PAGE> 1
EXHIBIT 10(n)(xii)
SILICON VALLEY BANK LOGO
AMENDMENT TO LOAN AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: NOVEMBER 22, 1995
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them
(the "Loan Agreement") dated July 28, 1995, effective as of the date hereof.
(Capitalized terms used but not defined in this Amendment, shall have the
meanings set forth in the Loan Agreement.)
1. CERTAIN FOREIGN SHARE CERTIFICATES. The Loan Agreement required,
among other things, that Borrower effect the pledge to Silicon of the shares of
Clinalfa AG and CalbiochemNovabiochem Pty Ltd. (collectively, the "Shares").
Borrower has been unable to provide the Shares to Silicon and has requested that
it have until December 5, 1995 to do so, and Silicon is willing to agree to such
request. Accordingly, it is agreed that Borrower shall have until December 5,
1995 in order to deliver the Shares to Silicon.
2. MODIFICATION TO DEBT SERVICE COVENANT. The Debt Service financial
covenant as set forth in the section of the Schedule to the Loan Agreement
entitled "Financial Covenants (Section 4.1) is hereby deleted and replaced with
the following:
"DEBT SERVICE RATIO: Parent shall maintain a Debt Service Ratio (as
referred to below) of 1.65 to 1 as of the end of
each fiscal quarter."
3. FEE. Borrower shall pay to Silicon a fee in the amount of $500 in
connection with this Amendment, which fee shall be in addition to all interest
and all other amounts payable hereunder, and which shall not be refundable.
4. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
5. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations
-1-
<PAGE> 2
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
and agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and understandings
between the parties with respect to the subject hereof. Except as herein
expressly amended, all of the terms and provisions of the Loan Agreement, and
all other documents and agreements between Silicon and the Borrower shall
continue in full force and effect and the same are hereby ratified and
confirmed.
BORROWER: SILICON:
CALBIOCHEM-NOVABIOCHEM SILICON VALLEY BANK
CORPORATION
BY /s/ Rita Pirkl
---------------------------------
TITLE VP
------------------------------
BY /s/ James G. Stewart
------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Arthur E. Roke
------------------------------
SECRETARY OR ASS'T SECRETARY
-2-
<PAGE> 1
EXHIBIT 10(n)(xiii)
[SILICON VALLEY BANK LOGO]
AMENDMENT TO LOAN AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JANUARY 24, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them
(the "Loan Agreement") dated July 28, 1995 and as amended by that Amendment to
Loan Agreement dated November 22, 1995, effective as of September 30, 1995.
(Capitalized terms used but not defined in this Amendment, shall have the
meanings set forth in the Loan Agreement.)
1. MODIFICATION TO TANGIBLE NET WORTH COVENANT. The Tangible Net Worth
financial covenant as set forth in the section of the Schedule to the Loan
Agreement entitled "Financial Covenants (Section 4.1) is hereby deleted and
replaced with the following:
"TANGIBLE NET WORTH: Parent shall maintain a tangible net worth of not
less than $10,200,000, excluding the amount of the
foreign currency translation account.
2. FEE. Borrower shall pay to Silicon a fee in the amount of $500 in
connection with this Amendment, which fee shall be in addition to all interest
and all other amounts payable hereunder, and which shall not be refundable.
3. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
4. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the
-1-
<PAGE> 2
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- -------------------------------------------------------------------------------
Loan Agreement, and all other documents and agreements between Silicon and the
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.
BORROWER: SILICON:
CALBIOCHEM-NOVABIOCHEM SILICON VALLEY BANK
CORPORATION
BY /s/ Rita Pirkl
_____________________________
TITLE VP
__________________________
BY /s/ James G. Stewart
_______________________________
PRESIDENT OR VICE PRESIDENT
BY /s/ Arthur E. Roke
_______________________________
SECRETARY OR ASS'T SECRETARY
-2-
<PAGE> 1
EXHIBIT 10(n)(xiv)
[SILICON VALLEY BANK LOGO]
AMENDMENT TO LOAN AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JUNE 27, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them
(the "Loan Agreement") dated July 28, 1995, as amended by that Amendment to Loan
Agreement dated November 22, 1995, effective as of September 30, 1995, and as
amended by that Amendment to Loan Agreement dated January 24, 1996, which
amendment shall be effective as of the date hereof. (Capitalized terms used but
not defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)
1. MODIFICATION TO SCHEDULE. The Schedule to the Loan Agreement is
hereby deleted and replaced with the Schedule to Loan Agreement as attached
hereto.
2. MODIFICATION TO SECTION 2.2 OF LOAN AGREEMENT. Section 2.2 of the
Loan Agreement is hereby deleted and replaced with the following Section 2.2 and
Section 2.2A:
2.2 GRANT OF SECURITY INTEREST IN COLLATERAL; TERMINATION OF
SECURITY INTEREST UPON IPO CONSUMMATION. The Borrower grants
Silicon a continuing security interest in all of the
Borrower's interest in the Collateral (as defined below in
Section 2.2A) as security for all Obligations (the "Grant").
The provisions of this section 2.2 shall be considered fully
effective until the IPO Consummation (as defined below), and
upon the occurrence of the IPO Consummation the provisions of
this section 2.2 shall be deemed to be of no force and effect,
provided that Borrower covenants and agrees, without
limitation of any other term of provision hereof, not to cause
or otherwise permit to exist any liens or encumbrances
regarding the Collateral on and after the IPO Consummation. In
furtherance of the foregoing, Silicon agrees to execute such
additional documentation is as necessary to implement the
termination of its security interest in the Collateral at the
time of the IPO Consummation. As used herein the term "IPO
Consummation" means (I) the consummation of an underwritten
initial public offering of the Borrower's common stock from
which the Borrower receives net proceeds in a minimum amount
of $20,000,000, which transaction is otherwise satisfactory to
Silicon, and relating to which Borrower has provided to
Silicon documentation and other information satisfactory to
Silicon evidencing the consummation thereof and (II) Borrower
has repaid all Obligations relating to the Working Capital
Term Loan and the Acquisition Term Loan.
2.2A COLLATERAL. This section 2.2A shall be considered to be
effective at all times during the effectiveness of this Loan
Agreement regardless of the status of the IPO Consummation.
The term "Collateral" as used herein shall mean all of the
Borrower's interest in the types of property described below,
whether now owned
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<PAGE> 2
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
or hereafter acquired, and wherever located: (a) All accounts,
contract rights, chattel paper, letters of credit, documents,
securities, money, and instruments, and all other obligations
now or in the future owing to the Borrower; (b) All inventory,
goods, merchandise, materials, raw materials, work in process,
finished goods, farm products, advertising, packaging and
shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under
contracts of service or consumed in the Borrower's business,
and all warehouse receipts and other documents; and (c) All
equipment, including without limitation all machinery,
fixtures, trade fixtures, vehicles, furnishings, furniture,
materials, tools, machine tools, office equipment, computers
and peripheral devices, appliances, apparatus, parts, dies,
and jigs; (d) All general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names,
trademarks and the goodwill of the business symbolized
thereby, trade secrets, drawings, blueprints, customer lists,
patents, patent applications, copyrights, security deposits,
loan commitment fees, federal, state and local tax refunds and
claims, all rights in all litigation presently or hereafter
pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, all rights
to purchase or sell real or personal property, all rights as a
licensor or licensee of any kind, all royalties, licenses,
processes, telephone numbers, proprietary information,
purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and
other insurance), and all other rights, privileges and
franchises of every kind; (e) All books and records, whether
stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the
foregoing, and all products, proceeds and insurance proceeds
of the foregoing, and all guaranties of and security for the
foregoing; and all books and records relating to any of the
foregoing. Silicon's security interest in any present or
future technology (including patents, trade secrets, and other
technology) shall be subject to any licenses or rights now or
in the future granted by the Borrower to any third parties in
the ordinary course of Borrower's business; provided that if
the Borrower proposes to sell, license or grant any other
rights with respect to any technology in a transaction that,
in substance, conveys a major part of the economic value of
that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold
such release in its discretion.
3. MODIFICATION TO SUPPLEMENT TO SCHEDULE. The Supplement to Schedule
to Loan Agreement is hereby amended by replacing the definition of "Interest
Rate" set forth in Section 1 thereof with the definition of "Interest Rate" as
set forth below:
"'Interest Rate' shall mean as to: (a) Prime Rate Revolving Loans, a
rate per annum equal to the Prime Rate; (b) Prime Rate Term Loans, a rate
per annum equal to the Prime Rate plus .375%; (c) LIBOR Rate Revolving
Loans, a rate of 2.85% per annum in excess of the LIBOR Rate (based on the
LIBOR Rate applicable for the Interest Period selected by the Borrower),
provided that on and after the IPO Consummation, the rate for LIBOR Rate
Revolving Loans shall be a rate of 2.35% per annum in excess of the LIBOR
Rate (based on the LIBOR Rate applicable for the Interest Period selected
by the Borrower); and (d) LIBOR Rate Term Loans, a rate of 3.22% per annum
in excess of the LIBOR Rate (based on the LIBOR Rate applicable for the
Interest Period selected by the Borrower)."
4. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
-2-
<PAGE> 3
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
5. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements between
Silicon and the Borrower shall continue in full force and effect and the same
are hereby ratified and confirmed.
BORROWER: SILICON:
CALBIOCHEM-NOVABIOCHEM SILICON VALLEY BANK
CORPORATION
BY /s/ Rita Pirkl
--------------------------------
TITLE Senior Vice President
BY /s/ James G. Stewart
---------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Arthur E. Roke
---------------------------
SECRETARY OR ASS'T SECRETARY
CONSENT
The undersigned, guarantors and pledgors, acknowledge that their
consent to the foregoing Amendment is not required, but the undersigned
nevertheless do hereby consent to the foregoing Amendment and to the documents
and agreements referred to therein and to all future modifications and
amendments thereto, and to any and all other present and future documents and
agreements between or among the foregoing parties. Nothing herein shall in any
way limit any of the terms or provisions of the Cross-Corporate Continuing
Guaranties and the Pledge Agreements executed by the undersigned in favor of
Silicon, all of which are hereby ratified and affirmed and shall continue in
full force and effect.
CALBIOCHEM-NOVABIOCHEM AG CALBIOCHEM-NOVABIOCHEM
INTERNATIONAL, INC.
By: /s/ Stelios B. Papadopoulos By: /s/ James G. Stewart
---------------------------- ------------------------
Title: Director Title: V.P. Finance
-3-
<PAGE> 1
EXHIBIT 10(n)(xv)
[SILICON VALLEY BANK LOGO]
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: JUNE 27, 1996
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
CREDIT LIMIT
(Section 1.1): PRIOR TO THE EFFECTIVENESS OF THE IPO
CONSUMMATION:
The sum of (A), (B) and (C) below:
(A) Revolving Loan Facility. An amount
not to exceed the lesser of (i) or (ii):
(i) $2,000,000 at any one time
outstanding; or (ii) (a) 80% of the Net
Amount of Borrower's accounts, which
Silicon in its discretion deems eligible
for borrowing plus (b) 10% of the Value
of Borrower's inventory, which Silicon
in its discretion deems eligible for
borrowing, up to a maximum of $500,000
total at any one time outstanding with
respect to inventory (Loans under
(ii)(a) above with respect to accounts
are referred to as "Accounts Loans";
Loans under (ii)(b) above with respect
to inventory are referred to as
"Inventory Loans" and together with the
Accounts Loans are collectively referred
to as the "Revolving Loans"; and the
loan facility under this subsection (A)
is referred to as the "Revolving Loan
Facility");
PLUS
(B) Working Capital Term Loan Facility.
The amount under the Working Capital
Term Loan Facility (as defined below);
PLUS
(C) Acquisition Term Loan Facility.
The amount under the Acquisition Term
Loan Facility (as defined below).
-1-
<PAGE> 2
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
"Net Amount" of an account means the gross amount of
the account, minus all applicable sales, use, excise
and other similar taxes and minus all discounts,
credits and allowances of any nature granted or
claimed. "Value" of inventory means the lower of cost
or wholesale market value. Without limiting the fact
that the determination of which accounts are eligible
for borrowing is a matter of Silicon's discretion,
the following will not be deemed eligible for
borrowing: accounts outstanding for more than 90 days
from the invoice date, accounts subject to any
contingencies, accounts owing from the United States
or any department, agency or instrumentality of the
United States or any state, city or municipality*,
accounts owing from an account debtor outside the
United States (unless pre-approved by Silicon in its
discretion, or backed by a letter of credit
satisfactory to Silicon, or FCIA insured satisfactory
to Silicon), accounts owing from one account debtor
to the extent they exceed 25% of the total eligible
accounts outstanding, accounts owing from an
affiliate of Borrower, and accounts owing from an
account debtor to whom Borrower is or may be liable
for goods purchased from such account debtor or
otherwise. In addition, if more than 50% of the
accounts owing from an account debtor are outstanding
more than 90 days from the invoice date or are
otherwise not eligible accounts, then all accounts
owing from that account debtor will be deemed
ineligible for borrowing.
* TO THE EXTENT SUCH ACCOUNTS EXCEED 20% OF THE TOTAL
ELIGIBLE ACCOUNTS OUTSTANDING ON AND AFTER THE
EFFECTIVENESS OF THE IPO CONSUMMATION:
An amount not to exceed $5,000,000 at any one time
outstanding (the "Revolving Loans" and the loan
facility is referred to as the "Revolving Loan
Facility").
LETTER OF CREDIT SUBLIMIT: Silicon, in its reasonable discretion, will from time
to time during the term of this Agreement issue
letters of credit for the account of the Borrower
("Letters of Credit"), in an aggregate amount at any
one time outstanding not to exceed $500,000, upon the
request of the Borrower, provided that, on the date
the Letters of Credit are to be issued, Borrower has
availability under the Revolving Loan Facility
-2-
<PAGE> 3
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
in an amount equal to or greater than the face amount
of the Letters of Credit to be issued. Prior to the
issuance of any Letters of Credit, Borrower shall
execute and deliver to Silicon Applications for
Letters of Credit and such other documentation as
Silicon shall specify (the "Letter of Credit
Documentation"). Fees for the Letters of Credit shall
be as provided in the Letter of Credit Documentation.
Letters of Credit may have a maturity date up to
twelve months beyond the Maturity Date in effect from
time to time, provided that if on the Maturity Date,
or on any earlier effective date of termination,
there are any outstanding letters of credit issued by
Silicon or issued by another institution based upon
an application, guarantee, indemnity or similar
agreement on the part of Silicon, then on such date
Borrower shall provide to Silicon cash collateral in
an amount equal to the face amount of all such
letters of credit plus all interest, fees and costs
due or to become due in connection therewith, to
secure all of the Obligations relating to said
letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. The Credit Limit
set forth above regarding the Revolving Loan Facility
and the Loans available thereunder at any time shall
be reduced by the face amount of Letters of Credit
from time to time outstanding.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT Up to $3,000,000 (the "Contract Limit") may be
utilized for spot and future foreign exchange
contracts (the "Exchange Contracts"). The Credit
Limit regarding the Revolving Loan Facility available
at any time shall be reduced by the following amounts
(the "Foreign Exchange Reserve") on each day (the
"Determination Date"): (i) on all outstanding
Exchange Contracts on which delivery is to be
effected or settlement allowed more than two business
days from the Determination Date, 10% of the gross
amount of the Exchange Contracts; plus (ii) on all
outstanding Exchange Contracts on which delivery is
to be effected or settlement allowed within two
business days after the Determination Date, 100% of
the gross amount of the Exchange Contracts. In lieu
of the Foreign Exchange Reserve for 100% of the gross
amount of any Exchange Contract, the Borrower may
request that Silicon debit the Borrower's bank
account with Silicon for such amount, provided
Borrower has immediately available funds in such
amount in its bank account.
Silicon may, in its discretion, terminate the
Exchange Contracts at any time (a) that an Event of
Default occurs or (b) that there is not sufficient
availability under the Credit Limit and Borrower does
not have available funds in its bank account to
satisfy the Foreign Exchange Reserve. If either
Silicon or Borrower terminates the Exchange
Contracts, and without limitation of the FX Indemnity
-3-
<PAGE> 4
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
Provisions (as referred to below), Borrower agrees to
reimburse Silicon for any and all fees, costs and
expenses relating thereto or arising in connection
therewith.
Borrower shall not permit the total gross amount of
all Exchange Contracts on which delivery is to be
effected and settlement allowed in any two business
day period to be more than $500,000 (the "Settlement
Limit"), nor shall Borrower permit the total gross
amount of all Exchange Contracts to which Borrower is
a party, outstanding at any one time, to exceed the
Contract Limit.
Notwithstanding the above, however, the amount which
may be settled in any two (2) business day period
may, in Silicon's sole discretion, be increased above
the Settlement Limit up to, but in no event to
exceed, the amount of the Contract Limit (the
"Discretionary Settlement Amount") under either of
the following circumstances (the "Discretionary
Settlement Circumstances"):
(i) if there is sufficient availability
under the Credit Limit regarding the
Revolving Loan Facility in the amount of the
Foreign Exchange Reserve as of each
Determination Date, provided that Silicon in
advance shall reserve the full amount of the
Foreign Exchange Reserve against the Credit
Limit regarding the Revolving Loan Facility;
or
(ii) if there is insufficient availability
under the Credit Limit regarding the
Revolving Loan Facility as to settlements
within any two (2) business day period if
Silicon is able to: (A) verify good funds
overseas prior to crediting Borrower's
deposit account with Silicon (in the case of
Borrower's sale of foreign currency); or (B)
debit Borrower's deposit account with
Silicon prior to delivering foreign currency
overseas (in the case of Borrower's purchase
of foreign currency);
Provided that it is expressly understood that
Silicon's willingness to adopt the Discretionary
Settlement Amount is a matter of Silicon's sole
discretion and the existence of the Discretionary
Settlement Circumstances in no way means or implies
that Silicon shall be obligated to permit the
Borrower to exceed the Settlement Limit in any two
business day period.
In the case of Borrower's purchase of foreign
currency, Borrower in advance shall instruct Silicon
upon settlement either to treat the settlement amount
as an advance under the Credit Limit regarding the
Revolving Loan Facility, or to debit Borrower's
account for the amount settled.
-4-
<PAGE> 5
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
The Borrower shall execute all standard form
applications and agreements of Silicon in connection
with the Exchange Contracts, and without limiting any
of the terms of such applications and agreements, the
Borrower will pay all standard fees and charges of
Silicon in connection with the Exchange Contracts.
Without limiting any of the other terms of this Loan
Agreement or any such standard form applications and
agreements of Silicon, Borrower agrees to indemnify
Silicon and hold it harmless, from and against any
and all claims, debts, liabilities, demands,
obligations, actions, costs and expenses (including,
without limitation, attorneys' fees of counsel of
Silicon's choice), of every nature and description,
which it may sustain or incur, based upon, arising
out of, or in any way relating to any of the Exchange
Contracts or any transactions relating thereto or
contemplated thereby (collectively referred to as the
"FX Indemnity Provisions").
The Exchange Contracts shall have maturity dates no
later than the Maturity Date.
WORKING CAPITAL TERM
LOAN FACILITY An amount up to $2,500,000 (such Loan is the "Working
Capital Term Loan" and the loan facility relating
thereto is the "Working Capital Term Loan Facility")
which was utilized by the Borrower in connection with
the closing of the Acquisition (as defined below).
Once amounts under the Working Capital Term Loan
Facility are repaid, such amounts may not be
reborrowed.
Borrower shall repay to Silicon the outstanding
aggregate principal amount of the Working Capital
Term Loan in 60 consecutive monthly installments on
the first day of each month commencing September 1,
1995 of which the first 59 installments shall each be
in the amount of $41,666.67, and the last installment
shall be in the amount of the entire unpaid balance
of the Working Capital Term Loan, provided that the
entire amount of the Working Capital Term Loan, all
accrued and unpaid interest thereon and all other
Obligations relating thereto shall be paid in full no
later than August 1, 2000, subject, however, to
repayments as required pursuant to the Excess Cash
Flow Repayment Covenant (as defined in paragraph 4 of
the section hereof entitled "Other Covenants"
(Section 4.1)).
Borrower hereby further promises to pay interest to
Silicon on the unpaid principal balance of the
Working Capital Term Loan at the Interest Rate (as
defined below). Such interest shall be paid each
month in accordance with the terms of the Loan
Agreement.
-5-
<PAGE> 6
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
ACQUISITION TERM
LOAN FACILITY An amount up to $6,000,000 (such Loan is the
"Acquisition Term Loan" and the loan facility
relating thereto is the "Acquisition Term Loan
Facility") which was utilized by the Borrower for the
purpose of financing the assets acquired by
Borrower pursuant to the Asset Purchase Agreement
dated as of June 26, 1995 (the "Purchase Agreement")
by and among Oncogene Science, Inc., as seller,
Borrower, as buyer, and Calbiochem-Novabiochem
International, Inc. ("Parent"). The acquisition and
related transactions contemplated by the Purchase
Agreement are collectively referred to as the
"Acquisition". Once amounts under the Acquisition
Term Loan Facility are repaid, such amounts may not
be reborrowed.
Borrower hereby further promises to pay interest to
Silicon on the unpaid principal balance of the
Acquisition Term Loan at the Interest Rate (as
defined below). Such interest shall be paid each
month in accordance with the terms of the Loan
Agreement.
Borrower shall repay to Silicon the outstanding
aggregate principal amount of the Acquisition Term
Loan in 60 consecutive monthly installments on the
first day of each month commencing September 1, 1995
as follows:
(A) The first installment through and including the
twelfth installment shall each be in the amount of
$41,666.67;
(B) The thirteenth installment through and including
the twenty-fourth installment shall each be in the
amount of $83,333.33; and
(C) The twenty-fifth installment through and
including the sixtieth installment shall each be in
the amount of $125,000;
Provided that the entire principal amount of the
Acquisition Term Loan, all accrued and unpaid
interest thereon and all other Obligations relating
thereto shall be paid in full no later than August 1,
2000; subject, however, to repayments as required
pursuant to the Excess Cash Flow Repayment Covenant.
SUPPLEMENT: The Supplement to Schedule to Loan Agreement (the
"Supplement") as attached to the original Schedule to
Loan Agreement, as amended by the Amendment to Loan
Agreement of even date herewith, is incorporated into
and forms a part of this Schedule and this Loan
Agreement.
-6-
<PAGE> 7
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
INTEREST RATE
(Section 1.2): Interest on the Loans shall be paid at the applicable
Interest Rate (as defined in the Supplement).
Interest shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
"Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate;" it is a base
rate upon which other rates charged by Silicon are
based, and it is not necessarily the best rate
available at Silicon. The interest rate applicable to
the Prime Rate-based Obligations shall change on each
date there is a change in the Prime Rate.
LOAN ORIGINATION FEE
(Section 1.3): Revolving Loan Facility: 50 basis points per annum of
the maximum amount available thereunder.
MATURITY DATE
(Section 5.1): The Maturity Date shall be considered to be JUNE __,
1998 for all purposes hereof other than with respect
to the maturities of the Working Capital Term Loan
and the Acquisition Term Loan, which shall have
maturities as set forth in Section 1.1 above.
PRIOR NAMES OF BORROWER
(Section 3.2): CALBIOCHEM CORPORATION; CBC ACQUISITION CORPORATION
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): BOULEVARD INDUSTRIAL PARK, PADGE ROAD, BEESTON,
NOTTINGHAM UNITED KINGDOM NG9 2JR; 80-84 ROGERS
STREET, CAMBRIDGE, MASSACHUSETTS.
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may
do the following, provided that, after giving effect
thereto, no Event of Default has occurred and no
event has occurred which, with notice or passage of
time or both, would constitute an Event of Default,
and provided that the following are done in
compliance with all applicable laws, rules and
regulations: (i) Borrower may upstream funds to the
Parent in order to permit the Parent to repurchase
shares of Parent's stock pursuant to any employee
stock purchase or benefit plan, provided that the
total amount that the Borrower
-7-
<PAGE> 8
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
upstreams for such purpose does not exceed $100,000
in any fiscal year, provided, the Borrower is also
permitted on a one-time basis to upstream funds to
the Parent in order to permit the Parent to
repurchase shares of Parent's stock owned by
Richard B. Slansky as long as such additional
amount that the Borrower upstreams for such purpose
does not exceed $400,000; and (ii) Borrower may
loan funds to the Parent in an aggregate amount not
to exceed $500,000 at any one time outstanding for
the purpose of the Parent's financing of
Calbiochem-Novabiochem AG.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall cause the Parent to comply with all of
the following covenants on a consolidated basis
effective with the month ending March 31, 1996.
Compliance shall be determined as of the end of each
month, except as otherwise specifically provided
below:
QUICK ASSET RATIO: Parent shall maintain a ratio of "Quick Assets" to
current liabilities of not less than .80 to 1.
TANGIBLE NET WORTH: Parent shall maintain a tangible net worth of not
less than $10,200,000, excluding the amount of the
foreign currency translation account, provided that
on and after the IPO Consummation, Parent shall
maintain a tangible net worth of not less than
$25,000,000, excluding the amount of the foreign
currency translation account.
DEBT TO TANGIBLE
NET WORTH RATIO: Parent shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.50 to 1,
provided that on and after the IPO Consummation,
Parent shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.00 to 1.
DEBT SERVICE RATIO: Parent shall maintain a Debt Service Ratio (as
referred to below) of 1.65 to 1 as of the end of each
fiscal quarter."
CLEAN-UP PERIOD: During the period commencing on the date of the IPO
Consummation and ending one year later, and during
each successive annual period thereafter, there shall
be period of 30 days when no Loans shall be
outstanding.
DEFINITIONS: "Current assets," and "current liabilities" shall
have the meanings ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of total assets
over total liabilities, determined in accordance with
generally accepted accounting principles, excluding
however all assets which would be classified as
intangible assets under generally accepted accounting
principles, including without limitation goodwill,
licenses, patents,
-8-
<PAGE> 9
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
trademarks, trade names, copyrights, capitalized
software and organizational costs, licences and
franchises.
"Quick Assets" means cash on hand or on deposit in
banks, readily marketable securities issued by the
United States, readily marketable commercial paper
rated "A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating organization),
certificates of deposit and banker's acceptances, and
accounts receivable (net of allowance for doubtful
accounts).
"Debt Service Ratio" means the ratio of (a)
consolidated net income of Parent before interest,
taxes, depreciation and other non-cash amortization
expenses and other non-cash expenses of the Parent,
determined in accordance with generally accepted
accounting principles, consistently applied, to (b)
the consolidated amount of Parent's obligations
relating to payment of interest and current
maturities of principal on Parent's outstanding
indebtedness, determined in accordance with generally
accepted accounting principles, consistently applied.
DEFERRED REVENUES: For purposes of the above quick asset ratio, deferred
revenues shall not be counted as current liabilities.
For purposes of the above debt to tangible net worth
ratio, deferred revenues shall not be counted in
determining total liabilities but shall be counted in
determining tangible net worth for purposes of such
ratio. For all other purposes deferred revenues shall
be counted as liabilities in accordance with
generally accepted accounting principles.
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants
do not include indebtedness which is subordinated to
the indebtedness to Silicon under a subordination
agreement in form specified by Silicon or by language
in the instrument evidencing the indebtedness which
is acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the
following additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with
Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING.
Within 20 days after the end of each month, Borrower
shall provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall specify,
and an aged listing of Borrower's accounts
receivable.
3. WARRANTS. Borrower shall continue in effect the
Warrant to Purchase Stock and related documents it
entered into with Silicon in connection with the
original execution of the Loan Agreement.
-9-
<PAGE> 10
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
4. EXCESS CASH FLOW REPAYMENT COVENANT. Borrower
shall cause to be paid to Silicon, within 90 days
after the end of each fiscal year of Parent, 25% of
the Excess Cash Flow (as defined below) relating to
such prior fiscal year, to be applied in inverse
order of maturity to the outstanding principal
balance of each of the Working Capital Term Loan and
the Acquisition Term Loan, pro rata, based on the
proportion that each such Loan bears to the sum of
both such Loans (collectively referred to as the
"Excess Cash Flow Repayment Covenant").
As used herein the term "Excess Cash Flow" means for
each fiscal year of Parent, on a consolidated basis,
(a) the Parent's net income (after taxes), plus (b)
depreciation and amortization (including amortizing
finance charges), plus (c) non-cash interest charges,
minus (d) all capital expenditures (including any
capitalization of software), minus (e) scheduled
principal payments on all of Parent's indebtedness
for the succeeding twelve month period, (f) if there
has been an increase in the Parent's net Working
Capital since the end of the prior fiscal year, then
plus the amount of any such increase, and (g) if
there has been an decrease in the Parent's net
Working Capital (as defined below) since the end of
the prior fiscal year, then minus the amount of any
such decrease, with all of the foregoing determined
in accordance with generally accepted accounting
principles, consistently applied.
As used herein the term "Working Capital" means the
amount represented by the difference between Parent's
current assets and current liabilities, determined in
accordance with generally accepted accounting
principles, consistently applied.
5. GUARANTY BY PARENT; PLEDGE; SECURITY AGREEMENT.
Parent shall continue in effect the following: (a)
the continuing guaranty of the Obligations it entered
into with Silicon in connection with the original
execution of the Loan Agreement, (b) the general
security agreement collateralizing such guaranty
obligations it entered into with Silicon in
connection with the original execution of the Loan
Agreement and (c) the pledge agreement it entered
into with Silicon in connection with the original
execution of the Loan Agreement.
6. GUARANTY BY CALBIOCHEM-NOVABIOCHEM AG; PLEDGE.
Calbiochem- Novabiochem AG continue in effect: (a)
the continuing guaranty of the Obligations it entered
into with Silicon in connection with the original
execution of the Loan Agreement, and (b) the pledge
agreement it entered into with Silicon in connection
with the original execution of the Loan Agreement.
7. PLEDGE BY BORROWER. Borrower shall continue in
effect the pledge agreement it entered into with
Silicon in connection with the original execution of
the Loan Agreement.
-10-
<PAGE> 11
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
8. SUBORDINATION AGREEMENT. Parent shall continue in
effect the subordination agreement it entered into
with Silicon in connection with the original
execution of the Loan Agreement.
9. SWISS LOAN FACILITY; REPRESENTATION REGARDING
TERMINATION; ETC. Calbiochem-Novabiochem AG
previously entered into a loan facility with
Basellandschaftliche Kantonalbank (the "Swiss Loan
Facility"). Borrower hereby represents and warrants
to Silicon that the Swiss Loan Facility has been
terminated.
10. UNUSED LINE FEE. Borrower shall pay to Silicon a
quarterly unused line fee equal to .125% per annum
calculated upon the amount by which the Credit Limit
regarding Revolving Loans exceeds the average daily
principal balance of the outstanding Revolving Loans
and Letters of Credit during the immediately
preceding quarter (or part thereof) while this
Agreement is in effect and for so long thereafter as
any of the Obligations are outstanding, which fee
shall be payable on the first day of each quarter in
arrears.
-11-
<PAGE> 12
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed by their duly authorized
representatives.
BORROWER:
CALBIOCHEM-NOVABIOCHEM CORPORATION
BY /s/ James G. Stewart
----------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Arthur E. Roke
----------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ Rita Pirkl
------------------------
TITLE Senior Vice President
-12-
<PAGE> 1
EXHIBIT 2(a)
CALBIOCHEM-NOVABIOCHEM CORPORATION
CALBIOCHEM-NOVABIOCHEM INTERNATIONAL, INC..
AND
ONCOGENE SCIENCE, INC.
------------------------
ASSET PURCHASE AGREEMENT
------------------------
---------------------------
Dated as of June 26, 1995
---------------------------
<PAGE> 1
EXHIBIT 16
July 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by CN Biosciences, Inc. (formerly
Calbiochem-Novabiochem International, Inc.) under the caption "Change in
Accountants" in the Registration Statement on Form S-1, which we understand will
be filed with the Commission. We agree with the statements concerning our Firm
in such Registration Statement.
Very truly yours
/s/ Coopers & Lybrand L.L.P.
--------------------------------------
Coopers & Lybrand L.L.P.
<PAGE> 1
EXHIBIT 21
List of Subsidiaries of CN Biosciences, Inc.
<TABLE>
<CAPTION>
Subsidiary Jurisdiction of Incorporation or Organization
- ---------- ---------------------------------------------
<S> <C>
Calbiochem-Novabiochem Corporation California
Calbiochem-Novabiochem PTY Limited Australia
Calbiochem-Novabiochem Japan Limited Japan
Calbiochem-Novabiochem GmbH Germany
Calbiochem-Novabiochem (UK) Limited United Kingdom
Calbiochem-Novabiochem AG Switzerland
Clinalfa AG Switzerland
</TABLE>
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary
Consolidated Financial Data," "Selected Consolidated Financial Data" and
"Experts" and to the use of our report dated July 16, 1996 in this Registration
Statement on Form S-1 and related Prospectus of CN Biosciences, Inc. for the
registration of shares of its common stock.
/s/ ERNST & YOUNG LLP
--------------------------------------
ERNST & YOUNG LLP
San Diego, California
July 17, 1996
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated September 22, 1995 on Oncogene Science, Inc.
Research Products Business in this Registration Statement on Form S-1 and
related Prospectus of CN Biosciences, Inc. for the registration of shares of its
common stock.
/s/ KPMG PEAT MARWICK LLP
-----------------------------
KPMG PEAT MARWICK LLP
Jericho, New York
July 17, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1995 AND AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 JUN-30-1996
<CASH> 1203 1118
<SECURITIES> 0 0
<RECEIVABLES> 4571 5189
<ALLOWANCES> 472 428
<INVENTORY> 14443 14372
<CURRENT-ASSETS> 20221 21154
<PP&E> 7496 8434
<DEPRECIATION> 3466 4596
<TOTAL-ASSETS> 31197 32228
<CURRENT-LIABILITIES> 4797 5868
<BONDS> 0 0
400 400
17943 17943
<COMMON> 5 5
<OTHER-SE> 261 357
<TOTAL-LIABILITY-AND-EQUITY> 31197 32228
<SALES> 26966 16565
<TOTAL-REVENUES> 26966 16565
<CGS> 13185 7602
<TOTAL-COSTS> 11946 7250
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 527 394
<INCOME-PRETAX> 1308 1319
<INCOME-TAX> 291 462
<INCOME-CONTINUING> 1017 857
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1017 857
<EPS-PRIMARY> 0.30<F1> 0.25<F1>
<EPS-DILUTED> 0.30<F1> 0.25<F1>
<FN>
<F1>EARNINGS PER SHARE IS CALCULATED BASED UPON PRO FORMA SHARES OUTSTANDING. SEE
NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</FN>
</TABLE>
