<PAGE> 1
________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD ________ TO _________
COMMISSION FILE NUMBER 000-21281
CN BIOSCIENCES, INC.
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-0509785
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10394 PACIFIC CENTER COURT, SAN DIEGO, CA 92121
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 450-5500
-------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ( ) No (X)
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
<TABLE>
<CAPTION>
Class November 13, 1996
------ -----------------
<S> <C>
Common Stock ( $.01 par value) 4,363,300
Class A Common Stock ($.01 par value) 788,814
</TABLE>
<PAGE> 2
CN BIOSCIENCES, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of September 30, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Income for the Three Months and
Nine Months Ended September 30, 1996 and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 (unaudited) 5
Notes to Interim Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES
INDEX OF EXHIBITS
2
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CN BIOSCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
-----------
(SEE NOTE 2) (Note)
------------ ------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $1,366,000 $1,203,000
Accounts receivable, net 4,991,000 4,099,000
Inventories 14,381,000 14,443,000
Other current assets 1,004,000 476,000
-------------- ---------------
Total current assets 21,742,000 20,221,000
Property and equipment, net 3,830,000 4,030,000
Intangible assets, net 5,581,000 6,067,000
Other assets 1,595,000 879,000
-------------- ---------------
Total assets $32,748,000 $31,197,000
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable, trade $1,575,000 $1,491,000
Accrued expenses 1,778,000 1,556,000
Other current liabilities 1,253,000 583,000
Current portion of long-term debt 1,542,000 1,167,000
-------------- ---------------
Total current liabilities 6,148,000 4,797,000
Long-term debt, net of current portion 6,533,000 7,000,000
Other liabilities 1,503,000 1,601,000
Commitments
Redeemable preferred stock 18,343,000 18,343,000
Stockholders' equity (deficit):
Common stock, $.01 par value; 30,000,000 shares
authorized, 1,089,876 shares in 1996 and 1,058,065
shares in 1995 issued and outstanding 11,000 11,000
Additional paid-in capital 351,000 255,000
Accumulated deficit (741,000) (2,064,000)
Foreign currency translation
adjustment 696,000 1,254,000
Notes receivable from common
stockholder (96,000) -
-------------- ---------------
Total stockholders' equity (deficit) 221,000 (544,000)
-------------- ---------------
Total liabilities and stockholders'
equity $32,748,000 $31,197,000
============== ===============
</TABLE>
See accompanying notes.
Note: The balance sheet at December 31, 1995 has been derived from
the audited financial statements at that date, but does not
include all of the disclosures required by generally accepted
accounting principles.
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CN BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $8,835,000 $6,865,000 $25,400,000 $19,940,000
Cost of sales 4,065,000 3,224,000 11,667,000 9,915,000
------------- ------------- ------------- -------------
Gross profit 4,770,000 3,641,000 13,733,000 10,025,000
Operating expenses:
Selling, general and
administrative 3,245,000 2,785,000 9,430,000 7,588,000
Research and development 590,000 401,000 1,655,000 889,000
------------- ------------- ------------- -------------
Total operating expenses 3,835,000 3,186,000 11,085,000 8,477,000
Income from
operations 935,000 455,000 2,648,000 1,548,000
Interest expense, net 219,000 157,000 613,000 316,000
------------- ------------- ------------- -------------
Income before income
taxes 716,000 298,000 2,035,000 1,232,000
Provision for income
taxes 250,000 66,000 712,000 274,000
------------- ------------- ------------- -------------
Net income 466,000 232,000 1,323,000 958,000
============= ============= ============= =============
Pro forma net income per
share .13 .07 .38 .28
============= ============= ============= =============
Pro forma shares used in per
share computations 3,532,000 3,422,000 3,495,000 3,422,000
============= ============= ============= =============
</TABLE>
See accompanying notes.
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CN BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $1,323,000 $958,000
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 1,177,000 1,294,000
Additions/(reductions) to inventory reserve 155,000 (100,000)
Additions/(reductions) to allowance for
doubtful accounts 1,000 (5,000)
Loss on disposal of property and equipment 5,000 -
Changes in assets and liabilities:
Accounts receivable, trade (1,127,000) (1,088,000)
Inventories (506,000) 410,000
Other current assets (550,000) (150,000)
Other assets (656,000) (428,000)
Accounts payable, trade 203,000 387,000
Accrued expenses 226,000 678,000
Other current liabilities 1,067,000 (401,000)
Other liabilities (679,000) (120,000)
------------- -------------
Net cash provided by operating activities 639,000 1,435,000
INVESTING ACTIVITIES
Purchases of property and equipment (387,000) (343,000)
Proceeds from sale of property and equipment 17,000 -
Purchase of business - (6,326,000)
Other - -
------------- -------------
Net cash used in investing activities (370,000) (6,669,000)
FINANCING ACTIVITIES
Proceeds from lines of credit 900,000 484,000
Payments on lines of credit (200,000) (1,078,000)
Proceeds from long-term debt - 8,500,000
Payments on long-term debt (789,000) (2,250,000)
Proceeds from the sale of common stock - 4,000
------------- -------------
Net cash provided by (used in) financing activities (89,000) 5,660,000
Effect of exchange rate changes on cash (17,000) 34,000
------------- -------------
Net increase in cash and cash equivalents 163,000 460,000
Balance at beginning of period 1,203,000 935,000
------------- -------------
Balance at end of period $1,366,000 $1,395,000
============= =============
Supplemental cash flow information:
Interest paid during the period 618,000 239,000
============= =============
Income taxes paid during the period 50,000 222,000
============= =============
</TABLE>
See accompanying notes.
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CN BIOSCIENCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim unaudited consolidated financial statements of CN
Biosciences, Inc. (the "Company") contained herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These consolidated financial statements should be read
in conjunction with the consolidated finanical statements and notes thereto for
the year ended December 31, 1995 included in the Company's prospectus dated
October 2, 1996, filed with the Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933, as amended. In management's
opinion, the unaudited information includes all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
financial position, results of operations and cash flows for the periods
presented. Interim results are not necessarily indicative of results to be
expected for the full year.
2. INITIAL PUBLIC OFFERING
In October 1996, the Company completed an initial public offering
("IPO") for 1,840,000 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), at $12.50 per share, raising gross proceeds of
$23,000,000 before underwriters' commissions and expenses. Proceeds from the
offering were used to repay approximately $8.1 million of bank borrowings, with
the balance of the net proceeds being invested in short-term, investment grade,
interest-bearing securities. In connection with the offering and pursuant to a
written agreement among the Company and the holders thereof, the Company's
previously issued Series A Convertible Preferred Stock, par value $1.00 per
share (the "Series A Convertible Preferred Stock") was converted into 788,814
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock") and the Company's previously issued Series B Preferred Stock, par value
$1.00 per share (the "Series B Preferred Stock") was converted into 1,435,424
shares of Common Stock. The Class A Common Stock is convertible into an equal
number of shares of Common Stock.
3. PRO FORMA NET INCOME PER SHARE
Pro forma net income per share is computed using the weighted average
number of shares of Common Stock and Common Stock equivalents outstanding
during the periods presented. Common Stock equivalents result from outstanding
options and warrants to
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purchase shares of Common Stock. 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, to be included in the calculation of shares used
in computing net income per share as if these shares were outstanding for all
periods presented (using the treasury stock method and the initial public
offering price). The calculation also gives effect to the conversion and
exchange of the shares of Series A Convertible Preferred Stock and Series B
Preferred Stock upon completion of the Company's initial public offering using
the if-converted method from the original date of issuance.
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1996 1995
---- ----
<S> <C> <C>
Finished products $13,764,000 $13,987,000
Semi-finished products, raw materials
and supplies 3,711,000 3,958,000
Work-in-progress 624,000 415,000
------------- -------------
18,099,000 18,360,000
Reserves for excess materials (3,718,000) (3,917,000)
------------- -------------
Total $14,381,000 $14,443,000
============= =============
</TABLE>
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company 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 Oncogene Science, Inc. ("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 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.
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
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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.
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 through the analysis of recent sales history and forecasted product
demand to ensure that inventory reserve levels are adequate to properly reflect
their net realizable value. Fluctuations in inventory reserve levels, other
than those related to reserves recorded in 1993 for impaired inventory
described above, have not been material to the Company's financial position or
results of operations.
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.
9
<PAGE> 10
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
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales:
Core 80.6% 77.1% 81.4% 74.9%
Bulk 19.4 22.9 18.6 25.1
-------- -------- -------- --------
Total sales 100.0 100.0 100.0 100.0
Cost of sales 46.0 47.0 45.9 49.7
-------- -------- -------- --------
Gross profit 54.0 53.0 54.1 50.3
Selling, general and
administrative 36.7 40.6 37.1 38.0
Research and development 6.7 5.8 6.5 4.5
-------- -------- -------- --------
Income from operations 10.6 6.6 10.4 7.8
Interest expense, net 2.5 2.3 2.4 1.6
-------- -------- -------- --------
Income before income taxes 8.1 4.3 8.0 6.2
Provision for income taxes 2.8 0.9 2.8 1.4
-------- -------- -------- --------
Net income 5.3% 3.4% 5.2% 4.8%
======== ======== ======== ========
</TABLE>
Three Months Ended September 30, 1996 Compared to the Three Months
Ended September 30, 1995
Sales. Sales increased 28.7% to $8.8 million for the three-month
period ended September 30, 1996 from $6.9 million for the comparable period in
1995. This increase resulted primarily from a 34.6% increase in core product
sales, including sales of Oncogene Research Products brand products, and an
increase in bulk sales of 9.0%. Sales of core products during the three month
period ended September 30, 1996, excluding Oncogene Research Products brand
sales, grew by 23.7% 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 three months ended September 30, 1996.
Additional factors which management believes contributed to the increase in
sales during the period included increased recognition of the Company's
specialty catalogs, and other marketing initiatives, including advertising in
various publications. The increase in bulk sales related to the timing of the
receipt of orders which resulted in a favorable comparison with the comparable
period in 1995.
Gross Profit. The Company's gross profit percentage increased to 54.0%
for the three-month period ended September 30, 1996 from 53.0% for the
comparable period in 1995. This increase was primarily the result of sales of
the higher gross margin Oncogene Research Products brand products for the full
three-month period ended September 30,
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1996 as compared to only two months for the comparable prior period, and
continued improved margins on the Company's Calbiochem and Novabiochem brand
products. 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 47.1% to $590,000 for the three-month period ended September 30, 1996
from $401,000 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 earlier in 1996, and
increased research in the area of glycobiology.
Selling, General and Administrative. Selling, general and
administrative expenditures increased 16.5% to $3.2 million for the three-
month period ended September 30, 1996 from $2.8 million for the comparable
period in 1995, and decreased to 36.7% of sales for the period from 40.6% for
the comparable period in 1995. The dollar increase in selling, general and
administrative 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 while expenses did not increase as rapidly. The decrease in selling,
general and administrative expenses as a percentage of sales was attributable
to the increased level of sales. The Company anticipates a modest growth in
administrative expenses resulting from the Company's reporting obligations and
investor relations activities as a new public company.
Interest Expense, Net. Interest expense, net increased to $219,000 for
the three-month period ended September 30, 1996 from $157,000 for the
comparable period in 1995 primarily as a result of increased borrowings in
connection with the acquisition of the Oncogene Research Products business, and
the financing of new catalogs.
Income Taxes. Income tax expense increased to $250,000 for the
three-month period ended September 30, 1996 from $66,000 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
100.9% to $466,000 for the three-month period ended September 30, 1996 from
$232,000 for the comparable period in 1995.
Nine Months Ended September 30, 1996 Compared to the Nine Months
Ended September 30, 1995
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Sales. Sales increased 27.4% to $25.4 million for the nine-month
period ended September 30, 1996 from $19.9 million for the comparable period in
1995. This increase resulted primarily from a 38.4% increase in core product
sales, including sales of Oncogene Research Products brand products, offset by
a decrease in bulk sales of 5.5%. Oncogene Research Products sales during the
period included initial stocking orders of approximately $292,000, principally
to international distributors, in connection with the Company's new Apoptosis
specialty catalog issued in February 1996. Sales of core products during the
nine-month period ended September 30, 1996, excluding Oncogene Research
Products brand sales, grew by 13.6% 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 nine months
ended September 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 nine-month period ended September 30, 1996 from 50.3% for the
comparable period in 1995. This increase was primarily the result of sales of
the higher gross margin Oncogene Research Products brand products for the
nine-month period ended September 30, 1996 as compared to only two months for
the comparable prior period, 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 86.2% to $1.7 million for the nine-month period ended September 30,
1996 from $889,000 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.
Selling, General and Administrative. Selling, general and
administrative expenditures increased 24.3% to $9.4 million for the nine- month
period ended September 30, 1996 from $7.6 million for the comparable period in
1995, and decreased to 37.1% of sales for the period from 38.1% for the
comparable period in 1995. The dollar increase in selling,
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general and administrative 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 decrease in selling, general and administrative expenses as a
percentage of sales was attributable to the increased level of sales while such
expenses did not increase as rapidly. The Company anticipates a modest growth
in administrative expenses resulting from the Company's reporting obligations
and investor relations activities as a new public company.
Interest Expense, Net. Interest expense, net increased to $613,000 for
the nine-month period ended September 30, 1996 from $316,000 for the comparable
period in 1995 primarily as a result of increased borrowings in connection with
the acquisition of the Oncogene Research Products business for the full
nine-month period ended September 30, 1996 as compared to only two months in
the prior comparable period, and the financing of new catalogs.
Income Taxes. Income tax expense increased to $712,000 for the
nine-month period ended September 30, 1996 from $274,000 for the comparable
prior period in 1995 as a result of increased profitability and increased
estimated tax rates having utilized certain operating loss carryforwards in the
comparable prior period.
Net Income. As a result of the above factors, net income increased
38.0% to $1.3 million for the nine-month period ended September 30, 1996 from
$958,000 for the comparable period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company provided $639,000 of cash from operating activities in the
nine months ended September 30, 1996 which was a $760,000 decrease from the
comparable prior period. Cash provided from operating activities for the nine
months ended September 30, 1996 was less than net income for the period
primarily due to costs incurred related to the production of catalogs which
have been capitalized. Cash provided from operating activities in the
comparable prior period in 1995 resulted from positive operating results, which
were increased by the amortization of catalog costs which had been capitalized
in prior periods.
Net cash used in investing activities was $370,000 in the nine months
ended September 30, 1996, as compared to $6.7 million in the comparable prior
period. Cash used in investing activities during the nine-month period ended
September 30, 1996 consisted primarily of capital expenditures for property and
equipment. During 1995, the Company acquired the Oncogene Research Products
business in a purchase transaction requiring an investment of approximately
$6.3 million. Other investing activities during the period consisted primarily
of capital expenditures for property and equipment.
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<PAGE> 14
Net cash used by financing activities was $89,000 in the nine months
ended September 30, 1996, as compared to net cash provided by financing
activities of $5,660,000 in the comparable prior period. For the nine months
ended September 30, 1996, net cash used consisted of payments on term debt
offset by net borrowings on revolving debt. During 1995, the Company incurred
$6.0 million of additional debt, consisting primarily of borrowings from a
financial institution, 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. 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 September 30, 1996, the Company had cash of $1.4 million and
working capital of $15.6 million. Outstanding borrowings consisted of
approximately $7.4 million of term debt, plus borrowings under a line of credit
of $700,000. Prior to the time it was amended, as discussed below, the line of
credit (the "Credit Facility") provided for borrowings up to a maximum of $2.0
million, based upon percentages of eligible accounts receivable and inventory.
At September 30, 1996, $1.3 million was available under the Credit Facility.
The Credit Facility, which is guaranteed by the Company and its Swiss
subsidiary requires, among other things, compliance with minimum financial and
operating covenants, and bank approval for certain mergers and acquisitions,
asset sales, the incurrence of debt, the making of loans and the repurchase,
redemption or other acquisition of shares of the Company's stock. The Credit
Facility expires in June 1998. Upon the consummation of the Company's initial
public offering of Common Stock, certain terms of the Credit Facility were
modified and it converted to an unsecured $5.0 million line of credit. In
addition to releasing its collateral and eliminating the restrictions on the
payment of cash dividends, loans and advances by the Company's U.S. subsidiary
to the Company, the lender modified certain financial covenants contained in
the Credit Facility to appropriately adjust for the increased equity resulting
from this offering. The general terms of the existing facility otherwise
continue. All bank borrowings (approximately $8.1 million at September 30,
1996) were repaid out of the net proceeds of the Company's initial public
offering of Common Stock on October 7, 1996. See Note 2 of Notes to
Consolidated Financial Statements.
The Company believes that its existing capital resources together with
the net proceeds from the Company's initial public offering of Common Stock on
October 7, 1996 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
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<PAGE> 15
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.
FORWARD-LOOKING STATEMENTS
Except for historical statements and discussions contained herein,
statements contained in this Report on Form 10-Q constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Act of 1934 and
Section 27A of the Securities Act of 1933. Any Form 10-K, Annual Report to
Stockholders, Form 10-Q or Form 8-K of the Company may include forward-looking
statements. In addition, other written or oral statements which constitute
forward-looking statements may in the future be made by or on behalf of the
Company. These forward-looking statements are and will be based on a number of
assumptions concerning future events and are and will be subject to a number of
risks, uncertainties and other factors, many of which are outside the Company's
control, that could cause actual results to differ materially from such
statements. These include, but are not limited to the following:
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.
15
<PAGE> 16
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 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
16
<PAGE> 17
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.
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
17
<PAGE> 18
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 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.
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 18.6% of net sales in the nine months ended September 30,
1996, 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.
Significant 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.
Uncertainty of Future Operating Results. Although the Company has had
net income for the past twenty-one months, the Company incurred net losses for
the period from its inception (March 11, 1992) through December 31, 1992 and
the years ended December 31, 1993 and 1994. Future operating results will
depend on many factors, including demand for the Company's products, the levels
and timing of government and private sector funding of life sciences research
and development activities, the timing of the introduction of products and
catalogs by the Company or its competitors, and the Company's ability to
control costs. Furthermore, the Company's gross margins can be significantly
affected by the presence or absence of bulk sales during any particular
18
<PAGE> 19
period and quarterly fluctuations in sales relative to operating expenses.
There can be no assurance that the Company will be able to grow in future
periods or remain profitable.
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.
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.
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 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. The Company has entered into employment agreements with
Stelios B. Papadopoulos, its Chairman, Chief Executive Officer and President,
and Ben Matzilevich, its Vice President, Market Development -- Niche
Applications.
Risk Relating to the 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
19
<PAGE> 20
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 and Environmental 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. The Company has in the past been notified of minor violations of
government and environmental regulations. The Company has promptly corrected
such violations without any material impact on the Company's operations. Any
future 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. Prior to the Company's inception, its U.S. subsidiary, at
the time it was owned by its former owners, was involved in two separate
incidents related to the release of hazardous materials into the environment at
a leased facility which is no longer occupied by the Company. The Company
believes from a review of correspondence from various regulatory agencies that
these incidents were investigated and remediated by the U.S. subsidiary's
former owners. Although the Company believes it is in material compliance with
all applicable government and environmental laws, rules, regulations, and
policies, 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 past or future releases or discharges of materials
that could be hazardous.
The Company recently became aware of regulations requiring the
issuance of export licenses for the exportation of certain neurotoxins in its
product line. The products involved represent approximately 30 of the
Company's 7,000 products and accounted for approximately $150,000 in sales in
each of the last three fiscal years. Upon becoming aware of these regulations,
the Company immediately ceased the exportation of these toxins, began the
process of applying for the appropriate export licenses and made a voluntary
disclosure to the U.S. Department of Commerce ("DOC") regarding its prior
exports of these products. The Company has advised the DOC that it will
cooperate fully in any investigation that it may undertake regarding these
exports. The Company may be subject to the payment of penalties for its failure
to have obtained such licenses in the past, but based upon discussions with the
DOC and published reports regarding similar
20
<PAGE> 21
violations by other companies, the Company does not believe that such
penalties, if levied, will have a material adverse effect on the Company.
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.
21
<PAGE> 22
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On July 17, 1996, the holders of a majority of the shares of Common
Stock, Series A Convertible Preferred Stock, and Series B Preferred
Stock, the Company acted by written consent to:
(i) Approve the amendment and restatement of the Company's
certificate of incorporation to change the Company's name from
Calbiochem-Novabiochem International, Inc. to CN Biosciences,
Inc., increase the authorized shares of capital stock in
anticipation of the Company's initial public offering of
Common Stock, and modify the indemnification provisions to
provide for indemnification of the Company's officers;
(ii) Approve the amendment of the Company's 1992 Stock Option Plan
to increase the number of shares of Common Stock which may be
issued pursuant to stock options granted under such plan and
to make certain other technical amendments; and
(iii) Approve the initial public offering of the Company's Common
Stock and authorize the Company to enter into an agreement
providing for the exchange of Series B Preferred Stock for
Common Stock and the conversion of Series A Convertible
Preferred Stock into Class A Common Stock upon consummation of
such initial public offering.
22
<PAGE> 23
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
10.1 Letter Agreement, dated September 30, 1996, by and
between Calbiochem-Novabiochem Corporation, CN
Biosciences, Inc., Calbiochem-Novabiochem AG, and
Silicon Valley Bank
10.2 Amendment to Loan Agreement, dated September 30, 1996
between Calbiochem-Novabiochem Corporation and
Silicon Valley Bank
10.3 Amendment to Loan Agreement, dated October 2, 1996
between Calbiochem-Novabiochem Corporation and
Silicon Valley Bank
11.1 Statement re computation of per share earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
None
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CN BIOSCIENCES, INC.
November 14, 1996 /s/ Stelios B. Papadopoulos
------------------------------------
Stelios B. Papadopoulos
Chief Executive Officer, Chairman
and President
(duly authorized officer)
November 14, 1996 /s/ James G. Stewart
------------------------------------
James G. Stewart
Vice President, Chief Financial Officer
and Secretary
(principal financial officer)
24
<PAGE> 25
INDEX OF EXHIBITS
Exhibit Number Description
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
10.1 Letter Agreement, dated September 30, 1996, by and
between Calbiochem-Novabiochem Corporation, CN
Biosciences, Inc., Calbiochem-Novabiochem AG, and
Silicon Valley Bank
10.2 Amendment to Loan Agreement, dated September 30, 1996
between Calbiochem-Novabiochem Corporation and
Silicon Valley Bank
10.3 Amendment to Loan Agreement, dated October 2, 1996
between Calbiochem-Novabiochem Corporation and
Silicon Valley Bank
11.1 Statement re computation of per share earnings
27.1 Financial Data Schedule
25
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CN BIOSCIENCES, INC.
CN BIOSCIENCES, 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 under the
name Calbiochem-Novabiochem International, Inc., which certificate was amended
and restated by the filing of an Amended and Restated Certificate of
Incorporation on February 22, 1995 and the filing of an Amended and Restated
Certificate of Incorporation on July 17, 1996 (as corrected by a Certificate of
Correction filed on July 31, 1996) (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.
<PAGE> 2
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.
ARTICLE IV
The total authorized capital stock of the Corporation shall be
35,800,000 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"), and 5,000,000 shares of
Preferred Stock, par value $.01 per share ("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"), and the Preferred Stock are as follows:
SECTION A: PREFERRED STOCK
The Preferred Stock may be issued from time to time as herein
provided in one or more series. The designations, relative 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 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
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<PAGE> 3
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;
(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
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<PAGE> 4
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 B: COMMON STOCK
(a) Dividends. Subject to the preferences and other rights of
the Preferred Stock, 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, 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 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 Preemptive 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 preemptive 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
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<PAGE> 5
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 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.
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<PAGE> 6
(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.
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
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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 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
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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.
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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IN WITNESS WHEREOF, CN BIOSCIENCES, 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 7th day of October, 1996.
CN BIOSCIENCES, INC.
By: /s/ Stelios B. Papadopoulos
---------------------------
Stelios B. Papadopoulos
Chief Executive Officer
Attest:
By: /s/James G. Stewart
-------------------
James G. Stewart
Secretary
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<PAGE> 1
Exhibit 3.2
CN BIOSCIENCES, INC.
Incorporated Under the Laws of the
State of Delaware
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
OFFICES.
CN Biosciences, 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 each year, on such date, 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
<PAGE> 2
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 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
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<PAGE> 3
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 11
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 Incorporation, or these By-laws shall be determined by the
affirmative vote of a majority of the shares present in person or by proxy and
entitled to vote thereat.
Section 8. Record Date of Stockholders: The Board of Directors
is authorized to fix in advance a date not exceeding sixty (60) days nor less
than ten (10) days preceding the date of any meeting of Stockholders, or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining the consent of Stockholders
for any purposes, as a record date for the determination of the Stockholders
entitled to notice of, and to vote at, any such meeting, and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, or to give such consent, and, in such
case, such Stockholders and only such Stockholders as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the
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books of the Corporation, after such record date fixed as aforesaid.
Section 9. Conduct of Meetings: The Chairman of the Board of
Directors or, in his absence the President or any Vice President designated by
the Chairman of the Board of Directors, shall preside at all regular or special
meetings of Stockholders. To the maximum extent permitted by law, such presiding
person shall have the power to set procedural rules, including but not limited
to rules respecting the time allotted to stockholders to speak, governing all
aspects of the conduct of such meetings. The Secretary of the Corporation, or in
the Secretary's absence an Assistant Secretary, shall act as secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary is present, the
presiding officer of the meeting shall appoint any person present to act as
secretary of the meeting.
Section 10. Business Conducted At Meetings: All business
properly brought before a meeting of the Stockholders shall be transacted at
such meeting. Business shall be deemed properly brought only if it is (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (iii) brought
before the meeting by a Stockholder of record entitled to vote at such meeting
if written notice of such Stockholder's intent to bring such business before
such meeting is delivered to, or mailed, postage prepaid, and received by, the
Secretary of the Corporation at the principal executive offices of the
Corporation not later than the close of business on the tenth day following the
date on which the Corporation first makes public disclosure (by notice to any
national securities exchange or national market system in the United States on
which the capital stock of the Corporation entitled to vote at such meeting is
listed or otherwise) of the date of such meeting; provided, however, that in the
event that such meeting is adjourned, and the Corporation is required by
Delaware law to give notice to Stockholders of the adjourned meeting date,
written notice of such Stockholder's intent to bring such business before the
meeting must be delivered to or received by the Secretary of the Corporation no
later than the close of business on the
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fifth day following the earlier of (1) the date the Corporation makes public
disclosure (by notice to any such exchange or system or otherwise) of the date
of the adjourned meeting or (2) the date on which notice of such adjourned
meeting is first given to Stockholders. Each notice given by such Stockholder
shall set forth: (A) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting;
(B) the name and address of the Stockholder who intends to propose such
business; (C) a representation that the Stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting (or if the record date
for such meeting is subsequent to the date required for such Stockholder notice,
a representation that the Stockholder is a holder of record at the time of such
notice and intends to be a holder of record on the record date for such meeting)
and intends to appear in person or by proxy at such meeting to propose such
business; and (D) any material interest of the Stockholder, if any, in such
business. The Chairman of the meeting may refuse to transact any business at any
meeting made without compliance with the foregoing procedure.
Section 11. 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 at an annual or special meeting of
Stockholders, 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.
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<PAGE> 6
Section 1. Number and Qualifications: The Board of Directors
shall consist initially of six 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 two 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. 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.
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
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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.
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 overnight courier, facsimile 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,
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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 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, consultant or
otherwise, and receiving compensation therefor.
ARTICLE IV
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<PAGE> 9
COMMITTEES.
Section 1. Executive Committee: The Board of Directors, by
resolution passed by a majority of the entire Board, may designate two 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 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.
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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
Board of Directors or 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 overnight courier, facsimile 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 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.
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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 provided, hold office until the selection and qualification of his
successor. Except as provided by law, any two or more offices may be held by the
same person.
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
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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.
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 Directors 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. Vice-Presidents: The Vice-Presidents, or any of
them, shall, subject to the direction of the Board of Directors, at the request
of the President or in his absence, or in case of his inability to perform his
duties from any cause, perform the duties of the President, and, when so acting,
shall have all the powers of, and be subject to all restrictions upon, the
President. The Vice-Presidents shall also perform such other duties as may be
assigned to them by the President or the Board of Directors, and the President
or the Board of Directors may determine the order of priority among them.
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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.
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. Where such certificates are signed by a transfer agent or an assistant
transfer agent or by a transfer clerk acting on behalf of the
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Corporation or a registrar, the signature of any such Chairman of the Board of
Directors, Chief Executive Officer, President, Vice-President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be by facsimile. 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
and may appoint a transfer agent or registrar or both and may require all
certificates of stock to bear the signature of either or both.
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
-14-
<PAGE> 15
of the stock and with 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 or any
other authorized officer 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
delivery by
-15-
<PAGE> 16
overnight courier, hand delivery or facsimile to such person at such addresses;
and such notice shall be deemed to be given at the time it is mailed, hand
delivered or faxed.
Section 4. Waiver of Notice: Any Stockholder or Director may
at any time, by writing, 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.
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
-16-
<PAGE> 17
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.
The Stockholders shall have power to make, rescind, alter,
amend or repeal these By-laws. The Board of Directors shall also have the power
to make, rescind, alter, amend and repeal these By-laws. By-laws adopted by the
Stockholders shall not be rescinded, altered, amended or repealed by the Board
of Directors if such by-laws so express.
Dated: October 3, 1996
-17-
<PAGE> 1
EXHIBIT 10.1
September 30, 1996
To: Calbiochem-Novabiochem Corporation
CN Biosciences, Inc.
(formerly known as Calbiochem-Novabiochem International, Inc.)
Calbiochem-Novabiochem AG
Re: Termination of Certain Agreements and Release of Collateral in
Connection with the IPO Consummation
Ladies and Gentlemen:
Reference is made to the following:
(A) the Loan and Security Agreement dated July 28, 1995 between
Calbiochem-Novabiochem Corporation ("Borrower") and Silicon Valley Bank
("Silicon"), as amended by that Amendment to Loan Agreement dated November 22,
1995, effective as of September 30, 1995, as amended by that Amendment to Loan
Agreement dated January 24, 1996, and as amended by that Amendment to Loan
Agreement dated June 27, 1996 (the "June 1996 Amendment"), and as otherwise
amended from time to time (the "Loan Agreement"; terms defined in the Loan
Agreement are used herein as therein defined);
(B) Pledge Agreement dated July 27, 1995 (the "Cal AG Pledge
Agreement") by Calbiochem-Novabiochem AG ("Cal AG") in favor of Silicon;
(C) Security Agreement dated July 28, 1995 (the "Parent Security
Agreement") by CN Biosciences, Inc. (formerly known as Calbiochem-Novabiochem
International, Inc.) ("Parent") in favor of Silicon;
(D) Pledge Agreement dated July 28, 1995 (the "Borrower Pledge
Agreement") by Borrower in favor of Silicon;
(E) Pledge Agreement dated July 28, 1995 (the "Parent Pledge
Agreement") by Parent in favor of Silicon; and
(F) Collateral Assignment, Patent Mortgage and Security Agreement dated
July 28, 1995 (the "Collateral Assignment") by Borrower in favor of Silicon.
Pursuant to the June 1996 Amendment, Silicon agreed that upon the
occurrence of the IPO Consummation the Borrower's grant of the security interest
in the Collateral as security for the Obligations shall be deemed terminated and
of no force and effect.
Further, Silicon hereby agrees as follows that upon the occurrence of
the IPO Consummation:
1. All references to the security interest or lien of Silicon in the
Collateral as set forth in the Loan Agreement and related documents are deemed
to be of no further force or effect;
2. Notwithstanding the terms of their respective termination provisions
or the Schedule, as amended, to the Loan Agreement, each of the Cal AG Pledge
Agreement, Borrower Pledge Agreement, and the Parent Pledge Agreement shall be
deemed terminated,
<PAGE> 2
Calbiochem-Novabiochem Corporation
CN Biosciences, Inc.
(formerly known as Calbiochem-Novabiochem International, Inc.)
Calbiochem-Novabiochem AG
September 30, 1996
Page 2
and, in connection therewith, Silicon agrees to return all collateral pledged
thereunder to the pledgor thereof;
3. Notwithstanding the terms of their respective termination provisions
or the Schedule, as amended, to the Loan Agreement, each of the Parent Security
Agreement and the Collateral Assignment shall be deemed terminated; and
4. Silicon shall execute such additional documentation and take such
additional actions as are reasonably necessary to implement the termination of
its security interests, pledges and liens as contemplated herein and as
contemplated in the June 1996 Amendment.
Finally, by your signature below, you hereby agree that, except as set
forth specifically herein, all of the terms and provisions of the Loan Agreement
and the continuing guaranties of CN Biosciences, Inc. and Calbiochem-Novabiochem
AG in favor of Silicon with respect to the Obligations, shall continue in full
force and effect and the same are hereby ratified and confirmed.
Sincerely yours,
Silicon Valley Bank
By /s/ Linda LeBeau
--------------------------------------
Title: Senior Vice President
------------------------------
AGREED:
Calbiochem-Novabiochem Corporation
By /s/ Arthur E. Roke
---------------------------
Title: Secretary
------------------
CN Biosciences, Inc.
(formerly known as Calbiochem-Novabiochem International, Inc.)
By /s/ James G. Stewart
---------------------------
Title: CFO
------------------
Calbiochem-Novabiochem AG
By /s/ Stelios B. Papadopoulos
---------------------------
Title: Director
------------------
<PAGE> 1
EXHIBIT. 10.2
[GRAPHIC OMITTED] SILICON VALLEY BANK
AMENDMENT TO LOAN AGREEMENT
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: SEPTEMBER 30, 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, as
amended by that Amendment to Loan Agreement dated January 24, 1996, as amended
by that Amendment to Loan Agreement dated June 27, 1996, and as modified by that
Consent and Waiver dated August 23, 1996. (Capitalized terms used but not
defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)
1. MODIFICATION TO NEGATIVE COVENANTS-EXCEPTIONS. Effective on the
occurrence of the IPO Consummation, the section of the Schedule to the Loan
Agreement entitled "Negative Covenants-Exceptions (Section 4.6)" is hereby
deleted and replaced with the following:
"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 and make
loans to the Parent without any restriction; and (ii)
Borrower may pay or declare dividends on Borrower's
stock in any form."
2. 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.
3. 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
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/ Linda LeBeau
--------------------------------------
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 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 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 CN BIOSCIENCES, INC. (formerly known
as Calbiochem-Novabiochem International,
Inc.)
By: /s/ Stelios B. Papadopoulos
-------------------------------
Title: Director By: /s/ James G. Stewart
---------------------------- -------------------------------------
Title: Vice President
----------------------------------
-2-
<PAGE> 1
EXHIBIT 10.3
[GRAPHIC OMITTED] SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: CALBIOCHEM-NOVABIOCHEM CORPORATION
ADDRESS: 10394 PACIFIC CENTER COURT
SAN DIEGO, CALIFORNIA 92121
DATE: OCTOBER 2, 1996
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY
BANK ("Silicon"), on the one side, and the borrower named above (the "Borrower")
and CN Biosciences, Inc. ("Parent"), on the other side..
The Borrower and Silicon 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, as amended by that Amendment to Loan Agreement dated January 24, 1996,
as amended by that Amendment to Loan Agreement dated June 27, 1996, as modified
by that Consent and Waiver dated August 23, 1996, and as amended by that
Amendment to Loan Agreement dated September 30, 1996. (Capitalized terms used
but not defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.) Further, Silicon and Parent agree to modify certain provisions of
the Cross Corporate Guaranty dated July 28, 1995 (the "Guaranty") by Parent
relating to the Obligations, the Security Agreement dated July 28, 1995 (the
"Security Agreement") by Parent in favor of Silicon, and the agreements and
documents relating thereto.
1. MODIFICATION TO DEFINITION. The definition of "IPO Consummation" as
set forth in Section 2.2 of the Loan Agreement is hereby amended to read as
follows:
"The term "IPO Consummation" means (I) the consummation of an
underwritten initial public offering of the Parent's common stock from
which the Parent receives gross proceeds less underwriting discounts and
commissions in a minimum amount of $18,600,000, which transaction is
otherwise satisfactory to Silicon, and relating to which Parent 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. PERMITTED LEASE DEBT; WAIVER. Notwithstanding any of the terms or
provisions of the Loan Agreement or any related agreement with respect to the
Borrower, Borrower may incur indebtedness for the purchase price of or lease of
equipment in an aggregate amount not exceeding $600,000 at any time outstanding
(the "Permitted Lease Debt"). Notwithstanding any of the terms or provisions of
the Guaranty, the Security Agreement or any other document or agreement relating
thereto, Parent may from time to time enter into guaranties of the Permitted
Lease Debt. Further, any defaults arising from Borrower's incurrence of
indebtedness for the purchase price of or lease of equipment or from Parent's
guaranty of such debt prior to the date hereof are deemed waived.
3. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon, the Borrower and the
Parent and the other written documents and agreements between and among such
parties set forth in full all of the
-1-
<PAGE> 2
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, and
between Silicon and the Parent shall continue in full force and effect and the
same are hereby ratified and confirmed. Parent, in its capacity as guarantor,
hereby consents to the provisions of this Amendment made with respect to the
Loan Agreement, and the guaranty of Parent with respect to the Obligations shall
continue in full force and effect and is hereby reaffirmed.
BORROWER: SILICON:
CALBIOCHEM-NOVABIOCHEM SILICON VALLEY BANK
CORPORATION
BY /s/ Linda LeBeau
--------------------------------------
TITLE Senior Vice President
-----------------------------------
BY /s/ James G. Stewart
-----------------------------
PRESIDENT OR VICE PRESIDENT
BY/s/ Arthur E. Roke
-----------------------------
SECRETARY OR ASS'T SECRETARY
PARENT:
CN BIOSCIENCES, INC.
BY /s/ Stelios B. Papadopoulos
-----------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ James G. Stewart
-----------------------------
SECRETARY OR ASS'T SECRETARY
CONSENT
The undersigned guarantor acknowledges that its consent to the
foregoing Amendment is not required, but the undersigned nevertheless does
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 Guaranty 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
By: Stelios B. Papadopoulos
-------------------------------------
Title: Director
----------------------------------
-2-
<PAGE> 1
Exhibit 11.1
CN BIOSCIENCES, INC.
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------------------------------------------------
1996 1995 1996 1995
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net income (loss) 466 232 1,323 958
Average common shares outstanding 1,059 1,067 1,059 1,067
Net effect of dilutive common share equivalents
based on the treasure stock method 988 870 988 870
Adjustments to reflect requirements of the
Securities and Exchange Commission (Effect
of SAB 83) 50 50 50 50
---------- ---------- ---------- ----------
Adjusted shares outstanding 2,097 1,987 2,097 1,987
---------- ---------- ---------- ----------
Historical net income (loss) per share reflecting
requirements of the SEC $0.22 $0.12 $0.63 0
---------- ---------- ---------- ----------
Effect of assumed conversion of preferred
shares from data of issuance 1,435 1,435 1,398 1,435
---------- ---------- ---------- ----------
Adjusted shares outstanding 3,532 3,422 3,495 3,422
---------- ---------- ---------- ----------
Pro Forma net income (loss) per share $0.13 $0.07 $0.38 $0.28
---------- ---------- ---------- ----------
</TABLE>
<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 NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,366
<SECURITIES> 0
<RECEIVABLES> 4,991
<ALLOWANCES> 0
<INVENTORY> 14,381
<CURRENT-ASSETS> 21,742
<PP&E> 3,830
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,748
<CURRENT-LIABILITIES> 6,148
<BONDS> 0
400
17,943
<COMMON> 11
<OTHER-SE> 210
<TOTAL-LIABILITY-AND-EQUITY> 32,748
<SALES> 25,400
<TOTAL-REVENUES> 25,400
<CGS> 11,667
<TOTAL-COSTS> 11,085
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 613
<INCOME-PRETAX> 2,035
<INCOME-TAX> 712
<INCOME-CONTINUING> 1,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,323
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
<FN>
EARNINGS PER SHARE IS CALCULATED BASED UPON PRO FORMA SHARES OUTSTANDING. SEE
NOTE 3 OF NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</FN>
</TABLE>
