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 June 30, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______ to ______
Commission File Number 0-12081
CAMBRIDGE BIOTECH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-2726626
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
365 Plantation Street, Worcester, MA 01605
(Address of Principal Executive Offices) (Zip Code)
(508) 797-5777
(Registrant's Telephone Number, Including Area Code)
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(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__
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes_____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of July 31, 1996
Common Stock Outstanding 26,065,017
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CAMBRIDGE BIOTECH CORPORATION
Form 10-Q June 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Unaudited, Consolidated Financial Statements Page Number
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995
Consolidated Statement of Operations for three
and six month periods ended June 30, 1996 and 1995
Consolidated Statement of Cash Flows for six month
periods ended June 30, 1996 and 1995
Notes to Consolidated Interim Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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Item 1. Consolidated Financial Statements
CAMBRIDGE BIOTECH CORPORATION
(Debtor-In-Possession)
Consolidated Balance Sheets
(Unaudited)
(In Thousands)
Assets 6/30/96 12/31/95
-------- --------
Current Assets:
Cash and cash equivalents $13,876 $ 6,856
Restricted Cash 1,000 0
Marketable Securities 0 216
Accounts receivable
-trade (net of allowance
for doubtful accounts) 2,828 2,638
Other receivables 131 126
Inventories 4,856 4,368
Prepaid expenses & other
current assets 455 695
------ ------
Total Current Assets 23,146 14,899
Investments 300 0
Property, plant, and equipment,
net 5,613 6,986
Patents and purchased
technology, net 503 1,055
Other assets 105 105
------ ------
Total Assets $ 29,667 $23,045
======= =======
Liabilities & Shareholders'
Equity
Current Liabilities:
Accounts payable $ 626 851
Accrued royalties 776 1,192
Accrued professional fees 1,142 753
Accrued incentive
compensation 1,226 1,458
Accrued restructuring costs 211 257
Other accrued expenses 2,791 2,001
Deferred revenue-current 3,156 411
------ -----
Total Current Liabilities 9,928 6,923
Deferred revenue-long term 1,879 2,287
Liabilities subject to
Chapter 11 proceedings 9,886 9,880
------ -----
Total Liabilities 21,693 19,090
Minority Interest 10 9
Shareholders'Equity
Preferred Stock, par value
$.01 per share authorized,
5,000,000 shares, none issued 0 0
Common stock, par value
$.01 per share authorized,
40,000,000 shares, issued
26,065,017 shares 261 261
Additional paid in
capital 120,382 120,382
Unearned compensation (138) (138)
Deficit (112,541) (116,559)
------- -------
Total Shareholders'Equity 7,964 3,946
------- -----
Total Liabilities and
Shareholder's Equity $29,667 $23,045
======= ========
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
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Cambridge Biotech Corporation
(Debtor-In-Possession)
Consolidated Statement of Operations
(Unaudited)
(In Thousands, except per share amount)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenue: ---- ---- ---- ----
Product sales $3,900 $ 4,056 $ 8,306 $ 7,114
Research & development 1,310 1,142 2,657 2,350
Royalties 454 478 905 908
----- ----- ----- -----
5,664 5,676 11,868 10,372
Cost and expenses:
Cost of sales 2,985 3,290 6,183 6,721
Research & development 1,423 1,270 2,715 2,868
Sales, general &
administrative 1,917 2,340 3,822 4,613
----- ----- ----- -----
6,325 6,900 12,720 14,202
Other:
Other income and interest
expense net of interest
income 103 119 197 188
----- ------ ----- -----
Loss from continuing
operations before
reorganization items
and income tax expense (558) (1,105) (655) (3,642)
Reorganization items:
Professional fees (454) (336) (710) (609)
Interest earned on
accumulated cash
resulting from Chapter
11 proceedings 117 100 230 208
----- ----- ----- -----
Total reorganization items (337) (236) (480) (401)
----- ----- ----- -----
Loss from continuing
operations before income
tax expense (895) (1,341) (1,135) (4,043)
Income tax expense --- (1) (2) (2)
----- ----- ----- -----
Loss before (895) (1,342) (1,137) (4,045)
minority interest
Minority Interest (1) 0 (2) (2)
----- ----- ----- -----
Loss from continuing
operations ($896) ($1,342) ($1,139) ($4,047)
Discontinued operations:
Income from discontinued
operations 214 109 620 109
Gain from disposal 4,537 0 4,537 0
----- ------ ----- -----
Net income/(Loss) $3,855 ($1,233) $4,018 ($3,938)
====== ======== ====== ======
Net Income/(Loss) per
weighted average number of
common shares:
Continuing operations ($0.03) ($0.05) ($0.05) ($0.15)
Discontinued operations $0.18 $0.00 $0.20 $0.00
------ ------- ------- -------
Net Income/(Loss) per share $0.15 ($0.05) $0.15 ($0.15)
===== ======= ===== =======
Weighted average number of
common shares outstanding 26,065 26,065 26,065 26,065
====== ====== ====== ======
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
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Cambridge Biotech Corporation
(Debtor-In-Possession)
Consolidated Statement of Cash Flows
For the six months ended June 30, 1996 and 1995
(Unaudited)
(In Thousands)
1996 1995
---- ----
Cash Flows From Operating
Activities:
Net Income/(Loss) $4,018 ($3,938)
Adjustments to reconcile net income/
(Loss) to net cash provided/(used)
by operating activities:
Depreciation and
amortization 2,085 2,478
Provision for doubtful accounts 30 23
Non-cash compensation expense --- 49
Gain on sale of enterics
business (4,496) ---
Loss on sale of
marketable securities --- 1
Changes in assets and
liabilities:
Restricted cash (1,000) ---
Accounts and other
receivables (226) (521)
Inventories (488) 85
Prepaid and other
current assets 241 (399)
Investments (300) ---
Accounts payable and
other accrued expenses 314 2,310
Deferred revenue 2,336 (2,035)
Accrued restructuring
charges (46) (12)
Other noncurrent assets and
liabilities 1 (1)
Minority interest 1 5
Net cash provided/(used) by ------ ------
operating activities 2,471 (1,955)
Cash Flows From Investing
Activities:
Proceeds from sale of
marketable securities 216 0
Purchases of property,
plant, and equipment (152) (311)
Patents & purchased
technology (114) (152)
Proceeds from sale of
enterics business 4,601 ---
------ ------
Net cash provided (used)
by investing activities 4,551 (463)
Cash Flows from Financing
Activities:
Payment on long-term
obligations (2) (2)
------- ------
Net cash used by
financing activities (2) (2)
------- ------
Net increase(decrease) in cash
and cash equivalents 7,020 (2,423)
Cash and cash equivalents at
the beginning of the year 6,856 8,538
----- ------
Cash and cash equivalents at
the end of the period $13,876 $6,115
====== =====
Supplemental disclosures:
Income taxes paid/refunded $7 $ 0
====== =====
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
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CAMBRIDGE BIOTECH CORPORATION
NOTES TO UNAUDITED, CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying consolidated interim financial statements are unaudited
and have been prepared on a basis substantially consistent with the
audited financial statements and based on considering the sale of the
enterics business as a discontinued operation as discussed in Footnote 3.
Certain information and footnote disclosures normally included in the
Company's annual financial statements have been condensed or omitted
pursuant to the Securities and Exchange Commission's rules and
regulations. The consolidated interim financial statements, in the
opinion of management, reflect all adjustments (including normal
recurring accruals) necessary for a fair presentation of the results
for the interim periods.
The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal
year. These consolidated interim financial statements should be read
in conjunction with the audited financial statements for the year ended
December 31, 1995, which are contained in the CBC's Annual Report
on Form 10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
2. Inventories:
Inventories consist of the following: (000'S)
6/30/96 12/31/95
------- --------
Finished goods $1,082 $ 681
Work in process 2,888 2,887
Raw materials & supplies 886 800
------- -------
$4,856 $ 4,368
======= =======
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3. Discontinued Operations:
On June 24, 1996, CBC sold the assets of its enterics diagnostic business
pursuant to an Asset Purchase Agreement ("Purchase Agreement") to Meridian
Diagnostics, Inc. ("Meridian") for approximately $5,700,000 in cash.
Meridian also agreed to pay to CBC appoximately $650,000 for certain
inventory purchased at closing and a "royalty" on annual sales in excess of
certain threshold amounts for a five year period. CBC has also entered into
a Supply Agreement to supply Meridian with certain quantities of product
over a period not to exceed six months from closing. Under the Purchase
Agreement, $1,000,000 of the purchase price is being held in escrow to be
released after consummation of CBC's bankruptcy reorganization plan (or
alternatively upon the expiration of certain representations and warranties)
as product is delivered under the Supply Agreement. The results from
operations and gain on disposal of the enterics business are reported as
discontinued operations and the prior periods have been restated to reflect
that occurrence. The income from the discontinued operation for the three
and six months ended June 30, 1996 was $214,000 and $620,000, respectively,
compared to $109,000 and $109,000 for the same period in 1995. A gain on
disposal of approximately $4,539,000 was recorded.
4. Subsequent Events:
On July 18, 1996 CBC's Plan of Reorganization was confirmed by order of
the U.S. Bankruptcy Court. The major transactions contemplated by the Plan
are: (i) CBC's sale of the assets of the enterics business; (ii) the
issuance by Aquila on the consummation date under the Plan of 5,000,000
shares of Aquila common stock (together with a right to purchase a "Unit" as
described below) to CBC equity security holders and certain CBC creditors
in exchange for their interests in and claims against CBC, and the payment of
other creditors in cash; (iii) the distribution of the assets of the biopharm
business to Aquila on the consummation date under the Plan; (iv) Aquila's
sale of all of the issued and outstanding stock of CBC to bioMerieux pursuant
to the Master Acquisition Agreement for $6.5 million in cash; and (v) a
rights offering (the "Rights Offering") pursuant to which the holder of each
share of Aquila common stock distributed pursuant to the Plan on account of
an allowed claim or interest would be entitled to purchase a "Unit" entitling
the purchaser to one share of Aquila common stock and a warrant to purchase
one share of Aquila common stock. Each participant in the Rights Offering
would also obtain certain rights with respect to unsubscribed Units. See
Current Report on Form 8-K dated July 18, 1996 and Exhibit 2 thereof, for a
description of the Plan.
The United States Bankruptcy Appellate Panel for the First Circuit entered
an order on July 29, 1996 imposing a temporary twenty-one day stay of the
Bankruptcy Court order confirming the Plan. The stay was requested by
Institut Pasteur and Pasteur Sanofi Diagnostics who are appealing the
Bankruptcy Court's confirmation of CBC's reorganization plan over their
objection to the assumption of various patent licenses covering patents
owned by Institut Pasteur and licensed to CBC.
On July 12, 1996 CBC entered into an agreement with Abbott Laboratories
("Abbott") that revised the terms for payment of amounts due from
Abbott to CBC under a sublicense agreement dated December 2, 1988. Under
the terms of the July 12 agreement, Abbott will pay CBC $5,000,000 in
exchange for a fully paid-up sublicense for the non-exclusive diagnostic
use of certain technology licensed exclusively to CBC by Harvard University
("Harvard"). Harvard will receive from CBC $1,750,000 of the Abbott
payment. CBC will retain $650,000 of the Abbott payment and the remaining
$2,600,000 will be transferred to Aquila upon consummation of the Plan (or
within three business days of receipt of the payment by CBC if the payment
is received after consummation).
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
- -------
CBC filed for protection under Chapter 11 of the United States Bankruptcy
Code ("Chapter 11") on July 7, 1994, pursuant to a voluntary petition filed
in the United States ("Bankruptcy Court") for the District of Massachusetts,
Western Division Bankruptcy Court. CBC has managed its assets and operated
its businesses as a debtor in possession throughout the Chapter 11 process.
As part of the reorganization process, management reviewed CBC's strategic
direction, including specific products and programs, and identified certain
assets and operations which did not fit within the business plan for re-
organizing CBC.
As of April 4, 1996, CBC, bioMerieux Vitek, Inc. ("bioMerieux") and Aquila
Biopharmaceuticals, Inc. ("Aquila") entered into a Master Acquisition
Agreement. Under the Master Acquisition Agreement, pursuant to the reorgan-
ization plan, CBC would become a wholly owned subsidiary of Aquila with the
shareholders of CBC exchanging all of their shares in CBC for Aquila shares.
CBC would continue its diagnostic business and retain the following as each
pertains to the diagnostic business: machinery, equipment, inventory,
employees located in Rockville, Maryland, permits, licenses, patents,
trademarks and other intellectual property pertaining to the diagnostic
business. The assets pertaining to CBC's biopharmaceutical business and
CBC's real estate interests would be transferred to Aquila, and the stock of
CBC (the owner of the diagnostic business) would be sold by Aquila to
bioMerieux for $6.5 million dollars in cash. In addition, bioMerieux would
lease the diagnostic manufacturing facilities in Rockville, Maryland from
Aquila. The biopharmaceutical business, which consists of the development
and commercialization of products which stimulate the immune system to treat
infectious diseases and cancer, would be continued by Aquila.
On April 10, 1996, CBC filed a disclosure statement and Reorganization Plan.
After a hearing, the disclosure statement was approved in an amended form
by the Bankruptcy Court on May 17, 1996, and was distributed to CBC's
creditors, shareholders, and other interested parties.
On May 6, 1996, CBC entered into an agreement for the sale of the assets of
CBC's enterics diagnostic business, including four tests for intestinal
pathogens and a diagnostic test for Lyme disease, for $4.5 million in cash.
On May 16, 1996 the Bankruptcy Court approved the sale of the enterics
business and a bidding process by which other parties could submit bids for
the enterics business. On June 19, 1996, the Bankruptcy Court approved the
sale of the enterics business to the successful bidder Meridian for
$5,700,000 and certain other considerations including inventory purchases
of $650,000 and a supply agreement. Meridian will also pay a royalty over a
five year period based upon net sales in excess of certain threshold amounts.
Under the Purchase Agreement, $1,000,000 of the purchase price is being held
in escrow to be released after consummation of CBC's bankruptcy reorganization
plan (or alternatively upon the expiration of certain representations and
warranties) as product is delivered under the Supply Agreement. The sale to
Meridian closed on June 24, 1996.
On July 15, 1996, a confirmation hearing on the proposed Reorganization Plan
was conducted, and the Plan was subsequently confirmed by order of the
Bankruptcy Court on July 18, 1996 (as confirmed, the "Plan"). The major
transactions contemplated by the Plan are: (i) CBC's sale of the assets of
the enterics business; (ii) the issuance by Aquila on the consummation date
under the Plan of 5,000,000 shares of Aquila common stock (together with a
right to purchase a "Unit" as described below) to CBC equity security holders
and certain CBC creditors in exchange for their interests in and claims
against CBC, and the payment of other creditors in cash; (iii) the dist-
ribution of the assets of the biopharmaceutical business to Aquila on the
consummation date under the Plan; (iv) Aquila's sale of all of the issued
and outstanding stock of CBC to bioMerieux pursuant to the Master Acquisition
Agreement for $6.5 million in cash; and (v) a rights offering (the "Rights
Offering") pursuant to which the holder of each share of Aquila common stock
distributed pursuant to the Plan on account of an allowed claim or interest
would be entitled to purchase a "Unit" entitling the purchaser to one share
of Aquila common stock and a warrant to purchase one share of Aquila common
stock. Each participant in the Rights Offering would also obtain certain
rights with respect to unsubscribed Units. See Current Report on Form 8-K
dated July 18, 1996 and Exhibit 2 thereof, for a description of the Plan.
On July 29, 1996, the Bankruptcy Appellate Panel for the First Circuit
imposed a temporary twenty-one day stay of the Bankruptcy Court's
confirmation order. The transactions described in the preceeding paragraph
cannot be executed and the Plan cannot be consummated while the stay remains
in effect.
Results of Operations
- ---------------------
The Consolidated Statement of Operations presents CBC's results from
operations exclusive of the enterics diagnostic business, which is presented
as a Discontinued Operation in the statement. Revenues, costs,
expenses, and other items reflect the results of CBC's retroviral and
biopharmaceutical businesses and administrative functions, as more fully
described below.
Three and Six Months Ended June 30, 1996 and 1995
Revenues were $5,664,000 for the three months ended June 30, 1996 compared
to $5,676,000 in the same period in 1995. Revenues for the six months ended
June 30, 1996 were $11,868,000 compared to $10,372,000 in the same period
in 1995.
Product sales decreased to $3,900,000 in the second quarter of 1996 from
$4,056,000 for the same period in 1995, a decrease of approximately 2%.
Product sales for the first six months of 1996 increased to $8,306,000 from
$7,114,000 for the same period in 1995. The increase is primarily
attributable to the sales of both diagnostic and biopharmaceutical antigen
products during the first quarter of 1996.
Research and Development ("R&D") revenues were $1,310,000 in the second
quarter of 1996 compared to $1,142,000 for the same period in 1995.
R&D revenue for the first six months of 1996 increased to $2,657,000 from
$2,350,000 for the same period in 1995. The increases in both periods
compared to the same periods in the prior year are attributable to increased
R&D activities.
Royalty revenue was virtually unchanged at $454,000 in the second quarter of
1996 compared to $478,000 for the same period in 1995, and at $905,000 for
the first six months of 1996 compared to $908,000 for the same period in
1995.
Cost of products sold as a percentage of product sales was 77% for the
three months ended June 30, 1996 compared to 81% for the same period
in 1995. For the six months ended June 30, 1996 and 1995, the cost of
products sold as a percentage of product sales was 74% and 94%, respect-
ively. Profit margins improved during 1996 because of the growth in antigen
sales, which have margins that are favorable to other products sold by CBC
and because production difficulties in 1995 resulted in significantly
greater costs.
Research and development expenses increased to $1,423,000 in the second
quarter of 1996 from $1,270,000 for the same period in 1995. For the first
six months of 1996 compared to the same period in 1995, research and devel-
opment expenses were $2,715,000 and $2,868,000, respectively. The increase
is due to a general increase in activity across a variety of research and
development projects. The decrease over the entire period is primarily due
to the accrual of expenses related to CBC's employee stock incentive plan for
R&D employees that occurred in 1995.
Selling, general and administrative expenses decreased to $1,917,000 in the
second quarter of 1996 from $2,340,000 for the same period in 1995. For the
first six months of 1996, selling, general and administrative expenses
decreased to $3,822,000 from $4,613,000 for the same period in 1995.
The decrease is primarily due to the accrual of expenses related to CBC's
employee stock incentive plan for administrative employees that occurred in
1995 and decreased personnel expenses in 1996.
Chapter 11 related professional fees and interest earned on accumulated
cash were $454,000 and $117,000, respectively for the three months ended
June 30, 1996, compared to $336,000 and $100,000 for the same period in 1995.
For the first six months of 1996 compared to the same period in 1995, Chapter
11 related professional fees and interest earned on accumulated cash were
$710,000 and $230,000 compared to $609,000 and $207,000, respectively.
The Company lost $896,000 or ($0.03) per share from continuing operations and
had net income of $3,855,000 or $0.15 per share in the second quarter of
1996 including the income and gain from disposal from discontinued
operations, as compared to a loss of $1,342,000 or ($0.05) per share from
continuing operations and a net loss of $1,233,300 or ($0.05) per share
including the income from discontinued operations for the same period in 1995.
For the first six months of the year, CBC lost $1,139,000 or ($0.05) per
share from continuing operations and had net income of $4,018,000 or $0.15
per share including the income and gain from disposal from discontinued
operations, compared to a loss of $4,047,000 or ($0.15) per share including
the income from continuing operations and a net loss of $3,937,900 or
($0.15) per share including the income from discontinued operations for the
same period in 1995.
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Liquidity and Capital Resources
- -------------------------------
Timely consummation of the Plan is crucial in order for CBC to successfully
emerge from bankruptcy and for Aquila to implement its plan for the
continuing development of the biopharmaceutical business. The stay of the
confirmation order, preventing the immediate consummation of the Plan,
seriously jeopardizes the ability of CBC to complete its plan of reorgani-
zation, including completion of the Rights Offering by Aquila, which was
anticipated to provide a source of funds for the ongoing development of
Aquila's technology. CBC has filed a request with the District Court to
vacate the stay and also filed requests to require the posting of a
substantial bond by Institut Pasteur and Pasteur Sanofi Diagnostics if the
stay is to remain in effect. Although CBC believes that the stay was
improvidently granted and that the Bankruptcy's Court's confirmation order
should be upheld, there can be no assurance that the stay will be lifted
or that the Court will order a bond to secure CBC against any damages
incurred as a result of the stay or that CBC will prevail on the merits of
the case. Even if the stay is lifted, there is no assurance that the passage
of time will not have jeopardized the successful completion of some of the
transactions contemplated in the Plan.
The ability of Aquila to fund its long term operations beyond 1996 after
consummation of the Plan is dependent upon several factors, including the
success of the Rights Offering and Aquila's ability to attract funding
through additional public or private financing or by establishing corporate
partnerships and collaborative arrangements. There can be no assurance that
such additional funding can be obtained on acceptable terms.
CBC's discussions as to management's plans and objectives for CBC's business
after the date hereof including those with respect to the consummation of
the Plan and operations of Aquila are forward looking statements. Actual
results may differ from those projected by CBC as a result of court actions,
the effect of economic conditions, risks in product and technology develop-
ment and other risks identified in CBC's Securities and Exchange Commission
filings and the exhibits thereto.
Cash and cash equivalents were $13,876,000 at June 30, 1996 compared to
$6,855,800 at December 31, 1995, with the increase resulting primarily from
the sale of the enterics business and receipt of a license payment from a
large pharmaceutical partner.
The net cash provided by operating activities was $2,467,100 for the six
months ended June 30, 1996 as compared to net cash used in operating
activity of $1,957,600 for the same period in 1995. The primary items
included in net income or loss that are not operating sources or uses of
cash were depreciation and amortization of $2,084,800 and $2,478,200 for
six months ended June 30, 1996 and 1995, respectively and the $4,500,000 gain
from the sale of the enterics business. The increase in deferred revenue in
the first half of 1996 is primarily the result of the receipt of an annual
license payment from a large pharmaceutical partner which is recognized as
earned and the $1,000,000 in deferred revenue from the escrowed portion of
the enterics purchase price. Accounts payable and accrued expenses increased
in 1995 due to patent related milestone obligations, employee retention
bonuses, and timing of expenditures.
CBC's investing activities provided cash of $4,551,000 for the six months
ended June 30, 1996, compared to using cash of $463,000 for the same period
in 1995. The sale of the enterics business and of certain marketable
securities were the primary reasons for the increase in cash provided by
investing activities.
CBC had total working capital of $13,218,900 and current ratio of 2.33 to
1 at June 30, 1996, compared to $7,976,600 and 2.15 to 1 at
December 31, 1995. However, CBC had approximately $9,886,000 in liabilities
subject to Chapter 11 proceedings as of June 30, 1996 and if all of these
liabilities were considered current liabilities, the current ratio would have
been 1.17 to 1 at June 30, 1996, compared to 0.89 to 1 at December 31, 1995.
- ----------------------------------------------------------------------------
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As reported above see (Part 1 Item 2) CBC's plan of reorganization was
confirmed by order of the U.S. Bankruptcy Court on July 18, 1996. See
Current Report on Form 8 and Exhibit 2 thereto, dated July 18, 1996, for a
description of the Plan. On July 29, 1996, the Bankruptcy Appellate Panel
for the First Circuit imposed a temporary twenty-one day stay of the
Bankruptcy Court's Confirmation order. The settlement agreement with
MicroGeneSys, Inc. reported in CBC's Annual Report for 1995 on Form 10-K
has been approved by the Bankruptcy Court and the United States District
Court for the District of Connecticut.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to Section 1125 of the Bankruptcy Code, on June 5, 1996, CBC mailed
a Disclosure Statement and soliciting materials to all members of classes of
Claims or Interests impaired under the Plan (including the holders of CBC
Common Stock), seeking approval as required by the Bankruptcy Code. Claimants
and Interest holders had until 4:00 p.m. Eastern Time on July 8, 1996 to vote.
The holders of Class 6 Interests (the CBC Common Stock) voted 10,312,697
shares in favor and 714,171 shares against approval of the Plan.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
2. Confirmed Reorganization Plan (consisting of Reorganization Plan
dated May 20, 1996, and Modification dated July 15, 1996) (incor-
porated by reference to Exhibit 2 to Current Report on Form 8-K
dated July 18, 1996, File No. 0-12081).
10.1 Master Acquisition Agreement by and among bioMerieux Vitex, Inc.
Aquila Biopharmaceuticals, Inc. and Cambridge Biotech Corporation
dated as of April 4, 1996.
10.2 Asset Purchase Agreement between Meridian Diagnostics, Inc. and
Cambridge Biotech Corporation dated as of June 24, 1996 (incorporated
by reference to Exhibit 2.1 to Current Report on Form 8-K, dated
June 24, 1996, File No. 01-12081).
27. Financial Data Schedule
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(b) Reports on Form 8-K
During the quarter ended June 30, 1996, CBC filed the following
reports on Form 8-K:
1. Current Report on Form 8-K dated 04/17/96
2. Current Report on Form 8-K dated 05/13/96
3. Current Report on Form 8-K dated 06/24/96
4. Current Report on Form 8-K dated 07/18/96
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
undersigned thereunto duly authorized.
CAMBRIDGE BIOTECH CORPORATION
Date: August 9, 1996
/s/ Alison Taunton-Rigby
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Alison Taunton-Rigby
President and Chief Executive Officer
/s/ Stephen J. DiPalma
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Stephen J. DiPalma
Chief Financial Officer, Vice President of
Finance and Treasurer
MASTER ACQUISITION AGREEMENT dated as of April 4, 1996
(this "Agreement"), by and among BIOMERIEUX VITEK, INC., a
Missouri corporation (the "Purchaser"), AQUILA
BIOPHARMACEUTICALS, INC., a Delaware corporation (the
"Seller"), and CAMBRIDGE BIOTECH CORPORATION, a Delaware
corporation and Debtor-in-Possession in the Bankruptcy Case
(as defined below) ("CBC").
R E C I T A L S
WHEREAS pursuant to a voluntary petition filed on July
7, 1994 in the United States Bankruptcy Court for the District of
Massachusetts, Western Division (the "Bankruptcy Court"), Case
Number 94-43054-JFQ (the "Bankruptcy Case"), CBC sought protection
under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code");
WHEREAS the Purchaser and CBC have agreed to structure a
transaction pursuant to which the Purchaser would acquire all the
outstanding shares of capital stock of CBC from and after its
reorganization pursuant to the Bankruptcy Code in a transaction to
be described in and consummated pursuant to a plan of
reorganization to be submitted to the Bankruptcy Court for its
approval (the "Plan of Reorganization");
WHEREAS the Parties intend that such acquisition of
capital stock would occur subsequent to the occurrence of certain
other transactions described below to be approved by the
Bankruptcy Court as elements of the Plan of Reorganization;
WHEREAS it is contemplated that, prior to the Closing
hereunder (as hereinafter defined), the Seller will be the
beneficial and record owner of all the issued and outstanding
capital stock of CBC;
WHEREAS the Seller wishes to provide for the sale to the
Purchaser and the Purchaser wishes to provide for the purchase
from the Seller of all such capital stock upon the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in contemplation of the foregoing and in
consideration of the mutual agreements, covenants, representations
and warranties contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:<PAGE>
ARTICLE I
EXPENSE REIMBURSEMENT
ALTERNATIVE TRANSACTIONS
PLAN OF REORGANIZATION
SECTION 1.1. Expense Reimbursement; Alternative
Transaction Fee; Bidding Procedure. (a) CBC shall promptly file
an appropriate and required notice and motion seeking an order of
the Bankruptcy Court (the "Definitive Authorization") (i)
approving the adoption of the no solicitation provision described
in paragraph 5 of Annex A hereto, (ii) recognizing and approving
the expense reimbursement fee (the "Expense Reimbursement Fee")
and the alternative transaction fees (the "Alternative Transaction
Fees") described on Annex A hereto as "administrative expenses"
pursuant to 11 U.S.C. Section 503(b), and (iii) adopting the
bidding procedure (the "Bidding Procedure") set forth on Annex A
hereto as the only means by which CBC can consider an alternative
transaction to the transaction proposed to be consummated
hereunder (the existence of a procedure for the consideration of
an alternative transaction not to be construed as calling for the
entering into of an agreement or the consummation of such an
alternative transaction hereunder. CBC will also diligently seek
a determination of the Bankruptcy Court that the Purchaser is an
entity that will have purchased the Assets (as defined below) "in
good faith" as such term is used in Section 363(m) of the
Bankruptcy Code, if the Assets are indirectly acquired through the
acquisition of stock as contemplated herein or the Purchaser
should purchase the Assets under an alternative structure agreed
to by the parties involving the direct purchase of the Assets.
(b) CBC shall not nor shall it authorize or knowingly
permit any officer, director, employee or representative retained
by it to solicit or initiate the solicitation of any offer to
purchase the Assets directly or through the acquisition of an
equity interest in CBC. It is understood and agreed that, subject
to applicable confidentiality provisions, CBC may receive other
bids for assets and/or equity of CBC; provided, however, that the
Bidding Procedure set forth on Annex A hereto shall be adhered to
with respect to any such bids.
SECTION 1.2. Plan of Reorganization. CBC and the
Seller will use all reasonable efforts to formulate, promote and
obtain Bankruptcy Court approval of a disclosure statement
containing "adequate information" within the meaning of such term
as used in Section 1125 of the Bankruptcy Code (the "Disclosure
Statement") and acceptance of the Plan of Reorganization by
holders of the requisite number and amount of interests and
claims, such plan to encompass the transactions described in this
Master Acquisition Agreement, including those described in this
Article I, expressly to approve this Agreement and all the
transactions contemplated hereby, and to provide for the
assumption, assignment and rejection of executory contracts and
unexpired leases under Section 365 of the Bankruptcy Code, and
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other appropriate actions, as are consistent with and in
furtherance of the transactions described herein. The Disclosure
Statement and Plan of Reorganization as presented to the
Bankruptcy Court and as the same may pertain to or have any
material impact or effect upon the transaction contemplated
hereunder shall be subject to the approval of the Purchaser as
hereinafter provided, and the Purchaser shall cooperate with the
Seller and CBC to support the Plan of Reorganization. The Seller,
CBC and the Purchaser may agree to restructure the transactions
provided for herein in the form of an asset purchase in the event
that effectiveness of the Plan were to be unreasonably delayed and
restructuring of the transaction provided an alternative
satisfactory to each, subject to Bankruptcy Court approval.
SECTION 1.3. Transactions Contemplated by the Plan of
Reorganization. The Plan of Reorganization shall provide that
(i) the Seller shall acquire all the outstanding shares of capital
stock (the "Shares") of the reorganized entity ("Reorganized
CBC"), (ii) the Seller shall sell such Shares of Reorganized CBC
to the Purchaser in accordance with the terms of this Agreement,
and (iii) the Seller and CBC shall cause distribution to the
former shareholders and the claimholders of CBC of such
consideration (consistent with the terms hereof) as will result in
full and complete discharge, release and cancellation of claims
against and all interests in CBC as it was constituted prior to
the consummation of the Plan of Reorganization ("Old CBC"). Prior
to the transfer of the Shares, CBC shall transfer all assets,
agreements, liabilities and other items not to be expressly
retained as set forth herein by Reorganized CBC to the Seller and
Reorganized CBC shall retain all the contracts, licenses and
personal property listed on Annex B hereto (the "Assets").
Concurrently with the transfer of the Shares, the Seller shall
lease to Reorganized CBC the premises described in the Lease
Agreement and Option to Purchase attached hereto as Annex C (the
"Lease Agreement"). The Plan of Reorganization shall provide that
all tax obligations of CBC will either be assumed by the Seller or
be satisfied out of the Consideration (as defined below) pursuant
to a determination of the Bankruptcy Court in accordance with
Section 505 of the Bankruptcy Code, a motion with respect to which
will be made before the Bankruptcy Court substantially in the form
attached hereto as Annex D (the "Section 505 Motion") and the
Seller will remain responsible for any additional tax assessed
upon CBC in accordance with Section 505(c) of the Bankruptcy Code.
Except as otherwise provided herein, Reorganized CBC shall be
responsible for the obligations of Reorganized CBC as set forth in
Schedule 1.3 (the "Reorganized CBC Obligations"), and the Seller
shall be responsible for all other obligations of CBC, including
all obligations that were incurred or will arise from conduct or
conditions created or occurring prior to the Closing hereunder,
including all claims, whether or not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, and
including any such post-petition claims. Reorganized CBC, as
acquired by the Purchaser, shall own and possess the Assets, and
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it and they shall be acquired by the Purchaser free and clear of
all obligations, except those obligations expressly set forth
herein, and all liens, claims, encumbrances and security interests
which theretofore had attached to the Assets shall thereafter
attach to the Consideration (as defined below), except as
expressly provided herein. All the Shares shall be acquired by
the Purchaser free and clear of all liens, claims and encumbrances
and rights and options of others.
ARTICLE II
PURCHASE OF THE SHARES
SECTION 2.1. Agreement To Purchase the Shares. The
Purchaser hereby agrees to purchase from the Seller, and the
Seller hereby agrees to sell to the Purchaser, subject to the
conditions set forth herein, the Shares, which shall represent all
the outstanding shares of capital stock of Reorganized CBC, and
which shall be free and clear of all liens, claims, pledges,
charges, security interests, mortgages and restrictions and
encumbrances of any nature whatsoever (individually and
collectively, "Liens").
SECTION 2.2. Consideration and Payment. Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations, warranties and agreements of the parties
contained herein, the Purchaser, at the closing of the
transactions hereunder (the "Closing"), will deliver to the
Seller, by wire transfer to an account designated by the Seller,
an amount equal to $6,500,000 (as such amount is adjusted pursuant
to Section 2.6, the "Consideration"), less (i) $50,000, which is
the amount of estimated liability for state taxes described in the
Schedules pursuant to Section 3.19, which amount shall be used by
Reorganized CBC to pay and discharge any state taxes payable by
CBC in respect of periods prior to the Closing, any balance to be
paid to the Seller within a reasonable time after CBC has
determined such liabilities and (ii) the amount specified in the
written agreement referred to in Section 7.1(t); provided,
however, that such payment shall be subject to the post-closing
adjustment provided in Section 2.6, below.
SECTION 2.3. Deliveries by the Seller. At the Closing,
the Seller will deliver to the Purchaser a certificate or
certificates issued in the name of such Seller, duly endorsed or
accompanied by stock powers duly executed in blank, together with
such other documents as the Purchaser may reasonably request to
evidence the transfer to the Purchaser of good, valid and
marketable title in and to all such Shares free of all Liens, and
evidencing, to the Purchaser's satisfaction, the due and valid
occurrence of the other transactions that were to occur pursuant
to the Plan of Reorganization, including certified orders of the
Bankruptcy Court, instruments of assumption and other instruments
as the Seller and the Purchaser shall agree constitute reasonable
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evidence of the transfers preliminary to the Closing hereunder.
In addition, the Seller shall deliver to the Purchaser:
(a) a long form good standing certificate of CBC issued
by the State of Delaware;
(b) Certificate of Incorporation of CBC certified by
the State of Delaware and By-Laws of CBC certified by its
Secretary;
(c) a certificate; dated the Closing Date, executed by
the Chief Executive Officer of the Seller and CBC, certifying
that, to the best of her knowledge, the representations and
warranties made by the Seller and CBC pursuant to this Agreement
are true and correct in all material respects as of the Closing
Date (except to the extent such representations and warranties
speak as of an earlier date) as though made on and as of the
Closing Date; (d) all books and records of CBC, including its
corporate minute book, seal and stock ledger book, in the
possession or control of CBC;
(e) the opinion of Bowditch & Dewey, counsel for the
Seller and CBC in the form set forth on Annex E-1 hereto and the
opinion of Brown, Rudnick, Freed & Gesmer, bankruptcy counsel to
CBC, in the form set forth on Annex E-2 hereto;
(f) an opinion of Coopers & Lybrand, accountants for
CBC, to the effect that the consummation of the transactions
contemplated herein in accordance with the Plan of Reorganization
will, provided the Purchaser makes an election under Section
338(h)(10) of the Code (as hereinafter defined) as contemplated
herein, cause the sale of the capital stock of CBC to be treated
as a sale of assets;
(g) the Lease Agreement (such Lease Agreement together
with the software and mainframe agreement referred to in Section
6.12(f) and the licenses and sublicense referred to in Section
6.16 being referred to herein as the "Additional Agreements");
(h) a detailed listing of the tangible and intangible
Assets to be transferred, reflecting the net book value of such
Assets as of the Closing Date (the "Closing Date Asset Schedule");
(i) all other previously undelivered items required to
be delivered by the Seller to the Purchaser at the Closing
pursuant to this Agreement or otherwise required in connection
herewith, including other reasonable and customary closing
documents required by the Purchaser.
All proceedings to be taken by the Seller in connection
with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents
required to effect the transactions contemplated hereby reasonably
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requested by the Purchaser will be reasonably satisfactory in form
and substance to the Purchaser.
SECTION 2.4. Deliveries by the Purchaser. At the
Closing, the Purchaser will deliver to the Seller the following:
(a) the Consideration to the Seller provided for in
Section 2.2;
(b) a long form good standing certificate of the
Purchaser, issued by its jurisdiction of incorporation;
(c) Certificate of Incorporation of the Purchaser
certified by its jurisdiction of incorporation and By-Laws of the
Purchaser certified by its Assistant Secretary;
(d) a certificate, dated the Closing Date, executed by
the President of the Purchaser, certifying that, to the best of
his knowledge, the representations and warranties made by the
Purchaser pursuant to this Agreement are true and correct in all
material respects as of the Closing Date (except to the extent
such representations and warranties speak as of an earlier date)
as though made on and as of the Closing Date;
(e) the opinion of Donovan Leisure Newton & Irvine in
the form set forth on Annex F hereto;
(f) the Lease Agreement;
(g) all other previously undelivered items required to
be delivered by the Purchaser to the Seller at the Closing
pursuant to this Agreement or otherwise required in connection
herewith, including other reasonable and customary closing
documents required by the Seller.
All proceedings to be taken by the Purchaser in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby
reasonably requested by the Seller will be reasonably satisfactory
in form and substance to the Seller.
SECTION 2.5. The Closing. The Closing for the sale
of Shares shall take place at the offices of Donovan Leisure
Newton & Irvine, 30 Rockefeller Plaza, New York, New York 10112 at
a date and time to be agreed upon by the parties consistent with
Section 9.1(b) hereof (the "Closing Date"), such date to be as
soon as practicable after the confirmation of the Plan of
Reorganization by the Bankruptcy Court and the fulfillment of the
other conditions set forth herein.
SECTION 2.6. Post-Closing Adjustment. (a) In the
event that the value of the inventory as determined in good faith
by the Purchaser (in the manner provided below) within ten
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business days from and after the Closing Date (the "Actual
Inventory Value") shall be less than an amount (the "Minimum
Inventory Value") equal to (A) the value of such inventory as
reflected in the audited financial statements of CBC as at
December 31, 1995, minus (B) $100,000, the Seller shall pay to the
Purchaser, in accordance with paragraph (c) below, an amount equal
to the difference between the Minimum Inventory Value and the
Actual Inventory Value. (Determination of value for purposes of
this section shall be in a manner consistent with that used by CBC
in connection with its 1995 financial statements to the extent
such manner was consistent with Generally Accepted Accounting
Principles.) Such amount shall be payable whether or not the
Purchaser elected to waive the condition set forth in Section
7.1(j), and shall, if paid, be deemed to constitute an adjustment
to the Consideration.
(b) In the event that the Purchaser discovers, within
six months from and after the Closing Date, that any of the Assets
listed in Schedule 3.10 (as such schedule is delivered on the date
hereof and without regard to any modification thereof pursuant to
Section 5.2(d)), or reflected on the Closing Date General Ledger,
did not constitute, at the time of the Closing, a part of the
assets in the physical possession of CBC, then, as the Purchaser
may direct, the Seller shall deliver at Seller's expense any
missing asset if such delivery is practicable or the Seller shall
pay to the Purchaser an amount equal to the net book value of such
assets reflected on such Schedule 3.10, in accordance with
paragraph (c) below. The payment of any amount pursuant to this
paragraph shall be deemed to constitute an adjustment to the
Consideration. Notwithstanding the above no adjustment shall be
payable under this section unless the aggregate net book value of
all such assets not in the physical possession of CBC exceeded
$15,000, but in such case Seller shall act in good faith to turn
over to CBC any such missing assets in good order and at its own
expense.
(c) The Purchase shall notify the Seller of any amount
payable in accordance with paragraph (a) above within 15 days of
the Closing Date, and of any amount payable in accordance with
paragraph (b) above from time to time after the Closing Date, but
within 31 days of the discovery that an item included in the
Assets was not in the physical possession of CBC at the Closing,
and not, in any event, later than seven months from the Closing
Date. The Seller shall pay to the Purchaser any such amount by
wire transfer or delivery of other immediately available funds
within ten business days after the date of any such notification,
failing which the Seller may cause Reorganized CBC to collect such
amount on its behalf by offset against amounts otherwise due to
Seller.
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ARTICLE III
REPRESENTATIONS OF
AND WARRANTIES BY CBC AND THE SELLER
The Seller and CBC hereby represent and warrant to the
Purchaser as follows, CBC's liability for any breach of
representation or warranty being limited as hereinafter provided:
SECTION 3.1. Ownership of the Shares. Prior to the
Closing, the Seller will be the record and beneficial owner of the
Shares, and at the time of the Closing on the Closing Date will
have (without exception) good, valid and marketable title with
respect to all such Shares, free and clear of all Liens or other
defects in title whatsoever. Upon the delivery of and payment for
the Shares at the Closing, the Seller will convey good, valid and
marketable title with respect to all the Shares, free and clear of
all Liens or other defects in title whatsoever.
SECTION 3.2. Authorization; Valid and Binding
Agreement. Subject to the approval of the Bankruptcy Court and
compliance with applicable requirements of the Bankruptcy Code,
(i) each of the Seller and CBC has, and both have, full right,
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby; (ii) the Seller
will have, at the Closing, full right, power and authority to
execute and deliver the Additional Agreements and to consummate
the transactions contemplated thereby; (iii) all actions and
proceedings required to be taken by or on the part of the Seller
and CBC have been duly and properly taken, and no other action on
the part of the Seller or CBC is necessary, to authorize the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby; (iv) this Agreement has been
duly and validly executed and delivered by the Seller and CBC and,
assuming the due authorization, execution and delivery of this
Agreement by the Purchaser, and assuming that this Agreement is
the valid, binding and enforceable obligation of the Purchaser,
constitutes the valid and binding agreement of the Seller and CBC
enforceable against them and each of them in accordance with its
terms, and (v) at the Closing the Additional Agreements to be
executed and delivered by the Seller will be duly and validly
executed and delivered by the Seller and, assuming the due
authorization, execution and delivery of such Additional
Agreements by the other parties thereto, will constitute the
valid, binding and enforceable obligations of the Seller,
enforceable against it in accordance with its terms.
SECTION 3.3. No Conflicts. Neither the execution and
delivery of this Agreement and the Additional Agreements nor the
consummation at the Closing by the Seller or CBC of the
transactions contemplated hereby or thereby will (i) violate any
provision of the Certificate of Incorporation or By-Laws of
Seller, Old CBC, Reorganized CBC or any Subsidiary (as defined in
Section 3.5(c)), (ii) violate any statute, rule or regulation of
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any governmental authority or any judgment, decree or order
applicable to Seller, Old CBC, CBC or any Subsidiary, or (iii)
except as set forth on Schedule 3.15(a), violate, conflict with,
or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) or change in control
under, or result in the creation of a Lien upon any of the
respective properties or assets of the Seller, CBC or any
Subsidiary under the terms, conditions or provisions of any
contract, license, commitment, agreement, understanding,
arrangement, or restriction of any kind to which the Seller, CBC
or any Subsidiary is a party or by which the Seller, CBC or any
Subsidiary or the property or assets of any of them is bound,
which violation, conflict, default, or change in control in the
case of clauses (ii) and (iii) hereof, individually or together
with all such other violations, conflicts, defaults, or changes in
control would have or, in reasonable contemplation, could have a
material adverse effect on the ability of the parties to
consummate the transactions contemplated by this Agreement or on
the business, assets, relationships with customers, vendors,
licensors, licensees or regulatory authorities, working capital,
liabilities, financial condition or results of operations of
Reorganized CBC or the Diagnostics Business (as hereinafter
defined) as presently conducted (a "Material Adverse Effect").
SECTION 3.4. Organization, Authority and Qualification
of the Seller and CBC. Each of the Seller and CBC is duly
incorporated, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority
to own, lease and operate its properties and assets and to carry
on its business as currently conducted and is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction where, individually or in the aggregate, the failure
to be so qualified would have or, in reasonable contemplation,
could have a Material Adverse Effect.
SECTION 3.5. Capitalization of CBC; Subsidiaries.
(a) As of the date hereof, the issued and outstanding
capital stock of Old CBC consists of 26,065,017 shares of Common
Stock and the total authorized capital stock of Old CBC consists
of 40,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. The issued shares as described above and any
additional shares issued between the date hereof and the Closing
are and will be duly authorized, validly issued, and not issued in
violation of any preemptive rights and are and will be fully paid
and nonassessable and all such issued shares will immediately
prior to and at the Closing be owned of record and beneficially by
the Seller.
(b) There are no options, warrants, conversion or other
rights, claims, agreements or commitments of any kind obligating
the Seller, Old CBC or Reorganized CBC to issue any additional
shares of capital stock of CBC, nor are there any stock
appreciation, phantom or similar rights outstanding based upon the
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book value or any other attribute of CBC, except the options,
warrants, conversion or other rights, claims, agreements or
commitments, stock appreciation, phantom or similar rights
described on Schedule 3.5(b) of the Information Letter (references
in this Agreement to a "Schedule" shall mean the Schedules to the
Information Letter executed and delivered by the parties
concurrently with the execution and delivery of this Agreement),
none of which will be binding on Reorganized CBC. As of the
Closing, no entity or person will be entitled to any preemptive or
other similar rights, and there will be no contract or commitment
that could require the Seller, CBC or Reorganized CBC to sell,
transfer or otherwise dispose of any capital stock of CBC (other
than this Agreement). Upon consummation of the transactions
contemplated by this Agreement, the Purchaser will directly own
the entire equity interest in CBC, and share certificates
reflecting same shall be delivered to Purchaser.
(c) Schedule 3.5(c) lists the Seller, CBC and each of
the companies and all other entities in which any entity listed on
Schedule 3.5(c) possesses any equity interest (each such entity,
except for the Seller, CBC and GRF Corporation, a corporation of
which CBC owns approximately 19% of the outstanding equity as of
the date hereof, a "Subsidiary"), identifying which of the
Subsidiaries are to be transferred to the Seller on or prior to
the Closing Date and which will be retained by CBC. The entities
listed on Schedule 3.5(c) own the percentages set forth on such
Schedule of voting capital stock of each such entity. Each
Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction indicated next to its
name on Schedule 3.5(c), and has the power and authority under its
organizational documents to carry on its current business and to
own or lease its current properties. Each Subsidiary is duly
licensed or qualified to do business and in good standing as a
foreign corporation in all jurisdictions where such entity owns or
leases real property. Except as set forth on Schedule 3.5(c),
there are no outstanding options, warrants or other rights to
purchase or securities convertible into or any contracts or
commitments to issue or sell capital stock of any Subsidiary.
SECTION 3.6. Financial Information. The Seller and CBC
have previously delivered to the Purchaser (i) the audited balance
sheet of CBC for the fiscal year ended December 31, 1994, and the
related income statements and statements of cash flows and
stockholders equity for the years then ended (the "Audited
Financial Statements"), (ii) the unaudited balance sheet and the
related statement of income and loss of CBC as of September 30,
1995, and for the nine months then ended (the "Nine-Month Interim
Financial Statements"), and (iii) the unaudited pro forma balance
sheet and the related statement of income and loss of the
Diagnostics Division as of September 30, 1995, and for the nine
months then ended (the "Rockville Division Interim Financial
Statements" and, together with the Nine Month Interim Financial
Statements, the "Interim Financial Statements"). CBC and the
Seller have covenanted in Section 6.9 to deliver certain financial
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statements to be prepared after the date hereof (the "Subsequent
Financial Statements"). The Audited Financial Statements have
been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, the Interim
Financial Statements have been prepared in accordance with
internal accounting procedures applied on a consistent basis
throughout the periods covered thereby, and the Audited Financial
Statements and the Interim Financial Statements present fairly the
financial condition of CBC as of such dates and the results of
operations of CBC for such periods, are complete and correct, and
are consistent with the books and records of CBC (which books and
records are correct and complete). The Subsequent Financial
Statements will be prepared in accordance with GAAP, if audited,
and otherwise in accordance with CBC's internal accounting
procedures applied on a consistent basis throughout the periods
covered thereby, will present fairly the financial condition of
CBC as of the date of their issuance, and the results of
operations of CBC for such periods, will be complete and correct,
and will be consistent with the books and records of CBC (which
books and records will be correct and complete), except that the
Subsequent Financial Statements will be subject to normal year-end
adjustments (which will not be material individually or in the
aggregate) and lack footnotes and other presentation items. The
Closing Date Asset Schedule will be complete and correct, and will
accurately reflect the net book value of the tangible and
intangible Assets listed thereon in accordance with CBC's internal
accounting procedures as applied on a consistent basis.
SECTION 3.7. Absence of Undisclosed Liabilities. Except
(a) as set forth in Schedule 3.7 hereto and (b) for those
liabilities that are fully reflected or reserved against on the
Interim Financial Statements (rather than in any notes thereto),
there are no material liabilities or obligations of any kind,
contingent or otherwise, whether due or to become due, of CBC or
any Subsidiary, except for liabilities incurred in the ordinary
course of business consistent with past practice since
September 30, 1995, that, either alone or when combined with all
similar liabilities, would have or, in reasonable contemplation,
could have a Material Adverse Effect.
SECTION 3.8. Absence of Certain Changes or Events.
Except (a) as may be set forth in Schedule 3.8 hereto and (b) for
matters that are fully disclosed, reflected or reserved against on
the Interim Financial Statements and Audited Financial Statements,
since January 1, 1995, the Seller, CBC and each of its
Subsidiaries, as applicable, has conducted the Diagnostics
Business and all aspects of any other business which aspects would
have or, in reasonable contemplation, could have a material impact
upon the Diagnostics Business in the ordinary and usual course and
consistent with past practice, and except as authorized hereby
neither the Seller, CBC nor any Subsidiary has (i) entered into or
amended any material transaction, contract or commitment relating
to the Diagnostics Business or the Assets or potentially impacting
the Diagnostics Business or the Assets in any material degree or
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respect, including, without limitation, any employment agreement
or collective bargaining agreement, and including any lease, which
is not in the ordinary course of business and consistent with past
practice; (ii) discharged or satisfied any lien or encumbrance or
paid any liability, other than current liabilities paid in the
ordinary course of business; (iii) mortgaged, pledged or subjected
to any lien, charge or other encumbrance, any of its real estate,
properties or assets, except liens for taxes (and assessments) not
delinquent and except for any workmen, repairmen, warehousemen and
carriers liens and encumbrances arising in the ordinary course of
business; (iv) sold, assigned, transferred, licensed or encumbered
any trademarks, patents, know-how or trade secrets of the Seller,
CBC or any Subsidiary or other intangible assets relating to the
Diagnostics Business or the Assets or potentially impacting the
Diagnostics Business or the Assets in any material degree or
respect, or disclosed any proprietary confidential information to
any person except disclosure in the ordinary course of business or
disclosure in connection with information provided to prospective
purchasers of the Diagnostics Business or other assets in each
case such disclosure having been made pursuant to a
confidentiality agreement; (v) made any individual capital
expenditure or commitment therefor in an amount exceeding $20,000
or exceeding $50,000 in the aggregate, which requires any
expenditures by Reorganized CBC or any subsidiary thereof on or
after the Closing; (vi) incurred any indebtedness for borrowed
money (including without limitation any guarantees of indebtedness
of other persons) or incurred or became subject to any liability
or damages except current liabilities in the ordinary course of
business pursuant to existing credit arrangements disclosed on the
Schedules which would or in reasonable contemplation could result
in any liability for Reorganized CBC; (vii) made any loans or
advances to, or guarantees for the benefit of, any person or
amended any loans to, or notes receivable due from, any person;
(viii) made charitable contributions or pledges in excess of
$10,000 in the aggregate or charitable contributions or pledges in
excess of $2,000 in the aggregate which would bind or have any
material impact upon Reorganized CBC; (ix) entered into, amended,
modified or terminated any insurance policies payable to CBC or
any Subsidiary (other than in the ordinary course of business) or
taken any loans out against any insurance policies payable to CBC
or any Subsidiary; (x) issued, pledged or otherwise encumbered or
sold any shares of its capital stock, or issued, sold or created
any securities convertible into, or options or other rights with
respect to, or warrants to purchase or rights to subscribe to, any
shares of its capital stock; (xi) split, combined or reclassified
any outstanding securities; (xii) declared, set aside, paid or
made any dividend or other distribution with respect to its
capital stock, whether payable in cash, stock or property, or
redeemed or purchased, directly or indirectly, any shares of
capital stock; (xiii) suffered any damage, destruction or other
casualty loss which would have or, in reasonable contemplation,
could have a Material Adverse Effect (whether or not covered by
insurance); (xiv) except for normal merit increases in the
ordinary course of business, increased the compensation payable or
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to become payable by CBC or any Subsidiary to any of its officers,
employees or consultants or increased any bonus, insurance,
pension or other employee benefit plan, payment or arrangement
made by CBC or any Subsidiary for or with any such officers,
employees or consultants which would or in reasonable
contemplation could result in any liability for Reorganized CBC;
(xv) other than in the ordinary and usual course of business,
acquired or disposed of any tangible assets; (xvi) amended its
Certificate of Incorporation or By-Laws; (xvii) suffered the
occurrence of any events or circumstances that would have or, in
reasonable contemplation, could have, in the aggregate, a Material
Adverse Effect; or (xviii) performed any act or attempt to do any
act, or permit any act or omission to act within the Seller's or
CBC's control, which will cause a breach of any material contract,
commitment or obligation to which the Seller or CBC is a party
relating to the Diagnostics Business or the Assets or potentially
impacting the Diagnostics Business or the Assets in any material
degree or respect; (xix) entered into an agreement to do any of
the foregoing.
SECTION 3.9. Real Property. (a) Fee Property. CBC owns
good and marketable title to the properties listed on Schedule
3.9(a) hereto (the "Fee Property"), free of any liens, charges or
encumbrances of any nature whatsoever, except as set forth on such
Schedule 3.9(a).
(b) Leased Real Properties. Schedule 3.9(b) hereto
sets forth a true and complete list of all leases of real property
(the "Leases") leased by CBC and its Subsidiaries (the "Leased
Real Property"). No other person or entity has any rights as
lessee of such property and neither the Seller nor CBC has
subleased or licensed any others to occupy or use any of the
Leased Real Property or any portion thereof. Except as set forth
on Schedule 3.9(b) hereto, each of the Leases is in full force and
effect and neither the Seller nor CBC has received any notice of
default or knows of any default or event or circumstance which,
with notice or passage of time or both, would give rise to a
default, under any of the Leases. CBC and the Seller have
heretofore delivered to the Purchaser true and complete copies of
all Leases and all amendments, assignments and supplements thereto
or thereof.
SECTION 3.10. Title to and Lease of Other Properties;
Absence of Liens, etc. Set forth in Schedule 3.10 hereto is a
complete and accurate list of all personal property owned or
leased by CBC and its Subsidiaries and included in the Assets,
excluding the Intellectual Property (as defined below) (the
"Personal Property"). Except as set forth in Schedule 3.10
hereto, CBC or the identified Subsidiary has good and valid title
to or a valid leasehold interest in all the Personal Property,
free and clear of any Liens, except for: (i) any Liens reflected
in the Interim Financial Statements; (ii) any Liens arising in the
ordinary and usual course of business and that do not materially
interfere with the use by CBC or such Subsidiary or materially
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detract from the value of the property subject thereto or affected
thereby or which do not otherwise have a Material Adverse Effect;
and (iii) any Liens for taxes (and assessments) not due and
payable (collectively, the "Permitted Liens"). Except as set
forth on Schedule 3.10 hereto, all the Fee Property, Leased Real
Property and Personal Property and other Assets which are
necessary for the conduct of the business of the Rockville,
Maryland operations of CBC (the "Rockville Facility") and the
other operations to be continued by Reorganized CBC after the
Closing, as set forth on Annex G (such operations being herein
referred to as the "Diagnostics Business") are owned by CBC and
are, to the extent currently used, in such working condition such
as to permit manufacture in accordance with "Good Manufacturing
Practice" standards and at Closing will be owned by or leased to
Reorganized CBC and will be in working condition as stated above,
and all the Assets listed on Schedule 3.10 are physically present
at the Rockville Facility. Upon the Closing, the Assets will be
transferred entirely free of any lien, claim, security interests,
conditional and installment sale agreements, encumbrances, leases,
subleases, defaults, obligation charges or other claims of third
parties of any kind, except for the Reorganized CBC Obligations,
except as set forth in Schedule 3.10.
SECTION 3.11. Inventory. The inventory reflected on
the Interim Financial Statements and the Subsequent Financial
Statements has been and will be determined in a manner in
accordance with CBC's internal accounting practices and, if
audited, in accordance with GAAP. Subject to any net realizable
value reserves included in the Interim Financial Statements and
the Subsequent Financial Statements, all merchandise inventories
of CBC and any Subsidiary being retained by CBC are saleable in
the ordinary course of business and are of merchantable quality,
and do not consist of "non-marketable" items, meet the usual
standards of the trade and are suitable for sale in the business
of CBC or such Subsidiary as presently conducted. For purposes of
this paragraph, "non-marketable" items shall, subject to the
exceptions set forth in Schedule 3.11, include items of finished
product and packaging material that (i) cannot reasonably be sold
or used (based on quantities sold or used, as the case may be, in
the most recent twelve months) through regular channels (as
distinguished from distress channels) within their unexpired shelf
life, if applicable, or within twelve months after the Closing,
whichever is shorter, and (ii) that are discontinued items, and
shall include items of raw materials and work in process that
cannot reasonably be used to produce finished products within
twelve months after the Closing.
SECTION 3.12. Contracts and Leases. (a) Except as set
forth on Schedule 3.12(a) hereto, with respect to the Diagnostics
Business and as disclosed to the Purchaser in the draft lists of
executory contracts to be assumed and rejected as relates to
business of CBC other than the Diagnostics Business, CBC, its
Subsidiaries and its assets are not a party to or bound by any
agreement written or oral not terminable on 91 days or less notice
- 14 -<PAGE>
(without payment or condition) which (i) involves the payment by
CBC or a Subsidiary, or the receipt of revenues by CBC or a
Subsidiary of more than $15,000 per annum relating to the
Diagnostics Business or the Assets or potentially impacting the
Diagnostics Business or the Assets in any material degree or
respect, (ii) concerns a partnership or joint venture; (iii)
involves the creation, incurrence, assumption or guarantee of any
indebtedness for borrowed money, or any lease obligation, in
excess of $5,000 or under which there is imposed a Lien on any of
the Assets; (iv) concerns confidentiality or noncompetition
relating to the Diagnostics Business or the Assets or potentially
impacting the Diagnostics Business or the Assets in any material
degree or respect; (v) so far as CBC knows or has reason to
believe, involves the stockholders of CBC, its Subsidiaries, or
any of their affiliates; (vi) is a profit sharing, stock option,
stock purchase, stock appreciation, deferred compensation,
severance or other plan or arrangement for the benefit of CBC's or
any Subsidiary's current or former directors, officers, employees
or consultants; (vii) is a collective bargaining agreement;
(viii) provides for the advance or loan of any amount to any of
CBC's or any Subsidiary's directors, officers, employees or
consultants outside the ordinary course of business; or (ix) would
have or, in reasonable contemplation, could have, upon a default
or termination thereof, a Material Adverse Effect (such agreements
and contracts set forth on Schedule 3.12(a) being referred to
herein as "Material Contracts"). Except as set forth on Schedule
3.12(a), (i) CBC and each relevant Subsidiary has in all material
respects performed all obligations required to be performed by it
under each Material Contract, and, to the knowledge of CBC: (x)
each of the Material Contracts is valid and binding and in full
force and effect, (y) CBC has not received notice and is not aware
of the assertion of the existence of any material violation of any
Material Contract, and (z) no event or condition exists which
constitutes or, after notice or lapse of time or both, would
constitute a material default on the part of any party under such
Material Contract.
(b) Except as set forth on Schedule 3.12(b) hereto,
neither CBC nor any Subsidiary is a party to or bound by any
contract, agreement or arrangement for the employment (including
as a consultant) of any director, former director, officer or
employee of CBC or any Subsidiary, and no director, officer or
employee or former director, officer or employee of CBC or any
Subsidiary, or consultant to CBC or any Subsidiary, is or would be
eligible to receive, or has received, as a result of any of the
transactions contemplated by this Agreement, any acceleration of
benefits or vesting or any severance pay, lump sum or other
payment, compensation or other remuneration from CBC or any
Subsidiary.
(c) Except as set forth on Schedule 3.12(c) hereto, no
contract, commitment, agreement or other understanding to which
CBC or any Subsidiary is a party or by which CBC or any Subsidiary
is bound restricts or limits the ability of CBC or the Diagnostics
- 15 -<PAGE>
Business or any Subsidiary to own, possess, use or exploit CBC's
or such Subsidiary's assets pertaining to the Diagnostics
Business, or having any impact in any material degree or respect
upon such Diagnostics Business, in or to any geographic area or to
conduct CBC's or such Subsidiary's operations, in or to any
geographic area.
(d) The Seller and CBC have heretofore made available
to the Purchaser true and correct copies of all the Material
Contracts (including summaries of oral contracts, if any),
identified in Schedules 3.12(a), (b) and (c) hereto, together with
all amendments, exhibits, attachments, waivers or other changes
thereto.
SECTION 3.13. Litigation. Except as set forth in
Schedule 3.13, there are no written claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the
Seller, CBC or any Subsidiary, threatened against or affecting the
Seller, CBC or any Subsidiary at law, in equity or otherwise, in,
before, or by, any court or governmental agency or authority.
There are no unsatisfied judgments or outstanding orders,
injunctions or awards (whether rendered by a court or
administrative agency or by arbitration) against the Seller, CBC
or any Subsidiary, or any of the properties of the Seller, CBC or
any Subsidiary, that would have or, in reasonable contemplation,
could have a Material Adverse Effect or which could impair the
ability of the Seller to deliver the Shares as contemplated by
this Agreement or perform its obligations under this Agreement.
SECTION 3.14. Compliance with Law. Except as set forth
in Schedule 3.14, to the knowledge of the Seller and CBC, the
business of CBC and each of its Subsidiaries has been conducted,
and will be conducted at all times prior to the Closing Date, in
compliance with all applicable laws, ordinances and regulations of
any governmental entity except for possible violations which
either individually or in the aggregate would not have and, in
reasonable contemplation, could not have, a Material Adverse
Effect. All governmental approvals, permits and licenses required
to conduct the business of CBC and its Subsidiaries have been
obtained and are in full force and effect and are being complied
with in all material respects except for such which either
individually or in the aggregate would not have and, in reasonable
contemplation, could not have, a Material Adverse Effect.
SECTION 3.15. Intellectual Property. (a) CBC and the
Subsidiaries own or have the right to use pursuant to license,
sublicense, agreement, or permission all patents, copyrights,
know-how, trade secrets, trade names, service marks, logos and
trademarks (the "Intellectual Property") necessary for or normally
or customarily incident to the operation of the Diagnostics
Business as presently conducted, either directly or through
affiliates or third parties as applicable ("Necessary Intellectual
Property"). Each item of Intellectual Property owned or used by
any of CBC and its Subsidiaries immediately prior to the Closing
- 16 -<PAGE>
hereunder and which constitutes part of the Assets will be owned
or available for use by CBC or the Subsidiary on identical terms
and conditions immediately subsequent to the Closing hereunder,
except as noted on Schedule 3.15(a). Except as noted on Schedule
3.15(a), CBC has not failed to take any action to protect the
Intellectual Property where the result of such failure would have
or, in reasonable contemplation, could have a Material Adverse
Effect.
(b) Except as noted on Schedule 3.15(b)(i), in
connection with the Diagnostics Business or any aspect of any
other business which would have or, in reasonable contemplation,
could have any material impact or effect upon the Diagnostics
Business, none of CBC or its Subsidiaries has any knowledge that
it has infringed upon, misappropriated, used in violation of any
applicable license, agreement or other restrictions or lawfully
imposed condition of use contained in or otherwise violated, or
any reason to believe that it may be infringing upon,
misappropriating, using in violation of any applicable license,
agreement or other restrictions or lawfully imposed condition of
use contained in or otherwise violating, any Intellectual Property
rights of third parties, and none of the Seller, CBC and the
directors and officers (and employees and consultants with
responsibility for Intellectual Property matters) of CBC and its
Subsidiaries has ever received any written (or, to the best of
CBC's knowledge, oral) charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that CBC or any of its Subsidiaries
must license or refrain from using any Intellectual Property
rights of any third party), Except as noted on Schedule
3.15(b)(ii), to the knowledge of the Seller and the directors and
officers (and employees and consultants with responsibility for
Intellectual Property matters) of CBC and its Subsidiaries, no
third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property
rights of CBC or its Subsidiaries.
(c) Schedule 3.15(c) identifies each patent or
registration which has been issued to CBC or any Subsidiary with
respect to any of its Intellectual Property which constitutes part
of the Assets, identifies each pending patent application or
application for registration which the Seller, CBC or any
Subsidiary has made with respect to any of such Intellectual
Property, and identifies each license, agreement, or other
permission which the Seller, CBC or any Subsidiary has granted to
any third party with respect to any of such Intellectual Property,
specifying in each case the Intellectual Property affected. The
Seller and CBC have made available to the Purchaser correct and
complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has
made available to the Purchaser for inspection and/or copying
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. Schedule 3.15(c) also identifies each trade name or
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unregistered trademark used by the Seller, CBC and each of the
Subsidiaries in connection with the Diagnostics Business, with
respect to each item of Intellectual Property required to be
identified in Schedule 3.15(c), except as noted on Schedule
3.15(b):
(i) CBC or its identified Subsidiary possesses all
right, title, and interest in and to the item, free and clear
of any Lien;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, is to the knowledge of CBC threatened which challenges
the legality, validity, enforceability, use, or ownership of
the item; and
(iv) none of CBC and its Subsidiaries has ever agreed to
indemnify any person for or against any infringement or
misappropriation with respect to the item.
(d) Schedule 3.15(d) identifies each item of
Intellectual Property that any third party owns and that any of
CBC or its Subsidiary uses pursuant to license, sublicense,
agreement, or permission in the Diagnostics Business. The Seller
and CBC have made available to the Purchaser correct and complete
copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Schedule
3.15(d), except as noted on Schedule 3.15(d):
(i) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect;
(ii) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the
Closing;
(iii) neither CBC nor, to the knowledge of the Seller or
CBC, any other party to the license, sublicense, agreement,
or permission is in breach or default, and, to the knowledge
of the Seller and CBC, no event has occurred, and neither the
Seller-nor CBC has any reason to believe that any event is
occurring, which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration thereunder, nor, to the
knowledge of the Seller or CBC, has any act or omission
occurred (nor does the Seller or CBC have any reason to
believe that any such act or omission is occurring) which
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could reasonably be contended to constitute a breach or
default of any of the terms thereunder;
(iv) to the knowledge of the Seller and CBC, no party to
the license, sublicense, agreement, or permission has
repudiated any provision thereof;
(v) insofar as CBC, the Seller or such Subsidiary has
knowledge or reason for belief, with respect to each
sublicense, the representations and warranties set forth in
Subsections (i) through (iv) above are true and correct with
respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(vii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or to the knowledge of the Seller or CBC, is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(viii) neither the Seller CBC nor any of the of the
Subsidiaries has granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(e) To the knowledge of the Seller and the directors
and officers (and employees and consultants with responsibility
for Intellectual Property matters) of CBC and its Subsidiaries,
neither CBC nor any of its Subsidiaries will interfere with,
infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a
result of the continued operation of the Diagnostics Business.
(f) Except as disclosed on Schedule 3.15(f), and based
solely on the certificate of CBC's consultant, Frederick V.
Casselman, neither the Seller nor CBC has any knowledge of any
products owned by competitors of CBC which reasonably could be
expected to supersede or make obsolete within eighteen months from
the date hereof the HIV-1 Western Blot product, or the HTLV-I
(rp2le enhanced) EIA.
SECTION 3.16. Employee Benefits. (a) Schedule 3.16
sets forth a true and complete list of all employee benefit plans,
agreements, commitments, practices or arrangements of any type,
maintained, sponsored or contributed to by CBC or by any entity
which is affiliated with CBC under Section 414(b), (c), (m), or
(o) of the Code or Section 4001 of ERISA ("ERISA Affiliate") for
the benefit of any employee, former employee, or director of CBC
or an ERISA Affiliate, or with respect to which CBC or an ERISA
Affiliate has a liability, whether direct or indirect, actual or
contingent (the "Plans"). Schedule 3.16 identifies each of the
Plans that is an "employee benefit plan" as defined in Section
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3(3) of ERISA (the "ERISA Plans"). With respect to each Plan, CBC
has delivered to Purchaser true and complete copies of:
(i) any and all plan texts and agreements, including
amendments;
(ii) all material employee communications (including
summary plan descriptions or material modifications, if any);
(iii) the two most recent annual reports and actuarial
reports, if required under ERISA;
(iv) the most recent determination letter received from
the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401(a) of the Code; and
(v) any other material documents, including any
applicable trust or other funding agreement and the latest
financial statements thereof.
(b) Each Plan has been operated and administered in
accordance with its terms and applicable law, including but not
limited to ERISA and the Code. All contributions required to be
made under the terms of any Plan have been made timely. There are
no pending, threatened, or anticipated claims (other than routine
claims for benefits) involving any Plan. There are no unpaid
penalties, fines or judgments, whether or not past due, involving
any of the Plans. Except as set forth on Schedule 3.16, all
filings and submissions required to be made by law in respect of
any of the Plans have been made timely, to the appropriate
authority and were complete in all material respects. All
amendments, changes or modifications to any of the Plans have been
made in accordance with the terms of such Plan and applicable law.
No Plan by its terms requires CBC to continue to employ any
employee, director or consultant.
(c) Each ERISA Plan intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified (or timely
application has been made therefor); no event has occurred since
the date of such determination that would adversely affect such
qualification; and each trust maintained thereunder has been
determined by the Internal Revenue Service to be exempt from
taxation under Section 501(a) of the Code. No breach of fiduciary
duty or prohibited transaction has occurred with respect to which
CBC or any ERISA Plan would be liable or otherwise damaged in any
material way. Each ERISA Plan that is maintained, sponsored or
contributed to by CBC for the benefit of employees, former
employees, or directors may be amended, modified or terminated by
CBC without liability to itself except for benefits accrued to the
effective date of such termination.
(d) With respect to each Plan that provides welfare
benefits of the type described in Section 3(l) of ERISA: (i) no
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such plan provides medical or death benefits with respect to
employees, former employees, or directors of CBC more than thirty
days beyond their termination of employment, other than coverage
mandated by Sections 601-608 of ERISA and 498OB(f) of the Code;
(ii) each such plan has been administered in compliance with
Sections 601-608 of ERISA where applicable and 498OB(f) of the
Code where applicable; and (iii) no such plan has reserves,
assets, surpluses or prepaid premiums.
(e) No ERISA Plan is a "multiemployer pension plan"
within the meaning of Sections 3(37) or 4001(a)(3). nor a plan
described in Section 4063(a) of ERISA, nor a plan subject to the
funding standards set forth under Section 412 of the Code.
Neither CBC or any ERISA Affiliate has ever maintained, sponsored
or contributed, or has ever had any liability with respect to, any
multiemployer pension plan, any plan described under Section
4063(a) of ERISA, or any plan subject to the funding standards set
forth under Section 412 of the Code.
(f) No Plan has assets consisting of "employer
securities" within the meaning of Section 407(d)(1) of ERISA.
(g) Except as set forth on Schedule 3.12(b), the
consummation of the transactions contemplated by this Agreement
will not (i) entitle any individual to severance pay, or (ii)
accelerate the time of payment, or increase the amount, of
compensation due any individual. No payment made or contemplated
under any of the Plans constitutes an "excess parachute payment"
within the meaning of Section 28OG of the Code.
SECTION 3.17. Environment. (a) Environmental
Compliance Status of Properties. (i) Except as disclosed on
Schedule 3.17(b), all activities, business and operations of the
Seller, CBC and its Subsidiaries on the Fee Property and the
Leased Real Properties, and any tenant, licensee or permittee
thereof, or of any third person on any of the Fee Property or the
Leased Real Properties (regardless of whether with the authority
or permission of CBC) have been conducted in all material respects
in compliance with any and all applicable federal, state, county,
municipal or other applicable environmental or nuclear regulatory
laws, ordinances, regulations, orders, directives or other
requirements of such governmental authorities ("Environmental
Requirements"); and (ii) the Seller, CBC and its Subsidiaries, and
any tenant, licensee or permittee thereof, have all permits and
licenses required to be issued by any governmental authority
pursuant to Environmental Requirements and are in full compliance
with all material terms and conditions of such permits and
licenses. Except as disclosed on Schedule 3.17(b), insofar as the
Seller, CBC or any Subsidiary has knowledge or reason for belief,
no change in the facts or circumstances reported or assumed in the
application for or granting of such permits or licenses exists,
and such permits and licenses are in full effect.
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(b) No Notice of Violation or Litigation. Except as
set forth in Schedule 3.17(b), (i) neither CBC nor the Seller nor
any Subsidiary has received notice or other communication
concerning any alleged violation of Environmental Requirements, or
notice or other communication concerning alleged liability for
damages caused by any such violation, nor has it been served with
any writ, injunction, decree, order or judgment outstanding, nor
any lawsuit, claim, proceeding, citation, directive, summons or
investigation, pending or threatened, relating to the ownership,
use maintenance or operation of the Leased Real Properties or the
Fee Property by any person, arising from the alleged violation of
Environmental Requirements, which alleged violation or violations,
individually or in the aggregate, would have or, in reasonable
contemplation, could have a Material Adverse Effect, nor does
there exist any basis for such lawsuit, claim, proceeding,
citation, directive, summons or investigation being instituted or
filed; and (ii) no such notice, communication, writ, injunction,
decree, order or judgment outstanding has been served on any of
the tenant, licensee or permittee of the Seller or CBC or any of
the Fee Property or any Leased Real Properties.
(c) No Hazardous Substances or Containers on
Properties; Use of Hazardous Substances. Except as set forth in
Schedule 3.17(b), neither the Seller, CBC, any Subsidiary, nor any
tenant, licensee or permittee thereof nor any of the Fee Property
or the Leased Real Properties, has used, stored, handled, disposed
of or transferred any hazardous, toxic or radioactive substances,
materials or wastes, pollutants or contaminants, as defined,
listed or regulated by any federal, state or local law, regulation
or order ("Hazardous Substances"), or maintained containers or
sources thereof, at, on or under any of the Leased Real Properties
or the Fee Property, including, without limitation, underground
storage tanks, asbestos or asbestos-containing building materials
and electrical transformers, capacitors, ballasts or other
equipment, or equipment which contains dielectric fluid containing
PCBS, except in compliance in all material respects with
applicable Environmental Requirements. Each of CBC and its
Subsidiaries has established and adhered to internal regulations
regarding the use, storage, handling, disposition and transfer of
Hazardous Substances.
(d) No Releases or Improper Disposition or Maintenance
of Hazardous Substances. Except as set forth on Schedule 3.17(b),
neither the Seller, CBC, the Subsidiaries nor any tenant, licensee
or permittee, has spilled, discharged, released, or emitted any
Hazardous Substance in, on or under any of the Fee Property or the
Leased Real Properties, or caused any Hazardous Substance to
migrate from the Fee Property or the Leased Real Property, in a
manner that would have or, in reasonable contemplation, could have
a Material Adverse Effect, and in the event that Seller, CBC, any
Subsidiary or tenant has caused or permitted any Hazardous
Substance to be removed from the Fee Property or the Leased Real
Property or otherwise to be disposed of, such removal or disposal
has been accomplished in full compliance with all Environmental
- 22 -<PAGE>
Requirements, and in respect of all such Hazardous Substances so
removed or disposed of, in whatever state, condition or location
the same or the residue thereof may be presently situate, all such
Environmental Requirements applicable have continuously been, are
and shall remain fully complied with.
SECTION 3.18. Health and Safety. Except as noted on
Schedule 3.18 and Schedule 3.17(b), to the knowledge of the Seller
and CBC, during the period commencing September 1990, CBC and its
Subsidiaries and their respective predecessors and affiliates have
complied with the Occupational Safety and Health Act of 1970, as
amended, and all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings and
charges) of federal, state, local and foreign governments (and all
agencies thereof) concerning public health and safety, or employee
health and safety except for possible violations which either
individually or in the aggregate would not have or, in reasonable
contemplation, could not have, a Material Adverse Effect.
SECTION 3.19. Tax Matters and Social Charges. (a)
Except as set forth on Schedule 3.19(a), each of the Seller, CBC,
any Subsidiary and any other member of the Seller Group has duly
and timely filed (either separately or on a consolidated or
combined basis) all Tax Returns that they were required to file by
applicable law and that each such Tax Return was correct and
complete in all respects. The Term "Seller Group" as used in this
Agreement shall mean CBC and any Subsidiary, and shall include,
from and after the acquisition of the Shares by the Seller, the
Seller, (and any corporation with regard to which the Seller, as
applicable, CBC or any Subsidiary is a successor in interest) and
every other entity included in a federal, national, state, county,
local or other consolidated or combined income tax return filed by
or otherwise including any of the Seller, as applicable, CBC and
any Subsidiary (and any corporation with regard to which any of
those entities is a successor in interest) and with respect to
which the Seller, as applicable, CBC or any Subsidiary could have
any liability for anything reported or disclosed on, or omitted
from such return. The term "Tax Returns" as used in this
Agreement shall mean all returns, declarations, reports, claims
for refund, or information returns or statements relating to Taxes
or Social Charges including any schedule or attachment thereto,
and including any amendment thereof. The term "Taxes" as used in
this Agreement shall mean any federal, national, state, county,
local and other taxes, minimum taxes, assessments, interest,
penalties or additions thereto and deficiencies, duties, fees and
other governmental or governmental authority or taxing district
charges or impositions of each and every kind whatsoever whether
assessed against or measured by gross receipts, income, real and
personal property, occupation, production, license payroll,
employment, excise, severance, stamp, premiums, sales, use, value
added, windfall profits, environmental factors, capital stock,
franchise, transfer, registration accumulation or otherwise, and
in each case whether disputed or not. The term "Social Charges"
as used in this Agreement shall mean all taxes, contributions and
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charges imposed by any federal, state or local governmental
authority or agency thereof for the provision of retirement,
disability, hospitalization, occupational injury and sickness,
unemployment or other benefits relating to the welfare of
employees or agents, including interest, penalties or additions
thereto.
(b) Except as disclosed in Schedule 3.19(b), all Taxes
and Social Charges of the Seller, CBC, any Subsidiary and every
other member of the Seller Group whether or not shown on any Tax
Return have been (i) properly and fully paid to the extent due and
payable and (ii) adequately provided for in a reserve for Tax
Liability (excluding any provision for deferred income taxes) set
forth on the face of the Audited Financial Statements and the
Interim Financial Statements Balance Sheet in the case of Taxes
(except for any Taxes arising from the Section 338 Election) or
Social Charges payable or anticipated to be payable on account of
the operations, acts or omissions of any member of the Seller
Group for any and all taxable periods up to and including the
Closing Date. Neither the Seller, CBC, any Subsidiary nor any
member of the Seller Group has or will have any liability whether
direct, indirect, fixed or contingent, for any Taxes or Social
Charges, for any and all taxable periods, in excess of the
reserves (excluding any provision for deferred income taxes) for
Taxes and Social Charges established on the books of each of them.
(c) Each of the Seller, CBC and any Subsidiary has
withheld and paid all Taxes and Social Charges required to have
been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or
other third party.
(d) Except as disclosed in Schedule 3.19(b), no member
of the Seller Group is delinquent in the Payment of any Taxes or
Social Charges nor has any of them requested or been granted any
extension of time within which to file any Tax Return or to pay
any Taxes or Social Charges except to the extent that such Tax
Return has since been filed or such Taxes or Social Charges have
since been paid.
(e) No member of the Seller Group has received written
notice or is otherwise aware of any claim by any authority in a
jurisdiction in which any member of the Seller Group does not file
a Tax Return that such member is or may be subject to taxation by
that jurisdiction.
(f) Schedule 3.19(f) lists all federal, state, local
and foreign income Tax Returns filed within respect to the Seller,
CBC and any Subsidiary for taxable periods ended and or after
January 1, 1987 and indicates those Tax Returns that have been
audited as well as those that currently are the subject of audit.
The Seller has delivered to the Purchaser correct and complete
copies of all federal and state income tax returns, examination
reports, and statements of deficiencies assessed against or agreed
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to by the Seller, CBC and any Subsidiary as well as any statements
of deficiency assessed against or agreed to by any other member of
the Seller Group, and shall promptly deliver to the Purchaser such
returns, reports and statements with respect to the period from
and after the date hereof through the Closing Date.
(g) Except as set forth on Schedule 3.19(g), no member
of the Seller Group (i) has knowledge, however obtained, of any
assessment, dispute or claim threatened or asserted by any
governmental authority concerning any Tax liability or Social
Charge for any such period (ii) is aware of any issue which has
been raised by a relevant authority concerning Taxes or Social
Charges in any examination or otherwise, which by application of
the same or similar principles, reasonably could be expected to
result in a proposed deficiency, for any such period, (iii) is
aware of the existence or any current or past state of facts which
would constitute grounds for any such deficiency or (iv) has a
request for a ruling or determination in respect of any Taxes or
Social Charges now pending or which was previously rejected or
withdrawn.
(h) No member of the Seller Group has waived any
statute of limitations in respect of Taxes or Social Charges or
agreed to any extension of time with respect to Tax or Social
Charge assessment or deficiency and no power of attorney granted
by any member with respect to any matter related to Taxes or
Social Charges is currently in force.
(i) No election pursuant to any tax laws has been made
with respect to the Seller, CBC or any Subsidiary which assuming
an election is made under Section 338 of the Internal Revenue Code
of 1986, as amended (the "Code") would be binding on CBC and any
Subsidiary after the closing. All agreements to which CBC or any
Subsidiary is a party as to the allocation or sharing of liability
for Taxes or Social Charges will be terminated on or before the
Closing and neither CBC nor any Subsidiary will have any remaining
liability under these agreements.
(j) None of the Seller, CBC or any Subsidiary has filed
a consent under Code Section 341(f) concerning collapsible
corporations. None of the Seller, CBC or any Subsidiary is
required to include in income for any period after closing any
adjustments required under Code Section 481. None of the Seller,
CBC or any Subsidiary has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not
be deductible under Code Section 280G. No tax is required to be
withheld pursuant to Code Section 1445 as a result of any of the
transfers contemplated by this Agreement. Each of the Seller, CBC
and any Subsidiary has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Section 6662 or the comparable provisions of any foreign, state or
local tax law. None of the property owned or used by CBC or any
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Subsidiary is subject to a tax benefit transfer lease executed in
accordance with Section 168(f)(8) of the Internal Revenue Code of
1954 as in effect before the enactment of Pub.L. 97-248, is
subject to a lease, other than a "true" lease for federal income
tax purposes or is "tax-exempt use property" within the meaning of
Code Section 168(h). There are no liens for Taxes for Social
Charges upon the assets of the Seller, CBC or any Subsidiary
except liens for current Taxes or Social Charges not yet due.
Neither CBC nor any Subsidiary is currently under any contractual
obligation to pay the Tax Social Charges obligations of any other
person, or to pay the Tax obligations with respect to transactions
relating to any other person, or to indemnify any other Person
with respect to any Tax, or Social Charges. CBC and any
Subsidiary has filed a protective carryover election in connection
with each transaction previously consummated that constituted a
"qualified stock purchase" within the meaning of Code Section 338.
Neither CBC nor any Subsidiary owns any interest in real property
in a jurisdiction in which a tax is imposed on the transfer of a
controlling interest in an entity that owns any interest in real
property.
(k) As of the Closing, the Seller, CBC and any
Subsidiary will be affiliated (within the meaning of Section 1504
of the Code) and the Seller will constitute a "Selling Affiliate"
within the meaning of Treas. Reg. 1-338(h)(10)-l.
SECTION 3.20. Insurance. Schedule 3.20 contains a true
and complete list of all liability, property, workers'
compensation, directors and officers liability and other similar
insurance of CBC and its Subsidiaries relating to the ownership,
use or operation of any of the assets or properties of CBC and its
Subsidiaries. The Seller has made available to the Purchaser
copies of such insurance policies prior to the date hereof. All
such policies are presently in full force and effect, and shall
continue to be in full force and effect on identical terms
following the consummation of the transactions contemplated hereby
with respect to Assets, the Rockville Facility and the Diagnostics
Business. As of the date hereof, except as set forth on Schedule
3.20, (i) neither CBC nor any Subsidiary has received any written
or to the knowledge of CBC, oral notice or other indication of
clear import from any insurer or agent of any intent to amend or
cancel any such insurance policy, and (ii) to CBC's knowledge, all
claims which CBC and its Subsidiaries have submitted under all
such insurance policies have been submitted on a timely basis to
the appropriate party. CBC and any Subsidiaries and any
subsidiaries it may have had from time to time during the past ten
years have been covered during the past ten years (or, in the case
of any such Subsidiary or subsidiary, such shorter period during
which any such Subsidiary or subsidiary was a subsidiary of CBC)
by insurance similar in scope and amount to that listed on
Schedule 3.20.
SECTION 3.21. Insider Interests. Except as set forth
in Schedule 3.21, no Related Party (as defined herein) has
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received a loan or advance from CBC or any Subsidiary which is
outstanding as of the date hereof. From and after the Closing
Date, no person or entity who is a Related Party as of the date of
the Interim Financial Statements will have the right to borrow
from CBC or any Subsidiary or any obligation to make any loan to
CBC or any Subsidiary. During the period from the date hereof
through the Closing Date, CBC and its Subsidiaries will not lend
money to or borrow money from any Related Party. Except as set
forth in Schedule 3.21, as of the date hereof, no officer,
director, employee or consultant of CBC or any Subsidiary has any
business relationship with CBC or any Subsidiary other than in his
or her capacity as an officer, director, employee or consultant.
"Related Party" means any person or entity controlled by,
controlling or under common control with CBC or its Subsidiary and
shall include, without limitation, the Seller, each of CBC's and
its Subsidiaries' officers, directors, employees and consultants,
and any person who is a member of the family of any such person.
SECTION 3.22. Customers and Suppliers. Schedule 3.22
lists the ten largest customers of and the ten largest suppliers
to CBC and its Subsidiaries relating to the Diagnostics Business
during calendar year 1995. Except as noted on Schedule 3.22,
neither CBC nor any of its Subsidiaries has received any written,
or to the knowledge of CBC or such Subsidiary, oral notice or
other indication that any such customer intends to terminate or
materially reduce its business with CBC or any Subsidiary.
SECTION 3.23. Products and Warranties. To the
knowledge of the Seller and CBC, the products currently sold by
CBC conform in all material respects with, and meet or exceed the
standards required by, all applicable governmental laws,
ordinances and regulations now in effect. To the knowledge of
CBC, each product manufactured, sold, leased or delivered by CBC
since January 1, 1990 has been in conformity in all material
respects with all applicable contractual commitments and all
express and implied warranties and all applicable governmental
laws, ordinances and regulations in effect at the applicable time.
Except as set forth in Schedule 3.23(a), neither the Seller nor
CBC has received any written claims of customers or others made
out of the ordinary course of business based upon an alleged or
admitted defect of material, workmanship or design or otherwise in
respect of any of CBC's products relating to the Diagnostics
Business that are presently pending or, to the knowledge of the
Seller or CBC, threatened against it that would have or, in
reasonable contemplation, could have a Material Adverse Effect,
and there is no basis for any present or future action arising out
of the ownership, possession or use of any product manufactured by
CBC. No product manufactured, sold, leased or delivered by CBC is
subject to any guaranty, warranty or other indemnity beyond
(i) the applicable standard terms and conditions of sale or lease,
which are set forth on Schedule 3.23(b) or (ii) the terms and
conditions of sale or lease contained in the applicable contract
of sale or lease listed on Annex B.
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SECTION 3.24. Disclosure. No representation or
warranty by the Seller or CBC contained in this Agreement and no
statement contained in the Schedules hereto or any certificate
delivered by the Seller or CBC to the Purchaser pursuant to this
Agreement contains any untrue statement of a material fact or
intentionally omits to state any related material facts in such
manner as to cause the statements made to be materially
misleading. The disclosures contained in the Disclosure Statement
and the Plan of Reorganization comport with the requirements of
law and notwithstanding any assertion or reservation to the
contrary the Disclosure Statement and Plan of Reorganization may
be relied on by Purchaser and CBC before any tribunal to
demonstrate notice to third parties of the matters therein set
forth to the extent that the same may be applicable or relevant.
SECTION 3.25. FIRPTA. The Seller is not a "foreign
person" as defined in Section 1445 of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder (the "Code
Withholding Section"). At or prior to the Closing, the Seller
shall deliver to the Purchaser a certification stating that the
Seller is not a foreign person, which certification shall be in
the form then required by the Code Withholding Section.
SECTION 3.26. Conduct During the Pendency of the
Bankruptcy Case. During the pendency of the Bankruptcy Case,
neither the Seller, CBC nor any Subsidiary has taken any action
without authorization of the Bankruptcy Court for which such
authorization was required, nor taken any action pursuant to any
applicable order of the Bankruptcy Court, which contravenes,
violates, conflicts with, exceeds the authority of, or is
otherwise inconsistent with the terms of such order, in either
case where such action would or in reasonable contemplation could
have any adverse effect upon the Diagnostics Business or the
Assets and the same is not cured prior to the Closing.
ARTICLE IV
REPRESENTATIONS OF AND
WARRANTIES BY THE PURCHASER
The Purchaser hereby represents and warrants to the
Seller as follows:
SECTION 4.1. Organization. The Purchaser is duly
incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation, with full corporate power
and authority to own, lease and operate its properties and assets
and to carry on its business as currently conducted and to
consummate the transactions contemplated hereby.
SECTION 4.2. Authorization: Valid and Binding
Agreement. The Purchaser has full right, power and authority to
execute and deliver this Agreement and to consummate the
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transactions contemplated hereby. All actions and proceedings
required to be taken by or on the part of the Purchaser have been
duly and properly taken, and no other action on the part of the
Purchaser is necessary, to authorize the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Purchaser, and, assuming the due
authorization, execution and delivery of this Agreement by the
Seller, and assuming that this Agreement is the valid, binding and
enforceable obligation of the Seller, constitutes the valid and
binding obligation of the Purchaser.
SECTION 4.3. No Conflicts. Neither the execution and
delivery of this Agreement nor the consummation at the Closing by
the Purchaser of the transaction contemplated hereby will
(i) violate any provision of the Certificate of Incorporation or
By-Laws of the Purchaser, (ii) violate in any material respect any
statute, rule or regulation of any governmental authority or any
judgment, decree or order applicable to the Purchaser, or
(iii) violate, conflict with or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under the terms, conditions or provisions of any
contract, commitment, agreement, understanding or restriction of
any kind to which the Purchaser is a party or by which the
Purchaser is bound, which violation, conflict or default, together
with all such other violations, conflicts or defaults, could
impair the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.
ARTICLE V
INDEMNIFICATION
SECTION 5.1. Survival of Representations and
Warranties. The representations and warranties of the Seller,
CBC, the Subsidiaries and the Purchaser contained in this
Agreement or in any instrument delivered pursuant hereto or
thereto shall survive the Closing Date, regardless of any
investigation made by or on behalf of any party hereto, and shall
remain in full force and effect thereafter until three years after
the Closing Date; provided, however, that the representations and
warranties contained in Sections 3.1, 3.2, 3.5, 3.9 and 3.19 shall
survive for the longest period permitted by applicable law, and
the representations and warranties contained in Sections 3.16,
3.17 and 3.18 shall survive until the applicable statutes of
limitations have run. No action or proceeding may be brought with
respect to any Losses (as defined herein) unless written notice
thereof, setting forth in reasonable detail each such Loss, shall
have been delivered to the Seller prior to the expiration of the
applicable survival periods set forth above and if such claim is
not satisfied, action is brought by the Purchaser within the later
of six months from the date of such notice or the expiration of
the applicable survival period.
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SECTION 5.2. Indemnification by the Seller and CBC.
(a) Subject to the limitations on the scope of CBC's
indemnification that are set forth below, each of the Seller and
CBC hereby agrees to indemnify, defend and hold the Purchaser, its
officers, directors, agents and affiliates and, from and after the
Closing, CBC (collectively, the "Purchaser's Indemnified Parties")
harmless from and against any and all claims, losses, liabilities,
costs, damages, interest, penalties, fines and expenses (including
attorneys' fees and expenses incurred in connection with any of
the foregoing and in seeking indemnification hereunder in any case
in which such claim for indemnification results in judgment in
favor of the Indemnitee) (collectively, "Losses") that they may
suffer, sustain, incur or become subject to arising out of, in
connection with or due to (i) any inaccuracy of any representation
or warranty or the breach of any warranty, covenant, undertaking
or other agreement of the Seller or CBC contained in this
Agreement or the Schedules or any certificate delivered to the
Purchaser hereunder, (ii) any liabilities of CBC existing
immediately prior to the Closing or arising in respect of any
period or event, condition, conduct, agreement (other than a
Reorganized CBC Obligation), act or omission that occurred or
existed prior to the Closing (and, in the case of any such
agreement, any liability in connection thereunder that arises at
any time whether before or after the Closing), including in
respect of any of the operations or business or properties of CBC
and its current or past subsidiaries or associated companies, or
any other entity listed on Schedule 3.5(c), and regardless of
actual or alleged fault or misconduct of or violation by any such
entities or persons (except that in no event shall Purchaser be
entitled to indemnification for Reorganized CBC Obligations), and
including, without limitation:
(i) the matters that are described (or, if accurate
disclosure with respect to any such matter was not
made, that would properly have been described) on
Schedules 3.7, 3.13, 3.14, and, to the extent that
such Schedule makes reference to liabilities
accruing prior to the Closing, 3.15(b)(i) (except
that the Seller gives no indemnity against any
order or judgment on appeal reversing the judgment
issued by the United States Bankruptcy Court on
September 1, 1995 in the case of Institut Pasteur
and Genetic Systems Corporation vs. Cambridge
Biotech Corporation, Adversary Proceeding No.
95-4074 (the "Genetic Systems Litigation") nor
against any ensuing adverse order or judgment in
such case (other than any monetary liability or
judgment paid by Reorganized CBC to a party to such
litigation as a result of conduct by CBC prior to
the Closing);
(ii) any matter referred to in Schedule 3.17(a)-(d);
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(iii) any Loss CBC may suffer in connection with or as a
consequence of a breach of a representation or
warranty contained in Section 3.19;
(iv) any product liability matters relating to products
manufactured or sold by CBC prior to the Closing
Date;
(v) any matters arising otherwise than in connection
with the Diagnostics Business.
and (iii) any event, condition, conduct, act or omission that
occurs from and after the Closing in respect of the assets,
operations or business or properties of the Seller and any
subsidiaries of the Seller or associated companies, and regardless
of actual or alleged fault or misconduct of or violations by any
such entities or persons.
(b) Seller hereby agrees to indemnify, defend and hold
the Purchaser and effective upon the closing, CBC and any
Subsidiary (the "Indemnified Group") harmless from any Losses or
Adverse Consequences arising out of or in connection with or due
to the breach or inaccuracy of the representation and warranty set
forth in Section 3.19(k) of this Agreement. "Adverse
Consequences" for purposes of this Agreement include without
limitation the failure of the Purchaser, CBC or any Subsidiary to
be entitled to calculate the basis of the assets of CBC or any
Subsidiary for Tax purposes pursuant to Treas. Reg. 1.338(h)(10)-
l(e)(5). If the receipt or accrual of any indemnification payment
hereunder is determined not to constitute a reduction of purchase
price for Federal income tax purposes, Seller shall also pay to
Purchaser a gross-up Tax Amount which shall be calculated by
taking into account the hypothetical tax consequences of the
receipt or accrual of such payment using the maximum rate
applicable to the Purchaser for the relevant years.
(c) The Seller shall indemnify, defend and hold
harmless the Indemnified Group from any Losses or Adverse
Consequences arising out of or in connection with any claim that,
due to any business arrangement or course of conduct adopted by
CBC or a Subsidiary pursuant to order of the Bankruptcy Court
prior to the Closing, or any representations made in connection
with such arrangement or course of conduct, CBC or the Subsidiary
is in breach of any obligation to any third party.
(d) Notwithstanding anything to the contrary contained
in this Agreement, neither the Seller nor CBC shall be liable
under the indemnification provisions of Article V hereof, or
otherwise have any liability, for any breach of representation or
warranty set forth in Article III of this Agreement with respect
to any matter arising after the date hereof to the extent that
such breach of warranty or the falsity of the representation upon
which such liability would be based is expressly disclosed in a
written notice furnished to the Purchaser at least seven days
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prior to the Closing (as the same may be extended pursuant to
Subsection (e) below) in a writing designated as updating the
Schedules attached to the Information Letter (together, in each
case, with accurate information and disclosure with respect to the
particular matter involved) and identification of the
representation and/or warranty concerned; provided, however, that
any such misrepresentation or breach of warranty or covenant so
disclosed to the Purchaser after the execution and delivery of
this Agreement and prior to the Closing shall not affect the right
of the Purchaser to elect not to close the transactions
contemplated by this Agreement as provided in Section 7.1 hereof
retaining all such right as it may have to the Expense
Reimbursement Fee and the Alternative Transaction Fee as provided
in the Definitive Authorization (it being understood and agreed
that if due disclosure is made as provided above of any such
matter arising after the date hereof and despite such disclosure
Purchaser elects to close, it shall thereby waive such
misrepresentation or breach); provided further, however, that the
provisions set forth in this paragraph shall not affect the right
of the Purchaser to make the post-closing adjustments referred to
in Section 2.6 hereof.
(e) The Seller and CBC agree as a separate covenant,
promptly to notify the Purchaser in writing of any material
inaccuracy or misrepresentation made by either of them in this
Agreement (or contained in the Plan of Reorganization or the
Disclosure Statement) of which either becomes aware prior to the
Closing Date. In connection with disclosures pursuant to
Subsection (d) above, each party may elect not more than once by
notice to the other parties to extend the Closing Date for a
period not to exceed seven days.
(f) From and after the Closing, CBC shall cease to have
any liability for breach of representation or warranty under this
Agreement, and shall have no liability with respect to any claim
for indemnification under this Agreement, including such claims
arising under this Article V. Moreover, as between the Seller and
CBC, the Seller shall have no right to claim or receive
contribution from CBC, nor shall the Seller have any other right
to assert any other claim against CBC with respect to the
representations and warranties made by the Seller and CBC in this
Agreement, or covenants made by CBC pertaining to the period prior
to the Closing.
SECTION 5.3. Indemnification by the Purchaser. Subject
to the limits set forth in this Article V, the Purchaser agrees to
indemnify, defend and hold the Seller and its agents and
affiliates (collectively, the "Seller's Indemnified Parties")
harmless from and against any and all Losses that they may suffer,
sustain, incur or become subject to arising out of, in connection
with or due to (i) any inaccuracy of any representation or
warranty or the breach of any warranty, covenant, undertaking or
other agreement of the Purchaser contained in this Agreement, or
(ii) any event, condition, conduct, act or omission (not
- 32 -<PAGE>
constituting a breach of any applicable provision hereof by the
Seller or Old CBC) that occurs from and after the Closing in
respect of the Assets, operations or business or properties of the
Purchaser, or Reorganized CBC or any subsidiaries, and regardless
of actual or alleged fault or misconduct of or violations by any
such entities or persons.
SECTION 5.4. Procedure for Indemnification. The
following procedures shall apply to any claim for indemnification
under this Agreement:
(a) If a party entitled to be indemnified under this
Agreement (an "Indemnitee") receives notice of the assertion by an
unaffiliated third party (a "Third Party") of any claim or of the
commencement by any Third Party of any action or proceeding (a
"Third Party Claim") with respect to which another party hereto
(an "Indemnifying Party") is obligated to provide indemnification
pursuant to the terms of this Agreement, the Indemnitee shall give
the Indemnifying Party prompt notice thereof after receiving
notice of such Third Party Claim. The notice to the Indemnifying
Party shall describe the Third Party Claim in reasonable detail
and shall indicate the amount (estimated if necessary) of the Loss
that has been or may be sustained by the Indemnitee. Such notice
shall be a condition precedent to any liability of the
Indemnifying Party for any Third Party Claim under the provisions
for indemnification contained in this Agreement; provided,
however, that the failure of the Indemnitee to give prompt notice
to the Indemnifying Party of such Third Party Claim shall
adversely affect the Indemnitee's rights to indemnification
hereunder solely to the extent that such failure materially
prejudices the Indemnifying Party in the defense of such Third
Party Claim. Except as otherwise provided herein, the
Indemnifying Party may elect to defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel
(which shall be reasonably satisfactory to the Indemnitee), any
Third Party Claim if the Indemnifying Party shall have set forth
in writing the basis for its obligation to indemnify for the
liability asserted in such action (together with a reasoned
statement of any reservations it may make as to such obligation)
and shall provide such evidence of financial capacity to meet such
obligations as the Indemnitee may reasonably require; provided,
however, that the Indemnitee is hereby authorized to file any
motion, answer or other pleading which it deems necessary or
appropriate to protect its interests, and provided further that if
the Indemnifying Party is the Seller or CBC, such Indemnifying
Party shall cease to have the right to assume the defense (and
shall permit the Indemnitee to assume any defense previously
assumed by such Indemnitee) of any and all claims in respect of
which indemnification may be sought under Section 5.2 if it shall
appear, in the Purchaser's judgment after consultation with the
Seller, that actual or reasonably foreseeable claims in respect of
which such indemnification may be sought may exceed $2,000,000 in
the aggregate or may affect title, ownership or property in excess
of such value. Prior to entering into a final settlement or
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compromise or the entering of any judgment with respect to such a
settlement or compromise with respect to such Third Party Claims,
the Indemnifying Party shall notify the Indemnitee and shall
obtain the Indemnitee's consent to such settlement, compromise or
entry of judgment if such settlement, compromise or entry would
result in any cost to the Indemnitee or (A) any action which could
reasonably be expected to adversely affect (i) the business,
financial condition or results of operations of the Indemnitee or
(ii) the Indemnitee's method of doing business, or (B) the
imposition of injunctive or other equitable relief upon the
Indemnitee. If the Indemnifying Party elects to compromise or
defend such Third Patty Claim, it shall, within the earlier of 30
days after receiving notice of the Third Party Claim or ten days
prior to the date upon which an answer is required to be filed
with respect to such Third Party Claim (but in no event earlier
than the date on which the Indemnifying Party receives actual
notice of the Third Party Claim), notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, in the
compromise of, or defense against, such Third Party Claim and the
Indemnitee shall make available (at reasonable times so as not to
materially interfere with Indemnitee's business and operations) to
the Indemnifying Party any personnel or any books, records or
other documents within its control that are reasonably necessary
or appropriate for such defense, subject to the receipt of
appropriate confidentiality agreements, and the Indemnifying Party
shall reimburse the Indemnitee for all its actual reasonable out-
of-pocket expenses in connection therewith. If the Indemnifying
Party elects not to compromise or defend against the Third Party
Claim, or fails to notify the Indemnitee of its election as herein
provided, or otherwise abandons the defense of such Third Party
Claim, (i) the Indemnitee may pay (without prejudice of any of its
rights as against the Indemnifying Party), compromise or defend
such Third Party Claim and (ii) the costs and expenses of the
Indemnitee incurred in connection therewith shall be indemnifiable
by the Indemnifying Party pursuant to the terms of this Agreement;
provided, however, that the Indemnitee shall have no obligation to
compromise or defend against such Third Party Claim.
(b) If the Indemnitee shall reasonably conclude that
its interests in such action are materially different from those
of the Indemnifying Party or that it may have defenses that are
different from or in addition to those available to the
Indemnifying Party, the Indemnitee may use separate counsel to
assert such defense and otherwise participate in the defense of
such action. If the Indemnifying Party shall assume the defense
with counsel satisfactory to the Indemnitee, the Indemnifying
Party shall not be liable for any legal expenses (other than
investigation expenses) subsequently incurred by the Indemnitee,
unless the Indemnitee shall have employed separate counsel in
accordance with the preceding sentence.
(c) The Indemnitee shall be entitled to receive from
the Indemnifying Party interest at an adjusted rate per annum
equal to the prime rate quoted in the Wall Street Journal plus one
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percent (calculated on a daily basis based on a year of 365 days
for the actual days elapsed) on indemnifiable Losses hereunder.
Such interest shall accrue from the date of the payment by the
Indemnitee of the amount to be indemnified to the date on which
the indemnity is paid by the Indemnifying Party.
SECTION 5.5. Production of Witnesses. Following the
Closing, each party shall use all reasonable efforts to make
available to the other party, upon written request, at reasonable
time and locations its employees and agents as witnesses to the
extent that any such person may be reasonably required in
connection with any legal, administrative or other proceedings in
which the requesting party may from time to time be involved, and
the requesting party shall reimburse the other party for all out-
of-pocket expenses reasonably incurred in connection therewith.
ARTICLE VI
COVENANTS
SECTION 6.1. Access and Information. (a) The Seller
shall, and shall cause CBC to, permit the Purchaser and its
agents, advisors and representatives after the date of execution
of this Agreement to have reasonable access, during regular
business hours and upon reasonable advance notice, to the
properties, books and records (including due diligence materials),
and officers, employees and consultants of CBC, and shall furnish,
or cause to be furnished, to the Purchaser and its debt and equity
financing sources and their respective agents, advisors and
representatives any financial and operating data, including
without limitation tax returns and information and accountants'
work papers, and other information that is available with respect
to the business and properties of CBC and the Subsidiaries,
including, but not limited to such periodic financial and
operating statements, as the Purchaser shall from time to time
reasonably request. The Purchaser may, with the prior written
consent of CBC, contact certain customers of and suppliers to CBC.
A transition team shall be organized by the parties, and the
representatives whom Purchaser may from time to time name to such
team shall, in consultation with the representatives of Seller and
CBC on such team and with appropriate advance notice have such
ongoing access as Purchaser may reasonably request to all business
operations of the Rockville Facility in order to inspect, monitor,
observe and report to Purchaser as to the status of those
operations and to permit Purchaser to consult with Seller and CBC
as to maintenance of such operations in good condition and order.
(b) All information provided or obtained pursuant to
clause (a) above shall be held by the Purchaser and Purchaser
shall cause all those to whom Purchaser distributes such
information to hold such information in accordance with and
subject to the terms of the Confidentiality Agreement, dated May
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3, 1995, between the Purchaser and CBC (the "Confidentiality
Agreement").
SECTION 6.2. Registrations, Filings and Consents. The
Seller will, and will cause CBC to, and the Purchaser will
cooperate and use their respective reasonable best efforts to make
all registrations, filings and applications, to give all notices
and to obtain any governmental or other consents, transfers,
approvals, orders, qualifications and waivers necessary or
desirable for the consummation of the transactions contemplated
hereby.
SECTION 6.3. Conduct of Business. Prior to the
Closing, and except as otherwise contemplated by this Agreement or
consented to or approved by the Purchaser, the Seller agrees to
cause CBC to:
(a) operate the Diagnostics Business of CBC and the
Subsidiaries and manage the Assets in the ordinary and usual
course consistent with past practices and use reasonable efforts
to preserve its properties, business and relationships with
suppliers and customers;
(b) cooperate with the Purchaser in attempting to
preserve for the Purchaser the benefit of CBC's previous business
relationships with suppliers and customers of CBC; provided,
however, that this Section 6.3(b) shall not be deemed to require
CBC to pay any sums or to take any action inconsistent with CBC's
prior practice;
(c) use all reasonable efforts to maintain in inventory
quantities of raw materials, component parts, work in process,
finished goods and other materials and supplies sufficient to
allow CBC to continue to operate the Diagnostic Business after the
Closing Date, free from any shortage of such items; and
(d) refrain from taking any of the actions specified in
Section 3.8 hereof.
SECTION 6.4. Notices and Consents. The Seller will
cause CBC to give any notices to third parties, and will cause CBC
to use its reasonable efforts to obtain any third-party consents,
that are necessary to the consummation of the transactions
contemplated herein or are reasonably requested by the Purchaser,
including those consents set forth on Schedule 6.4.
SECTION 6.5. Fulfillment of Conditions. Each of the
parties hereto shall use all reasonable efforts to fulfill or
obtain the fulfillment of the conditions to Closing, including,
without limitation, the execution and delivery of all agreements
or other documents contemplated hereunder to be so executed and
delivered.
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SECTION 6.6. Retention of Books and Records. The
books, records and documents pertaining to CBC in existence at the
date hereof shall be duly retained in accordance with CBC's
records retention policy and at the Closing all such books,
records, records and documents as pertain to the Diagnostics
Business or the Assets or are reasonably requested by Purchaser as
required for conduct of the business of Reorganized CBC shall be
retained by it at the Rockville Facility, at the Worcester
Facility of Old CBC (on a temporary basis up to 90 days with
access by CBC assured during office hours until removal by CBC) or
at such other location as Purchaser may designate, or shall be
transferred to Seller subject to separate agreement in writing by
Seller and Purchaser. With respect to such of the aforesaid
books, records and documents which shall be in the possession of
Seller or Reorganized CBC from and after the Closing, each
covenants that it shall retain in existence the same and make the
same available after the Closing Date for inspection and copying
by the other or its agents at such party's request and expense,
upon reasonable notice. No such books, records or documents shall
be destroyed by the party prior to the sixth anniversary of the
Closing Date nor shall any such documents be destroyed at any time
without prior written notice to the other parties hereto in
writing and giving such parties a reasonable opportunity to obtain
possession thereof.
SECTION 6.7. Further Assurances. At any time after the
Closing Date, the Seller and the Purchaser shall, and the
Purchaser shall cause CBC to, promptly execute, acknowledge and
deliver any other assurances or documents reasonably requested by
the Purchaser or the Seller, as the case may be, and necessary for
the Purchaser or the Seller, as the case may be, to satisfy their
respective obligations hereunder.
SECTION 6.8. Hart-Scott-Rodino. Each party shall file
with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice the notification and
report form (the "Report") required, if any, under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") with respect to the sale and purchase of the Shares. If the
Purchaser concludes the HSR Act is applicable, it shall so notify
CBC and each party hereby covenants to prepare and file the Report
required to be filed by it no later than the tenth business day
following such notification by Purchaser, to cooperate with the
other party to the extent necessary to assist the other party in
the preparation of its Report, to request early termination of the
waiting period required by the HSR Act and, if requested, to
promptly amend or furnish additional information thereunder. Any
applicable fees will be shared equally by the Seller and the
Purchaser.
SECTION 6.9. Subsequent Financial Statements and
General Ledger. The Seller and CBC shall prepare and deliver to
the Purchaser for its review the following financial information
for the following periods (the "Subsequent Financial Statements"),
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the financial statements to be audited where indicated and the
financial information to pertain to the business and operations of
only the Rockville Facility where indicated below.
12 months consolidated financial statements ended
December 31, 1995 (audited);
An income statement and list of assets for the 12 months
ended December 31, 1995 (Rockville Division);
Monthly statements of revenue for each month subsequent to
March, 1996 (Rockville Division);
Monthly statements of income and expense and list of assets
for each month subsequent to March 1996 (Rockville Division);
Quarterly income statements and list of assets for each
quarterly period subsequent to the period ended December 31,
1995 (Rockville Division);
Quarterly financial statements for each quarterly period
subsequent to the period ended December 31, 1995
(Consolidated).
Such financial information shall be delivered to the Purchaser,
(i) in the case of audited year-end financial statements, within
93 days after the end of the fiscal year, (ii) in the case of
quarterly financial statements, within 47 days after the end of
the fiscal quarter and (iii) in the case of monthly statements of
revenue within 14 days after the end of the month; (iv) in the
case of monthly statements of income and expense and list of
assets within 21 days after the end of the month; and (v) in the
case of quarterly income statements and list of assets (Rockville
Division) within 30 days after the end of the quarter. The Seller
and CBC shall also deliver to Purchaser promptly upon request such
draft financial statements as have been prepared to the date of
any such request with respect to any such period (or other period
as may be covered by any such draft financial statements).
The Seller and CBC shall also deliver to the Purchaser
CBC's general ledger no later than the day prior to the Closing
Date which shall reflect that CBC has processed and posted all
ordinary course transactions and accrued appropriate amounts for
payroll through the day prior to the Closing Date ("Closing Date
General Ledger") all business of CBC being suspended from the last
such entry in the General Ledger up to and through the Closing.
SECTION 6.10. Other Transactions. Except as provided
in this Agreement and in the Order, neither CBC nor the Seller
shall sell or transfer, or agree to sell or transfer, or enter
into any negotiations to sell or transfer, any of the Shares or
any interest in the Shares and shall keep the Shares free and
clear of all liens, charges and encumbrances and voting
agreements, commitments, agreements, understandings and
- 38 -<PAGE>
arrangements of every kind except as may be set forth in the Plan
of Reorganization until the earlier of the Closing or termination
of this Agreement.
SECTION 6.11. Employees and Employee Benefits. (a) The
Purchaser agrees that, until six months after the Closing it shall
use reasonable efforts to, and shall cause CBC to use reasonable
efforts to, continue to retain the employees at the Rockville
Facility, and to provide three months' notice of any termination,
subject, in each case, to any exceptions as circumstances may
require.
(b) Prior to the transfer of the Shares hereunder, the
Seller shall offer employment to each of those employees regularly
based at the Worcester Facility as it may wish to engage and to
such other identified employees as it may solicit with the written
consent of Purchaser, on terms no less favorable to each such
employee than those terms currently in effect, and the employment
of such employees by CBC shall cease prior to the Closing. At the
time of such termination, such terminated former employees will
cease to be active under any employee benefit plan, agreement,
commitment, practice or arrangement of any type which is
maintained or sponsored by CBC (including any plan subject to
ERISA), and the Seller will be responsible for all benefits, if
any, otherwise payable in accordance with the terms of such plans,
agreements, commitments, practices or arrangements with respect to
events occurring or services provided before the Closing Date.
Neither CBC nor the Purchaser shall have any responsibility for
any employee benefits for former employees of CBC employed by the
Seller with respect to events occurring or services provided on or
after the Closing Date, and the Seller shall assume, and indemnify
and hold harmless the Purchaser, CBC and their affiliates from and
against, any and all Losses with respect to such benefits. The
Seller shall have no responsibility for any employee benefits for
employees that continue to be employed by CBC with respect to
events occurring or services provided on or after the Closing
Date, and CBC and the Purchaser shall assume, and indemnify and
hold harmless the Seller from and against, any and all Losses with
respect to such benefits.
(c) Prior to Closing, CBC shall establish in such
manner as shall be reasonably directed by Purchaser a tax-
qualified individual account plan (the "CBC's 401(k) Plan"), which
plan shall be substantially similar to the Cambridge Biotech
Corporation 401(k) Savings Plan (the "Cambridge 401(k) Plan") and
which shall cover employees that continue to be employed by CBC on
and after the Closing Date (the "CBC Participants"). On or before
Closing, Seller shall cause in such manner as shall be reasonably
directed by Purchaser the trustee of the Cambridge 401(k) Plan to
transfer assets equal in value to the accounts of CBC's
Participants in the Cambridge 401(k) Plan to the trustee under the
trust agreement forming a part of CBC's 401(k) Plan. Immediately
after such transfer, (i) each participant's account balance in
CBC's 401(k) Plan or the Cambridge 401(k) Plan, as the case may
- 39 -<PAGE>
be, shall equal the account balance of such participant in
Cambridge 401(k) Plan immediately prior to such transfer, (ii) the
value of the assets in the CBC's 401(k) Plan shall equal the sum
of the account balances for all participants in that plan and
(iii) the value of the Assets in the Cambridge 401(k) Plan shall
equal the sum of account balances for all participants in that
Plan. Seller shall cause to be made any and all filings with the
submissions to the appropriate governmental authorities required
to be made in connection with such transfer. Seller shall on the
Closing Date assume the Cambridge 401(k) Plan in its entirety,
including any and all obligations and operations on and after the
Closing Date and shall indemnify and hold harmless the Purchaser,
CBC and their affiliates from and against, all Losses with respect
to the operation or obligations of the Cambridge 401(k) Plan with
respect to events occurring or services provided prior to the
Closing Date. Each party shall bear its own expenses, including
expenses of counsel, in connection with the transactions set forth
in this paragraph. Prior to the transfer of assets from the
Cambridge 401(k) Plan to CBC's 401(k) Plan, Seller shall conform
the Plan document to reflect the amendment of the Cambridge 401(k)
Plan to cease matching contributions effective as of July 7, 1994.
(d) The Seller shall be responsible for providing, or
causing CBC to provide, all notices required to be given to such
employees to be terminated by CBC under the Worker Adjustment and
Retraining Act of 1988, as amended, and shall indemnify and hold
harmless the Purchaser and CBC from and after the Closing in
respect of any Losses attributable to failure to give any such
notices that may have been required to be given prior to the
Closing Date.
(e) Seller shall deliver to Purchaser prior to Closing,
copies of IRS Form 5500s for the 1991 through 1994 plan years for
each Plan (as defined in Section 3.16) which is not exempt from
the IRS Form 5500 reporting requirements. Each such IRS Form 5500
shall be complete and accurate in material respects. Seller shall
also deliver to Purchaser prior to Closing evidence that each such
IRS Form 5500 has been filed with the appropriate government
agency.
(f) In connection with Seller's covenants under Section
6.11(e), prior to Closing, Seller shall have a reputable
accounting firm perform an audit and produce an audit report, as
required under Section 103(a)(3) of ERISA, covering the 1995, 1994
and 1993 plan years of the Cambridge 401(k) Plan. The audit
report shall be submitted to the appropriate government agencies
prior to Closing, concurrently with IRS Form 5500s for the 1994
and 1993 plan years of the Cambridge 401(k) Plan. Each such IRS
Form 5500 shall reflect the audit report and the accountant's
opinion contained therein, and shall contain such information so
that it is complete and accurate in material respects. Seller
shall not have satisfied its covenant to have a reputable
accounting firm produce an audit report if the accountant's
opinion contained in the audit report is other than "unqualified"
- 40 -<PAGE>
(within the meaning of Item 26(b)(1) of 1994 IRS Form 5500) for
the entire period covered by the audit report; except, however,
that Seller shall have satisfied such covenant if the accountant's
opinion is other than "unqualified" and any liabilities resulting
from such opinion being other than "unqualified" are disposed of
to Purchaser's reasonable satisfaction by an order issued pursuant
to Section 6.11(g).
(g) Prior to Closing, Seller shall obtain orders of the
Bankruptcy Court (i) approving the transfer of assets described in
Section 6.11(c) and (ii) declaring any and all penalties, taxes or
other Losses arising out of or in connection with the IRS Form
5500s described in Section 6.11(e) ("Plan Penalties") to be, as
the case may be, paid, discharged, or zero in amount or otherwise
determining in terms reasonably satisfactory to Purchaser that
Reorganized CBC shall be free and clear of all Plan Penalties.
Such orders shall direct that they be furnished to the Internal
Revenue Service and the Department of Labor. Seller shall
indemnify and hold harmless the Purchaser, CBC and their
affiliates from and against all penalties, taxes or other Losses
described herein. In this regard, Reorganized CBC shall also be
protected by the order of the Bankruptcy Court referred to in
Section 6.12 which shall provide in general terms or otherwise to
the reasonable satisfaction of the Purchaser that, except as
otherwise provided herein, Reorganized CBC shall be free and clear
of all claims arising out of or in connection with conduct or
obligations of CBC and Seller prior to the Closing including,
without limitation, such claims relating to the Benefits Plans and
that all such claims shall be discharged or shall attach to Seller
as of the Closing.
SECTION 6.12. Certain Matters. (a) CBC shall seek
orders of the Bankruptcy Court pursuant to such procedure and upon
such prior notice and disclosure to interested parties as
Purchaser shall reasonably consider necessary to assure the
binding effect of such orders upon such parties, (1) establishing
a bar date for the filing of any and all claims arising after the
commencement of CBC's Bankruptcy Case with respect to all
executory contracts, licenses, unexpired leases and other
agreements included in the Assets or to be assumed by Reorganized
CBC under the Plan of Reorganization; (2) providing that, upon
confirmation of such Plan, the Assets shall vest in CBC free and
clear of all claims and interests of creditors and equity security
holders, except as may be otherwise provided in this Agreement;
that Seller, not CBC, shall be responsible for payment of all
claims of the kind described in Section 503(b) of the Bankruptcy
Code; (3) approving CBC's assumption of all executory contracts
and unexpired leases included in the Assets and finding and
concluding that each of such executory contracts and unexpired
leases is free of any default, except that if any such default(s)
shall have occurred, the same shall have been duly cured or
adequate assurance of prompt cure shall have been provided through
arrangements duly approved by the Bankruptcy Court and to take
effect not later than concurrently with the consummation of the
- 41 -<PAGE>
Plan of Reorganization, and in consequence of such absence of
default, cure or adequate assurance of prompt cure, each such
contract or lease shall be in full force and effect; (4) barring
and enjoining all interested parties from asserting by way of
litigation before any tribunal any claim against CBC or any
Subsidiary that is discharged under the Plan or that the Plan
provides is to be the responsibility of Seller, not CBC, including
any claim that any contractual arrangement, agreement, or course
of dealing adopted by the Debtor pursuant to or in implementation
of order of the Bankruptcy Court in the course of the Bankruptcy
Case, constitutes or will constitute after consummation of the
Plan a breach of any executory contract constituting a part of the
Assets.
(b) Seller shall cause CBC in the course of the
bankruptcy proceedings, to reject under Section 365 of the
Bankruptcy Code the Development/Supply Agreement dated June 29,
1992, between Syva Company ("Syva") and CBC, and all exhibits and
schedules thereto (whether any such exhibit or schedule
constitutes an independent agreement for purposes of the
application of such Section 365), except that Seller undertakes
that it shall cause CBC with approval of the Bankruptcy Court
validly to assume under such Section 365 the License Agreements
dated such date between Syva, Syntex (U.S.A.) Inc. and CBC set
forth in Schedules H and J to such Development/Supply Agreement
(the "H and J Agreements") and Seller shall indemnify Purchaser
and Reorganized CBC against any failure to fulfill the undertaking
as to assumption of the H and J Agreements and if such agreements
are rejected any rejection damages shall be discharged at or prior
to the Closing or shall attach to Seller, not Reorganized CBC.
(c) Seller shall cause CBC to assume (i) the License
from NTIS to Biotech Research Laboratories, Inc. (jointly with
E.I. du Pont de Nemours and Company) originally dated June 19,
1984 as the same has been amended from time to time to date, (ii)
the License from NTIS to CBC dated June 15, 1988, and (iii) the
License from NTIS to CBC dated February 1, 1989.
(d) As provided in paragraph (b) above, CBC shall
reject pursuant to the Plan of Reorganization the executory
contracts with Syva providing for the supply of certain product
there referred to. It is understood and agreed between Seller and
Purchaser, however, that CBC shall be prepared to supply
Recombigen HIV-1-EIA and HIV-1/2 EIA to Ortho Diagnostic Systems,
Inc. ("Ortho") and certain existing direct customers identified on
Schedule 6.12 and Microtrak HIV-1-EIA and HIV-1/2 EIA to Syva
during the period commencing at the Closing which may continue
through December 31, 1996 subject to terms to be agreed and
provided that Seller shall provide toll manufacturing services to
Purchaser on satisfactory terms to be agreed. In connection with
such supply, CBC shall arrange for use of the trade name
Recombigen and such name shall remain applicable while inventory
from such supply remains on hand to December 31, 1997 or a later
date if CBC so elects.
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(e) In order to permit Reorganized CBC to build
necessary inventories of rp2le, provided that a firm order is
received from Reorganized CBC on or prior to September 30, 1996
(or if the Closing occurs subsequent to that date, promptly after
the Closing provided that Purchaser shall have acted reasonably to
advise Seller as to the projected needs of Reorganized CBC on or
prior to September 30), Seller shall manufacture for and deliver
to CBC such quantity of rp2le in good and merchantable form
consistent with applicable regulatory requirements for the
intended use (including applicable outdate requirements which
shall not be less than two years after December 31, 1997 and at
least at such purity and quality levels as are consistent with
past practice of CBC) as CBC may order from 500 milligrams up to 5
grams at the price of $140 per milligram FOB Seller's facility at
Worcester, Massachusetts, such delivery to take place in
accordance with a schedule indicated by Purchaser in its order but
providing at least 90 days from the date of such order for
manufacture and delivery.
(f) The Seller will allow the Reorganized CBC to use
its accounting and financial information software package (the
"Software") and to access its mainframe computer (the "Mainframe")
to run the Software until December 31, 1996. Reorganized CBC or
Purchaser will pay any out-of-pocket costs incurred by the Seller
solely by reason of Reorganized CBC's use of the Software or
access to the Mainframe. During such period as both the Seller
and Reorganized CBC are using the Software and/or accessing the
Mainframe, they shall share on an equal basis any applicable
licensing or maintenance fees at applicable rates as previously
disclosed by CBC in writing and for any period when only one party
is so benefitting it shall bear all such applicable costs. Seller
will provide during the transition period between the date hereof
and the Closing training for two people for two days each in each
of the accounts payable and customer support areas. Reorganized
CBC will engage an independent contractor, at its own expense, to
construct security measures such as are necessary to separate the
data relating to the Diagnostics Business from the Seller's data
and which prevent access by Reorganized CBC to the Seller's data
or by the Seller to the data relating to the Diagnostics Business.
The Seller shall not be liable to the Purchaser, Reorganized CBC
or any third party for any damages or costs incurred as a result
of Reorganized CBC's use of the Seller's Software or Mainframe,
except in the case of willful misconduct.
SECTION 6.13. Section 338(h)(10) Election. (a) The
Seller will join with the Purchaser in making an election under
Sections 338(g) and 338(h)(10) of the Code or any similar state or
local law provision in any state or states as the Purchaser may
designate or as shall be required, with respect to the sale of the
Shares to the Purchaser hereunder (collectively the "Section
338(h)(10) Election"). The Seller and the Purchaser shall jointly
make an election on Form 8023 or in such other manner as may be
required by rule or regulation of the Internal Revenue Service
under Section 338(h)(10) of the Code, concerning the transactions
- 43 -<PAGE>
contemplated by this Agreement. The Purchaser shall, with the
assistance and cooperation of the Seller, prepare all Section
338(h)(10) forms in accordance with applicable tax laws.
(b) The Seller and the Purchaser will allocate the
"Modified Aggregate Deemed Sale Price" as computed under Treasury
Regulations (or similar state or local law provisions) (including
any portion of the Tax Increment properly treated as consideration
for the Shares) among CBC's assets for tax purposes in accordance
with the Purchaser's and Seller's reasonable determination of
their fair market values (the "Price Allocation"), which Price
Allocation shall be delivered to the Seller. The Seller and the
Purchaser agree to act in accordance with the Price Allocation in
the preparation, filing and audit of any Tax Return.
The Purchaser will have the right, at its expense, to
defend against and control the disposition of any challenge (a
"Challenge") by any taxing authority to the allocation of the
Modified Aggregate Deemed Sales Price referred to in the preceding
paragraph if the defense of the Challenge can be separated from
any challenge to, or audit of, other issues in the tax returns of
the Seller or CBC. If the defense cannot be so separated, the
Seller will contest the Challenge and use their best efforts to
cause the reporting positions taken at the Purchaser's direction
in connection with the above matters to be upheld. The Seller
shall consult with the Purchaser concerning all action to be taken
in such contest, and shall not settle any Challenge without the
Purchaser's consent, which consent shall not unreasonably be
withheld by the Purchaser. The Seller will advise the Purchaser
promptly upon receipt of any formal or informal notice of a
Challenge.
(c) without the prior written consent of the Purchaser,
neither the Seller, CBC nor any Subsidiary shall, to the extent it
may affect or relate to CBC or any Subsidiary, make any election
other than the Section 338(h)(10) Election, change any election,
change an annual tax accounting period, adopt or change any tax
accounting method, file any amended Return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right
to claim a refund of Taxes, consent to any extension or waiver of
the limitation period applicable to any Tax claim or assessment,
take any other action or omit to take any action, if any such
election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action or omission would have the
effect of increasing the Tax liability or decreasing any Tax asset
of CBC or any Subsidiary.
(d) The Seller shall include CBC and any Subsidiaries
through the close of business on the Closing Date in those state
and local tax returns that are filed on a consolidated, combined
or unitary basis.
(e) The Seller will pay any and all federal, state,
local or foreign Taxes, including any liability of CBC or any
- 44 -<PAGE>
Subsidiary for Taxes attributable to the making of the Section
338(h)(10) Election, and will indemnify the Purchaser, CBC and any
Subsidiary against any Losses or Adverse Consequences arising out
of any failure to pay such Tax.
SECTION 6.14. Other Tax Matters. (a) Tax Periods
Ending on or Before the Closing Date. The Purchaser and the
Seller at the Seller's expense shall jointly prepare or cause to
be prepared and file or cause to be filed all Tax Returns for CBC
and any Subsidiary for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. Seller shall
pay to the Purchaser for Taxes of CBC and Subsidiary with respect
to such periods within fifteen (15) days after demand by the
Purchaser or CBC and its Subsidiaries of such Taxes.
(b) Tax Periods Beginning Before and Ending After the
Closing Date. The Purchaser shall prepare or cause to be prepared
and file or cause to be filed any Tax Returns of CBC and any
Subsidiary for Tax periods which begin before the Closing Date and
end after the Closing Date. The Seller shall pay to the Purchaser
within fifteen (15) days after demand by the Purchaser or CBC an
amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date. For
purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period
that includes (but does not end on) the Closing Date, the portion
of such Tax which relates to the portion of such Taxable period
ending on the Closing Date shall (x) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be
deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of
days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable
period, and (y) in the case of any Tax based upon or related to
income or receipts be deemed equal to the amount which would be
payable if the relevant Taxable period ended on the Closing Date.
Any credits relating to a Taxable period that begins before and
ends after the Closing Date shall be taken into account as though
the relevant Taxable period ending on the Closing Date. All
determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior
practice of CBC and its Subsidiaries.
(c) Cooperation on Tax Matters.
(i) The Purchaser, CBC and any Subsidiary and the
Seller shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing
of Tax Returns pursuant to this Section and any audit,
litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other
party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation
or other proceeding and making employees available on a
- 45 -<PAGE>
mutually convenient basis to provide additional information
and explanation of any material provided hereunder. CBC and
any Subsidiary and Seller agree (A) to retain all books and
records with respect to Tax matters pertinent to CBC and any
Subsidiary relating to any taxable period beginning before
the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Purchaser or
Seller, any extensions thereof) of the respective taxable
periods provided that in the event there is a net operating
loss incurred in such year, the relevant books and records
must be retained until the expiration of the statute of
limitations (and to the extent notified by Purchaser or
Seller, any extensions thereof) of the year which is the last
year to which the net operating loss could be carried forward
as provided by law, and to abide by all record agreements
entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if
the other party so requests, CBC and any Subsidiary or the
Seller, as the case may be, shall allow the party to take
possession of such books and records.
(ii) The Purchaser and the Seller further agree, upon
request, to use their best efforts to obtain any certificate
or other document from any governmental authority or any
other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated
hereby).
(iii) The Purchaser and the Seller further agree, upon
request, to provide the other party with all information that
either party may be required to report pursuant to Section
6043 of the Code and all Treasury Regulations promulgated
thereunder.
(d) Tax Sharing Agreements. All tax sharing agreements
or similar agreements with respect to or involving the Seller, CBC
and the Subsidiaries shall be terminated as of the Closing Date
and, after the Closing Date, CBC and its Subsidiaries shall not be
bound thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including
any penalties and interest) incurred in connection with this
Agreement (including any New York State Gains Tax, New York City
Transfer Tax and any similar tax imposed in other states or
subdivisions), shall be paid by Seller when due, and Seller will,
at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Purchaser will, and will cause its
affiliates to, join in the execution of any such Tax Returns and
other documentation.
- 46 -<PAGE>
SECTION 6.15. Covenant Not To Compete. Except as set
forth on Schedule 6.15, for a period of five years from and after
the Closing Date, neither the Seller nor any entity in which the
Seller after the Closing Date holds an equity interest equal to or
greater than 25% of such entity's outstanding equity will engage
or be engaged in the retroviral diagnostic business or any other
line of business in which Reorganized CBC is engaged immediately
after the Closing. The Seller acknowledges that a violation on
its part of this Section 6.15 would cause immeasurable and
irreparable damage to CBC and the Purchaser, and accordingly
acknowledges that the Purchaser and CBC shall be entitled to
injunctive relief for any actual violation of such covenant in
addition to any remedies it may otherwise have. If the final
judgment of a court of competent jurisdiction declares that any
term or provision of this Section 6.15 is invalid or
unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the
power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed.
SECTION 6.16. Licenses and Sublicense. (a) Effective
as of the Closing, CBC hereby grants to the Seller a fully paid-
up, royalty free, nonexclusive sublicense to make, use and sell
products and processes in the vaccine, therapeutic and related
research use fields only under U.S. Patent # 4,734,362 and foreign
counterparts (protein purification patent) and to make, use and
sell products in the veterinary diagnostics field of use only
under U.S. Patent # 4,753,873 and foreign counterparts (peptides
for the diagnosis of HTLV-III antibodies, their preparation and
use). Such licenses shall continue for the term of the applicable
patent in each country wherein the same has issued or may issue,
without right to sublicense.
(b) Effective as of the Closing, CBC grants to the
Seller a nonexclusive sublicense to make, use and sell products or
processes in the vaccine, therapeutic and related research use
fields of use only under U.S. Patents 4,725,669 and 5,068,174
(Harvard gpl20 and p27) and any foreign counterparts subject to
all applicable limitations on sublicensees under the License
Agreement dated May 1, 1987 between the President and Fellows of
Harvard College ("Harvard") and CBC as such agreement is amended
to and in effect on the date of this Agreement ("Harvard
License"). Seller and Purchaser agree to consult as to
renegotiation of the Harvard License in order to accomplish mutual
objectives and in this connection Purchaser will give due
consideration to negotiating positions previously taken by CBC
with Harvard which have been communicated to Purchaser in writing
and will not unreasonably withhold its consent to those positions
- 47 -<PAGE>
but Seller shall not cause or permit CBC to agree to, and CBC
shall not agree to any amendment, alteration or termination of the
aforesaid Harvard License or any other license, contract,
agreement or lease constituting a part of the Assets without
Purchaser's prior written consent. In connection with the
negotiations with Harvard, Purchaser will lend support to Seller's
request for the right to grant sublicenses for therapeutic and
vaccine uses only and in the event such right is granted Purchaser
will cause Reorganized CBC to relinquish the right to grant
sublicenses under the Harvard License (other than sublicenses of
the invention claimed under U.S. Patent Application Ser. No.
789,126 ("Green Monkey" patent)) for therapeutic and vaccine uses
otherwise than to affiliates of Reorganized CBC and without
authorizing such affiliated sublicensees to grant further
sublicenses (for this purpose affiliate means any company,
partnership or other entity controlling, controlled by or under
common control with Reorganized CBC and control refers to
possession of half or more of the equity, ownership, or voting
control or the ability to cause the election or designation of
half or more of any board, committee or group having the direction
of the business concerned), any sublicense to such an affiliate to
cease if affiliate status ceases, provided that Seller shall make
available without interruption of rights a sublicense of the same
technology on reasonable terms and conditions no less favorable to
such former affiliate than those then being currently offered by
Seller for sublicenses of such technology; notwithstanding the
foregoing provision as to cessation, any sublicense to Transgene
S.A. ("Transgene") shall not cease but shall continue in effect
for the benefit of Transgene and any successor even if Transgene
or such successor should cease to be a Reorganized CBC affiliate,
and any sublicense to a Reorganized CBC affiliate controlled by
Transgene or such successor shall continue in effect so long as
such affiliate status or such control continues.
The term of the sublicense to Seller under the Harvard
License shall be coextensive with the term of the Harvard License
and the royalty rate payable to CBC shall be 3% of Seller's net
sales as defined in the Harvard License or such lesser percentage
as may be authorized pursuant to a formula applicable under such
license permitting reduction of royalty in connection with sales
of products requiring payment of multiple royalties, provided,
however, that in no case shall the royalty be fixed at a lower
rate than that necessary to prevent a reduction of the royalty
rate payable by previous sublicenses of Cambridge under provisions
assuring them treatment on the same basis as afforded more favored
licensees. Purchaser and Seller agree that within a reasonable
time after the Closing they shall consult together with Harvard
and the portion of royalties received by CBC to be remitted to
Harvard shall be determined by agreement between CBC and Harvard.
Purchaser represents that subject to satisfactory conclusion of
such discussions it would be prepared to remit as much as the full
3% royalty rate to Harvard and would have no objection if Harvard
is prepared to accord Seller, as sublicensee, the right to grant
further sublicenses within the field of use authorized by the
- 48 -<PAGE>
sublicense to Seller and on terms permitting a reasonable sharing
of royalties between Harvard, Seller and CBC. As an alternative
arrangement, in the event of failure of the negotiations
contemplated above, Purchaser will be prepared to cause
Reorganized CBC to grant sublicenses for nondiagnostic uses only
to selected customers or co-venturers of Seller on reasonable
terms and conditions and on a basis assuring Reorganized CBC a
fair return for its role in such transactions, based on
administrative compensation as provided in Subsection (d) hereof,
and subject to the maximum there referred to except that such
maximum will be subject to renegotiation in good faith if required
to fully compensate for the administrative burden to CBC.
(c) The Seller acknowledges its familiarity with the
terms and conditions of the Harvard License and agrees that it
will abide by all provisions therein applicable to sublicensees
thereunder, and such provisions are agreed to as if set forth
herein in full. Seller as sublicensee shall also comply with all
such reporting requirements and customary sublicense provisions as
Purchaser may reasonably request to assure full and timely
compliance with all obligations under the Harvard License. The
Seller indemnifies CBC in full for any liability (including
attorneys' fees) CBC may incur in connection with Seller's
exploitation of the rights granted under these sublicenses.
(d) Royalties Collected by CBC or Seller (if Allowed to
Sublicense) Under the Harvard License. Royalties Paid by CBC's
sublicensees under the Harvard License pursuant to sublicense
agreements entered into prior to the date hereof (as set forth on
Schedule 6.16(d) "Existing Harvard Sublicenses") shall be
collected by CBC and such collections ("Collections") shall be
applied as set forth in this Subsection (d). As used in this
subsection, Net Sales means Net Sales as defined in the Harvard
License; the term "Seller Harvard Net Sales" means, for a given
calendar year, (i) all net sales on which royalties are payable to
CBC in respect of Existing Harvard Sublicenses, (ii) all Net Sales
on which royalties are payable to or for the benefit of Seller in
respect of any sublicenses of the Harvard License granted
hereafter, and (iii) all royalties payable by Seller to CBC in
respect of the sublicense of the Harvard License granted hereby to
Seller. As used in this subsection, the term "CBC Harvard Net
Sales" means, for a given calendar year, (i) all Net Sales on
which royalties are payable to CBC under sublicenses of the
Harvard License granted by CBC after the date hereof (other than
any amounts thereof paid to or for the benefit of Seller), and
(ii) all Net Sales of CBC on which royalties are payable in
respect of the Harvard License; provided, however, that the term
CBC Harvard Net Sales shall in all cases exclude Net Sales of
Licensed Products as defined in the Harvard License which are
Licensed Products solely because they are made, used or sold
pursuant to rights claimed under the Green Monkey patent. As used
in this subsection, the term "Harvard Expense" means, for a given
calendar year, the sum of (i) the amounts (licensing fees, minimum
royalties) owed by CBC to Harvard with respect to the patents
- 49 -<PAGE>
licensed by the Harvard License, and (ii) the patent prosecution
expenses for which CBC is responsible for under Section 7.1 of
such Harvard License, in both cases excluding from such amounts
and expenses those related to Green Monkey patent. For each
calendar year the percentage that Seller Harvard Net Sales
constitute in relation to the sum of Seller Harvard Net Sales and
CBC Harvard Net Sales shall be determined and the same percentage
of Harvard Expenses for such year ("Seller's Share") shall be paid
by application of collections made in such year. A further 1O% of
such collections shall be retained as an administrative fee, not
to exceed $25,000 for any year. The balance of such collections
shall be payable to Seller. In the event that Collections are
insufficient to cover Seller's Share, Seller shall not be required
to contribute any deficiency.
CBC and Seller shall cooperate to achieve the foregoing
sharing of revenues and expense. Within sixty days after the end
of each calendar year, CBC shall remit to Seller any sums due
Seller with respect to the previous year together with a statement
of receipts and applicable charges and costs. In the event that
Collections are substantially in excess of expectations the
Discretionary Advance Payment Procedure referred to in subsection
(e) below shall be applicable.
(e) Royalties Collected by Reorganized CBC under the
Cottingham License. Royalties paid by Hoffman-La Roche Ltd. as
sublicensee pursuant to sublicense agreements dated July 23, 1986
and August 19, 1986 and by Hoffman-La Roche, Inc. as sublicensee
pursuant to Sublicense Agreement dated March 29, 1991, all such
sublicense agreements being under the license agreement dated
February 2, 1982 between Hugh Cottingham and Angenics Inc., as
such agreement is amended to, and in effect on, the date of this
Agreement (the "Cottingham License"), shall be collected by
Reorganized CBC. With respect to such royalties received in any
year, Reorganized CBC may retain an administrative fee of 5% (but
not to exceed $10,000.00), shall pay the licensor his share of
such royalties (taking into account as a credit against such
royalties pursuant to the Cottingham License minimum royalties
previously paid), shall pay patent maintenance expenses required
by the Cottingham License, and shall remit the balance, if any, to
Seller. In the event Reorganized CBC shall derive royalties from
sublicenses under the Cottingham License other than from Hoffman-
La Roche, Reorganized CBC shall contribute pro rata to said patent
maintenance expenses. Within sixty days after the end of each
calendar year, Reorganized CBC shall remit to Seller any sums due
Seller with respect to the previous year together with a statement
of receipts and applicable charges and costs. In the event that,
prior to the end of the year, it shall be clear to Reorganized CBC
that a balance will be due to Seller, Reorganized CBC shall from
time to time make a good faith estimate of the portion of such
balance on hand, and in its reasonable discretion may make
payments to Seller from such balance on hand in advance of the
date referred to above ("Discretionary Advance Payment
Procedure").
- 50 -<PAGE>
(f) Bacula. Effective as of the Closing, Seller hereby
grants to CBC and Purchaser a fully paid-up royalty free,
nonexclusive sublicense to make, use and sell products and
processes in the diagnostics and research fields only under U.S.
Patent Application No. 08/029402 Bacula Virus Vectors for
Expression of Secretory Membrane Based Proteins and foreign
counterparts, continuations, divisions, continuations in part.
Seller makes no representations with respect to the technology
embodied in such application and specifically disclaims all
warranties thereto.
SECTION 6.17. Certain Discussions. In addition to
ongoing discussions concerning contractual relationships of CBC's
Subsidiary, it is understood that prior to the Closing the
Purchaser may with the prior written consent of CBC (such consent
not to be unreasonably withheld) seek to restructure certain
arrangements with third parties relating to the Diagnostics
Business in order to achieve optimal business arrangements with
effect upon or after the Closing, and in the event that any
agreement for such restructuring is achieved, Seller and CBC shall
make such disclosure thereof to the Bankruptcy Court with such
notice to third parties as the Purchaser may reasonably request in
writing in connection with the assumption of any executory
contract or unexpired lease constituting a part of the Assets; if
such request is unreasonable because untimely or otherwise
inappropriate, and bankruptcy counsel to CBC so advises, Seller
and CBC may decline to comply with such request and the parties
shall consult in good faith as to the appropriate course to
achieve mutual objectives of security of the Assets and success of
the Plan of Reorganization.
SECTION 6.18. Contract with Ortho Diagnostics. In
addition to its obligations under such other provisions hereof as
may be applicable, Seller specifically covenants that as of the
Closing, Reorganized CBC shall have no liability for damages to
Ortho Diagnostics Systems, Inc. ("Ortho") for debts or other
payables accruing prior to the Closing upon any contract, purchase
order or other agreement, whether by way of set off against
amounts falling due from Ortho to CBC or Reorganized CBC or
otherwise, and Seller indemnifies Reorganized CBC against any such
claim. CBC and Seller further agree that during the period from
the execution hereof to the Closing they shall use best efforts in
consultation with and as reasonably directed by Purchaser to
obtain Ortho's agreement to an amendment (the "Amendment") to the
License Supply and Development Agreement among CBC, Ortho and
Chiron Corporation dated March 30, 1993 (the "Ortho Agreement"),
such Amendment to be in form substantially similar to the draft
dated April 1, 1996 (the "Draft") furnished to the Purchaser (or
in such other form as is reasonably acceptable to Purchaser and
CBC) and Seller and CBC represent that they shall, if requested by
Purchaser, seek to negotiate a reasonable period for supply by CBC
to Ortho that is longer than that provided in the Draft. CBC and
Seller represent to Purchaser that, based on prior discussions
with Ortho, they believe that the provisions of the Draft with
- 51 -<PAGE>
respect to distribution and pricing are acceptable to Ortho and
that the parties have not reached agreement on all other items of
the Draft including obligations of Ortho to manufacture. The
Chief Executive Officer of CBC has been conducting the
negotiations with Ortho, with respect to the Amendment and has not
been told by Ortho that Ortho has plans to discontinue
distribution of the HTLV-I (rp2le enhanced) EIA product or is
considering such a plan. It is understood and agreed between
Purchaser and Seller that such Amendment should at a minimum
contain supply and pricing provisions at least as favorable to CBC
as those of the Draft. In the event that Seller and CBC are
unable to accomplish the execution of the Amendment, Purchaser and
Seller shall consult as to strategic and tactical matters with
respect to assumption, termination or rejection of the Ortho
Agreement. If Purchaser in consultation with bankruptcy counsel
determines that there are reasonable grounds to terminate the
Agreement and notifies CBC to such effect on or prior to May 15,
1996 then CBC shall deliver a termination notice to Ortho.
Purchaser and CBC shall cooperate with respect to any proceedings
with Ortho respecting assumption, termination or rejection. CBC
shall allow Purchaser reasonably to direct the conduct of any
proceedings including structuring any proceedings in order to
preserve CBC's right to reject the Agreement provided that such
proceedings do not interfere with the ability of CBC to have its
Plan of Reorganization confirmed in a timely manner and provided
further that Purchaser and/or Reorganized CBC shall be responsible
for all costs and expenses of the proceedings (other than costs
incurred in such connection in the Bankruptcy Case that are not
substantially in excess of those CBC would normally incur in
connection with actions it might take independently of Purchaser's
wishes to resolve the matter of the Ortho Agreement), any
rejection damages if the Agreement is rejected (to the extent that
CBC as Debtor-In-Possession or Seller would otherwise be required
to satisfy or make payment in discharge of such rejection damages)
and shall bear the risk of an unfavorable result of any such
proceedings as to the Ortho Agreement except as to the liability
for damages referred to in the first sentence of this section. In
the event the Agreement is terminated or rejected Reorganized CBC
shall benefit from any rights arising or resulting from such
termination or rejection after the Closing and Annex B shall be
deemed amended to reflect such occurrence.
ARTICLE VII
CONDITIONS
SECTION 7.1. Condition to the Purchaser's Obligation.
The obligation of the Purchaser to effect the Closing is also
subject to the satisfaction or waiver by the Purchaser on or prior
to the Closing of the following conditions:
(a) The waiting period under the HSR Act, if
applicable, shall have expired.
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(b) The representations and warranties of the Seller
set forth in Article III of this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date.
(c) The Seller shall have performed (or shall have
caused CBC to perform, as appropriate) in all material respects
all obligations required to be performed by either the Seller or
CBC under this Agreement at or prior to the Closing Date,
including those transactions set forth herein and in the Plan of
Reorganization.
(d) Since the date hereof, no event or events,
individually or in the aggregate, having or which could reasonably
be expected to result in a Material Adverse Effect shall have
occurred.
(e) All the directors, officers and consultants of CBC
immediately prior to the Closing Date shall have delivered to CBC
their respective resignations effective as of the Closing Date.
(f) There shall be no pending or threatened court
action or proceeding by any federal or state governmental
authority challenging the consummation of the transaction, nor any
order issued by the Bankruptcy Court or the United States District
Court or any other court having jurisdiction in the premises which
order stays the Order of the Bankruptcy Court confirming the Plan
of Reorganization or otherwise restrains, enjoins or prevents the
consummation of the Plan or any action necessary for such
consummation, and the time to appeal from the order confirming the
Plan shall have expired with no appeal taken or, if any appeal
shall have been taken, the same shall have been withdrawn or
dismissed or the Closing as proposed to be conducted together with
such other transactions as contemplated by the Plan which have
been conducted prior to the Closing or would be conducted
simultaneously therewith would be such as, in the aggregate, to
constitute substantial consummation of the Plan within the meaning
of 11 U.S.C. 1101 unless there is reasonable basis to believe
that despite such substantial consummation such pending appeal
would not be moot.
(g) The Seller and CBC shall have procured all the
consents of third parties specified in Schedule 6.4.
(h) The Bankruptcy Court shall have given all such
approvals as may be required in connection with the transactions
contemplated hereby, including confirmation of the Plan of
Reorganization, and the Plan of Reorganization shall have been
substantially consummated within the meaning of 11 U.S.C. 1101
concurrently with the consummation of the transactions hereunder.
- 53 -<PAGE>
(i) Aggregate revenues from sales of products
manufactured in Rockville and Lyme Western Blots for the last
quarter of calendar year 1995 and the first quarter of calendar
year 1996 (collectively the "Late Quarters") shall equal at least
80% of the aggregate revenues from sale of such products during
the last quarter of calendar year 1994 and the first quarter of
calendar year 1995 (collectively the "Early Quarters"), and with
respect to such products, annualized pretax profits for the Late
Quarters shall equal at least 70% of such pretax profits for the
Early Quarters. In addition, aggregate revenues from sales of
products referred to on Schedule 7.1(i) for the period commencing
at the end of the first quarter of calendar 1996 and ending at the
end of the month preceding the Closing (the "Measurement Period")
shall equal at least 80% of the aggregate revenues shown as "Grand
Total" on the "Rockville 1996 Budget" dated March 22, 1996
attached hereto as Schedule 7.1(i) for the Measurement Period.
(j) The value of the inventory at the Closing Date as
reflected on the Closing Date General Ledger shall be not less
than an amount equal to (A) the value of such inventory as
reflected in the audited financial statements of CBC as at
December 31, 1995, minus (B) $1,000,000 and Purchaser shall have
had reasonably satisfactory opportunity to review the same.
(k) The Purchaser shall be reasonably satisfied that
CBC has all licenses or rights as are necessary to permit it (A)
to continue to manufacture and sell HIV-1 Western Blot Tests and
(B) to continue to use as heretofore its methods for such
manufacture and for the detection of the pl8 protein of HIV-1, and
to use the pl8 protein itself, at an overall cost in terms of
royalties which is no greater than its historical royalty cost
plus an incremental amount which is either (a) no greater than 3%
of net sales, or (b) if greater than 3% of net sales, not so great
as to render production "unprofitable" (on a quantity and resale
price basis equivalent to that in effect during the first half of
calendar year 1995)
(l) The Purchaser shall be reasonably satisfied that
the Judgment issued by the United States Bankruptcy Court on
September 1, 1995 in the Genetic Systems Litigation has not been
reversed and counsel to the Purchaser shall not have identified
(giving the basis therefor) any objective indication that such
reversal is forthcoming, Seller having disclosed to the Purchaser
all circumstances related to the course of the Genetic Systems
Litigation up to the Closing (except that any information sealed
pursuant to court order or stipulation of confidentiality shall be
disclosed to counsel for Purchaser who has qualified for
disclosure under such order or stipulation).
(m) CBC shall have completed to the reasonable
satisfaction of the Purchaser the arrangements and renegotiations
and other matters referred to in Section 6.12(b), (c) and (d)
above.
- 54 -<PAGE>
(n) The Purchaser shall be reasonably satisfied that
pre-bankruptcy tax liabilities have been calculated and discharged
in a manner that is not likely to result in the imposition of
material additional tax, obligations on Reorganized CBC, any
subsidiary of Reorganized CBC, or the Purchaser, and that the
Seller has adequately indemnified or otherwise sufficiently
provided for the possibility of any additional tax obligations.
(o) The Definitive Authorization, including the
determinations regarding the existing CBC business thereunder,
shall have become a final order of the Bankruptcy Court.
(p) The Purchaser shall have received not later than 24
hours prior to the commencement of the proposed Closing in good
order the Closing Date General Ledger reflecting all transactions
required to be reflected therein.
(q) The Order of the Bankruptcy Court confirming the
Plan of Reorganization shall be consistent with that called for by
Section 6.12(a)(ii) and shall include the following findings of
fact and conclusions of law with respect to each of the executory
contracts and unexpired leases included in the Assets, it being a
material condition that such findings and conclusions be made
applicable to each such executory contract and lease severally:
(i) each of such executory contracts and unexpired
leases shall be free of any breach (other than of a kind
described in Section 365(b)(ii) of the Bankruptcy Code) or
default, except that if any such breach (other than of a kind
described in Section 365(b)(ii) of the Bankruptcy Code) or
default shall have occurred, the same shall have been duly
cured or adequate assurance of prompt cure shall have been
provided through arrangements duly approved by the Bankruptcy
Court and to take effect not later than concurrently with the
consummation of the Plan of Reorganization, and in
consequence of such absence of breach or default, cure, or
assurance of prompt cure, each such contract or lease shall
be in full force and effect; and
(ii) such executory contracts and unexpired leases
referred to in clause (i) above are duly assumed by CBC in
accordance with Section 365(a) of the Bankruptcy Code.
(r) The Bankruptcy Court shall have made such orders as
called for in Section 6.12(a)(i) and (iii).
(s) The Plan of Reorganization shall have been
confirmed and the Disclosure Statement shall have been
disseminated in substantially the forms circulated to the parties
prior to the date of this Agreement (draft of March 20, 1996),
with such changes therein as have been approved by the Purchaser
in writing, such approval not to be unreasonably withheld;
provided, however, that, upon reasonable prior notice to Purchaser
but without Purchaser's approval, Seller and CBC may make changes
- 55 -<PAGE>
to the provisions of the Plan and Disclosure Statement dealing
with the classification and treatment of claims and interests,
financing of Seller, the disposition of CBC's assets other than
the Assets, and matters other than provisions describing
transactions contemplated by this Agreement, so long as such
changes neither alter any of the terms or conditions of the
transactions contemplated by this Agreement, nor have any material
effect or impact upon such transactions or the rights of Purchaser
in connection therewith.
(t) The covenants described in Sections 6.11(c)(i),
(ii) and (iii), 6.11(e), 6.11(f) and 6.11(g) have been satisfied.
In lieu of satisfaction of any or all of these covenants,
Purchaser, at its discretion, may accept a reduction in the
Consideration referred to in Section 2.2; such reduction to be
evidenced in a separate written agreement. In addition, Seller
will certify that neither the Internal Revenue Service nor the
Department of Labor has announced its intention to audit the
Benefit Plans or that, if any such intention has been announced,
any Losses arising in connection with such audit have been
disposed of to Purchaser's reasonable satisfaction by an order
issued pursuant to Section 6.11(g) prior to Closing.
(u) The Purchaser shall have received from the Seller
and CBC a certificate to the effect that each of the conditions
specified above in this Section 7.1 has been satisfied.
SECTION 7.2. Condition to the Seller's Obligation. The
obligation of the Seller to effect the Closing is also subject to
the satisfaction or waiver by the Seller's on or prior to the
Closing of the following conditions:
(a) The representations and warranties of the Purchaser
set forth in Article IV of this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date.
(b) All regulatory approvals required to consummate the
transactions contemplated hereby, if any, including without
limitation expiration or termination of the waiting period under
the HSR Act, if applicable, shall have been obtained and shall
remain in full force and effect.
(c) The Purchaser shall have performed in all material
respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(d) The Bankruptcy Court shall have given all such
approvals as may be required in connection with the transactions
contemplated hereby, including confirmation of the Plan of
Reorganization.
- 56 -<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Public Statements. Neither CBC nor the
Seller shall make any public announcement or statement with
respect to the transactions contemplated hereby, this Agreement or
any related transaction without the prior written approval of the
Purchaser except for an initial press release by CBC announcing
the execution of this Agreement in form reasonably acceptable to
the Purchaser (together with any oral and written recapitulation
accurately reflecting the content thereof), filings made with the
SEC and the Bankruptcy Court, and as required by applicable law.
The Purchaser shall not rake any public announcement or statement
with respect to the transactions contemplated hereby, this
Agreement or any related transaction without the prior written
consent of the Seller, except for an initial press release by the
Purchaser announcing the execution of this Agreement in form
reasonably acceptable to the Seller and as required by applicable
law. Notwithstanding anything else in this Agreement, the
Purchaser may announce the purchase of CBC any time after the
Closing Date and the Seller may announce the same in connection
with and after consummation of the Plan of Reorganization.
SECTION 8.2. Expenses. Except as otherwise
specifically provided herein, the Purchaser shall pay its own fees
and expenses in connection with the consummation of the proposed
transactions, including the fees of Lazard Freres & Co. and the
Seller shall pay the fees and expenses of CBC and the Seller
incurred in connection with the consummation of the proposed
transactions, including the fees of Musket Research Associates.
The Seller represents and warrants to the Purchaser that such
Seller has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein, except for
fees payable to Musket Research Associates. The Purchaser
represents and warrants to the Seller that the Purchaser has not
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with
the transactions contemplated herein.
SECTION 8.3. Assignment; Parties in Interest. Neither
party may assign any of its rights under this Agreement without
the prior written consent of the other party, except that the
Purchaser may assign its rights under this Agreement to an
affiliate. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the
parties and their respective heirs, legal representatives,
successors and permitted assigns. Nothing contained in this
Agreement, express or implied, is intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
- 57 -<PAGE>
SECTION 8.4. Entire Agreement. This Agreement and the
Annexes and Schedules and the documents referred to herein or
delivered pursuant hereto which form a part hereof, including the
Information Letter, together with the Confidentiality Agreement,
contain the entire understanding of the parties with respect to
the subject matter hereof and thereof. There are no restrictions,
agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the
parties with respect to its subject matter.
SECTION 8.5. Notices. All notices, claims,
certificates, requests, demands and other communications hereunder
("Notices") will be in writing and will be deemed to have been
duly given if delivered by hand or facsimile transmission
confirmed in writing or mailed (registered or certified mail,
postage prepaid, return receipt), as follows:
(a) If to the Purchaser or to CBC after the Closing to:
bioMerieux Vitek, Inc.
595 Anglum Drive
Hazelwood, Missouri 63042-2395
Fax: (314) 731-8700
Attention: Philippe A. Archinard, President
With copies to:
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 632-3315
Attention: W.J.T. Brown, Esquire
(b) If to the Seller or to CBC prior to the Closing to:
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 06105
Fax: (508) 797-4014
Attention: Alison Taunton-Rigby, President
With copies to:
Bowditch & Dewey
311 Main Street
Worcester, MA 01608-1552
Fax: (508) 756-7636
Attention: Jane V. Hawkes, Esquire
or to such other address as the person to whom Notice is to be
given may have previously furnished to the other in writing in the
manner set forth above.
- 58 -<PAGE>
SECTION 8.6. Governing Law; Consent to Jurisdiction.
This Agreement will be governed by and construed in accordance
with the laws of the State of New York without giving effect to
the principles of conflicts of law thereof. The parties to this
Agreement consent to the jurisdiction of the United States
District Court for the Southern District of New York and of any of
the courts of competent jurisdiction in the State of New York
located in New York County in disputes arising under this
Agreement, waive any objection to venue laid in such courts, and
consent that service of process or notice in any action, suit or
proceeding may be served by personal service or sent by registered
or certified mail with postage prepaid to the parties at the
addresses set forth in Section 8.5.
SECTION 8.7. Severability of Provisions. In case any
one or more of the provisions contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 8.8. Counterparts; Headings. This Agreement
may be executed simultaneously in several counterparts, each of
which will be deemed to be an original, but all which together
will constitute one and the same instrument. The article and
section headings contained herein are for reference purposes only
and will not affect in any way the meaning or interpretation of
this Agreement.
SECTION 8.9. Remedies. The parties hereto agree that
if for any reason any party hereto shall have failed to perform
its obligations under this Agreement, then any other party hereto
seeking to enforce this Agreement against such non-performing
party shall be entitled to specific performance and injunctive and
other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other
equitable relief. This provision is without prejudice to any
other rights that any party hereto may have against any other
party hereto for any failure to perform its obligations under this
Agreement.
SECTION 8.10. Further Assurances. Subject to the terms
and conditions herein provided, each of the parties hereto agrees
to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, the Seller or the Purchaser, as the case may be, shall
take all such necessary action.
SECTION 8.11. Amendment; Waiver. No amendment or
waiver of any provision of this Agreement or consent to departure
- 59 -<PAGE>
therefrom shall be effective unless in writing and signed by the
Purchaser and the Seller, in the case of an amendment, or by the
party which is the beneficiary of any such provisions, in the case
of a waiver or a consent to departure therefrom.
ARTICLE IX
TERMINATION
SECTION 9.1. Termination. This Agreement may be
terminated at any time prior to the Closing Date:
(a) by mutual consent of the Purchaser and the Seller,
set forth in a written instrument;
(b) (i) by the Purchaser in the event that the
Definitive Authorization has not been obtained on or before May
17, 1996, or the Plan of Reorganization has not been confirmed by
the Bankruptcy Court on or before August 16, 1996, or (ii) by
either party if the transactions hereunder are not consummated by
October 31, 1996, or (iii) by the Seller in the event that
appropriate motion with respect to the matters described in clause
(i) above has been duly made and supported by reasonable efforts
of the Seller - and CBC and has been denied, and the Seller and
CBC reasonably determine in consultation with Purchaser that, upon
renewal, such motions in respect thereof would not be granted by
the Bankruptcy Court upon any conditions agreeable to Purchaser;
(c) by the Purchaser (provided that the Purchaser is
not then in material breach of any representation, warranty,
covenant or any other agreement contained herein) if there shall
have been a material breach of any representation, warranty,
covenant or agreement set forth in this Agreement on the part of
the Seller, which breach is not cured within thirty (30) days
after written notice thereof is given by the Purchaser, or which
breach, by its nature, cannot be cured prior to the Closing; and
(d) by the Seller and CBC (provided that the Seller and
CBC are not then in material breach of any representation,
warranty, covenant or any other agreement contained herein) if
there shall have been a material breach of any representation,
warranty, covenant or agreement set forth in this Agreement on the
part of the Purchaser, which breach is not cured within thirty
(30) days after written notice thereof is given by the Seller, or
which breach, by its nature, cannot be cured prior to the Closing.
SECTION 9.2. Effect of Termination. In the event of
termination of this Agreement by either the Purchaser or the
Seller as provided in Section 9.1, this Agreement shall forthwith
become void and have no effect, except that (i) Sections 6.1(b),
6.8, 8.1, 8.21 8.51 8.6, and this Section 9.2 shall survive any
termination of this Agreement, and (ii) notwithstanding anything
to the contrary contained in this Agreement, no party shall be
- 60 -<PAGE>
relieved or released from any liabilities or damages arising out
of its willful breach of any provision of this Agreement
SECTION 9.3. Amendment. Subject to compliance with
applicable law, this Agreement may be amended by the parties
hereto. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
BIOMERIEUX VITEK, INC.
By:/s/ Philippe Archinard
Philippe Archinard
President
AQUILA BIOPHARMACEUTICALS, INC.
By:/s/ Alison Taunton-Rigby
Alison Taunton-Rigby
President
CAMBRIDGE BIOTECH CORPORATION
By:/s/ Alison Taunton-Rigby
Alison Taunton-Rigby
President
- 61 -
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