SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
__________
June 24, 1996
Date of Report (Date of earliest event reported)
CAMBRIDGE BIOTECH CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-12081 04-2726626
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification Number)
incorporation)
365 Plantation Street, Biotechnology Research Park
Worcester, Massachusetts 01605
(Address of principal executive offices and zip code)
(508) 797-5777
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Item 2.
Cambridge Biotech Corporation, debtor and debtor-in-possession
("CBC"), United States Bankruptcy Court for the District of
Massachusetts, Western Division ("Bankruptcy Court"), Case No.
94-43054-JFQ has disposed of assets relating to its business in
Enteric and Lyme disease ELISA diagnostic test products (the
"Enterics Business"). The Enterics Business was sold to Meridian
Diagnostics, Inc. ("Meridian") pursuant to an Asset Purchase
Agreement with Meridian dated as of June 24, 1996. The transaction
closed on June 24, 1996 pursuant to an order of the Bankruptcy Court.
The Enterics Business includes the development, manufacture, and
marketing of a line of screening and confirmatory assay products
(the "Products") which are used to detect infection of certain
gastrointestinal diseases and Lyme disease. Included within the
assets sold to Meridian are patents and patent applications owned
by CBC and patent rights granted to CBC relating to the Products,
trade secrets and technical information relating to the manufacture,
sale, or use of the Products, trademarks and trademark applications
and registrations relating to the Products, and certain equipment
relating to the manufacturing of the Products.
The total consideration paid by Meridian at the closing was
$5,701,000 of which $200,000 represented an advance royalty payment.
Meridian will also pay to CBC approximately $650,527 within
30 days of the closing for certain inventory purchased at closing and
a "royalty" of 2% of annual Product sales in excess of $2,500,000 for
a five year period. The final consideration was determined pursuant
to a sealed bid procedure ordered by the Bankruptcy Court.
CBC also entered into a Supply Agreement with Meridian effective June
24, 1996 under which CBC will manufacture Products for Meridian for
a period of up to six months.
Item 7. Financial Statements and Exhibits.
(b) Pro forma Financial Information,
Notes to Pro forma Financial Statements,
Unaudited pro forma Balance Sheet as of March 31,
1996,
Unaudited pro forma Statement of Operations for the
period ending December 31, 1996,
Unaudited pro forma Statement of Operations for the
period ending March 31, 1996.
(c) Exhibits
2.1 Asset Purchase Agreement between Cambridge
Biotech Corporation and Meridian Diagnostics, Inc.
dated as of June 24, 1996. Meridian and CBC
executed an Information Letter containing further
"due diligence" information with respect to the
assets purchased which CBC will furnish
supplementally to the Commission upon request.
CAMBRIDGE BIOTECH CORPORATION
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 1996
The following unaudited pro forma balance sheet of Cambridge Biotech
Corporation gives effect to the sale by Cambridge Biotech Corporation of
certain assets of its Enterics business to Meridian Diagnostics Inc., as of
March 31, 1996. Cambridge Biotech Corporation's investment in the Enterics
business is shown as a single investment. This pro forma balance sheet
is not indicative of the actual financial position had the sale of these
assets occurred at March 31, 1996.
This statement should be read in conjunction with the audited financial
statements of Cambridge Biotech Corporation filed with the Securities
and Exchange Commission (the "SEC") in its annual report on Form 10-K for
the fiscal year ended December 31, 1995.
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CAMBRIDGE BIOTECH CORPORATION
(Debtor-In-Possession)
Pro Forma Consolidated Condensed Balance Sheet (unaudited)
March 31, 1996
(In thousands)
Assets Adjustments Unaudited
Actual Enterics (Note B) Pro Forma
Current Assets
Cash and cash
equivalents $ 8,797 $ 0 $ 6,352 $ 15,149
Marketable securities 0 0 0
Accounts receivable
trade (less allowance
for doubtful accounts
of $160,000) 3,655 0 3,655
Other receivables 131 0 131
Inventories 4,492 508 3,984
Prepaid expenses and
other current assets 674 0 674
----- ---- ------ -----
Total current assets 17,749 508 6,352 23,593
Investment in Enterics 0 (639) (639)
Property,Plant, and
Equipment, Net 6,324 102 6,222
Patents and Purchased
Technology, Net 820 29 791
Other Assets 105 0 105
----- --- ----- -----
Total Assets $24,998 $ 0 $ 5,713 $ 30,711
Liabilities & Shareholder's
Equity
Current Liabilities:
Accounts payable $ 798 $ 0 $ $ 798
Accrued royalties 646 0 646
Accrued professional
fees 830 0 830
Accrued incentive
compensation 1,247 0 1,247
Accrued restructuring
costs 217 0 217
Accrued expenses 2,285 0 2,285
Deferred revenue 3,038 0 3,038
----- ---- ------- -----
Total Current Liabilities 9,061 0 0 9,061
Deferred Revenue 1,952 0 1,952
Liabilities Subject to
Chapter 11 Proceedings 9,889 0 9,889
----- ---- ------ -----
Total Liabilities 20,902 0 0 20,902
Minority Interest 9 0 9
Shareholders' Equity
Preferred stock, per
value $.01 per share
authorized, 5,000,000
shares, none issued
Common stock, par value
$.01 per share,
authorized 40,000,000
shares issued,
26,057,006 shares 261 261
Additional Paid in
Capital 120,382 120,382
Unearned Compensation (138) (138)
Deficit (116,418) 5,713 (110,705)
--------- ------ ------ -------
Total Shareholders' Equity 4,087 0 5,713 9,800
Total Liabilities and
Shareholders' Equity $ 24,998 $ 0 $ 5,713 $ 30,711
====== ===== ===== ======
The accompanying notes are an integral part of the proforms financial
information.
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CAMBRIDGE BIOTECH CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
FOR THE QUARTER ENDED MARCH 31, 1996
The following unaudited pro forma statements of operations of Cambridge
Biotech Corporation give effect to the sale by Cambridge Biotech
Corporation of certain assets of its Enteric business to Meridian
Diagnostics Inc., immediately prior to the beginning of the fiscal year
ended December 31, 1995 and the fiscal quarter ended March 31, 1996.
These pro forma statements of operations are not indicative of the results
which would have occurred if the sale had occurred at the beginning of
each of the fiscal periods presented or which may occur in the future.
This statement should be read in conjunction with the audited financial
statements of Cambridge Biotech Corporation filed with the SEC in its
annual report on Form 10-K for the fiscal year ended December 31, 1995.
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CAMBRIDGE BIOTECH CORPORATION
(Debtor-In-Possession)
Pro Forma Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1995
(In thousands, except per share amounts)
Unaudited
Revenue: Actual Enterics Pro Forma
Product Sales $ 20,854 $ 3,717 $ 17,137
Research and development 5,137 0 5,137
Royalties 1,877 0 1,877
----- ----- -----
Total revenue 27,868 3,717 24,151
Cost and expenses:
Cost of sales 16,156 2,081 14,075
Research & development 6,454 326 6,128
Selling, general &
administrative 9,955 760 9,195
----- ----- -----
Total cost and expenses 32,565 3,167 29,398
Other:
Other income and interest
expense net of interest
income 581 0 581
Income/(Loss) from operations
before reorganization items
and income tax benefit ----- ----- -----
(4,116) 550 (4,666)
Reorganization items:
Professional fees (1,200) (1,200)
Interest earned on accumulated
cash resulting from Chapt.11
proceedings 387 387
----- -----
Total reorganization items (813) (813)
Income/(Loss) from operations
before income tax benefit/
(expense) ----- ----- -----
(4,929) 550 (5,479)
Income tax expense (4) (4)
----- ----- ------
Income/(Loss) before
minority interest (4,933) 550 (5,483)
Minority Interest (9) (9)
----- ----- ------
Net income (loss) $ (4,492) $ 550 $ (5,492)
===== ===== ======
Net income (loss) per share $ (0.19) $ (0.21)
===== ======
Weighted average number
of common shares 26,057 26,057
The accompanying notes are an integral part of the pro forma financial
information.
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CAMBRIDGE BIOTECH CORPORATION
(Debtor-In-Possession)
Pro Forma Consolidated Statement of Operations (unaudited)
For the Quarter Ended March 31, 1996
(In thousands, except per share amounts)
Unaudited
Actual Enterics Pro Forma
Revenue:
Product Sales $ 5,589 $ 1,158 $ 4,431
Research & Development 1,346 0 1,346
Royalties 452 0 452
------ ----- -----
Total revenue 7,387 1,158 6,229
Cost and expenses:
Cost of sales 3,721 466 3,255
Research & Development 1,410 82 1,328
Selling, general and
administrative 2,063 181 1,882
----- ----- -----
Total cost & expenses 7,194 729 6,465
Other:
Other income and interest
expense net of interest
income 93 0 93
Income/(Loss) from operations
before reorganization items
and income tax benefit ---- ----- -----
286 429 (143)
Reorganization items:
Professional fees (256) (256)
Interest earned on accumulated
cash resulting from Chapter
11 proceedings 114 114
---- ----
Total reorganization items (142) (142)
Income/(Loss) from operations
before income tax benefit/
(expense) ---- ----- ----
144 429 (285)
Income tax expense (2) (2)
---- ----- ----
Income/(Loss) before minority
interest 142 429 (287)
Minority Interest (1) (1)
---- ----- ----
Net income (loss) $ 141 $ 429 $ (288)
==== ===== =====
Net income (loss) per share $ 0.01 $ (0.01)
Weighted average number
of common shares 26,057 26,057
The accompanying notes are an integral part of the pro forma financial
information.
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CAMBRIDGE BIOTECH CORPORATION
NOTES TO PROFORMA FINANCIAL STATEMENTS
Note A. Basis of Presentation
On June 24, 1996, Cambridge Biotech Corporation (the "Company") sold
certain assets of the Enterics business to Meridian Diagnostics, Inc.
("MDI") for approximately $6,351,527 in cash. The Company will
recognize a pre-tax gain of approximately $5,713,000 in the second
fiscal quarter of 1996.
The unaudited Pro Forma Consolidated Condensed Statements of
Operations reflect the Company's results of operations for the year
ended December 31, 1995 and the quarter ended March 31, 1996, on a
pro forma basis assuming the transactions had been completed as of
December 31, 1994 and December 31, 1995 respectively. The unaudited
Pro Forma Consolidated Balance Sheet at March 31, 1996, assumes that
the transactions had been completed on that date.
The financials of the Enterics business are intended to present
management's estimates of the results of operations and financial
condition of the Business. Certain of the costs and expenses
presented in the financial statements of the Enterics business
represent allocations and management estimates of the cost of
services provided to the Business. As a result, the financial
statements presented may not be indicative of the results that
would have been achieved had the Business operated as a
non-affiliated entity.
Note B. Proforma Adjustments:
The balance sheet as of March 31, 1996 gives effect to the following
pro forma adjustments:
(a) to record the sale of selected assets of the business
(b) to record the cash proceeds as an addition to cash
(c) to record the gain on the sale of the Enterics business
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAMBRIDGE BIOTECH CORPORATION
Date: July 9, 1996 /s/ Alison Taunton-Rigby
___________________________
Alison Taunton-Rigby, President
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of the 24th day of June, 1996, by and
between CAMBRIDGE BIOTECH CORPORATION, Debtor and Debtor in
Possession, a Delaware corporation with offices at 365 Plantation
Street, Biotechnology Research Park, Worcester, Massachusetts
11605-2376 (hereinafter referred to as "CBC"), and MERIDIAN
DIAGNOSTICS, INC., an Ohio corporation with offices at 3471 River
Hills Drive, Cincinnati, Ohio 45244 (hereinafter referred to as
"Meridian").
WHEREAS, CBC desires to sell to Meridian certain assets as
more particularly described below relating to CBC's business in
Enteric and Lyme disease ELISA diagnostic test products and
Meridian desires to purchase such assets;
NOW, THEREFORE, the parties hereby agree as follows:
A. A 1 DEFINITIONS
A 1.1 "Inventory Price" as used in this Agreement shall
mean an amount per unit of that Product, as set forth on Schedule
A.1.1.
A 1.2 "Schedule" as used in this Agreement shall mean
the particular schedule or schedules referred to in this
Agreement attached to the Information Letter previously executed
and delivered by the parties hereto.
A 1.3 "Supply Agreement" as used in this Agreement
shall mean the Supply Agreement as defined in Section B 1.4.
A 1.4 "Patent Rights" as used in this Agreement shall
mean all claims of patents and patent applications which are
obtained, owned or controlled, in the sense of having a right to
grant licenses thereunder, by CBC insofar and only insofar as
such claims cover the Products and/or methods for the manufacture
and/or use of the Products.
A 1.5 "Products" as used in this Agreement shall mean
Enteric and Lyme disease ELISA diagnostic test products, the
components thereof and their accessories and their software and
firmware and the source codes thereof (the aforesaid components,
accessories, software, firmware and their source codes are
hereinafter referred to as "Accessories"), whether now marketed,
previously marketed or under development by CBC. CBC shall list
on Schedule A.1.5 all of the Products and Accessories.
A 1.6 The terms "Salable inventory" and "Salable
inventories" as used in this Agreement shall mean inventory or
inventories, as the case may be, fit for the ordinary purposes
for which it is to be used, not in violation of any law or
regulations, presently on CBC's price list for the Products and
presently being sold by CBC and, except as set forth on Schedule
A.2.1.1, as of the Closing Date having at least ten (10) months
of dating remaining before it reaches its expiration date.
A 1.7 "Affiliate" as used in this Agreement shall mean
a corporation or any other entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by,
or is under common control with, the designated party, but only
for so long as the relationship exists. Without limiting the
foregoing, "Control" shall include ownership of at least forty-
eight percent (48%) of the shares of stock entitled to vote for
the election of directors in the case of a corporation, and at
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least forty-eight percent (48%) of the interests in profits in
the case of a business entity other than a corporation.
A 1.8 "Usable" as used in this Agreement shall mean
that if there are specifications for the item of inventory then
it has to meet those specifications; or, if there are no
specifications, it has to be Salable inventory.
A 1.9 "Trademarks" as used in this Agreement shall mean
the trademarks covered by Section B 1.1.11.
A 1.10 "CBC Knowledge, as used in this Agreement shall
mean the actual knowledge of CBC's officers and/or employees at
or above manager level on the CBC organizational chart attached
hereto as Schedule A.l.l0 and information contained in CBC's
records which would be discovered after diligent investigation.
A 2 CONSIDERATION FOR TRANSFERS, ETC.
A 2.1 As consideration for the Assets (as hereinafter
defined) being transferred, assigned and conveyed by CBC to
Meridian pursuant to the terms of this Agreement:
A.2.1.1 Meridian shall pay CBC the sum of Five
Million Seven Hundred and One Thousand Dollars ($5,701,000.00)
(hereinafter the "Purchase Price") plus the Inventory Price of
Salable and Usable finished inventories for the Products. CBC
shall have at least the finished goods inventory of the Products
at Closing, as set forth on Schedule A.2.1.1, all of which shall
be unallocated inventory which shall be transferred to Meridian
within fifteen (15) days after the Closing. The Purchase Price
shall be paid to CBC at the Closing, less the sum of Four Hundred
Eighty-Three Thousand Dollars ($483,000) previously received by
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CBC as a deposit, and less the sum of One Million Dollars
($1,000,000), which shall be deposited at the Closing with the
Escrow Agent as specified in Section A 2.4. Within thirty (30)
days after the Closing, Meridian shall pay CBC the Inventory
Price of finished goods inventories of the Products transferred
to Meridian at the Closing which Meridian determines (i) after
audit were transferred and (ii) after quality control testing of
the Products that the Products are Salable and Usable finished
goods inventories of the Products. In the event that CBC
disagrees with Meridian's determination with respect to (i) and/
or (ii), CBC and Meridian shall submit only the determination
that CBC disagrees with respect to (i) or (ii) to arbitration in
New York, New York under the rules of the American Arbitration
Association.
A 2.1.2 Meridian shall pay CBC royalties in an
amount equal to two percent (2%) of worldwide Net Sales, as
hereinafter defined, for each twelve month period commencing on
the Closing Date or an anniversary thereof ("Royalty Year"), in
excess of Two Million Five Hundred Thousand Dollars ($2,500,000)
of Products and any improvements replacements or substitutions
for the Products (collectively "Royalty Products"). Net Sales
shall mean the amount billed or invoiced on sales of Royalty
Products less (i) customary trade, quantity or cash discounts and
non-affiliated brokers or agents commissions actually allowed and
taken; (ii) amounts repaid or credited by reason of rejection or
return; (iii) to the extent separately stated on purchase orders,
invoices or other documents of sale, transportation costs, and
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taxes levied on and/or other governmental charges made as to
production, sale, transportation, delivery or use and paid by or
on behalf of Meridian; and (iv) uncollected bills to the extent
these have been "written off" on Meridian's books. For the pur-
pose of calculating royalties, Net Sales in each Royalty Year of
Cytoclone A&B EIA shall be deemed to be the greater of: (i)
actual Net Sales, or (ii) $1,500,000. The parties acknowledge
that Meridian markets an existing product to detect C. difficile
toxin A which may be competitive with CBC's Cytoclone product.
Meridian agrees that it shall offer equal incentives to its sales
force for the sale of each of the products.
Royalties shall be payable commencing with respect
to Net Sales on and after the Closing Date and shall continue
until the end of the fifth Royalty Year. Meridian shall pay
royalties to CBC within thirty days from the end of each calendar
quarter; that is, the end of March, June, September and December.
Any royalties not paid within this time period shall be deemed
past due royalties which shall bear interest at the rate of ten
percent per annum from their due date payable on demand to CBC.
Meridian shall prepare for each calendar quarter a
written report acceptable to CBC setting forth the Net Sales and
royalties payable thereon, including a detailed listing of all
Royalty Products sold and all deductions from Net Sales. The
reports required by this agreement shall be certified by
Meridian's chief financial officer. Meridian shall keep accurate
and correct records of calculations for determining royalties on
Royalty Products made, used or sold under this agreement at least
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three years following a given reporting period. The records
shall be available during normal business hours for inspection by
a certified public accountant selected by CBC and reasonably
acceptable to Meridian for the sole purpose of verifying reports
and payments hereunder.
A 2.1.3 The parties agree that Meridian and CBC
shall both utilize the asset allocation specified on Schedule
A.2.1.3 for United States Federal Income Tax filings.
A 2.2 At the times specified in Section B 1.3.1, CBC
shall ship to Meridian at locations designated by Meridian, the
tangible assets which are included in the Assets. Meridian will
pay the cost of shipping and, provided the Products are
appropriately packaged for shipment by CBC, Meridian will bear
the risk of loss during shipment of said tangible assets to
Meridian once the tangible Assets are turned over to the carrier
by CBC at CBC's loading dock. As provided in Section B 1.3.1, at
Meridian's request CBC shall store the tangible Assets for
Meridian without charge to Meridian for up to six (6) months
after the Closing, and CBC shall bear the risk of loss with
respect to such tangible Assets while they are being stored by
CBC.
A 2.3 Notwithstanding anything provided herein to the
contrary, each party will be responsible for promotional
discounts including, but not limited to, free goods under deals
and/or contracts in connection with the Products which it shipped
or ships or which were shipped or will be shipped on its behalf.
CBC represents that attached as Schedule A.2.3 is a copy of the
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promotional discounts offered by CBC on the Products since
January 1, 1995. Except as shown on said Schedule A.2.3, between
the date of execution of this Agreement and the Closing Date, CBC
shall not and shall not allow others on its behalf to offer any
promotional discounts on the Products except for normal discounts
generally consistent with past practice.
A 2.4 At the Closing, the parties hereto shall execute
an escrow agreement in form and substance the same as attached
hereto as Schedule A.2.4 (hereinafter the "Escrow Agreement").
One Dollars ($1,000,000) of the Purchase Price (hereinafter the
"Escrow Funds") shall be deposited at the Closing with the escrow
agent specified in the Escrow Agreement. The Escrow Funds shall
be held and disbursed by said escrow agent pursuant to the Escrow
Agreement.
B. TRANSACTIONS RELATING TO THE ASSETS.
B 1 TRANSFER OF ASSETS AND RELATED TRANSACTIONS.
B 1.1 Transfer of Assets. Subject to the terms and
conditions set forth in this Agreement, at the Closing, CBC shall
transfer, assign and convey and cause to be transferred, assigned
and conveyed to Meridian the following assets of CBC and CBC's
Affiliates wherever they exist throughout the world, if any
(hereinafter the "Assets"):
B 1.1.1 All Salable and Usable inventories of
finished goods of the Products set forth on Schedule B.1.1.1
subject to changes therein in the ordinary course of business to
the Closing Date.
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B 1.1.2 All patents and patent applications owned
by CBC and Patent Rights granted CBC which relate to or which are
or have been used in the business relating to the Products. CBC
shall list all Patent Rights, patents and patent applications
covered by this section on Schedule B.1.1.2.
B 1.1.3 All rights, trade secrets or secret
processes, inventions whether patentable or unpatentable),
shoprights, discoveries, improvements and compositions owned by
CBC insofar as any of the foregoing are or have been or are
intended to be used by CBC in its development and/or
manufacturing and/or testing and/or sale and/or use by CBC and/or
customers (development and/or manufacturing and/or testing and/or
sale and/or use by CBC and/or customers shall hereinafter be
referred to as "M, S and U") of the Products and all technical
information owned by CBC incidental thereto, to the extent it
relates to the M, S and U of the Products or CBC products
competitive therewith or how to make the Products or CBC products
competitive therewith (hereinafter referred to as "Technical
Information"). Technical Information shall include but not be
limited to all technical information, know-how, data and formulas
for the manufacture, testing or use of the Products, master
device record for each Product including a complete set of the
most recent manufacturing, quality control and purchasing
documents, raw material specifications for the Products, device
history records for each Product, data to support expiry
assignments, data to support product improvements or other
changes which did not result in filing of a 510(k) submission,
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Material Safety Data Sheets for the Products and any unique
materials, and all technical service complaint records and
information for the Products over the three (3) year period prior
to Closing and all other technical information relating to the
Products including, but not limited to, all other manufacturing,
quality control and technical service records and information,
process validation studies and raw data to support performance
claims. Technical Information shall include but not be limited
to the information specified in 21 Code of Federal Regulations
820.181 and 820.184. CBC shall list on Schedule B.1.1.3 all
principal separately identifiable Technical Information related
to manufacture and quality control of the Products.
B 1.1.4 Copies of all applications, notices, data
and other information relating to the Products, their
manufacture, and processing filed or in the process of being
developed or prepared in order to be filed with the FDA or with
other agencies and regulatory bodies in the United States, or
with boards of health, or other similar agencies in foreign
countries (hereinafter referred to as the "Materials").
B 1.1.5 All goodwill of CBC relating to the
Products and the business transferred.
B 1.1.6 Copies of all records and accounts dealing
with the business of CBC relating to the Products, including
without limitation, the complete customer lists, customer records
and sales histories for the three (3) year period immediately
prior to the Closing, Rental Instrument accounts, Rental
Instrument customers and Rental Instrument rental histories for
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the three (3) year period immediately prior to the Closing, of
CBC relating to the Products.
B 1.1.7 All rights with respect to periods after
the Closing (including any pertaining to goods or services to be
delivered or performed subsequent to the Closing) relating to the
Products in, to and under the contracts, purchase orders,
licenses, agreements and commitments listed on Schedule B.1.1.7.
B 1.1.8 All applications, permits, licenses,
registrations, IDE's, PMA'S, 510K's and other authorizations
(hereinafter collectively "Authorizations") to the extent they
relate to the M, S and U of the Products and to the extent CBC
can transfer same. CBC shall list all such Authorizations on
Schedule B.1.1.8.
B 1.1.9 All copyrights and applications for
copyright which are or have been or are intended to be used by
CBC for the Products and all software owned by or licensed to CBC
(to the extent assignable) which are, have been or were intended
to be used by CBC on or in connection with the Products. CBC
shall list all copyrights and applications for copyright covered
by this section on Schedule B.1.1.9.
B 1.1.10 The following intangibles and tangibles,
relating to the M, S and U of the Products, whether or not
appearing on the books of CBC: supplier lists, photographs,
artwork, layouts and printers' cuts, and plates, advertising,
sales and promotional materials (including media items), market
and consumer research (except if agreements with the company that
provided the consumer research prohibit CBC from transferring
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such research to Meridian as part of the transfer of the Assets),
catalogs, manuals, copies of scientific publications, abstracts,
samples and displays of all types, wherever found, computer
tapes, computer programs, and printouts and records (including
credit records).
B 1.1.11 All trademarks and the goodwill related
thereto and trademark applications and registrations owned by CBC
which are or have been or are intended to be used by CBC relating
to the Products except for the trademarks listed as exceptions on
Schedule B.1.1.11. CBC shall list all such marks, and the
application numbers and registration numbers of such marks on
Schedule B.1.1.11.
B 1.1.12 At Meridian's option, all machinery and
equipment listed on Schedule B.1.1.12 (hereinafter the
"Equipment").
B 1.1.13 All reagent rental instrumentation for
the Products in CBC's possession or in the field with customers
under rental agreements covering the reagent rental instruments
(hereinafter the "Rental Instruments"). CBC shall list all
Rental Instruments on Schedule B.1.1.13.
B 1.2 Shipment of Products. Commencing at 6:00 A.M. on
the Closing Date, no further shipments of the Products will be
made by CBC for its own account and all Product orders coming in
and not filled as of 6:00 A.M. on that date shall be held for
Meridian's account or shipped by CBC for Meridian's account, with
Meridian's written approval, at Meridian's discretion, unless the
Closing Date shall thereafter for any reason be delayed by more
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than three (3) days from the expected Closing Date.
B 1.3 Instruments of Conveyance, Transfer, Assumption
and Further Assurances.
B 1.3.1 At the Closing, with respect to the Assets
being transferred to Meridian pursuant hereto, CBC shall deliver
to Meridian such good and sufficient instruments of conveyance
and transfer, including, without limitation, bills of sale,
consents, patent, trademark, and copyright assignments, and
contract assignment and endorsements, in form and substance
reasonably satisfactory to Meridian and its counsel, to convey
to, and vest in, Meridian all right, title and interest in and to
all of the Assets to be transferred and delivered hereunder free
and clear of all liens, mortgages, pledges, security interests,
conditional sales agreements and restrictions on transfer, and
free and clear of all other restrictions, encroachments and
easements. Except as set forth on Schedule B.1.3.1, after the
Closing, Meridian shall be the sole owner of the Assets and
entitled to exclusive possession thereof, and CBC and its
Affiliates, if any, shall, except as otherwise contemplated by
this Agreement, cease all use of and not use or make any further
use of any of the Assets. At the Closing, CBC shall deliver to
Meridian the Assets set forth in Sections B 1.1.6 and B 1.1.7 and
copies of contracts, purchase orders, licenses, commitments and
agreements listed on Schedule B.1.1.7 and copies of all similar
contracts, licenses, agreements and commitments entered into or
incurred by CBC in the ordinary course of business between the
date hereof and the Closing. Promptly following the Closing, CBC
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shall ship to Meridian the Assets covered by Sections B 1.1.10,
B 1.1.13 and B 1.1.1, except such portion of the finished goods
inventory which Meridian requests that CBC store as provided in
Section A 2.2. Within thirty (30) days following the Closing,
CBC shall deliver to Meridian in accordance with Meridian's
instructions (but subject to Section A 2.2), the Assets set forth
in Section B 1.1.3, B 1.1.4 and B 1.1.8, and copies of the files
and the patent, copyright, and trademark registrations issued for
the Assets set forth in Sections B 1.1.2, B 1.1.9, and B 1.1.11.
Should Meridian require it, CBC agrees to permit Meridian to
store the Assets at the premises of CBC for a reasonable period
of up to six (6) months after the Closing without charge. Except
as specified on Schedule B.1.3.1, CBC shall be entitled to use
the Equipment covered by Section B.1.1.12 after the Closing
solely for manufacturing Products to be supplied by CBC to
Meridian in accordance with the Supply Agreement. On a date
within thirty (30) days after the completion by CBC of its
obligations under the Supply Agreement to supply to Meridian the
Products as required by the Supply Agreement, CBC shall ship the
Equipment to Meridian at Meridian's cost at the address specified
by Meridian.
B 1.3.2 From time to time after the Closing Date,
without further consideration, CBC shall execute and cause to be
executed and shall deliver to Meridian all such instruments of
conveyance and transfer, and take all such other actions, as
Meridian may reasonably request to more effectively transfer to
and vest in Meridian, and to put Meridian in possession of the
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Assets and business relating to the Assets to be transferred and
delivered hereunder.
B 1.3.3 At the Closing, Meridian shall deliver to
CBC an instrument or instruments or assumption in form reasonably
satisfactory to both CBC and Meridian to evidence the assumption
by Meridian of those certain of CBC's obligations as are set
forth in Section B 2.1 hereof.
B 1.3.4 CBC will obtain and deliver to Meridian on
or before the Closing Date consents authorizing the transfer and
assignment to Meridian of all those rights and only those
obligations arising subsequent to the Closing, pertaining to
goods or services to be delivered or performed with respect to
periods after the Closing, under the contracts, licenses,
agreements, purchase orders, and commitments specified in Section
B 1.1.7 and Section 2.1 hereto which are to be assigned to and
assumed by Meridian hereunder, effective on the Closing Date, as
required in order for CBC to transfer and assign the same to
Meridian.
B 1.4 At the Closing, Meridian and CBC shall enter into
a Supply Agreement in the form attached hereto as Schedule B.1.4
(the "Supply Agreement").
B 1.5 Training, Etc. Provided the people who have
expertise to provide training still work for CBC and resources
are still available to CBC, for the period of twelve (12) months
following the Closing Date, CBC shall without charge to Meridian,
except for reimbursement of Meridian-requested travel (including
transportation at coach, hotels and meals) when verified by
- 14 -
suitable evidence of expenditure, provide any training with
respect to the Products which Meridian or its designees
reasonably requires for manufacturing, raw material production,
evaluation and qualification, and quality control and personnel.
For the period of three (3) months following the Closing Date,
CBC shall, without charge to Meridian, except for reimbursement
of Meridian-requested travel (including transportation at coach,
hotels and meals) when verified by suitable evidence of
expenditure, provide training, assistance and collaboration which
Meridian or its designees reasonably requires for technical
service, customer service, marketing, regulatory, compliance and
field personnel relating to the Products.
B 1.6 For up to three (3) months after the Closing, CBC
shall continue to handle technical service calls and at
Meridian's request CBC shall seek to continue to retain up to two
(2) technical service representatives to handle said technical
service calls. Meridian shall reimburse CBC for the salaries and
benefits for said three (3) month period after the Closing for up
to two people retained by CBC for this purpose at the same
salaries and benefits paid to them by CBC prior to the Closing
plus no more than a twenty percent (20%) retention bonus
(calculated based on the aforesaid three (3) month period), which
bonus shall only be payable if such retained service
representative works for CBC for the full three (3) month period
following the Closing, which bonus may be prorated based on the
portion of the aforesaid three (3) month period the retained
service representative works, if Meridian decides that the
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service representative's services are no longer required before
the end of said three (3) month period. Meridian shall reimburse
CBC for such salaries, benefits and bonus within ten (10) days
after the end of each month in question.
B 2 LIMITED ASSUMPTION OF LIABILITIES; DISCLAIMER;
INDEMNIFICATION.
B 2.1 Limited Assumption of Liabilities by Meridian.
Except as otherwise specifically provided elsewhere in this
Agreement, Meridian shall assume only those liabilities and
obligations which arise, are imposed, or accrue, subsequent to
the Closing, pertaining to goods or services to be delivered or
performed with respect to periods after the Closing Date, and
which relate to the Products or Assets, under the contracts,
licenses, agreements and commitments specified on Schedule
B.1.1.7 hereto. Such assumption shall be subject to the
execution, terms, and conditions of the separately executed
instrument or instruments of assumption referred to in Section
B 1.3.3 and shall, notwithstanding the execution and delivery of
such instrument or instruments of assumption at the Closing,
continue to be subject to the provisions of Section B 2.2 which
shall survive the Closing and which shall be deemed to be
incorporated into any such instrument or instruments of
assumption, and further, such assumption shall be subject to
entry of an Order by the Bankruptcy Court, in form and substance
reasonably satisfactory to Meridian, which approves the
assumption and assignment of such contracts, and which fixes the
amount of the payments to be made by CBC to cure any breaches by
- 16 -
CBC and obtain waivers for any such breaches (hereinafter "Cure
Payments"), if any.
B 2.2 Disclaimer. Other than as specifically provided
in Section B 2.1 hereof or elsewhere in this Agreement, Meridian
does not hereby, and will not, assume responsibility or be
responsible for any termination indemnities which have accrued
under "Dealer Protection" laws, or otherwise, with respect to
periods on and prior to the Closing Date and become payable upon
the rightful termination of any contract, license, agreement or
commitment referred to in Section B 2.1 or for any debts,
obligations of any kind or liabilities (including penalties or
exemplary or punitive damages) of CBC and/or its Affiliates, if
any, or any other person or entity not affiliated with Meridian,
whether accrued, absolute, contingent or otherwise including
without limitation all labilities for any product liability,
trademark infringement, patent infringement, breach of warranty,
negligence, strict liability, personal injury, wrongful death,
wrongful life, economic loss, or property damage, or any other
claim, suit, action, damage, expense, notice, or proceeding
arising as a result of CBC's and/or its Affiliate's, if any,
actions or omissions, regardless of when such a claim is
discovered, arises, or is made. Meridian shall not be liable for
such indemnities, debts, obligations or liabilities even though
they might be raised or imposed for the first time after the
Closing, and Meridian shall have no liability or obligation to
any person, organization or entity with respect to any action,
inaction, conduct, event or occurrence occurring or failing to
- 17 -
occur prior to the Closing Date irrespective of when raised, or
any actions, inactions or conduct of CBC after the Closing Date.
B 3 COVENANTS, REPRESENTATIONS AND WARRANTIES OF CBC.
Except as, and to the extent, otherwise disclosed in
this Agreement or the schedules hereto, CBC hereby covenants,
represents and warrants as follows:
B 3.1 Operating Statement, Etc. CBC's financial
statements, annexed hereto as Schedule B.3.1, which consist of
(i) sales by Product by country in units and dollars for 1994 and
1995; and (ii) raw materials at standard cost by Product for 1995
(hereinafter called the "Financials"), present fairly the
financial results of CBC's operations relating to the Products
during the period they cover subject to the reservations
contained in D 1.2.15. The information was prepared from the
accounting records of CBC and includes all accruals and
allocations and other adjustments necessary for a fair
presentation of sales and materials costs relating to the
Products during the period they cover, subject to the
reservations contained in D 1.2.15. CBC warrants that there are
no material misstatements in the Financials.
B 3.2 Business Actions Between January 1, 1994 and Date
of Agreement. Except as otherwise expressly provided or set
forth in or contemplated by this Agreement, between January 1,
1994 and the date of this Agreement, CBC has not in connection
with the Assets:
B 3.2.1 incurred any obligation or liability
absolute or contingent in connection with its business relating
- 18 -
to the Products, except in the ordinary and usual course of
business;
B 3.2.2 paid any liability, absolute or contingent
in connection with its business relating to the Products, other
than liabilities as at January 1, 1994 and liabilities incurred
since January 1, 1994, in the ordinary and usual course of
business;
B 3.2.3 except as provided on Schedule B.3.2.3,
leased, licensed, mortgaged, pledged or subjected to lien or
other encumbrance, any of the Assets to be transferred, sold and
conveyed hereunder;
B 3.2.4 except as provided on Schedule B.3.2.4,
sold, assigned or transferred any of the Products or Assets used
by, or in connection with, its business relating to the Products
except finished goods inventories in the ordinary and usual
course of business;
B 3.2.5 except as provided for on Schedule
B.3.2.5, entered into any transaction relating to the Products or
Assets not in the ordinary and usual course of business;
B 3.2.6 except as provided for on Schedule
B.3.2.6, cancelled, released or assigned any indebtedness owed to
it with respect to its business relating to Products or the
Assets except for the collection of accounts receivable in the
ordinary course of business, nor granted any immunities from
suit;
B 3.2.7 except as set forth on Schedule B.3.2.7
hereto, sold, assigned, transferred, or licensed any patents,
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trademarks, copyrights, patent or trademark applications or
licenses therefor, or other intangible assets included in the
Assets; or
B 3.2.8 except as provided on Schedule B.3.2.8,
experienced any loss, damage or destruction to or of any of its
Assets (whether or not covered by insurance) which materially
affects or impairs the Assets or its ability to conduct its
business relating to the Products, including, without limitation,
the M, S and U of the Products, and no labor trouble, or, to
CBC's knowledge, other event or condition of any character
generally not known within the industry has come to its attention
which materially and adversely affects or threatens to affect,
within two (2) years after the Closing, the Assets or the M, S
and U of the Products.
B 3.3 Business Actions Between Date of Agreement and
Closing Date. Except as may otherwise be expressly permitted in
or contemplated by this Agreement or as is not material, between
the date of this Agreement and the Closing Date, CBC will, except
as provided on Schedule B.3.3, conduct the business relating to
the Products and Assets diligently and in substantially the same
manner as they previously have been conducted and CBC will not,
without Meridian's permission, with respect to the Assets and
business to be transferred, sold and conveyed hereunder:
B 3.3.1 enter into any contract, lease or
commitment of any type whatsoever except such contracts or
commitments as are in the ordinary course of business which by
their terms are to be performed in a reasonable time or are
- 20 -
terminable on reasonable notice;
B 3.3.2 except as provided on Schedule B.3.3.2,
make an expenditure or incur liability in any one transaction in
excess of Ten Thousand Dollars ($10,000) or in any series of
transactions in excess of Fifty Thousand Dollars ($50,000) in the
aggregate;
B 3.3.3 cause or permit to occur any of the
actions set forth in Sections B 3.2.2 through B 3.2.8 hereof;
B 3.3.4 except as disclosed on Schedule B.3.3.4,
knowingly violate any law or regulation applicable to the
Products or the Materials, nor knowingly violate any order,
injunction or decree applicable to the conduct of its business
relating to the Products, the effect of any of which would be
materially adverse;
B 3.3.5 except in the ordinary course of business,
modify, amend, cancel or terminate any of its existing contracts
or agreements relating to the Products or the Assets, or agree to
do any of those acts; or
B 3.3.6 subject to unexpected manufacturing
problems, allow the quantities of Salable and Usable inventories
of the Products to fall below normal levels.
B 3.4 Adverse Developments. Except as set forth on
Schedule B.3.4, since January 1, 1994, there have been no changes
in the business, assets, properties, operations or financial
condition of CBC which have had or to CBC's Knowledge will (a)
have a material adverse effect on CBC's business relating to the
Products or the value of the Assets, and to CBC's Knowledge there
- 21 -
has not been a development or threatened development which has
not been disclosed herein or in the Schedules hereto, or which is
not a published law, regulation or regulatory proceeding, of a
nature that is or may be materially adverse to the M, S and U of
the Products and/or the Assets or (b) materially adversely affect
CBC's ability to perform its obligations under this Agreement and
the Supply Agreement, and to CBC's Knowledge no development or
threatened development, which is not a published law, regulation
or regulatory proceeding, is of a nature that it may be
materially adverse to CBC's, M, S and U so as to materially
adversely affect CBC's ability to perform its obligations under
this Agreement and the Supply Agreement.
B 3.5 Ownership of Assets.
B 3.5.1 (i) Except as set forth on Schedule
B.3.5.1(i)(a), CBC owns and has good and marketable title to all
of the Assets and the Products to be transferred, sold and
conveyed hereunder free and clear of any liens, mortgages,
pledges, security interest, conditional sales agreements,
encumbrances, notes, easements, restrictions, charges or any kind
or notices of violations of law or municipal ordinances. Except
as set forth on Schedule B.3.5.1.(i)(b), CBC will at the Closing
convey or cause to be conveyed the Assets to Meridian free and
clear or any mortgages, liens, pledges, security interests,
conditional sales agreements, encumbrances, notes, easements,
restrictions, charges of any kind or notices of violations of law
or municipal ordinances, in the manner required herein.
- 22 -
(ii) Except as set forth on Schedule
B.3.5.1(ii)(a), CBC represents and warrants that it is the sole
and exclusive owner of or has exclusive rights to all of the
Assets and that it has not licensed any of the Assets or rights
relating thereto to any party. Except as set forth on Schedule
B.3.5.1(ii)(b), CBC expressly represents and warrants that none
of the Assets is owned by any of CBC's subsidiaries or
Affiliates.
B 3.5.2 (i) Except as set forth on Schedules
B.1.1.2, B.1.1.9 and B.1.1.11, CBC owns no copyright, trademarks,
patents, or applications or registrations therefor, which have
been used, are used or are being held for use in connection with
the Products. The intellectual property Assets are, in the
reasonable business judgment of CBC, sufficient to permit
Meridian to develop and/or manufacture and/or test and use and
allow Meridian's customers to use the Products consistent with
how they were developed, made, tested and/or used in the past.
(ii) Except as set forth on Schedule B.3.5.2(ii),
CBC is not a party to or bound by any license or agreement
requiring the payment of any royalty, license fee or other
consideration relating to the Trademarks and applications or
registrations therefor, the patents and applications therefor
listed on Schedule B.1.1.2 hereto, the copyrights and
applications therefor listed on Schedule B.1.1.9 hereto, or the
Technical Information or the Products.
B 3.5.3 Except for inventory sold in the ordinary
course of business and except as set forth on Schedule B.3.5.3,
- 23 -
CBC has not since January 1, 1994 sold, assigned, licensed or
otherwise disposed of any of the Assets or any right relating to
the Assets to any third party nor licensed or otherwise granted
to any third party the right to use any trademark, patent,
copyright or know-how relating to the Products.
B 3.5.4 (i) All patents and patent applications
covered by Section B 1.1.2 (the "Patents") that have not expired
are listed on Schedule B.1.1.2 hereto.
(ii) Except in, to and under the contracts,
purchase orders, licenses, agreements, and commitments listed on
Schedule B.1.1.7, there are no contracts, purchase orders,
licenses, agreements or commitments under which there are or will
be any rights and obligations relating to the Products or Assets
with respect to periods after the Closing to which CBC is a party
or relating to any of the Assets.
(iii) All principal separately identifiable
Technical Information is listed on Schedule B.1.1.3 hereto.
(iv) All Salable and Usable finished goods
inventories of Products determined as provided in Section B 1.2
are set forth on Schedule B.1.1.1.
(v) All trademarks and the applications and
registrations therefor covered by Section B 1.1.11 are set forth
on Schedule B.1.1.11.
(vi) All patents, patent applications and Patent
Rights covered by Section B 1.1.2 are set forth on Schedule
B.1.1.2.
- 24 -
(vii) All separately identifiable Materials
relating to FDA filings are listed on Schedule B.1.1.4.
B 3.5.5 Patents. To CBC's Knowledge, the Patents
have been properly obtained and issued, and have not been
misused. Except as set forth on Schedule B.3.5.5.1 hereto, none
of the issued Patents has been held to be invalid and, to CBC's
Knowledge, each of the issued Patents is in full force and
effect. Except as set forth on Schedule B.3.5.5.2 hereto, none
of the Patents is the subject of any pending or, to CBC's
Knowledge, threatened challenge, dispute, claim or suit. To
CBC's Knowledge, except as set forth on Schedule B.3.5.5.3
hereto, the manufacture, use or sale of the Products embodying
any of the Patents does not infringe, breach or violate any
rights of any third party. Except as set forth on Schedule
B.3.5.5.4 hereto, to CBC's Knowledge and information, none of the
Patents is being infringed or violated by any third party.
Except as set forth on Schedule B.3.5.5.5 hereto, CBC has not
entered into any agreement with any person containing any
restriction or obligation on CBC with respect to the Patents,
whether for the payment of money or otherwise, which remain in
effect as of the date hereof. Except as set forth on Schedule
B.1.1.2 and Schedule B.3.5.5.6 hereto, to CBC's Knowledge, the
Patents and Patent Rights comprise the only patents and Patent
Rights used or licensed in connection with the M, S and U of the
Products, except only for such patents and Patent Rights as may
be embodied in products bought by CBC from third parties and
incorporated in the Products sold by CBC. Except as set forth on
- 25 -
Schedule B.3.5.5.7 hereto, CBC has not licensed or authorized any
third party to make, use or sell any of the Products or products
competitive thereto and, except as set forth on Schedule
B.3.5.5.8 hereto, has not given any indemnifications to any
person, firm, or corporation with respect to any of the Patents.
B 3.5.6 Formulations, Trade Secrets, etc. Except
as set forth on Schedule B.3.5.6.1 hereto, to CBC's Knowledge,
(i) none of the Technical Information being acquired by Meridian
pursuant to this Agreement is the subject of any pending or
threatened challenge, dispute, claim or suit; (ii) the use of any
of the Technical Information does not infringe, breach or violate
any right of any third party; (iii) none of the Technical
Information is being infringed or violated by any third party;
and (iv) the Technical Information are the only inventions,
formulations, proprietary technology, know-how or trade secrets
used or intended to be used or licensed by CBC in connection with
the M, S and U of the Products except for such as are embodied in
products purchased by CBC from third parties and incorporated in
products sold by CBC. Except as set forth on Schedule B.3.5.6.2,
CBC has not licensed or authorized any third party to use any of
the Technical Information or given any indemnifications to any
person, firm or corporation with respect to any of the Technical
Information.
B 3.6 Non-Infringement of Trademarks. Except as set
forth herein or on Schedule B.3.6.1 or another schedule hereto,
CBC knows of no infringement or other violation by others of the
Trademarks or the copyrights to be transferred to Meridian
- 26 -
hereunder. To CBC's Knowledge, CBC is not and has not been
infringing upon any copyright or trademark or trade name, or
breaching the rights of any third party, by manufacturing,
promoting or selling the Products and/or using the Trademarks,
and no infringement proceedings have been instituted or are
pending or, to CBC's Knowledge, are any such proceedings
threatened, and no claim has been received alleging any such
violation. Except as set forth on Schedule B.3.6.2, to CBC's
Knowledge, the Trademarks are not the subject of any pending or
threatened challenge, dispute, claim or suit. To CBC's
Knowledge, the Trademarks and copyrights to be transferred to
Meridian have been properly obtained and issued, have not been
misused and have not been declared invalid by any court. To
CBC's Knowledge, the Trademarks have been duly and properly
registered in the countries indicated on Schedule B.1.1.11
hereof.
B 3.7 Lawsuits, Regulatory Proceedings, Investigations,
etc. Except as set forth on Schedule B.3.7.1, there are no
pending legal actions, suits or proceedings, or, to CBC's
Knowledge, any pending governmental investigations or other
investigations of any nature, or any orders, injunctions or
decrees outstanding, pending, affecting or, to CBC's Knowledge,
threatened, against CBC relating to or against the Assets, the
Products, the Technical Information or CBC's business relating to
the Products or the plant where the Products are manufactured or,
to CBC's Knowledge, threatened against the Assets or CBC's
business relating to the Products, or which seeks to enjoin,
- 27 -
prohibit or otherwise challenge the performance of this
Agreement, or which may have a material adverse effect upon the
enjoyment and use by Meridian of the Assets, or, to CBC's
Knowledge, any basis for such litigation, proceeding or
investigation. Except as set forth on Schedule B 3.7.2 hereto,
during the last four (4) years, there have been no written claims
or suits against CBC relating to or against CBC's business
relating to the Products, the Assets or the Products, no seizure
under any law or any recall after distribution by CBC, or by any
licensor or licensee of CBC, of any of the Products and, to the
best of CBC's Knowledge, no information has come to CBC's
attention which might cause any such seizure or recall except as
otherwise disclosed herein. Except as set forth on Schedule
B.3.7.3 or except to the extent that they relate to routine
administrative matters, during the last four (4) years there have
been no communications and correspondence received by CBC from
any governmental authority affecting or relating to the business
of CBC relating to the Products, and CBC has provided Meridian
with copies thereof prior to the execution of this Agreement. To
the Knowledge of CBC, except as set forth on Schedule B.3.7.4,
during the last four (4) years there have been no customer
complaints received by CBC, which with normal industry practice
would be reduced to writing, relating to the Products and CBC has
provided Meridian with copies thereof prior to the execution of
this Agreement.
B 3.8 Compliance with Laws and Regulations. Except as
set forth on Schedule B.3.8, CBC is not in violation of and is
- 28 -
not in default under any judgment, injunction, writ, award or
decree of any court, arbitrator, agency or governmental body,
and, to the Knowledge of CBC, CBC is not in material violation of
any law, regulation, ordinance, order, or other requirement of
any governmental body or court and no event has occurred which,
with notice or lapse of time or both, would constitute such a
material violation or default relating to the Assets or the
Products, including without limitation, any regulations or
requirements of the FDA, the United States Environmental
Protection Agency, the Federal Trade Commission or the Internal
Revenue Service.
B 3.9 Agreement and Obligations; Performance. Except
as set forth on Schedule B.3.9, CBC has, in all material
respects, performed all obligations to be performed by it to date
under all contracts, purchase orders, licenses, agreements, and
commitments specified on Schedule B.1.1.7 to which CBC is a
party, is not in default in any material respect under any of
said contracts, purchase orders, licenses, agreements, or
commitments or any other agreements, and has received no notice
of or has no Knowledge of any default or alleged default
thereunder which has not heretofore been withdrawn. To the
extent CBC has breached any of its obligations under any
contracts, purchase orders, licenses, agreements or commitments
specified on Schedule B.1.1.7, CBC shall cure said breach on or
prior to the Closing and, on or prior to the Closing, pay any
Cure Payments which are necessary. CBC has no knowledge of any
existing material default under any of said contracts, purchase
- 29 -
orders, licenses, agreements, and commitments by any other party
thereto, except to the extent CBC's bankruptcy filing may be
deemed a default thereunder.
B 3.10 The Products, Inventories and Operations.
B 3.10.1 The finished goods inventories of the
Products sold to Meridian at the Closing, are in good, Usable and
Salable condition, free from any defect, whether latent or
patent, and currently of a quality, strength and purity which is
in conformity with applicable FDA regulations. Except as set
forth on Schedule B.3.10.1, no article in such inventories is
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act nor is any finished article contained in
such inventories an article which may not, under the provisions
of Sections 404 or 505 of the said Act, be introduced into
interstate commerce for the uses thereof previously made by CBC.
The inventories of finished goods of the Products are packaged
for resale in customary packaging used for those products by CBC.
B 3.10.2 Except as set forth on Schedule B.3.10.2
and Schedule B.3.5.5.3, to CBC's Knowledge, the manufacture, use
and sale by CBC of the Products are in accordance with the
provisions of the applicable Authorizations, comply in all
material respects with all applicable laws and regulations and do
not interfere with the rights of any person to know-how or to any
property right the existence of which would materially adversely
affect the value of the Assets or the Products.
B 3.10.3 Except as set forth on Schedule B.3.10.3,
CBC has the necessary material business permits, licenses,
- 30 -
orders, applications and approvals to allow it to carry on the M,
S and U relating to the Products as presently conducted; all such
permits, licenses, orders, applications and approvals are in full
force and effect and, except as specifically set forth on
Schedule B.3.10.3, no suspension or cancellation of any of them
is threatened. To the extent permitted under existing laws and
regulations, CBC will assign and transfer, or cause to be
assigned and transferred, to Meridian all such permits, orders,
licenses, applications and approvals at the Closing. With
respect to such permits, licenses, orders, applications and
approvals which are not permitted to be assigned to Meridian or
which relate to assets not being assigned to Meridian, CBC will
use reasonable efforts after the Closing to assist Meridian to
obtain for Meridian or its designees such permits, licenses,
orders and approvals, including but not limited to, authorizing
the appropriate governmental body or agency to refer to CBC's
permits, licenses, orders and approvals relating to the Products
on behalf of Meridian, subject to reimbursement of any reasonable
expenses incurred.
B 3.10.4 Except as set forth on Schedule
B.3.10.4.1, since January 1, 1994, CBC has not failed to file any
report, data, or other information with respect to the Products,
the Materials or the operation of CBC's plant where the Products
are manufactured that is required to be filed with the FDA or any
other federal, state or local government agency or other
governmental agency, which failure to file would materially
adversely affect the Products, the Materials or the operations of
- 31 -
CBC's plant where the Products are manufactured. Except as
disclosed on Schedule B.3.10.4.2, CBC is in all material respects
in compliance with current federal, state, state agency and local
government and other governmental reporting requirements, if any,
relating to the Products, the Materials, Authorizations and the
plan operation where the Products are manufactured.
B 3.10.5 All information concerning the items
listed on Schedules B.3.5.1(i)(a), B.3.5.5.1, B.3.5.5.2,
B.3.5.5.3, B.3.5.5.4, B.3.5.5.5, B.3.5.6.1, B.3.6.1, B.3.6.2,
B.3.7.1, B.3.7.2 and B.3.7.3, the Products, the Materials, the
Authorizations and the operation of CBC's plant where the
Products are manufactured, including published and unpublished
data, relating to the safety and efficacy of the Products, coming
to the attention of CBC within four (4) years prior to the
Closing Date not already listed on Schedules B.3.5.1(i)(a),
B.3.5.5.1, B.3.5.5.2, B.3.5.5.3, B.3.5.5.4, B.3.5.5.5, B.3.5.6.1,
B.3.6.1, B.3.6.2, B.3.7.1, B.3.7.2 and B.3.7.3 will be promptly
disclosed to Meridian prior to Closing. CBC will transmit to
Meridian any adverse reaction, adverse experience or quality
complaints pertaining to the Products coming to CBC's attention
after the Closing addressed to the attention of the Director of
Scientific and Regulatory Affairs, Meridian Diagnostics, Inc.,
3471 River Hills Drive, Cincinnati, Ohio 45244.
B 3.11 Formulae, Etc., for Products.
B 3.11.1 Schedule A.1.5 is a true and correct list
of the Products currently in inventory, currently being
manufactured and products or technology related to the Products,
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including, without limitation, that relating to the C. difficile
Product contemplated by ongoing research programs by CBC.
B 3.11.2 Except as set forth on Schedule B.3.11.2
with respect to the Products currently being manufactured, CBC
has a sufficient combination of manufacturing and testing
instructions, formulae and other documentation which a person
reasonably skilled in the art and with appropriate training can
follow to manufacture or produce all the Products. At the
Closing, CBC shall deliver to Meridian all such manufacturing
instructions, formulae and other documentation and all available
information concerning the Products under development and shall
disclose to Meridian all manufacturing processes and trade
secrets possessed by CBC relating to the Products.
B 3.12 Expiration Dates.
B 3.12.1 Except as set forth on Schedule B.3.12.1,
all of the Products bear an expiration date which is based upon
CBC's available data, a copy of which has been provided to
Meridian.
B 3.12.2 Schedule A.2.1.1 lists the current
expiration dates for each of the Products.
B 3 13 Insurance. CBC has maintained during the three
(3) year period prior to the Closing at a minimum claims made
insurance with the following limits covering CBC:
Comprehensive General Liability
Bodily Injury $2,000,000 Combined Single Limit
$2,000,000 Aggregate
Property Damage $2,000,000 Combined Single Limit
$2,000,000 Aggregate
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Personal Injury $2,000,000 Combined Single Limit
$2,000,000 Aggregate
The above coverage included premises-operations. In addition,
CBC has maintained products completed operations (product
liability) insurance covering CBC and having policy limits of
$1,000,000.
B 3.14 Payments of Taxes. Except as set forth on
Schedule B.3.14, CBC has paid all income taxes, and ad valorem
taxes, sales and use taxes and all other taxes and levies of
every kind, character or description imposed by the United
States, by any state, or by any municipality, subdivision or
instrumentality of the United States, any state, or any
municipality and which are due and payable. CBC shall pay all
such taxes for which it is liable for the periods prior to and
including the Closing Date, but which are not yet due and
payable, at such time as such taxes become due and payable.
B 3.15 Consents. Except as set forth on Schedule
B.3.15 hereto, and except as provided with respect to the
assumption and assignment of the executory contracts, purchase
orders, licenses, agreements and commitments, no consent or
permission of any third party is necessary for the sale of the
Assets or the performance of this Agreement.
B 3.16 Contractual Obligations. To CBC's Knowledge,
each contract, purchase order, license, agreement, and commitment
listed on Schedule B.1.1.7, or otherwise disclosed in this
Agreement, has been lawfully entered into, is in full force and
effect and, except as disclosed to Meridian in the Schedule in
which such agreement, purchase order, license, commitment or
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contract is disclosed, there have been no modifications, oral or
written, to the terms of any of such agreements, purchase orders,
licenses, commitments, and contracts.
B 3.17 Disclosure. No representation or warranty by
CBC in this Agreement, nor any Schedule, Exhibit, statement or
certificate furnished or to be furnished by or on behalf of CBC
pursuant to this Agreement, nor any document or certificate
delivered by CBC to Meridian pursuant to this Agreement or in
connection with the transactions contemplated herein, contains or
shall contain any untrue statement of a material fact.
B 3.18 Environmental Compliance. CBC and its facility
have complied and will comply in all material respects as they
relate to the Products and Assets, with all federal, state, and
local environmental or pollution-control laws, including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Resource Conservation and
Recovery Act, the Federal Water Pollution Control Act, the Clean
Air Act, the Toxic Substances Control Act and any other Federal,
State or local statute, regulation, order, or decree governing,
without limitation, the discharge of waste water, emission of air
pollutants and the handling, transportation, treatment, storage,
generation or disposal of solid or hazardous waste, hazardous
substances, petroleum, toxic substances, contaminants, and
pollutants.
B 3.19 The Equipment and, to CBC's Knowledge without a
duty to inquire, except as set forth on Schedule B.3.19, the
Rental Instruments with customers included in the Assets are in
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operating condition and are not in material violation of any
laws, regulations, orders or requirements, and will be in
operating condition, reasonable wear and tear excepted, and to
the best of CBC's Knowledge will be in compliance with all laws,
regulations, orders or requirements at the time of Closing and
when delivered to Meridian, except for normal wear and tear to
the Equipment during the period the Equipment is used by CBC
after the Closing to make Product for Meridian under the Supply
Agreement. The condition of the Equipment at the Closing will be
specified on Schedule B.3.19.
B 3.20 No past or present Affiliate of CBC owns or has
an interest in the Assets. No past or present Affiliate of CBC
has owned or had any interest in any of the Assets except for a
former Affiliate having distributed the Products and discontinued
distributing them at a period in time more than fifteen months
before the Closing.
B 4 FURTHER OBLIGATIONS.
B 4.1 Pre-Closing Obligations. CBC hereby covenants
and agrees to cause the following to occur between the date
hereof and the Closing Date:
B 4.1.1 Upon reasonable advance notice, CBC shall
afford to the officers, attorneys, accountants and reasonable
numbers of other employees and agents of Meridian free and full
access, during regular business hours, to CBC's books, records,
and key personnel relating to the Products and to the Assets and
manufacturing operations relating to the Products and the
business of CBC relating to the Products to be transferred to
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Meridian hereunder, in order that Meridian may have full
opportunity to make such investigation as it may reasonably
desire of the business and affairs of CBC relating to the
Products. Said representatives shall keep confidential all
information obtained during such audit as specified in Section
C 1.1.2.
B 4.1.2 CBC will use reasonable efforts to
preserve or cause to be preserved intact the business
organization of CBC relating to the Products (except as Meridian
may otherwise approve in writing, but without obligation to
change compensation paid to any officers or employees, or any
representation that such persons will remain employed by CBC), to
keep available to Meridian the services of the present officers
and employees who contribute substantially to the operation of
the business of CBC relating to the Products (except as Meridian
may otherwise approve in writing but without obligation to change
compensation paid to such officers or employees or any
representation that such persons will remain employed by CBC), to
preserve for Meridian the present relationships and goodwill of
the suppliers, customers and others having business relations
with CBC relating to CBC's business relating to the Products and
to operate or cause to be operated the business of CBC relating
to the Products in a manner reasonably consistent with past
operations.
B 4.1.3 CBC will fully cooperate with Meridian's
efforts to hire, effective as of the Closing, any of the sales,
marketing and technical support employees associated with CBC's
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diagnostics business that Meridian may wish to hire from those
listed on Schedule B.4.1.3.
B 4.2 Post-Closing Obligations. CBC and Meridian
hereby covenant and agree as follows:
B 4.2.1 Non-Compete.
B 4.2.1.1 From and after the Closing, CBC
covenants and agrees, warrants and represents that except as
specifically provided herein or as may be required pursuant to
the Supply Agreement attached hereto as Schedule B.1.4 or as
otherwise agreed in writing by Meridian, neither CBC nor its
Affiliates, if any, will directly or indirectly engage in the
business of manufacturing, selling, distributing or licensing
products, or technology for use on or in connection with any
products competitive to the Products for a period of five (5)
years from the date of Closing.
B 4.2.1.2 If CBC acquires another company
which has a product competitive with the Products among the other
products sold by the company which CBC is acquiring, CBC will
offer that product to Meridian, and if Meridian is interested in
acquiring such product, Meridian will so notify CBC, and CBC and
Meridian will negotiate in good faith the terms of sale of such
product to Meridian. If CBC and Meridian cannot agree on sale
terms, CBC can offer to sell that Product to a third party on
terms no more favorable than CBC offered to Meridian, and CBC can
continue to sell such product to the acquired company's customers
for up to a year after acquiring said company while trying to
arrange a sale to a third party of that product, but if Meridian
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or a third party do not purchase such product from CBC within a
year, CBC must discontinue all sales of that product within a
year after the purchase by CBC of the company with said
competitive product.
B 4.2.2 Secrecy. CBC and its Affiliates, if any,
after the Closing Date will hold in confidence and not use or
disclose to any third party for use on or in connection with any
products or business any information transferred by CBC to
Meridian hereunder.
B 4.2.3 Assignment and Assumption CBC shall
assign this Agreement, the Supply Agreement and the Escrow
Agreement to the company to whom the assets of CBC's
biopharmaceutical business relating to vaccines and other
products which stimulate the immune system for use in treating
and preventing infectious diseases and cancer shall be conveyed
(the "Vaccine Acquiring Company") and each of such agreements
shall be assumed by the Vaccine Acquiring Company. The Vaccine
Acquiring Company shall have a net worth at the time the
aforesaid agreements are assigned to it of at least Seven Million
Dollars ($7,000,000).
B 5 RETURNED CBC PRODUCTS AFTER CLOSING
B 5.1 With respect to returned goods;
(a) Meridian shall have no responsibility and
CBC shall have sole responsibility for any of the Products
returned that are manufactured and sold prior to the Closing;
(b) Meridian shall have no responsibility, and
CBC shall have sole responsibility, for any of the Products
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returned that are manufactured prior to the Closing, irrespective
of when sold, that are returned because (i) they are unsafe or
ineffective, or in violation of any law or governmental
regulation, guideline or policy statement, provided Meridian did
not do anything to cause such Products to be unsafe or
ineffective or in violation of law or governmental regulation,
guideline or policy statement in effect at the time of Closing;
or (ii) of a product defect, provided Meridian did not cause the
product defect;
(c) Except as provided in the Supply Agreement,
CBC shall have no responsibility, and Meridian shall have sole
responsibility, for any of the Products returned that are
manufactured and sold after the Closing;
(d) Meridian shall have sole responsibility for
any of the Products returned that are manufactured prior to the
Closing, and sold by Meridian after the Closing, which are
returned even though not defective, and not unsafe or ineffective
and not in violation of any law or governmental regulation,
guideline or policy statement; and
(e) Returned goods manufactured by CBC which are
defective or which are not Salable shall be property disposed of
by CBC in accordance with all appropriate federal, state and
local laws and regulations and appropriate substantiation thereof
shall be submitted to Meridian.
B 5.2 Non-Defective Returned Goods and Processing of
Returns
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B 5.2.1 If any returned Products are not defective
and it cannot be determined who sold the Products, then any non-
defective Products returned within four (4) months after Closing
shall be the sole responsibility of CBC, except that any Salable
inventory shall be purchased by Meridian from CBC at CBC's
Inventory Price, except any non-defective Products returned to
Meridian in accordance with Meridian's returns policy.
B 5.2.2 Meridian shall process all returns in
accordance with Meridian's returned goods policy, a copy of which
is annexed hereto as Schedule B 5.2.2. Should any such goods for
which CBC is responsible be returned by CBC's customer to
Meridian, then Meridian shall reimburse said customer for the
customer's cost of the goods and bill CBC for such reimbursement
and any related disposal costs with appropriate credit for any
salvage value. CBC shall pay Meridian by check for such
replacements or reimbursements made by Meridian on a monthly
basis, such payment to be made within thirty (30) days of receipt
by CBC of a statement from Meridian covering the prior monthly
period.
B 5.3 Any returned Products received at any of CBC's
facilities after the Closing Date which are Meridian's
responsibility shall be turned over to Meridian for processing as
above. Meridian shall furnish CBC with appropriate returned
goods documentation monthly for the prior month, and CBC shall be
granted access during normal business hours to Meridian's
returned goods records relating to the Products, customer files
relating to the Products and other appropriate books and records
- 41 -
relating to the Products as CBC may reasonably request in order
to verify CBC's rights and obligations hereunder. Meridian shall
notify CBC of any returns which fall within Section B 5.1(b), and
CBC shall have the right, within five (5) business days of such
notification, to request that Products returned pursuant to that
section be shipped to CBC at CBC's expense in order for CBC to
confirm that they are defective or otherwise fall within Section
B 5.1(b). If, within five (5) business days of such
notification, CBC does not request that such Products be returned
to it, then all such Products shall be deemed accepted by CBC as
defective.
B 5.4 Neither CBC nor Meridian nor any of its
Affiliates shall do anything to encourage returns of any of the
non-defective Products prior to or subsequent to the Closing
Date.
C C 1 ADDITIONAL COVENANTS, REPRESENTATIONS AND WARRANTIES OF
MERIDIAN
C 1.1 Meridian covenants, represents and warrants, both
as of the date hereof and as of the Closing Date, as follows:
C 1.1.1 Valid Corporate Existence; Qualification.
Meridian is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio.
C 1.1.2 Confidential Information Except as
required by the filing and disclosure rules of public agencies
and as required by any court, only if the Closing does not take
place, Meridian shall in the future, require its employees and
representatives to abide by terms of the Non-Disclosure Agreement
- 42 -
dated January 19, 1996 entered into by CBC and Meridian (the
"Non-Disclosure Agreement").
C 1.1.3 No Breach - Meridian. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not (i) violate
or result in a breach of, or constitute a default under any
provision of the articles of incorporation or code of regulations
of Meridian, or (ii) result in a material breach of any term,
condition or other provision of, or constitute a material default
under, any material agreement to which Meridian is a party or by
which Meridian is bound or (iii) result in a material breach of
any applicable laws, rules or regulations.
C 1.1.4 Authority for Agreement. All corporate
and other proceedings required to be taken by or on behalf of
Meridian, including without limitation all action required to be
taken by its Board of Directors to authorize Meridian to enter
into and carry out this Agreement and the other documents and
agreements contemplated hereby, have been duly and properly
taken. This Agreement has been duly executed and delivered by
Meridian and is valid and binding upon Meridian in accordance
with its terms.
C 1.2 Additional Covenants, Representations and
Warranties of CBC. CBC covenants, represents and warrants, both
as of the date hereof and as of the Closing Date, as follows:
C 1.2.1 Valid Corporate Existence; Qualification.
CBC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the
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corporate power to own, operate and lease its Assets and
properties and to carry on CBC's businesses including its
business relating to the Assets as now being and as heretofore
conducted and to enter into this Agreement. CBC is not
prohibited by agreement from carrying on its business relating to
the Assets or Products as now being conducted in any place where
its business or operations relating to the Assets or Products are
now conducted.
C 1.2.2 CBC has no severance, compensation,
benefit plan, employment or other obligations with respect to its
employees, which will by contract, operation of law or otherwise,
become the obligation or liability of Meridian as a result of the
transactions contemplated by this Agreement.
C 1.2.3 No Breach - CBC. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not (i) violate
or result in a breach of, or constitute a default under, any
provision of the articles of incorporation or by-laws of CBC, or
(ii) result in a material breach of any term, condition or other
provision of, or constitute a material default under, any
agreement to which CBC and/or any of its Affiliates is a party or
by which CBC is bound, other than non-assignable purchase orders
below $1,000 which the customer refuses to allow to be assigned,
or (iii) result in a material breach of any applicable laws,
rules or regulations.
C 1.2.4 Authority for Agreement. Except for the
required approval by the Bankruptcy Court, all corporate and
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other proceedings required to be taken by or on behalf of CBC,
including without limitation all action required to be taken by
its Board of Directors, to authorize CBC to enter into and carry
out this Agreement and the other documents and agreements
contemplated hereby, and to convey, assign, transfer and deliver
the Assets to Meridian pursuant to this Agreement, have been duly
and properly taken. This Agreement has been duly executed and
delivered by CBC and is valid and binding upon CBC in accordance
with its terms, subject to the entry of an Order by the
Bankruptcy Court, in form and substance satisfactory to Meridian,
authorizing CBC to complete the transaction contemplated herein,
including, but not limited to, the assumption and assignment of
the executory contracts, purchase orders, licenses, agreements
and commitments set forth on Schedule B.1.1.7 hereto, on terms
satisfactory to Meridian.
D. D 1 CONDITIONS PRECEDENT TO THE CLOSING.
D 1.1 Conditions Precedent to the Obligations of CBC.
The obligations of CBC under this Agreement are subject to the
satisfaction on or before the Closing Date of each of the
following conditions, except to the extent that any of such
conditions may have been waived in writing by CBC:
D 1.1.1 Except for activities or transactions
after the date of this Agreement in the ordinary course of
business and activities and transactions expressly contemplated
hereby, the representations and warranties of Meridian contained
herein shall be true and correct in all material respects on the
Closing Date as if made on such date.
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D 1.1.2 Meridian shall have, or shall have caused
to be, performed and observed all covenants, agreements and
conditions hereof to be performed or observed by it on or before
the Closing Date.
D 1.1.3 CBC shall have received a favorable
certificate, dated as of the Closing Date, signed by the
Chairman, or the President or a Vice President and by the
Secretary or an Assistant Secretary of Meridian as to the matters
set forth in Sections D 1.1.1 and D 1.1.2.
D 1.1.4 CBC shall have received an opinion of
Meridian's Counsel dated the Closing Date and in the form of
Schedule D 1.1.4.
D 1.1.5 CBC shall have executed an agreement to
sell its retroviral business to a third party, however, receipt
of Bankruptcy Court approval of such agreement is not a part of
this condition precedent.
D 1.1.6 CBC's receipt of Bankruptcy Court approval
to this Agreement.
D 1.2 Conditions Precedent to the Obligations of
Meridian. The obligations of Meridian under this Agreement are
subject to the satisfaction on or before the Closing Date of each
of the following conditions, except to the extent that any of
such conditions may have been waived in writing by Meridian:
D 1.2.1 Except for activities or transactions
after the date of this Agreement in the ordinary course of
business and activities and transactions expressly contemplated
hereby, the representations and warranties of CBC contained
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herein shall be true and correct in all material respects on the
Closing Date as if made on such date.
D 1.2.2 CBC shall have, or shall have caused to
be, performed and observed all covenants, agreements and
conditions hereof to be performed or observed by it on or before
the Closing Date.
D 1.2.3 Subsequent to the date hereof and prior to
the Closing Date, there shall not have been any materially
adverse change in the business or financial condition of CBC
relating to the Products or the Assets.
D 1.2.4 Meridian shall have received a favorable
certificate, dated as of the Closing Date, signed by the
Chairman, or the President or a Vice President and by the
Secretary or an Assistant Secretary of CBC, as to the matters set
forth in Sections D 1.2.1 through D 1.2.3.
D 1.2.5 Meridian shall have received an opinion of
CBC's outside Counsel dated the Closing Date and in the form of
Schedule D.1.2.5.
D 1.2.6 Meridian shall have received a Certificate
signed by the Secretary of CBC, and dated as of the Closing Date,
attesting to the adoption of resolutions by the Board of
Directors of CBC authorizing and approving the sale of the Assets
to Meridian and the execution and delivery of an agreement
providing for such sale.
D 1.2.7 Meridian shall have received such other
documents as it or its counsel shall have reasonably requested in
order to satisfy it that the conditions to Meridian's obligations
- 47 -
hereunder have been met.
D 1.2.8 Meridian shall have received from CBC a
letter, dated the Closing Date, to the effect that on the basis
of a review of the latest available accounting records of CBC and
on the basis of consultations with responsible officers of CBC
and other pertinent inquiries that CBC may deem necessary and
except as otherwise provided on Schedule D.1.2.8, CBC has no
reason to believe that during the period from January 1, 1995 to
the Closing Date there was any adverse material change in the
financial condition or results of operations of CBC relating to
the Products, except changes incurred in the ordinary and usual
course of CBC's business during that period which in the
aggregate are not materially adverse with respect to the Products
or CBC's business relating to the Products.
D 1.2.9 All Authorizations, to the extent
transferable, shall have been effectively assigned or transferred
to Meridian.
D 1.2.10 CBC shall deliver to Meridian at the
Closing certificates of insurance showing that CBC has maintained
the insurance specified in Section B 3.13.
D 1.2.11 There shall not have been suffered any
casualty or loss, whether or not covered by insurance, which
materially and adversely affects the Assets or the ability of
Meridian to continue CBC's business relating to the Products
substantially as conducted by CBC.
D 1.2.12 Meridian shall have received such good
and sufficient instruments of conveyance and transfer, including
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without limitation, bills of sale, consents, patent, trademark
and copyright assignments and contract assignments and
endorsements, in form and substance reasonably satisfactory to
Meridian and its counsel, to convey to and vest in Meridian all
rights, title and interest in and to all of the Assets.
D 1.2.13 Meridian shall have received a written
consent of the relevant other party to each contract, purchase
order, license, agreement and commitment set forth on Schedule
B.1.1.7, with the exception of the agreement with Toray-Fuji
Bionics, Inc. ("TFB") to the transfer and assignment by CBC of
all rights, and to the assumption by Meridian of only those
liabilities and only those obligations which arise, are imposed
or accrue thereunder subsequent to the date of Closing and which
relate to the Products or Assets, and written confirmation from
each such relevant other party (except TFB) that the contract,
purchase order, license, agreement and commitment to which the
consent relates is in full force and effect, that there has not
been a breach or default with respect thereto, and all amounts
due thereunder, including, without limitation, all royalties due
such relevant party, have been paid.
D 1.2.14 CBC shall have provided Meridian with a
certified copy of the Order entered by the Bankruptcy Court on
June 19, 1996.
D 1.2.15 [RESERVED]
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D 1.3 Mutual Conditions Precedent. The obligations of
both parties hereto shall be subject to the following conditions,
except to the extent that any of such conditions have been waived
in writing by both parties:
D 1.3.1 Meridian and CBC shall have executed the
Supply Agreement in the form set forth on Schedule B.1.4.
D 1.3.2 Meridian and CBC shall have executed the
Escrow Agreement.
D 1.3.3 On the Closing Date, there shall be no
valid order of any court or governmental agency, including a stay
or injunction issued by the Bankruptcy Court, which does or is
likely to delay, alter or preclude the transactions as set forth
herein.
E. TERMINATION OF AGREEMENT AND SURVIVAL.
E 1 Under the circumstances provided below, this Agreement
and the transactions contemplated hereby may be terminated or
abandoned at any time on or prior to the Closing Date, except
that Section C 1.1.2 shall survive termination:
(a) By mutual written consent of Meridian and CBC in
which case neither party shall have any obligation to the other
except as provided in Section C 1.1.2.
(b) By CBC, if there has been (i) a material
misrepresentation in this Agreement by Meridian that is not cured
by Meridian prior to Closing Date, or (ii) a material breach of
any of the representations, warranties or covenants by Meridian
set forth that is not cured by Meridian prior to Closing, or
(iii) a failure of any condition to which the obligations of CBC
- 50 -
are subject, which is not cured prior to the Closing Date.
(c) By Meridian, if (i) there has been a material
misrepresentation in this Agreement by CBC that is not cured by
CBC prior to Closing, (ii) there has been a material breach of
any of the representations, warranties or covenants by CBC set
forth that is not cured prior to the Closing Date including, but
not limited to, damage by fire, flood or other casualty to the
physical properties to be transferred herein to Meridian by CBC
and/or its Affiliates, so as to cause any material interruption
or suspension of production of the Products that cannot be cured
by CBC prior to Closing, or (iii) the Bankruptcy Court has not
entered an Order approving the Asset Purchase Agreement, in form
and substance satisfactory to Meridian, in its sole and absolute
discretion on or before July 1, 1996.
F. CLOSING DATE.
The Closing of the transactions provided for herein with
respect to Assets shall take place on June 24, 1996, at 10:00
A.M., at the offices of Bowditch & Dewey, at 311 Main Street,
Worcester, Massachusetts 01608; provided, however, that the
Closing may, by mutual written agreement of the parties, be
extended to a later date. The time and date of the Closing are
referred to in this Agreement as the "Closing" or "Closing Date".
G. G 1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES,
ETC.
Notwithstanding any investigation made at any time by
or on behalf of any of the parties, unless otherwise provided
herein, all of the representations warranties, covenants,
- 51 -
obligations and indemnifications contained in this Agreement
shall survive the Closing and shall remain in full force and
effect thereafter, but only to claims asserted during the five
(5) year period after the Closing, except those relating to title
to the Assets and those relating to environmental matters shall
survive the Closing and remain in full force and effect
thereafter, but shall only apply to claims asserted before the
end of applicable statutes of limitations relating to the claim
in question.
G 2 TRANSITION. In order to ensure a fair and effective
transition in connection with the transactions contemplated by
this Agreement, the parties hereto further covenant and agree as
follows:
G 2.1 Preservation of Records. CBC shall maintain and
retain for a period of six (6) years commencing on the Closing
Date, unless a greater time period is required by law, all books
and records in its possession at any time after the Closing Date
concerning or relating to the Assets or the Products, wherever
located. If any of CBC's records are transferred by CBC to
Meridian, Meridian shall maintain and retain such records for the
remainder of said same period. Such books and records shall be
made available to the non-custodial party upon reasonable notice;
and neither shall destroy any such books and records without
first specifying to the other party the nature and coverage of
the records proposed to be destroyed and of offering to turn them
over to the other party.
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G 2.2 Meridian shall be entitled to use existing CBC
labels and labeling for Products made by CBC for Meridian for up
to one (1) year after the Closing.
H. H 1 INDEMNITY.
H 1.2 Meridian's Indemnity. Meridian agrees to defend
and indemnify CBC against, and hold CBC harmless from, all
claims, actions, suits, proceedings, liabilities, losses,
damages, costs and expenses (including without limitation
reasonable attorneys' fees and expenses and other out-of-pocket
costs and expenses reasonably incurred in investigating,
preparing and defending against any claim, action, suit,
proceeding or demand of any kind) (collectively the "Damages")
suffered by CBC:
H 1.1.1 arising out of or resulting from any
breach or default by Meridian under any of the covenants,
representations and warranties of this Agreement;
H 1.1.2 arising out of or resulting from any
actual or alleged breach or default by Meridian of the contracts,
purchase orders, licenses, agreements and commitments contained
on Schedule B.1.1.7 but only to the extent Meridian has assumed
those obligations under Section B 2; and
H 1.1.3 arising out of or resulting from
Meridian's activities with respect to the Products after the
Closing but excluding any Damages (i) resulting from (a) the
Products which are part of inventories of finished goods
purchased at the Closing, except to the extent the Damages were
caused by Meridian, (b) the Products to be supplied to Meridian
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pursuant to the Supply Agreement, except to the extent the
Damages were caused by Meridian, or (c) any act or omission of
CBC or any third parties CBC deals with relating to the Products
to be supplied to Meridian under the Supply Agreement, except to
the extent the Damages were caused by Meridian, and (ii)
resulting from Rental Instruments arising from incorrect
servicing or failure to service the Rental Instruments after
notice from the customer to CBC, to the extent the Damages were
caused by CBC.
H 1.2 CBC's Indemnity.
H 1.2.1 CBC agrees to defend and indemnify
Meridian against, and hold Meridian harmless from, all Damages
suffered by Meridian as a result of or arising out of any
misrepresentation by CBC or any breach or default by CBC, of or
under, any of its covenants, representations, warranties,
obligations or other provisions of this Agreement.
H 1.2.2 CBC also agrees to defend and indemnify
Meridian against and hold Meridian harmless from all Damages
suffered by Meridian from:
(a) All debts, liabilities and obligations
of CBC and/or its Affiliates, whether accrued, absolute,
contingent or otherwise, other than those specifically assumed by
Meridian in Section B 2.1 hereof.
(b) Obligations of CBC and/or its Affiliates
accruing prior to the Closing (except with respect to goods or
services to be delivered or performed subsequent to the Closing
or return of goods which are governed by Section B 5) under any
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contract, purchase order, license, agreement or commitment
referred to on Schedule B.1.1.7 hereof.
(c) Obligations arising out of any claims of
successor liability, except as to those obligations specifically
assumed herein in Section B 2.1.
(d) Any and all claims or suits brought
against Meridian by Professors J. Thomas LaMont and/or Harry
Pothoulakis, M.D., relating to their claim that they are entitled
to a royalty and/or damages as a result of the manufacture,
marketing, use and/or sale of the Clostridium Difficile test and
all liability resulting to Meridian therefrom.
(e) Any and all claims or suits brought
against Meridian by the Institute Pasteur and/or Genetic Systems
Corporation or their successors or assigns as a result of
Meridian's manufacture, marketing, use and/or sale of the
Products and/or use of the Technical Information or any Patents
or Patent Rights acquired by Meridian from CBC.
(f) All Damages suffered by Meridian as a
result of:
(i) The recall of any of the Products or
device notification relating to any of the Products manufactured
prior to the Closing Date in order to comply with laws and
governmental regulations, guidelines or policy statements in
existence on the Closing Date, providing that the recall has not
been caused in substantial part by any act or omission by
Meridian, its Affiliates or their employees or agents.
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(ii) Any product liability claim relating to
any of the Products in finished form or finished bulk
manufactured prior to the Closing Date providing Meridian has not
done or failed to do anything with respect to such Products which
caused the liability.
(iii) Any litigation to the extent based upon
or arising out of the operation of the business of CBC and/or its
Affiliates, including but not limited to such litigation
involving any of the Products manufactured prior to the Closing
Date providing Meridian has not done or failed to do anything to
cause such litigation or liability which may result therefrom.
(iv) Any injury to or any claim of any
employee of CBC and/or its Affiliates to the extent attributable
to operations of CBC and/or its Affiliates providing Meridian has
not done or failed to do anything to cause such injury or claim.
(v) Any breach or violation by CBC or its
Affiliates of any federal, state or local law, regulation or
ordinance relating to the Products or business of CBC and/or its
Affiliates providing Meridian has not done or failed to do
anything to cause such breach or violation.
(vi) Any inventory transferred to Meridian on
the Closing Date which is not Salable inventory.
(vii) Any act or omission of CBC or its
Affiliates in connection with or relating to its business or any
part thereof, including its business relating to the Products, up
to and including the Closing Date, and in connection with or
relating to the transfer by CBC and or its Affiliates to Meridian
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of the Assets provided Meridian has not done or failed to do
anything to cause such Damage.
H 1.2.3 CBC agrees to defend, indemnify and save
harmless Meridian, its officers, directors, employees, agents,
successors and assigns, from and against any damage, liability,
loss, claims, cost or expense, including without limitation
attorneys fees, arising out of any claim by any person,
government or other entity, whether grounded in statutory or
common law, for personal injury, wrongful death, property damage,
economic loss, costs of abatement, costs of remediation, damage
to natural resources, civil penalties or any other claim, demand,
notice or expense arising out of or related to the presence,
generation, handling, treatment, storage, transport, disposal,
discharge or release of any solid waste, hazardous waste,
hazardous substance, toxic substance, petroleum, contaminant or
pollutant, or any other environmental condition, on, at, beneath,
or near CBC's or CBC's subcontractors facility or from CBC's or
CBC's subcontractor's facility to or at another facility, site or
property; provided, however, CBC shall not be responsible for raw
materials and components specifically requested by Meridian in
writing to be shipped to Meridian at a site specifically
designated by Meridian.
H 1.2.4 Meridian shall not be entitled to claim
or receive indemnity hereunder unless and until such claims equal
or exceed Twenty-five Thousand Dollars ($25,000.00) in the
aggregate, but once they exceed such amount, all amounts from the
above first dollar may be claimed. Notwithstanding anything
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provided above, Meridian shall be entitled to claim and receive
indemnity for all items covered by H 1.2.2(a), H 1.2.2(b) and
H 1.2.2(d) above even if they are less than Twenty-five Thousand
Dollars ($25,000.00) individually or in the aggregate.
H.1.3 Indemnification Procedures. Upon the party to
be indemnified becoming aware of any event contained herein for
which it is entitled to be indemnified, if a claim in respect
thereof is to be made against the indemnitor pursuant hereto, the
indemnified party will with reasonable promptness notify the
indemnitor in writing of such event. If such event is the
assertion of a claim or suit by a third party, the indemnitor
shall defend the action, and the indemnified party will be
entitled to participate in the defense against such claim at its
own cost and expense with counsel of its own choice; provided the
indemnitor and its counsel shall proceed with diligence and in
good faith with respect to the claim; otherwise the indemnified
party shall have the right to proceed with the defense and in
addition to all other rights of the indemnified party thereunder,
such defense shall be at indemnitor's cost and expense. The
Indemnitor shall not have the right to settle any claim or suit
to which Indemnitee is a party without the written consent of the
Indemnitee which shall not be unreasonably withheld.
I. I 1 MISCELLANEOUS PROVISIONS
I 1.1 Accounts Receivable. CBC and its Affiliates
shall retain and collect all their respective accounts receivable
outstanding as of the Closing Date relating to the Products. All
monies received by Meridian after the Closing where it is
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indicated by words or amount that it relates to the accounts
receivable retained by CBC and/or its Affiliates hereunder or is
otherwise due to CBC and/or its Affiliates shall be promptly paid
over to CBC by Meridian.
I 1.2 Severability. If any of the provisions
contained in this Agreement shall be proven unlawful or non-
enforceable, said provision or provisions will be considered as
never written, but that will not affect the validity of the
remaining terms and conditions of this Agreement and the parties
shall substitute to the extent lawfully permissible a new
provision or provisions embodying as closely as lawfully
permissible the intentions of the parties with respect to the
provision or provisions which have been proven unlawful or non-
enforceable.
I 1.3 Benefit Plans - General. It is specifically
understood and agreed that Meridian shall not assume any
obligation or liability under any employee benefit plan or
program which may be maintained by CBC and/or any of its
Affiliates.
I 1.4 No Third Party Rights. Nothing herein shall
grant or create in any person not a party hereto any right to be
offered or to continue employment or to receive any other
benefit.
I 1.5 Brokerage.
1 1.5.1 CBC hereby represents and warrants to
Meridian that, except for Musket Research Associates Inc., whose
fee shall be paid by CBC, (i) it has not retained any broker,
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finder or intermediary, or paid or agreed to pay any fee or
commission to any person, for or on account of the transactions
herein contemplated and (ii) it has not had communications with
any such person which would obligate Meridian to pay any such fee
or commission. In the event that any such fee or commission
shall become payable by reason of any act of CBC, same shall be
paid by CBC.
I 1.5.2 Meridian represents and warrants to CBC
that it has not retained any broker, finder or intermediary, or
agreed to pay any fee or commission to any such person, for or on
account of the transactions herein contemplated, and (ii) that it
has not had communications with any such person which would
obligate CBC to pay any such fee or commission. In the event
that any such fee or commission shall become payable by reason of
any act of Meridian, the same shall be paid by Meridian.
I 1.6 Expenses - Taxes. The parties shall pay their
own respective expenses (including, without limitation, the fees,
disbursements and expenses of their attorneys, accountants and
investment advisors) in connection with the negotiation and
preparation of this Agreement and the transactions contemplated
hereby. Each party shall pay all taxes, if any, imposed on it as
a result of the transfer of assets to the other party or arising
as a result of the consummation of the transactions contemplated
by this Agreement, including, without limitation, all applicable
sales taxes and use taxes.
I 1.7 Adjustments. Notwithstanding any provision
contained herein to the contrary, CBC agrees that all invoices
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received after the Closing Date for goods delivered or services
supplied to CBC and/or any of its Affiliates prior to the Closing
Date shall be for the account of and paid by CBC and/or its
relevant Affiliate.
I 1.8 Meridian agrees that it shall change batch codes
for the Products it manufactures after the Closing and that it
will use different batch codes after the Closing from the batch
codes used prior to the Closing.
I 1.9 Cooperation. Each party shall provide such
reasonable cooperation as may be requested by the other party on
and after Closing Date at the requesting party's expense, in
furnishing information, evidence, testimony and other assistance
in connection with any action, proceeding, arrangement, claim or
dispute based upon contracts, arrangements or acts which were in
effect or incurred on or prior to the Closing Date or in
connection with any FDA proceedings.
I 1.10 Amendments - Waivers. This Agreement may be
amended, modified, or superseded only by a written instrument
executed by CBC and Meridian, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived
only by a written instrument executed by the party waiving
compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the
same. No waiver by any party of the breach of any term,
covenant, representation or warranty contained in this Agreement
or a condition to such party's obligations hereunder shall be
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deemed to be, or construed as, a further or continuing waiver of
any such breach or condition or a waiver of any other condition
or of a breach of any other term, covenant, representation or
warranty of this Agreement.
I 1.11 Publicity. No party hereto, nor any person
acting on such party's behalf shall, prior to or at the Closing,
issue any publicity or news release with respect to the
transactions contemplated hereby, except with the advance consent
of the other party hereto which consent shall not unreasonably be
withheld. This restriction shall not prevent either party from
issuing any release or from filing such reports or other data and
information as may be required to comply with the requirements of
the Federal Trade Commission, the Securities and Exchange
Commission or other governmental bodies.
I 1.12 Notices. Any notice or other communication
required or which may be given hereunder shall be in writing and
mailed, certified or registered mail, postage prepaid, and shall
be deemed given seventy-two (72) hours after the time of mailing,
as follows:
If to Meridian, to:
Meridian Diagnostics, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
Attention: President
With copy to:
Keating, Muething & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, OH 45202
Attention: James M. Jansing, Esq.
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If to CBC, to:
Cambridge Biotech Corporation
365 Plantation Street
Biotechnology Research Park
Worcester, Massachusetts 11605-2376
Attention: President
With copy to:
Bowditch & Dewey
311 Main Street
Worcester, Massachusetts 01608
Attention: Jane V. Hawkes, Esq.
Either party may change the persons and address to which notice
or other communications are to be sent to it by giving written
notice of any such change in the manner provided herein for
giving notice.
I 1.13 Assignment. This Agreement shall be binding
upon the successors and permitted assigns of the parties hereto.
Except for the assignment by CBC pursuant to CBC's reorganization
plan to Aquila Biopharmaceuticals, Inc., this Agreement may not
be assigned by CBC or Meridian without the consent of the other
party, which consent shall not be unreasonably withheld.
I 1.14 Entire Agreement. This Agreement and the
schedules and exhibits hereto and the Non-Disclosure Agreement
contain the entire agreement between the parties hereto with
respect to the subject matter hereof, and there are no
representations, warranties, understanding or agreements other
than those expressly set forth herein and therein.
I 1.15 Exhibits. All schedules, exhibits and
appendices annexed hereto are expressly made a part of this
Agreement as fully as though completely set forth herein, and all
references to this Agreement herein or in any of such writings
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shall be deemed to refer to and include all such writings. Any
breach of, or default under, any provision of any of such
writings shall for all purposes constitute a breach or default
under this Agreement (including without limitation, all such
writings).
I 1.16 Counterparts. This Agreement may be executed
in any number of separate counterparts, each of which shall be
deemed to be an original but which together shall constitute one
and the same instrument.
I 1.17 Section Headings. The Section headings
contained in this Agreement are inserted for convenience of
reference only and shall not affect the meaning or interpretation
of this Agreement.
I 1.18 Governing Law. This Agreement shall be
governed and construed under the laws of The Commonwealth of
Massachusetts. The validity, construction, and interpretation of
this Agreement shall be governed by the internal laws of The
Commonwealth of Massachusetts without reference to Massachusetts'
choice of law rules. In connection with any dispute or
controversy arising out of or relating to this Agreement, both
parties consent to the jurisdiction of the United States District
Court for the District of Massachusetts.
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WITNESS the execution of this Agreement as of the date first
above written.
CAMBRIDGE BIOTECH CORPORATION,
Debtor and Debtor in Possession
By:______________________________
______________________________
President
MERIDIAN DIAGNOSTICS, INC.
By:______________________________
Title:
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ASSET PURCHASE AGREEMENT
BETWEEN
CAMBRIDGE BIOTECH CORPORATION
AND
MERIDIAN DIAGNOSTICS, INC.
DATED: JUNE 24, 1996
