<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended March 31, 1997 Commission File No. 0-6994
------
NEW BRUNSWICK SCIENTIFIC CO., INC.
State of Incorporation - New Jersey E. I. #22-1630072
-----------
44 Talmadge Road, Edison, N.J. 08818-4005
Registrant's Telephone Number: 732-287-1200
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve (12) months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety (90) days.
Yes [X] No [ ]
There are 3,809,982 Common shares outstanding as of May 5, 1997.
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC.
Index
<TABLE>
<CAPTION>
PAGE NO.
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PART I. FINANCIAL INFORMATION:
<S> <C>
Item 1:
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of
Cash Flows - Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial
Statements 6
Item II:
Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. OTHER INFORMATION 9
</TABLE>
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except for share data)
<TABLE>
<CAPTION>
ASSETS
------
March 31, December 31,
1997 1996
------------ -----------
Current Assets (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 3,871 $ 5,196
Accounts receivable, net 8,404 10,108
Refundable income taxes 107 334
Deferred income tax benefit 97 97
Inventories:
Raw materials and sub-assemblies 6,940 6,762
Work-in-process 3,022 2,327
Finished goods 4,161 3,891
------- -------
Total inventories 14,123 12,980
Prepaid expenses and other current assets 2,213 1,880
------- -------
Total current assets 28,815 30,595
------- -------
Property, plant and equipment, net 5,599 5,701
Other assets 1,242 930
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$35,656 $37,226
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Current installments of long-term debt $ 133 $ 135
Accounts payable and accrued expenses 6,335 7,014
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Total current liabilities 6,468 7,149
------- -------
Long-term debt, net of current installments 344 401
Other liabilities 425 425
------- -------
Shareholders' equity:
Common stock, $.0625 par, authorized 25,000,000
shares; shares issued and outstanding,
1997 - 3,809,982 and 1996 - 3,808,932 net of
shares held in treasury, 1997 and 1996 - 355,425 238 238
Capital in excess of par 20,781 20,738
Retained earnings 8,764 9,092
Currency translation adjustment (939) (392)
Pension liability adjustment (425) (425)
------- -------
Total shareholders' equity 28,419 29,251
------- -------
$35,656 $37,226
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1997 1996
---- ----
<S> <C> <C>
Net sales $10,095 $9,707
Operating costs and expenses:
Cost of sales 6,382 5,980
Selling, general and administrative expenses 3,148 2,934
Research, development and engineering expenses 1,001 763
------- ------
Total operating costs and expenses 10,531 9,677
------- ------
Income (loss) from operations (436) 30
Other income (expense):
Interest income 33 51
Interest expense (8) (12)
Other income (expense), net 1 (1)
------- ------
26 38
------- ------
Income (loss) before income taxes (410) 68
Income taxes (benefit) (82) 14
------- ------
Net income (loss) $ (328) $ 54
======= ======
Earnings (loss) per Common share $ (.09) $ .01
======= ======
Weighted average number of shares outstanding 3,809 3,775
======= ======
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1997 1996
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (328) $ 54
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 201 162
Change in related balance sheet accounts:
Accounts receivable 1,348 925
Refundable income taxes 227 -
Inventories (1,362) (690)
Prepaid expenses and other current assets (407) (188)
Accounts payable and accrued expenses 146 167
Advance payments from customers (696) (59)
------- -------
Net cash provided (used) by operating activities (871) 371
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (198) (648)
Investment (250) -
Sale of equipment - 1
------- -------
Net cash used by investing activities (448) (647)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (25) (26)
Discount from fair market value upon issuance
of options under stock option plan for
nonemployee directors 35 -
Proceeds from issue of Common stock under
stock option plan for nonemployee directors 8 -
------- -------
Net cash provided (used) by financing activities 18 (26)
------- -------
Net effect of exchange rate changes on cash (24) (53)
------- -------
Net decrease in cash and cash equivalents (1,325) (355)
Cash and cash equivalents at beginning of period 5,196 6,382
------- -------
Cash and cash equivalents at end of period $ 3,871 $ 6,027
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 8 $ 7
Income taxes 69 3
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Interim Results:
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly, its financial position as of
March 31, 1997 and the results of its of its operations and cash flows for the
three months ended March 31, 1997 and 1996. Interim results may not be
indicative of the results that may be expected for the year.
Note 2 - Earnings per share:
Earnings per Common share are based on the weighted average number of shares
outstanding. Stock options are not included in the calculation as they had no
significant dilutive effect on earnings per share.
Note 3 - Consolidated Condensed Statements of Shareholders' Equity:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1996
-------- -------
(In thousands)
<S> <C> <C>
Balance at beginning of period $29,251 $28,181
Net income (loss) (328) 54
Currency translation adjustment (547) (179)
Discount from fair market value upon issuance
of options under stock option plan
for nonemployee directors 35 -
Issue of shares under stock option plan
for nonemployee directors 8 -
------- -------
Balance at end of period $28,419 $28,056
======= =======
</TABLE>
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following is Management's discussion and analysis of significant factors
that have affected the Company's operating results and financial condition
during the quarter ended March 31, 1997.
Results of Operations
---------------------
Quarter Ended March 31, 1997 vs. Quarter Ended March 31, 1996.
- --------------------------------------------------------------
For the quarter ended March 31, 1997, net sales were $10,095,000 compared with
net sales of $9,707,000 for the quarter ended March 31, 1996. There was a net
loss for the 1997 quarter of $328,000 or $.09 per share compared with net income
of $54,000 or $.01 per share for the first quarter of 1996. The loss for the
1997 quarter was primarily attributable to research, development and engineering
expenses which increased to $1,001,000 in the 1997 quarter from $763,000 in the
1996 quarter to support the operations of DGI BioTechnologies, the Company's
drug lead discovery operation and to a decrease in gross margin due to the
effects of foreign currency exchange rate fluctuations on the Company's European
operations.
Financial Condition
-------------------
Liquidity and Capital Resources
- -------------------------------
During the period ended March 31, 1997, Cash and Cash Equivalents decreased to
$3,871,000 from $5,196,000 at December 31, 1996. The decrease in cash resulted
primarily from an increase in inventories from $12,980,000 at December 31, 1996
to $14,123,000 at March 31, 1997 of which $695,000 was in work-in-process
inventory in preparation for the introduction of new products; the net loss for
the quarter of $328,000; an increase in prepaid expenses and other current
assets of $333,000 and a reduction in accounts payable and accrued expenses of
$679,000 for the quarter, partially offset by a decrease in accounts receivable
to $8,404,000 at March 31, 1997 from $10,108,000 at December 31, 1996. The
decrease in accounts receivable, resulted from the lower volume of sales during
the quarter ended March 31, 1997 as compared with the quarter ended December 31,
1996.
Cash Flows from Operating Activities
- ------------------------------------
During the period ended March 31, 1997, net cash used by operating activities
amounted to $871,000 compared with net cash provided of $371,000 for the quarter
ended March 31, 1996. The primary reasons for the $1,242,000 negative change
between the two periods were the following: (a) inventories increased $1,362,000
in 1997 vs. a decrease of $690,000 in 1996: (b) prepaid expenses and other
current assets increased $407,000 in 1997 vs. an increase of $188,000 in 1996;
c) advance payments from customers decreased $696,000 in 1997 vs. a decrease of
$59,000 in 1996 and there was a net loss of $328,000 in 1997 vs. net income of
$54,000 in 1996 and were partially offset by a decrease in accounts receivable
of $1,348,000 in 1997 vs. a decrease of $925,000 in 1996.
Cash Flows from Investing Activities
- ------------------------------------
Net cash used by investing activities amounted to $448,000 in 1997 vs. $647,000
in 1996, as a result of additions to property, plant and equipment and from an
investment in another entity in
<PAGE>
1997. A significant portion of the 1996 capital additions were attributable to
building laboratories and purchasing equipment for DGI BioTechnologies.
Cash Flows from Financing Activities
- ------------------------------------
Net cash provided by financing activities amounted to $18,000 in 1997 vs.
$26,000 of net cash used in 1996. The 1997 amount includes $35,000 related to
the discount from fair market value upon issuance of options under the Company's
stock option plan for nonemployee directors.
Management believes that the resources available to the Company, including its
line of credit are sufficient to meet its near and intermediate-term needs,
including funding commitments for DGI BioTechnologies, and its strong
unleveraged balance sheet and debt-free real estate provide the basis for any
long-term financing if the need should arise.
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
(10-18) Distribution Agreement with Fisher Scientific Company
dated January 1, 1997.
(10-19) Amendment dated March 13, 1997, to Loan and Security
Agreement with Summit Bank, the successor to United
Jersey Bank/Central NA dated February 17, 1993.
(b) No reports on Form 8-K have been filed during the quarter ended March
31, 1997.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW BRUNSWICK SCIENTIFIC CO., INC.
----------------------------------
(Registrant)
Date: May 5, 1997 /s/ Ezra Weisman
----------------------------------
Ezra Weisman
President
(Chief Executive Officer)
/s/ Samuel Eichenbaum
----------------------------------
Samuel Eichenbaum
Vice President - Finance
(Principal Accounting Officer)
<PAGE>
EXHIBIT (10-18)
DISTRIBUTORSHIP AGREEMENT
This Agreement, made and entered into to be effective as of the 1st day
of January, 1997, by and between:
NEW BRUNSWICK SCIENTIFIC CO. INC.
Box 4005, 44 Talmadge Road
Edison, New Jersey 08818
a corporation organized under the laws of the state of New Jersey, hereinafter
referred to as SUPPLIER; and
FISHER SCIENTIFIC COMPANY
2000 Park Lane
Pittsburgh, PA 15275
a corporation organized under the laws of the state of Delaware, hereinafter
referred to as DISTRIBUTOR.
W I T N E S S E T H:
WHEREAS, SUPPLIER desires to sell and/or market its products through
the use of an exclusive distributor; and
WHEREAS, DISTRIBUTOR desires to exclusively market the SUPPLIER's
laboratory shakers and accessories for resale to customers; and
WHEREAS, the parties desire to enter into a distributorship agreement
governing their relationship;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth herein, and intending to be legally bound hereby, the parties hereto agree
as follows:
<PAGE>
1. PRODUCT
1.1 Products. The Products covered by this Agreement are those products
set forth and attached hereto in Exhibit A ("Products"), manufactured by or for
SUPPLIER, and any improved or updated versions thereof, together with
accessories, parts and components necessary for their maintenance and repair.
Product groups set forth in Exhibit A include, but are not limited to, the G
Series, New C Series, Low End Innova Shakers and Accessories. Exhibit A may be
amended from time to time by mutual written consent of the parties.
1.2 Similar or Related Products. SUPPLIER shall offer to DISTRIBUTOR in
writing the right to distribute any similar or related Products developed by
SUPPLIER during the term of this Agreement on the same terms as set forth
herein. DISTRIBUTOR shall accept distribution rights with respect to similar or
related Products, if at all, in writing, within thirty (30) days after SUPPLIER
advises DISTRIBUTOR of the availability of such similar or related Products. In
the event Products elects not to exercise such right as to all or any of the
products so offered by SUPPLIER within such period, SUPPLIER may distribute any
such rejected similar or related product to any third party on terms no more
advantageous than those offered to DISTRIBUTOR.
1.3 Spare Parts. SUPPLIER represents and warrants that spare parts
necessary for the operation and repair of Products furnished hereunder, if any,
shall be available to DISTRIBUTOR and its customers for a period of five (5)
years after the date of SUPPLIER's invoice for such Products.
-2-
<PAGE>
2. GRANT OF RIGHTS
2.1 Distribution Rights. SUPPLIER hereby appoints DISTRIBUTOR and
DISTRIBUTOR accepts the appointment as the exclusive distributor of the Products
during the term and pursuant to the provisions of this Agreement, reserving only
those distribution rights set forth in Paragraph 2.3.
2.2 Territory. The territory in which the DISTRIBUTOR has the exclusive
right to sell and distribute the Products shall be the United States and Puerto
Rico.
2.3 SUPPLIER's Reserved Distribution Rights. SUPPLIER reserves no right
to sell the New C Series Products, as defined in Exhibit A, in the Territory
except: (a) to the federal government under its GSA contract and (b) directly to
an end user who is restricted by contract from purchasing such Products from
DISTRIBUTOR. SUPPLIER shall pay to DISTRIBUTOR on a quarterly basis a commission
equal to five percent (5%) of the amount of SUPPLIER's direct sales to end users
under exception (b). SUPPLIER expressly reserves the right to sell all Products
other than New C Series Products in the Territory to any end user.
2.4 Lead Program. In consideration for sales leads provided by
DISTRIBUTOR for SUPPLIER's Fermenter and High End Innova line of products which
DISTRIBUTOR is not authorized to distribute, SUPPLIER shall provide a lead
program as set forth in Exhibit B.
2.5 Exclusive Promotional Activity. DISTRIBUTOR shall exclusively
promote SUPPLIER's G Series, New C Series and Low End Innova Products effective
upon notification from SUPPLIER that all New C Series Products are available for
shipment. "Exclusive Promotion" shall be as defined as set forth in Exhibit C.
-3-
<PAGE>
3. ORDERS; DELIVERY
3.1 Orders. DISTRIBUTOR shall make purchases by submitting firm
purchase orders to SUPPLIER.
3.2 Product Availability. All New C Series Products shall be available
for shipment to DISTRIBUTOR no later than March 31, 1997.
3.3 Quarterly Forecasts. DISTRIBUTOR shall use reasonable efforts to
provide a written four quarter forecast, which shall be updated quarterly by the
third week following a calendar quarter.
3.4 Delivery. SUPPLIER shall ship all Products for which it has
received a firm purchase order that are within forecasted levels within thirty
(30) days of order receipt. SUPPLIER agrees that time is of the essence
regarding its delivery of Products.
4. SHIPPING; INVENTORY
4.1 Shipping. SUPPLIER shall ship all Products F.O.B. Origin, freight
collect; provided, however, that SUPPLIER shall be responsible for filing all
claims against the carrier for lost or damaged goods. SUPPLIER shall ship
Products to DISTRIBUTOR or DISTRIBUTOR's customers, at DISTRIBUTOR's election,
via a carrier selected by DISTRIBUTOR.
4.2 Overstocked Inventory. DISTRIBUTOR shall review its inventory twice
per year and identify those Products which it considers, in its reasonable
discretion, to be excess inventory. DISTRIBUTOR shall notify the SUPPLIER in
writing, describing such Products, and SUPPLIER shall credit DISTRIBUTOR with
the full purchase price by DISTRIBUTOR for each such Product upon return of the
Product, less a five percent (5%)
-4-
<PAGE>
restocking fee for shakers and a fifteen percent (15%) restocking fee for
accessories. DISTRIBUTOR agrees to pay all freight and insurance charges for the
returned Products. Overstocked inventory may be returned no later than one (1)
year after receipt by DISTRIBUTOR. DISTRIBUTOR shall issue a reciprocal purchase
order to SUPPLIER for the amount no less than the net credit due DISTRIBUTOR for
the returned inventory.
4.3 Obsolete Inventory. Any Products owned by DISTRIBUTOR and rendered
unsalable, in DISTRIBUTOR's reasonable opinion, due to: (i) a change in any
Product specification, (ii) discontinuation or elimination by SUPPLIER of any
Product from its product offering, (iii) release by SUPPLIER of any improved or
updated version of any Product, or (iv) any other cause outside of DISTRIBUTOR's
control, shall be repurchased from DISTRIBUTOR by SUPPLIER within thirty (30)
days following DISTRIBUTOR's request therefor at the price paid for such
Product(s) by DISTRIBUTOR.
Obsolete inventory may be returned no later than one (1) year after
receipt by DISTRIBUTOR. DISTRIBUTOR shall issue a reciprocal purchase order to
SUPPLIER for the amount no less than the net credit due DISTRIBUTOR for the
obsolete inventory. Obsolete inventory shall be subject to a five percent (5%)
restocking fee for shakers and a fifteen percent (15%) restocking fee for
accessories.
5. SALES & MARKETING SUPPORT
5.1 Training. SUPPLIER shall provide to DISTRIBUTOR's sales personnel,
at DISTRIBUTOR's premises or such other location as the parties may agree, such
training in the demonstration and use of the Products as may be reasonably
requested by DISTRIBUTOR, and for such training purposes shall make available at
SUPPLIER's expense all necessary instructors, training material and Products for
demonstration. DISTRIBUTOR
-5-
<PAGE>
shall provide transportation and lodging expenses for DISTRIBUTOR personnel for
the training of DISTRIBUTOR representatives by SUPPLIER.
5.2 Technical Support. SUPPLIER shall provide technical support to
DISTRIBUTOR's sales personnel and customers, and promptly provide to DISTRIBUTOR
such additional technical information developed or acquired by SUPPLIER from
time to time as may reasonably be expected to be of assistance to DISTRIBUTOR in
fulfilling its obligations hereunder. SUPPLIER shall provide at its own expense
a toll-free long distance telephone service for sales and customer support.
5.3 Literature. SUPPLIER shall provide, at its expense, reasonable
quantities of such instruction manuals and point of sale literature as may, from
time to time, be requested by DISTRIBUTOR for use in connection with the
marketing, sale and distribution of the Products. Subject to DISTRIBUTOR's prior
written approval, DISTRIBUTOR's name may be incorporated in SUPPLIER's
advertising literature intended for distribution by DISTRIBUTOR's sales
representatives. If requested to do so by DISTRIBUTOR, SUPPLIER shall furnish
DISTRIBUTOR with suitable copy and photographs for use by DISTRIBUTOR in
cataloging the Products.
5.4 Sales Commissions. SUPPLIER shall compensate its sales
representatives for Product sales through DISTRIBUTOR in such a way as to limit
the competitive environment between each company's sales forces.
6. PRICE AND PAYMENT TERMS
6.1 Price. SUPPLIER shall supply and ship Product at the prices shown
in Exhibit A through December 31, 1997 ("Firm Price Period"). Such prices may be
reduced by SUPPLIER, but may be increased only according to the terms hereof.
-6-
<PAGE>
6.2 DISTRIBUTOR Discount. DISTRIBUTOR's discount from SUPPLIER's
published list prices for the Products shall as set forth in Exhibit A. These
discounts may not be reduced except with prior written approval by DISTRIBUTOR.
6.3 Price Increases. After the expiration of the Firm Price Period,
prices may be increased no more than once in any contract year to be effective
January 1 of the next following calendar year. SUPPLIER shall give at least
ninety (90) days prior written notice to the DISTRIBUTOR of any price increase.
Such price increases shall be as negotiated by the parties. Shipments shall be
billed at the price in effect at time of order placement.
Notice of price changes shall be sent to:
MARKETING SERVICES
Fisher Scientific
2000 Park Lane
Pittsburgh, PA 15275
With a copy to: CENTRAL PURCHASING
6.4 Payment Terms. Payment terms shall be net thirty (30) days from the
date of receipt of the invoice. DISTRIBUTOR shall not be in breach of this
Agreement unless payment from the DISTRIBUTOR is more than thirty (30) days
overdue. DISTRIBUTOR shall not be considered in breach if the late payment is
for an invoice in dispute.
6.5 Resale. DISTRIBUTOR shall be entitled to resell Products on such
terms as it may, in its sole discretion, determine, including without limitation
price, returns, credit and discounts.
6.6 Special Pricing. SUPPLIER shall negotiate in good faith with
DISTRIBUTOR to provide special pricing (i) where required for DISTRIBUTOR to
meet competition, and (ii) on any large quantity order for Products which may be
requested by DISTRIBUTOR's customers.
6.7 Information Exchange. All price changes and additions of new
products
-7-
<PAGE>
accepted by DISTRIBUTOR shall be sent to DISTRIBUTOR at the address set forth in
Section 6.3 hereof in an electronic format as provided to SUPPLIER. In addition,
SUPPLIER shall promptly implement full Electronic Data Interchange (EDI)
capability in a format compatible with DISTRIBUTOR's systems for receipt of
purchase orders and transmission of invoices.
7. PACKAGING
7.1 Packaging. SUPPLIER shall supply Products in sizes and packaging
configurations corresponding to those set forth in Exhibit A as it may be
amended from time to time. SUPPLIER further agrees to prepare and mark all outer
packaging with DISTRIBUTOR's catalog numbers.
7.2 Bar Coding. Upon request from DISTRIBUTOR, SUPPLIER agrees to bar
code the Products at the lowest saleable unit using symbology 3 of 9 in
accordance with HIBC (Health Industry Bar Code). Additionally, where applicable,
Products shall be bar coded to include standard unit, alternate unit, lot number
and expiration date.
8. TERM AND TERMINATION
8.1 Term. The initial term of this Agreement shall be from the date of
execution by the last-signing party through December 31, 1999. Thereafter, the
Agreement shall automatically renew for successive one (1) year periods unless
and until either party given written notice to the other party of its intent to
terminate the Agreement. Such notice must be given no less than ninety (90) days
prior to the expiration of the then-current term.
8.2 Termination. Notwithstanding the foregoing, this Agreement may be
-8-
<PAGE>
terminated for cause at any time as follows:
(i) In the event of default or material breach of the terms of this
Agreement by either party, written notice thereof may be given to the
defaulting party. Thereafter, the defaulting party shall have thirty
(30) days to cure said breach. In the event that said breach has not
been cured within said thirty (30) day period, the non-defaulting party
may terminate this Agreement on or within thirty (30) days after the
expiration of the cure period.
(ii) In the event of nationalization, expropriation, liquidation or
bankruptcy of, or an assignment for the benefit of creditors of
insolvency of either party.
9. PROCEDURES ON TERMINATION
9.1 Procedures. On the termination of this Agreement, except for cause
pursuant to Section 8.2(ii), SUPPLIER shall continue to honor DISTRIBUTOR's
orders for Products up to the effective date of termination and for a period of
sixty (60) days thereafter, provided such orders are no greater than ten percent
(10%) above the quantities established during the sixty (60) days prior to the
date of the notice of termination, and DISTRIBUTOR shall pay for all such
Products on the terms and conditions of this Agreement.
9.2 Survival. The rights and duties of each party under this Agreement
and the Exhibits hereto in respect of performance prior to termination or
non-renewal shall survive and be enforceable in accordance with the terms of
this Agreement.
9.3 Existing Inventory. Upon termination or non-renewal of this
Agreement, SUPPLIER shall repurchase from DISTRIBUTOR, at DISTRIBUTOR's request
and at DISTRIBUTOR's current cost therefor, such Products as are then owned by
DISTRIBUTOR
-9-
<PAGE>
which have been purchased within the previous twelve (12) months. In the event
of SUPPLIER's breach, termination or non-renewal of the Agreement, no restocking
fees shall apply. In the event of DISTRIBUTOR's breach, termination or
non-renewal, a restocking fee shall apply equal to five percent (5%) for shakers
and fifteen percent (15%) for accessories. Delivery of Products repurchased from
DISTRIBUTOR hereunder shall be F.O.B. origin, freight collect.
10. WARRANTIES, INDEMNITY, RECALL AND INSURANCE
10.1 Warranties. In addition to the warranties of SUPPLIER set forth in
this Agreement and in the Continuing Guaranty which is attached hereto as
Exhibit D, SUPPLIER warrants that the Products will conform to the
specifications set forth in SUPPLIER's product literature and Exhibit A; that
they will comply and be manufactured, packaged, labeled and shipped by SUPPLIER
in compliance with all applicable federal, state and local laws, orders,
regulations and standards; and that they will be merchantable and fit for their
intended purpose.
All Products shall include SUPPLIER's warranty statement containing the
customer's warranty. All SUPPLIER Products shall be warranted to DISTRIBUTOR's
customer against defects in materials and workmanship, including parts and
labor, under normal use for a period of two (2) years. SUPPLIER warrants that
the Products have been thoroughly tested before shipment and that, if
applicable, they are free of mechanical and electrical defects. The warranty
period becomes effective at the earlier of installation or fifteen (15) days
from date of shipment to the DISTRIBUTOR's customer. DISTRIBUTOR shall request
customers present reasonably acceptable documentation verifying the effective
warranty date.
-10-
<PAGE>
During the first year of the warranty period, DISTRIBUTOR may, at its
option, return any instrument requiring service to SUPPLIER for replacement or
repair, or service the instrument through Fisher Service Division ("FSD"). All
reasonable charges for parts, labor and travel incurred by FSD shall be paid by
SUPPLIER. DISTRIBUTOR shall use its best efforts to effectively service the
customer in one trip to the customer's location. DISTRIBUTOR shall be
responsible for all parts, labor and travel expenses of the second year warranty
period; provided, however, that in the event DISTRIBUTOR's warranty costs during
any calendar year exceed one percent (1%) of gross Product sales, SUPPLIER shall
reimburse DISTRIBUTOR for the cost of all warranty parts in excess of that
amount either by cash settlement or credit for Products as agreed by the
parties; and further providing that in the event DISTRIBUTOR's warranty costs
during any calendar year exceed two percent (2%) of gross Product sales,
SUPPLIER shall reimburse DISTRIBUTOR for all warranty costs in excess of the two
percent (2%) amount. Notwithstanding the foregoing, in the event SUPPLIER must
pay warranty costs, it shall be responsible for the travel portion of such
warranty costs only to the extent of one (1) round trip per service call.
DISTRIBUTOR shall cause FSD to provide SUPPLIER with quarterly service
reports submitted thirty (30) days after the close of the previous calendar
quarter reasonably detailing total warranty costs for the Products by categories
of parts, labor and travel. FSD's right to reimbursement under this section
shall survive termination of this Agreement. FSD shall be considered a third
party beneficiary to this Agreement only insofar as Section 10.1, Paragraph 3 is
or may be concerned.
10.2 Product Improvement Reports. SUPPLIER shall promptly respond to
all Product Improvement Reports (PIR) submitted by DISTRIBUTOR, and take all
necessary
-11-
<PAGE>
and appropriate corrective action.
10.3 Continuing Guaranty. SUPPLIER shall execute and abide by the terms
of DISTRIBUTOR's Continuing Guaranty, a copy of which is attached hereto as
Exhibit D and incorporated herein by reference. The terms and provisions of the
Continuing Guaranty shall survive the termination of this Agreement.
10.4 Insurance. On or prior to execution of this Agreement, SUPPLIER
shall provide DISTRIBUTOR with a Certificate of Insurance which meets the
requirements of Paragraph D of the Continuing Guaranty. SUPPLIER shall provide
DISTRIBUTOR with renewal insurance certificates in the form mandated by
Paragraph D of the Continuing Guaranty during the term of this Agreement,
without demand therefor by DISTRIBUTOR.
10.5 Recall. In the event of a confirmed Product failure, or a recall
required by a government agency or requested by SUPPLIER, SUPPLIER agrees to pay
the costs of retrieval, recall and Product corrective action, including Products
already delivered to DISTRIBUTOR's customers, and further agrees to reimburse
DISTRIBUTOR for all affected Products including shipping charges. In addition,
SUPPLIER shall notify DISTRIBUTOR immediately in writing should SUPPLIER become
aware of any defect or condition which may render any of the Products in
violation of any statute or regulation, or which in any way alters the
specifications or quality of the Products.
11. TRADEMARKS
11.1 Trademarks and Trade Names: SUPPLIER recognizes that DISTRIBUTOR
is the owner of the trademarks and trade names connoting DISTRIBUTOR or
DISTRIBUTOR products which it may elect to use in the promotion and sale of the
Products and that SUPPLIER has no right or interest in such trademarks and trade
names.
-12-
<PAGE>
11.2 Trademark License: SUPPLIER hereby grants to DISTRIBUTOR the
royalty-free right to use SUPPLIER's trademarks on SUPPLIER's Products during
the term of this Agreement, it being expressly understood that if DISTRIBUTOR
elects to use SUPPLIER's trademarks during the term of the Agreement,
DISTRIBUTOR shall properly do so and shall discontinue the use of such
trademarks in any new published material following the termination hereof.
Following the termination of this Agreement, SUPPLIER grants DISTRIBUTOR the
right to continue to use its trademarks in connection with sale or service of
Products purchased by DISTRIBUTOR during the term of this Agreement. DISTRIBUTOR
disclaims any rights to SUPPLIER's trademarks other than the said license.
12. CONFIDENTIALITY
12.1 The parties expressly agree to hold as confidential ("Confidential
Information") any information which is designated in writing by the disclosing
party as confidential, provided such information is clearly marked as
confidential, and the disclosing party obtains a signed receipt or agreement
from the receiving party acknowledging that such information is confidential. In
the event Confidential Information is exchanged according to these guidelines,
such information will be retained by the other party in confidence for a period
of two (2) years following the termination of this Agreement; the transmittal of
such information is and shall be upon the express condition that the information
is to be used solely to effectuate this Agreement; and the receiving party shall
not use, publish, or disclose said information, in whole or in part, for any
purpose other than that stated herein. SUPPLIER expressly acknowledges and
agrees that DISTRIBUTOR's customer names, address and key contacts are and shall
be the Confidential Information of DISTRIBUTOR. Notwithstanding the foregoing,
the above
-13-
<PAGE>
restrictions on disclosure and use shall not apply to any information which the
party can show by written evidence, was known to it at the time of receipt, or
which may be obtained from third parties who are not bound by a confidentiality
agreement, or which is in the public domain.
13. MISCELLANEOUS
13.1 Force Majeure: The obligations of either party to perform under
this Agreement shall be excused during each period of delay if such delay arises
from any cause or causes which are reasonably beyond the control of the party
obligated to perform, including, but not limited to, the following: acts of God,
acts or omissions of any government, or any rules, regulations or orders of any
governmental authority or any officer, department, agency or instrumentality
thereof; fire, storm, flood, earthquake, insurrection, riot, invasion or
strikes. The affected party shall use its best efforts to remedy the effects of
such force majeure. Any force majeure shall not excuse performance by the party,
but shall postpone performance, unless such force majeure continues for a period
in excess of ninety (90) days. In such event, the party seeking performance may
cancel its obligations hereunder.
13.2 Assignment: This Agreement shall not be assignable by either party
except: (a) with the consent of the other party, or (b) to the successor of all
or substantially all of the business to which this Agreement relates.
13.3 Notices: Any notice required by this Agreement shall be in writing
and shall be deemed sufficient if given personally or by registered or certified
mail, postage prepaid, or by any nationally recognized overnight delivery
service, addressed to the party to be notified at the address set forth in the
initial paragraph of this Agreement. Either
-14-
<PAGE>
party may, by notice to the other, change its address for receiving such
notices.
13.4 Entire Agreement: This Agreement, including exhibits, constitutes
the entire agreement between the parties relating to the subject matter hereof
and cancels and supersedes all prior agreements and understandings, whether
written or oral, between the parties with respect to such subject matter.
13.5 Existing Obligations: Each party warrants that the terms of this
Agreement do not violate any of its existing obligations or contracts. Each
party shall protect, defend, indemnify, and hold harmless the other party from
and against any claims, demands, liabilities or actions which are hereafter made
or brought against the other party and which allege any such violation.
13.6 Modifications, Waiver: No amendment, modification or claimed
waiver of the terms of this Agreement shall be binding on either party unless
reduced to writing and signed by an authorized officer of the party to be bound.
In ordering and delivery of the Products, the parties may employ their standard
forms, but nothing in those forms shall be construed to modify or amend the
terms of this Agreement.
13.7 Relationship of the Parties: This Agreement does not constitute
either party as the agent or legal representation of the other for any purpose
whatsoever.
13.8 Governing Laws: This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives.
NEW BRUNSWICK SCIENTIFIC FISHER SCIENTIFIC COMPANY
COMPANY, INC.
By: By:
-------------------- ----------------------
Title: Title:
----------------- -------------------
Dated: Dated:
----------------- -------------------
-16-
<PAGE>
EXHIBIT (10-19)
THIRD MODIFICATION AGREEMENT
This third modification agreement dated March 13, 1997 ("Modification")
between Summit Bank ("Bank"), successor in interest to United Jersey
Bank/Central, N.A. and United Jersey Bank, and New Brunswick Scientific Co.,
Inc. ("Borrower").
W I T N E S S E T H
WHEREAS, United Jersey Bank/Central, N.A. and Borrower entered into an
Amended and Restated Loan and Security Agreement on February 17, 1993, as
modified pursuant to a Modification Agreement between Borrower and United Jersey
Bank/Central, N.A. dated as of June 1, 1994 and further modified pursuant to a
Second Modification Agreement between Borrower and United Jersey Bank dated
December 29, 1995 (together, the "Loan Agreement"); and
WHEREAS, the Loan Agreement sets forth the terms and conditions for a
Revolving Loan, Equipment Loan and Foreign Exchange Transaction Loan, as such
capitalized terms are more particularly described in the Loan Agreement; and
WHEREAS, Bank and Borrower desire to (a) extend the date for payment of
the Obligations defined in the Loan Agreement, (b) extend the credit
arrangements under the Loan Agreement and (c) modify certain terms affecting the
Foreign Exchange Transaction Loan, as more particularly described below;
NOW, THEREFORE, in exchange for the mutual covenants in this
Modification and for the other good and valuable consideration, receipt of which
is hereby acknowledged, the parties to this Modification agree to the following
terms, conditions and provisions:
1. Capitalized Terms. Capitalized terms used in this Modification and
not expressly defined herein shall have the meaning for such terms set forth in
the Loan Agreement.
2. Amendments to the Revolving Loan.
(A) All indebtedness under the Revolving Loan shall be payable no
later than May 31, 1998, or such earlier date determined pursuant to the Loan
Agreement, as modified hereby.
<PAGE>
(B) The Bank shall not be required to issue Letters of Credit under
the Revolving Loan after May 31, 1998. Letters of Credit then outstanding will
be reimbursable in accordance with the terms of their issuance.
3. Amendments to the Equipment Loan. The Bank shall not be required to
make any advances under the Equipment Loan after May 31, 1998, or such earlier
date determined pursuant to the Loan Agreement, as modified hereby.
4. Amendments to the Foreign Exchange Transaction Loan.
(A) The definition of Foreign Exchange Transaction Loan as used in the
Loan Agreement is hereby deleted and replaced as follows:
"Foreign Exchange Line of Credit" means a line of credit with respect
to which Bank has agreed to enter into Foreign Exchange Contracts not
to exceed the Foreign Exchange Line Of Credit Maximum.
(B) The definition of Foreign Exchange Transaction Loan Maximum as used
in the Loan Agreement is hereby deleted and replaced as follows:
"Foreign Exchange Line of Credit Maximum" means the aggregate principal
amount of $2,500,000, but in no event shall Bank be obligated to
deliver Foreign Exchange Contracts having the same settlement date in
excess of $500,000 in the aggregate.
(C) All references in the Loan Agreement to "Foreign Exchange
Transaction Loan" shall mean "Foreign Exchange Line of Credit" and all
references to "Foreign Exchange Transaction Loan Maximum" shall mean "Foreign
Exchange Line of Credit Maximum."
(D) The Loan Agreement is amended to delete all references to the
Foreign Exchange Transaction Note. The obligation of Borrower to repay all
monies advanced by Lender to Borrower in connection with the Foreign Exchange
Line of Credit shall be evidenced by this Loan Agreement.
(E) All indebtedness under the Foreign Exchange Line of Credit shall be
payable in accordance with the terms of the particular Foreign Exchange Contract
with Bank. The Foreign Exchange Line of Credit shall terminate on May 31, 1998
or such earlier date determined pursuant to the Loan Agreement, as modified
hereby.
-2-
<PAGE>
5. Delivery of Renewal Notes. Simultaneously with the execution of this
Modification by Borrower, Borrower has made and delivered to Bank restatements
of the Revolving Note and Equipment Note to evidence the obligation of Borrower
to repay all monies at any time advanced by Bank in connection with,
respectively, the Revolving Loan and the Equipment Loan. Each such note amends
and restates the note it replaces but is not delivered by Borrower in payment,
satisfaction or cancellation of the Obligations evidenced thereby.
6. Affirmation; Estoppel. Except as expressly modified herein, all
terms and conditions of the Loan Agreement and each of the other Loan Documents
remain in full force and effect. Borrower affirms (a) the extent and validity of
each obligation, (b) that all Loan Documents remain enforceable as of the date
hereof, (c) that payment and performance of all Obligations continue to be
secured by all Collateral, with respect to which this Modification shall
constitute Borrower's grant and re-grant of a security in all Collateral, (d)
that all representations set forth in the Loan Agreement remain true and correct
as if stated on the date hereof, and (e) that Borrower has no knowledge of the
existence of an Event of Default under any Loan Document or an event or
condition that, with notice or passage of time, would constitute an Event of
Default. All Obligations are owed without setoff, right, claim or cause of
action of any nature whatsoever known to Borrower.
7. Conditions Precedent. Bank's performance under this Modification is
conditioned upon:
(A) Updated UCC searches showing no liens on any other Collateral;
(B) Receipt of an officer's certificate of Borrower respecting due
authorization and authority for the execution, delivery and performance of this
Modification;
(C) Payment of all fees and expenses of Bank's counsel incurred in
connection with this Modification; and
(D) Other documents, opinions, resolutions and certificates as Bank
may reasonably request.
8. Notice. The address for notices to Bank is: Summit Bank, 210 Main
Street, Hackensack, New Jersey 07601
9. Complete Agreement. This Modification constitutes the complete,
entire final agreement of the parties regarding the subject matter hereof and
supersedes all prior agreements regarding the subject matter hereof.
-3-
<PAGE>
10. Jury Trial Waiver. IN ANY LITIGATION RELATING TO THIS
MODIFICATION, BANK AND BORROWER EACH WAIVE THEIR RIGHT TO TRIAL BY JURY. BANK
AND BORROWER ACKNOWLEDGE THAT THEY HAVE CONSULTED WITH THEIR RESPECTIVE COUNSEL
SPECIFICALLY ON THE RAMIFICATIONS OF WAIVING THE RIGHT TO TRIAL BY JURY PRIOR TO
AGREEING TO THIS PROVISION.
IN WITNESS WHEREOF, Bank and Borrower have caused this Modification to
the Loan Agreement to be executed as of the day and year first above written.
BORROWER:
ATTEST: NEW BRUNSWICK SCIENTIFIC CO., INC.
a New Jersey corporation
By:
- -------------------------- --------------------------
Name: Name:
Title: Title:
BANK:
ATTEST: SUMMIT BANK
By:
- -------------------------- --------------------------
Name: Name:
Title: Title:
-4-
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<CIK> 0000071241
<NAME> NEW BRUNSWICK SCIENTIFIC CO., INC.
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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<COMMON> 236,000
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<TOTAL-LIABILITY-AND-EQUITY> 34,905,000
<SALES> 29,074,000
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<INCOME-PRETAX> 210,000
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