<PAGE> 1
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
Date of Report (Date of earliest event reported) June 24, 1996
--------------------------------
Meridian Diagnostics, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-14902 31-0888197
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3471 River Hills Drive, Cincinnati, Ohio 45244
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (513) 271-3700
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
- 2 -
Item 5. Other Events.
-------------
On June 24, 1996, Meridian Diagnostics, Inc. purchased the enteric
product line of Cambridge Biotech Corporation. The diagnostic products, which
identify Adenovirus, Rotavirus, C. DIFFICILE and Lyme disease, were purchased
for $5.5 million in cash plus an advance of royalties and certain other
considerations including inventory purchases and a supply agreement. The current
sales volume of the acquired products is approximately $4 million dollars
annually. Meridian will fund the acquisition from available cash without
incurring any indebtedness.
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) Exhibits.
10. Material Contracts
10.1 Asset Purchase Agreement between Cambridge
Biotech Corporation and Meridian Diagnostics,
Inc. dated June 24, 1996
<PAGE> 3
- 3 -
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.
MERIDIAN DIAGNOSTICS, INC.
Date: July 2, 1996 By: John A. Kraeutler
-----------------------------
John A. Kraeutler
President and Chief
Operating Officer
<PAGE> 1
ASSET PURCHASE AGREEMENT
BETWEEN
CAMBRIDGE BIOTECH CORPORATION
AND
MERIDIAN DIAGNOSTICS, INC.
DATED: JUNE 24, 1996
<PAGE> 2
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
<PAGE> 3
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
-2-
<PAGE> 4
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.1.10 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
-3-
<PAGE> 5
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
-4-
<PAGE> 6
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 purpose of calculating royalties, Net Sales in each Royalty Year
of Cytoclone(TM) 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(TM) 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
-5-
<PAGE> 7
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
-6-
<PAGE> 8
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.
-7-
<PAGE> 9
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,
-8-
<PAGE> 10
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 ss.ss. 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
-9-
<PAGE> 11
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
-10-
<PAGE> 12
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
-11-
<PAGE> 13
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
-12-
<PAGE> 14
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
-13-
<PAGE> 15
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-
<PAGE> 16
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
-15-
<PAGE> 17
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-
<PAGE> 18
CBC and obtain waivers for any such breaches (hereinafter "Cure Payments"), if
any.
B 2.2 DISCLAIMER. Other than as specifically provided in
Section 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-
<PAGE> 19
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-
<PAGE> 20
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,
-19-
<PAGE> 21
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-
<PAGE> 22
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-
<PAGE> 23
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-
<PAGE> 24
(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-
<PAGE> 25
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-
<PAGE> 26
(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-
<PAGE> 27
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-
<PAGE> 28
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-
<PAGE> 29
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-
<PAGE> 30
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-
<PAGE> 31
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-
<PAGE> 32
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-
<PAGE> 33
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,
-32-
<PAGE> 34
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:
<TABLE>
<CAPTION>
COMPREHENSIVE GENERAL LIABILITY
- -------------------------------
<S> <C>
Bodily Injury $2,000,000 Combined Single Limit
$2,000,000 Aggregate
Property Damage $2,000,000 Combined Single Limit
$2,000,000 Aggregate
</TABLE>
-33-
<PAGE> 35
<TABLE>
<S> <C>
Personal Injury $2,000,000 Combined Single Limit
$2,000,000 Aggregate
</TABLE>
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
-34-
<PAGE> 36
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
-35-
<PAGE> 37
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
-36-
<PAGE> 38
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
-37-
<PAGE> 39
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
-38-
<PAGE> 40
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
<PAGE> 41
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
------------------------------------------------------
-40-
<PAGE> 42
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-
<PAGE> 43
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-
<PAGE> 44
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
-43-
<PAGE> 45
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
-44-
<PAGE> 46
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.
-45-
<PAGE> 47
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
-46-
<PAGE> 48
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-
<PAGE> 49
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
-48-
<PAGE> 50
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]
-49-
<PAGE> 51
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-
<PAGE> 52
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-
<PAGE> 53
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.
-52-
<PAGE> 54
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
-53-
<PAGE> 55
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
-54-
<PAGE> 56
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.
-55-
<PAGE> 57
(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
-56-
<PAGE> 58
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
-57-
<PAGE> 59
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
-58-
<PAGE> 60
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,
-59-
<PAGE> 61
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
-60-
<PAGE> 62
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
-61-
<PAGE> 63
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.
-62-
<PAGE> 64
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
-63-
<PAGE> 65
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.
-64-
<PAGE> 66
WITNESS the execution of this Agreement as of the date first above
written.
CAMBRIDGE BIOTECH CORPORATION,
Debtor and Debtor in Possession
By: Alison Taunton-Rigby
------------------------------
President
MERIDIAN DIAGNOSTICS, INC.
By: William J. Motto
------------------------------
Title: Chairman CEO
-65-
